RR Donnelley rrd138008_Annual_Report_2019_Cover_1
ANNUAL REPORT ON FORM 10 -K FOR THE YEAR ENDED JANUARY 31, 2020
NOTICE OF 2020 ANNUAL MEETING AND PROXY STATEMENT
RR Donnelley rrd138008_Annual_Report_2019_Cover_2
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A L E S S A N D R O B O G L I O L O
C H I E F E X E C U T I V E O F F I C E R
Dear Shareholder:
April 20, 2020
You are cordially invited to attend the Annual Meeting of Shareholders of Tiffany & Co. (“Tiffany”
or the “Company”) on Monday, June 1, 2020. The meeting will be held at Tiffany’s corporate
offices, 200 Fifth Avenue (at 23rd Street) in New York City, and will begin at 2:30 p.m.
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 in
advance regardless of 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 enclosed proxy card by
mail or by calling the number listed on the card and following the prompts.
We look back on fiscal 2019 as a year of progress on all of our strategic initiatives. My thoughts
go first to our Tiffany teams around the world. Thanks to their dedication, professionalism
and tenacity we managed to achieve so much in spite of an external environment that—with
persisting protests in France and Hong Kong, rapidly changing tourist flows and, in the last
month of our fiscal year, the outbreak of COVID-19—has challenged our operations. Our teams
have been a precious resource to our Company, as we navigate our iconic Brand through these
turbulent times.
A primary focus in 2019 was on the local consumers in our key markets. Through crafted
marketing and brand messaging campaigns and curated product assortments for the local
markets, we believe that this focus and attention was rewarded with growth in domestic
sales in all regions, including the Chinese Mainland where we experienced strong double-digit
growth for the year.
For our global store network, we continued to focus on individual markets’ luxury sensibilities. For
example, we completed the enlargement of our flagship store in Shanghai, now the largest Tiffany
store in Asia, in a prominent street-facing location within the Hong Kong Plaza mall. We believe
that the size and location of a store matters to these luxury consumers and we are adapting our
in-country network accordingly through sensible relocations. At the Shanghai flagship store, we
also celebrated the opening of the first Tiffany Blue Box Café on the Chinese Mainland. We also
experimented with various pop-up stores around the world and opened concept stores such as
on Cat Street in Tokyo, Japan.
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In other markets, we opened a new flagship store in Hong Kong at One Peking Road. As in
Shanghai, the Hong Kong flagship store also houses a new Tiffany Blue Box Café. We relocated
our Sydney flagship store earlier in the year. And our London flagship store on Old Bond Street
was renovated to a more modern aesthetic. We also partnered on our first store in India at a
prominent New Delhi luxury mall.
The transformation of our iconic flagship store on Fifth Avenue in New York City has begun, with
the “Tiffany Flagship Next Door” at 6 East 57th Street, which opened as a surprise pop-up during
the holidays, now housing our full flagship store product range during that renovation.
During 2019, we also focused on the elevation of our average unit retail price (“AUR”) by
bringing higher price point offerings like gold and gold and diamond jewelry to the forefront of
our consumers’ attention through marketing and in-store visual merchandising, all of which
contributed to the approximately 10% increase in AUR for the year.
We cannot achieve our goals without achieving a steady cadence of new product introductions.
In 2019, we launched Tiffany T Color, an extension of the powerhouse Tiffany T collection, which
adds colorful striking stones like turquoise, tiger’s eye, mother-of-pearl, and onyx to
the recognizable Tiffany T jewelry designs. Additionally, we launched a new and invigorating
collection of men’s and unisex jewelry accessories. We also continued to enhance the offerings
within our Home & Accessories collection including the introduction of a new Tiffany & Love
fragrance pillar that includes scents for Him & Her. I personally cannot wait until we bring to
market the new lineups already in our pipeline.
At Tiffany, our sustainability framework focuses on our Product, Planet and People and underpins
all areas of our business from planning to sourcing to making and delivering. For example,
2019 was the first full year of our pioneering Diamond Source Initiative, which shares with our
customers the provenance—region or country of origin—of all newly sourced, individually
registered diamonds (0.18 carats and larger). We also launched “Tiffany & Co.—The Leader in
Diamond Sustainability,” a client-facing campaign directed toward existing and potential
customers who are ever more interested in sustainability when purchasing a piece of beauty. Our
progress on diversity and inclusion initiatives is exemplified by the 60% representation of women
in our manager and above roles and 50% representation on our Board of Directors. Additionally,
for the second straight year, Tiffany has been recognized by the Human Rights Campaign
Foundation as one of the “Best Places to Work for LGBTQ Equality” and received a 100% score on
its Corporate Equality Index.
Tiffany has had a storied history with a legacy that can fill volumes. From its early days as a
fine goods store in downtown New York City to the creation of the much-sought-after Blue Book
to its retail presence in Paris during the Second French Empire to its acquisition of the Tiffany
Diamond to its purchase of a significant portion of the French Crown Jewels at auction to its
move (80 years ago) to Fifth Avenue and 57th Street to the 24-year ownership by Hoving Corp.
to its celebrated inclusion in the book and film “Breakfast at Tiffany’s” to its list of memorable in
house jewelry designers and gemologists as well as designer partnerships with Jean Schlumberger,
Elsa Peretti and Paloma Picasso to its first taste of operating under public company rules, for the
five years as a subsidiary of Avon Corporation, to its becoming an independent public company in
1987, these are the substance of a legendary American institution.
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But over this 182-year history, there were the tough times as well with the American Civil War,
the Great War, the Great Depression, World War II, 9/11 and the Great Recession. Through all
of these, Tiffany & Co. has done what it needed to do to survive as a business, help where it can
(for example, shifting manufacturing to assist in certain war efforts) and continue to succeed as
a company. We will endure the challenges of the COVID-19 outbreak and recovery and continue
to keep focus on our long-term strategic priorities. Charles Lewis Tiffany’s original vision of
high-quality work with originality of design to the widest possible audience holds true in what
Tiffany & Co. has done, is doing and will continue to do in the luxury jewelry category. Makers
of beauty, Creators of joy.
As I have said before, we have laid out the groundwork for the long journey to continued sustainable
growth as one of the leaders in the luxury jewelry category. The success and momentum of 2019
has shown that we are on the right path. And we are proud to become a part of the LVMH family
of exceptional luxury brands following the completion of the pending merger and will use the new
platform to accelerate our growth and leadership in all that we do.
Sincerely,
Alessandro Bogliolo
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R O G E R N . F A R A H
C H A I R M A N O F T H E B O A R D
Dear Shareholder:
April 20, 2020
I am pleased to be addressing the shareholders of the Company for the third year. In my capacity
as Chairman, I work with the rest of the Board of Directors to drive strong corporate governance
practices that serve the interests of the Company and its shareholders, as detailed in the Proxy
Statement section of this report.
The entire Board is pleased with the leadership of our Company and with the strategic progress
being made. The Board also extends an extra thanks to the management team for the speed and
agility exercised in its response to COVID-19 as well as the protests in markets like Hong Kong
and France during the year, all while continuing to successfully operate this prestigious Company.
We have faith in the team to not only weather the COVID-19 outbreak, but also manage the
Company during the recovery period across our global markets.
I am extremely grateful for our diverse Board of current and former executives from different
consumer-focused organizations that offer critical thinking and provide the Company and
management with lenses of varying perspectives. Such diversity of thought has been further
enhanced by our Board refreshment efforts over the past three years, during which seven new
members have joined. One of our directors who joined the Board in 2017, Francesco Trapani,
tendered his resignation from the Board in November to pursue other opportunities.
I know that the Board shares my excitement and support for Tiffany’s continuing journey of
progress and accomplishments on its strategic road map. We will be proud to transfer the
ownership of this iconic brand and Company to LVMH upon the completion of the pending merger.
Thank you as always for your support.
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Sincerely,
Roger Farah
FINANCIAL HIGHLIGHTS
(in millions, except percentages, per share amounts and stores)
2019
2018
Net sales:
Increase from prior year
On a constant-exchange-rate basis: *
Net sales increase from prior year *
Comparable sales increase from prior year *
Net earnings:
As a percentage of net sales
Per diluted share
Net earnings, as adjusted: *
As a percentage of net sales *
Per diluted share *
Weighted-average number of diluted common shares
Cash flow from operating activities
Free cash flow *
Total debt-to-equity ratio
Cash dividends paid per share
Company-operated TIFFANY & CO. stores
$
4,424.0
$
4,442.1
—%
1%
—%
541.1
12%
4.45
558.2
13%
4.59
121.6
670.9
350.3
31%
2.29
326
$
$
$
$
$
7%
6%
4%
586.4
13%
4.75
N/A
N/A
N/A
123.5
531.8
249.7
32%
2.15
321
$
$
$
$
$
$
$
All references to years relate to fiscal years which ended on January 31 of the following calendar year.
See "Item 6. Selected Financial Data" for certain items that affected 2019 and 2018 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 2019
Table of Contents
Annual Report on Form 10-K for the fiscal year ended January 31, 2020
PART I
Page
Item 1.
Business................................................................................................................... K-4
Item 1A.
Risk Factors.............................................................................................................. K-13
Item 1B.
Unresolved Staff Comments ....................................................................................... K-22
Item 2.
Item 3.
Item 4.
Properties ................................................................................................................. K-22
Legal Proceedings ..................................................................................................... K-23
Mine Safety Disclosures ............................................................................................. K-24
PART II
Item 5.
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities ................................................................................. K-25
Item 6.
Item 7.
Selected Financial Data ............................................................................................. K-27
Management's Discussion and Analysis of Financial Condition and
Results of Operations.............................................................................................. K-29
Item 7A.
Quantitative and Qualitative Disclosures about Market Risk ........................................... K-46
Item 8.
Item 9.
Financial Statements and Supplementary Data............................................................. K-47
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
Item 16.
Form 10-K Summary ................................................................................................. K-100
PART IV
Tiffany & Co. Year-End Report 2019
Table of Contents
Proxy Statement for the 2020 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
Executive Officers of the Company...................................................................................................
PS - 15
Item 1. Election of the Board..........................................................................................................
PS - 17
Board of Directors and Corporate Governance .......................................................................
PS - 22
Item 2. Ratification of the Selection of the Independent Registered Public Accounting Firm to Audit
our Fiscal 2020 Financial Statements........................................................................................
PS - 35
Report of the Audit Committee ............................................................................................
PS - 36
Relationship with Independent Registered Public Accounting Firm .........................................
PS - 37
Item 3. Approval, on an Advisory Basis, of the Compensation of the Company's Named Executive
Officers...................................................................................................................................
PS - 38
Compensation of the CEO and Other Executive Officers .........................................................
PS - 39
Compensation Discussion and Analysis ................................................................................
PS - 40
Other Matters ................................................................................................................................
PS - 91
Appendix I. Non-GAAP Measures.....................................................................................................
PS - 93
Board of Directors and Executive Officers of Tiffany & Co...................................................................
Shareholder Information .................................................................................................................
C-1
C-2
Corporate Information
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, 2020
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
TIFFANY & CO.
(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.)
200 Fifth Avenue, New York, NY 10010
(Address of principal executive offices and zip code)
Registrant’s telephone number, including area code: (212) 755-8000
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Securities registered pursuant to Section 12(b) of the Act:
Trading Symbol(s)
Title of each class
Name of each exchange on which registered
Common Stock, $.01 par value per share
TIF
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 every Interactive Data File required to be submitted 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 such files). Yes
No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of large accelerated filer, accelerated filer, smaller reporting company, and
emerging growth company in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with
any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
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, 2019, the aggregate market value of the registrant's voting and non-voting stock held by non-affiliates of the registrant was
approximately $11,273,922,094 using the closing sales price on July 31, 2019 of $93.92.
As of March 16, 2020, the registrant had outstanding 121,191,337 shares of its common stock, $.01 par value per share.
The following documents are incorporated by reference into this Annual Report on Form 10-K: Registrant's Proxy Statement Dated April 20, 2020
(Part III).
DOCUMENTS INCORPORATED BY REFERENCE.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
The historical trends and results reported in this annual report on Form 10-K should not be considered an indication
of future performance. Further, statements contained in this annual report on Form 10-K that are not statements of
historical fact, including those that refer to plans, assumptions and expectations for future periods, are "forward-
looking statements" within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities
Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995, each as amended. Forward-looking
statements by their nature address matters that are, to different degrees, uncertain, such as statements about the
consummation of the proposed Merger (as defined under "Item 1. Business - Entry into Merger Agreement") and the
anticipated benefits thereof. Forward-looking statements include, but are not limited to, statements that can be
identified by the use of words such as 'expects,' 'projects,' 'anticipates,' 'assumes,' 'forecasts,' 'plans,' 'believes,'
'intends,' 'estimates,' 'pursues,' 'scheduled,' 'continues,' 'outlook,' 'may,' 'will,' 'can,' 'should' and variations of such
words and similar expressions. Examples of forward-looking statements include, but are not limited to, statements
we make regarding the Company's plans, assumptions, expectations, beliefs and objectives with respect to the
proposed Merger; store openings and closings; store productivity; the renovation of the Company's New York Flagship
store, including the timing and cost thereof, and the temporary relocation of its retail operations to 6 East 57th
Street; product introductions; sales; sales growth; sales trends; store traffic; the Company's strategy and initiatives
and the pace of execution thereon; the amount and timing of investment spending; the Company's objectives to
compete in the global luxury market and to improve financial performance; retail prices; gross margin; operating
margin; expenses; interest expense and financing costs; effective income tax rate; the nature, amount or scope of
charges resulting from recent revisions to the U.S. tax code; net earnings and net earnings per share; share count;
inventories; capital expenditures; cash flow; liquidity; currency translation; macroeconomic and geopolitical
conditions; growth opportunities; litigation outcomes and recovery related thereto; amounts recovered under
Company insurance policies; contributions to Company pension plans; and certain ongoing or planned real estate,
product, marketing, retail, customer experience, manufacturing, supply chain, information systems development,
upgrades and replacement, and other operational initiatives and strategic priorities.
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These forward-looking statements are not guarantees of future results and are based upon the current views,
assumptions and plans of management, and speak only as of the date on which they are made and are subject to a
number of factors, risks and uncertainties, many of which are outside of our control. You should not place undue
reliance on such statements. Actual results could therefore differ materially from the planned, assumed or expected
results expressed in, or implied by, these forward-looking statements. While we cannot predict all of the factors that
could form the basis of such differences, key factors, risks and uncertainties include, but are not limited to: the
recent outbreak of the novel coronavirus, and changes in financial, business, travel and tourism, political, public
health and other conditions, circumstances, requirements and practices resulting therefrom; global macroeconomic
and geopolitical developments; changes in interest and foreign currency rates; changes in taxation policies and
regulations (including changes effected by the recent revisions to the U.S. tax code) or changes in the guidance
related to, or interpretation of, such policies and regulations; shifting tourism trends; regional instability; violence
(including terrorist activities); political activities or events (including the potential for rapid and unexpected changes
in government, economic and political policies, the imposition of additional duties, tariffs, taxes and other charges or
other barriers to trade, including as a result of changes in diplomatic and trade relations or agreements with other
countries); weather conditions that may affect local and tourist consumer spending; changes in consumer
confidence, preferences and shopping patterns, as well as our ability to accurately predict and timely respond to
such changes; shifts in the Company's product and geographic sales mix; variations in the cost and availability of
diamonds, gemstones and precious metals; adverse publicity regarding the Company and its products, the Company's
third-party vendors or the diamond or jewelry industry more generally; any non-compliance by third-party vendors and
suppliers with the Company's sourcing and quality standards, codes of conduct, or contractual requirements as well
as applicable laws and regulations; changes in our competitive landscape; disruptions impacting the Company's
business and operations; failure to successfully implement or make changes to the Company's information systems;
changes in the cost and timing estimates associated with the renovation of the Company's New York Flagship store;
delays caused by third parties involved in the aforementioned renovation; any casualty, damage or destruction to the
Company's New York Flagship store or 6 East 57th Street location; the Company's ability to successfully control
costs and execute on, and achieve the expected benefits from, the operational initiatives and strategic priorities
referenced above; conditions to the completion of the proposed Merger may not be satisfied or the regulatory
approvals required for the proposed Merger may not be obtained, in each case, on the terms expected or on the
anticipated schedule which contemplates closing of the acquisition in the middle of 2020; the occurrence of any
event, change or other circumstance that could give rise to the termination of the Merger Agreement (as defined
under "Item 1. Business – Entry into Merger Agreement") or affect the ability of the parties to recognize the benefits
TIFFANY & CO.
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of the proposed Merger; the effect of the announcement or pendency of the proposed Merger on the Company's
business relationships, operating results and business generally; risks that the proposed Merger disrupts the
Company's current plans and operations and potential difficulties in the Company's employee retention as a result of
the proposed Merger; potential litigation that may be instituted against the Company or its directors or officers
related to the proposed Merger or the Merger Agreement and any adverse outcome of any such litigation; the amount
of the costs, fees, expenses and other charges related to the proposed Merger, including in the event of any
unexpected delays; other risks to consummation of the proposed Merger, including the risk that the proposed Merger
will not be consummated within the expected time period, or at all, which may affect the Company's business and
the price of the common stock of the Registrant; and any adverse effects on the Company by other general industry,
economic, business and/or competitive factors. Consequences of material differences in results as compared with
those anticipated in the forward-looking statements could include, among other things, business disruption,
operational problems, financial loss, legal liability to third parties and similar risks. Developments relating to these
and other factors may also warrant changes to the Company's operating and strategic plans, including with respect to
store openings, closings and renovations, capital expenditures, information systems development, inventory
management, and continuing execution on, or timing of, the aforementioned initiatives and priorities. Such
consequences and changes could also cause actual results to differ materially from the expected results expressed
in, or implied by, the forward-looking statements.
Additional information about potential risks and uncertainties that could affect the Company's business and financial
results is included under "Item 1A. Risk Factors" and "Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations" in this Annual Report on Form 10-K for the fiscal year ended January 31,
2020, the definitive proxy statement on Schedule 14A that the Company filed on January 6, 2020, and in the
Company's other filings made with the U.S. Securities and Exchange Commission ("SEC") from time to time, which
are available via the SEC's website at www.sec.gov. Readers of this Annual Report on Form 10-K should consider the
risks, uncertainties and factors outlined above and in this Form 10-K in evaluating, and are cautioned not to place
undue reliance on, the forward-looking statements contained herein. 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.
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TIFFANY & CO.
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PART I
Item 1. Business.
GENERAL HISTORY AND NARRATIVE DESCRIPTION OF BUSINESS
Tiffany & Co. (the "Registrant") is a holding company that operates through Tiffany and Company ("Tiffany") and the
Registrant's other subsidiary companies (collectively, the "Company"). 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.
All references to years relate to fiscal years that end on January 31 of the following calendar year.
ENTRY INTO MERGER AGREEMENT
On November 24, 2019, the Registrant entered into an Agreement and Plan of Merger (the "Merger Agreement") by
and among the Registrant, LVMH Moët Hennessy – Louis Vuitton SE, a societas Europaea (European company)
organized under the laws of France ("Parent"), Breakfast Holdings Acquisition Corp., a Delaware corporation and an
indirect wholly owned subsidiary of Parent ("Holding"), and Breakfast Acquisition Corp., a Delaware corporation and a
direct wholly owned subsidiary of Holding ("Merger Sub"). Pursuant to the Merger Agreement, Merger Sub will be
merged with and into the Registrant (the "Merger"), with the Registrant continuing as the surviving company in the
Merger and a wholly owned indirect subsidiary of Parent.
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Subject to the terms and conditions set forth in the Merger Agreement, at the effective time of the Merger (the
"Effective Time"), each share of Common Stock issued and outstanding immediately prior to the Effective Time (other
than shares of Common Stock owned by the Registrant, Parent or any of their respective wholly owned subsidiaries,
and shares of Common Stock owned by stockholders of the Registrant who have properly demanded and not
withdrawn a demand for appraisal rights under Delaware law) will be converted into the right to receive $135.00 in
cash, without interest and less any required tax withholding.
The consummation of the proposed Merger is subject to various conditions, including, among others, customary
conditions relating to (a) the adoption of the Merger Agreement by holders of a majority of the outstanding shares of
the Registrant's Common Stock entitled to vote on such matter at the meeting of stockholders of the Registrant (the
"Special Meeting") held to vote on the adoption of the Merger Agreement and (b) the expiration or earlier termination
of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (as amended, and
all rules and regulations promulgated thereunder, collectively, the "HSR Act"). As previously announced, on February
3, 2020, the waiting period under the HSR Act in connection with the proposed Merger expired, and on February 4,
2020, the Company held the Special Meeting, at which the holders of shares of Common Stock issued and
outstanding as of the close of business on the record date for the Special Meeting considered and voted to approve
(i) the adoption of the Merger Agreement and (ii) by non-binding, advisory vote, certain compensation arrangements
for the Company's named executive officers in connection with the proposed Merger. The proposed Merger remains
subject to satisfaction or waiver of the remaining customary closing conditions, including, among others, (A) certain
non-U.S. regulatory approvals, (B) clearance by the Committee on Foreign Investment in the United States
("CFIUS"), (C) the absence of a law or order in effect that enjoins, prevents or otherwise prohibits the consummation
of the proposed Merger or any other transactions contemplated under the Merger Agreement issued by a
governmental entity; (D) the absence of any legal proceeding seeking to enjoin, prevent or otherwise prohibit the
consummation of the proposed Merger or any other transactions contemplated under the Merger Agreement
instituted by a governmental entity of competent jurisdiction; and (E) the absence of a Material Adverse Effect (as
defined in the Merger Agreement). The obligation of each party to consummate the proposed Merger is also
conditioned on the accuracy of the other party's representations and warranties (subject to certain materiality
exceptions) and the other party's compliance, in all material respects, with its covenants and agreements under the
Merger Agreement.
The Merger Agreement provides for certain customary termination rights of the Registrant and Parent, including the
right of either party to terminate the Merger Agreement if the Merger is not completed on or before August 24, 2020
(the "Outside Date"), provided that the Outside Date may be extended up to an additional 90 days by either party if
all conditions are satisfied other than the receipt of regulatory approvals and CFIUS clearance or absence of legal
TIFFANY & CO.
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restraints. The Merger Agreement also provides that the Registrant will be required to pay Parent a termination fee of
$575.0 million in certain circumstances.
For additional information related to the Merger Agreement, please refer to the Company's Definitive Proxy Statement
on Schedule 14A (the "Definitive Proxy Statement") filed with the U.S. Securities and Exchange Commission (the
"SEC") on January 6, 2020.
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; sophisticated style and romance; excellent customer service; an elegant store and online environment;
upscale store locations; "classic" product positioning; and distinctive and high-quality packaging materials (most
significantly, the TIFFANY & CO. blue box). 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, as well as platinum and gold, which carry a lower overall gross margin; 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;
• While the "classic" positioning of much of Tiffany's product line supports the Brand and requires sufficient
display space in its stores, management's strategic priorities also include the accelerated introduction of new
design collections primarily in jewelry, but also in non-jewelry products, which could result in a necessary
reallocation of product display space;
• Tiffany's packaging supports consumer expectations with respect to the Brand but is expensive; and
• A significant amount of marketing across print, digital and social media, as well as public relations events
are required to both reinforce the Brand's association with luxury, sophistication, style and romance, as well
as to market specific products.
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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, marketing 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 any 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
product, marketing or distribution initiatives.
REPORTABLE SEGMENTS
The Company has four reportable segments: (i) Americas, (ii) Asia-Pacific, (iii) Japan and (iv) Europe. All non-
reportable segments are included within Other. The Company transacts business within certain of its segments
through the following channels: (i) retail, (ii) Internet, (iii) catalog, (iv) business-to-business (products drawn from
the retail product line and items specially developed for the business market) and (v) wholesale distribution
(merchandise sold to independent distributors for resale). The Company's segment information for the fiscal years
ended January 31, 2020, 2019 and 2018 is reported in "Item 8. Financial Statements and Supplementary Data -
Note Q. Segment Information."
TIFFANY & CO.
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Americas
Sales in the Americas represented 43% of worldwide net sales in 2019, while sales in the United States ("U.S.")
represented 86% of net sales in the Americas. Sales are transacted through the following channels: retail (in the
U.S., Canada and Latin America), Internet and catalog (in the U.S. and Canada), business-to-business (in the U.S.)
and wholesale distribution (in Latin America and the Caribbean).
Retail sales in the Americas are transacted in 124 Company-operated TIFFANY & CO. stores in (number of stores at
January 31, 2020 included in parentheses): the U.S. (94), Canada (13), Mexico (10), Brazil (6) and Chile (1).
Included within these totals are 14 Company-operated stores located within various department stores in Canada and
Mexico. Included in the U.S. retail stores is the New York Flagship store, which represented less than 10% of
worldwide net sales in 2019.
Asia-Pacific
Sales in Asia-Pacific represented 28% of worldwide net sales in 2019, while sales in Greater China represented
approximately 60% of net sales in Asia-Pacific. Sales are transacted through the following channels: retail, Internet
(in Australia and China), business-to-business (in China) and wholesale distribution.
Retail sales in Asia-Pacific are transacted in 91 Company-operated TIFFANY & CO. stores in (number of stores at
January 31, 2020 included in parentheses): China (34), Korea (15), Australia (11), Hong Kong (10), Taiwan (7),
Singapore (5), Macau (4), Malaysia (2), Thailand (2) and New Zealand (1). Included within these totals are 35
Company-operated stores located within various department stores.
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Japan
Sales in Japan represented 15% of worldwide net sales in 2019. Sales are transacted through the following
channels: retail, Internet, business-to-business and wholesale distribution.
Retail sales in Japan are transacted in 58 Company-operated TIFFANY & CO. stores. Included within this total are 53
stores located within department stores, generating approximately 75% of net sales in Japan. 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, 2020 included in parentheses): Isetan Mitsukoshi Ltd. (14),
Takashimaya Co., Ltd. (9), J. Front Retailing Co., Ltd. (Daimaru and Matsuzakaya department stores) (8) and Seven
& i Holding Co., Ltd. (Sogo and Seibu department stores) (4). The Company also operates 18 stores in other
department stores.
Europe
Sales in Europe represented 11% of worldwide net sales in 2019, while sales in the United Kingdom ("U.K.")
represented approximately 40% of net sales in Europe. Sales are transacted through the following channels: retail,
Internet and wholesale distribution.
Retail sales in Europe are transacted in 48 Company-operated TIFFANY & CO. stores in (number of stores at January
31, 2020 included in parentheses): the U.K. (12), Italy (9), Germany (7), France (5), Spain (3), Switzerland (3), the
Netherlands (2), Russia (2), Austria (1), Belgium (1), the Czech Republic (1), Denmark (1) and Ireland (1). Included
within these totals are 11 Company-operated stores located within various department stores. The Company currently
operates e-commerce enabled websites within the following countries: U.K., Austria, Belgium, France, Germany,
Ireland, Italy, the Netherlands and Spain.
Other
Other consists of all non-reportable segments, including: (i) retail sales transacted in five Company-operated
TIFFANY & CO. stores in the United Arab Emirates ("U.A.E.") and wholesale distribution in the Emerging Markets
region; (ii) wholesale sales of diamonds (see "PRODUCT SUPPLY CHAIN – Supply of Diamonds" below); and (iii)
licensing agreements.
TIFFANY & CO.
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Licensing Agreements. The Company receives earnings from a licensing agreement with Luxottica Group S.p.A., for
the development, production and distribution of TIFFANY & CO. brand eyewear, and from a licensing agreement with
Coty Inc., for the development, production and distribution of TIFFANY & CO. brand fragrance products. The
earnings received from these licensing agreements represented less than 1% of worldwide net sales in 2019.
Retail Distribution Base
Management regularly evaluates opportunities to optimize its retail store base. This includes evaluating potential
markets for new TIFFANY & CO. stores, as well as the renovation, relocation, or closure of existing stores.
Considerations include the characteristics of the markets 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 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 2015:
Year:
2015
2016
2017
2018
2019
Americas
U.S.
95
95
94
93
94
Canada &
Latin America
Asia-Pacific
Japan
Europe
Emerging
Markets
29
30
30
31
30
81
85
87
90
91
56
55
54
55
58
41
43
46
47
48
5
5
4
5
5
Total
307
313
315
321
326
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E-Commerce, Catalog and Phone Orders
The Company currently operates e-commerce enabled websites in 14 countries, as well as informational websites in
several additional countries. To a lesser extent, sales are also generated through catalogs that the Company
distributes in certain countries as well as orders placed via telephone in certain markets. Sales transacted on those
websites, through catalogs or via telephone accounted for 7% of worldwide net sales in 2019, 2018 and 2017.
Management believes that its websites serve an important marketing role in building brand awareness and attracting
customers to the Company's stores. In addition, the Company offers a select assortment of its products through third
party websites.
Products
The Company's principal product category is jewelry, which represented 92%, 92% and 91% of worldwide net sales
in 2019, 2018 and 2017, respectively. 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).
The Company also sells watches, home and accessories products and fragrances, which represented, in total, 6%,
7% and 7% of worldwide net sales in 2019, 2018 and 2017, respectively. The remainder of worldwide net sales
was attributable to wholesale sales of diamonds and earnings from third-party licensing agreements.
TIFFANY & CO.
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Sales by Reportable Segment of TIFFANY & CO. Jewelry by Category
% of total
Americas
Sales
% of total
Asia-Pacific
Sales
% of total
Japan
Sales
% of total
Europe
Sales
% of total
Reportable
Segment
Sales
55%
21%
14%
53%
21%
14%
53%
22%
14%
63%
29%
6%
61%
31%
7%
59%
31%
8%
38%
38%
17%
37%
37%
18%
30%
39%
22%
60%
24%
12%
60%
23%
12%
60%
25%
12%
55%
26%
12%
54%
26%
12%
52%
27%
13%
2019
Jewelry collections a
Engagement jewelry b
Designer jewelry c
2018
Jewelry collections a
Engagement jewelry b
Designer jewelry c
2017
Jewelry collections a
Engagement jewelry b
Designer jewelry c
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a) This category includes jewelry in a wide range of prices within the Company's high jewelry and named jewelry
collections such as Tiffany Paper Flowers®, Tiffany Victoria®, Tiffany Soleste®, Tiffany Keys, Tiffany T, Tiffany
HardWear and Return to Tiffany®, among others. Jewelry in this category is primarily crafted using precious metals
(platinum, gold or sterling silver) and may contain diamonds and/or other gemstones.
b) This category includes engagement rings and wedding bands. Most jewelry in this category contains diamonds and
is constructed of platinum and/or gold.
c) This category includes only jewelry that is attributed to one of the Company's "named" designers: Elsa Peretti (see
"MATERIAL DESIGNER LICENSE" below), Paloma Picasso and Jean Schlumberger. Jewelry in this category is
primarily crafted using precious metals (platinum, gold or sterling silver) and may contain diamonds and/or other
gemstones.
ADVERTISING, MARKETING, PUBLIC AND MEDIA RELATIONS
The Company's strategy is to invest in marketing and public relations programs designed to build awareness of the
Brand, its heritage and its products, as well as to enhance the Brand's relevance and association among consumers
with quality and luxury. The Company regularly advertises in newspapers and magazines, as well as through digital
and social 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 2019,
2018 and 2017, the Company spent $378.8 million, $394.1 million and $314.9 million, representing 8.6%, 8.9%
and 7.6% 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 philanthropic efforts, including charitable
sponsorships and monetary and merchandise donations. The Company also periodically makes donations to The
Tiffany & Co. Foundation, a private foundation established to support nonprofit organizations. The philanthropic
efforts of this Foundation are primarily focused on environmental conservation.
TIFFANY & CO.
K-8
TRADEMARKS
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 ®, the TIFFANY BLUE BOX design, TIFFANY BLUE ® and the color Tiffany Blue for a
variety of product categories and services in the U.S. and in other countries.
Tiffany maintains a program to protect its trademarks and institutes legal action where necessary to prevent others
either from registering or using marks which are considered to create a likelihood of confusion with the Company or
its products.
Tiffany has been generally successful in such actions and management considers that the Company's worldwide
rights in its principal trademarks, 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
pursues infringers through leads generated internally and through a network of investigators, legal counsel, law
enforcement and customs authorities worldwide. The Company responds to such infringing activity by taking various
actions, including sending cease and desist letters, cooperating with law enforcement in criminal prosecutions,
initiating civil proceedings and participating in joint actions and anti-counterfeiting programs with other like-minded
third party rights holders.
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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, in some countries, third parties have registered the name TIFFANY in connection with certain
product categories (including, in the U.S., the category of bedding and, in certain foreign countries, the categories of
food, cosmetics, clothing, paper goods 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.
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
7%, 8% and 9% of the Company's worldwide net sales in 2019, 2018 and 2017, respectively.
Tiffany is party to an Amended and Restated Agreement (the "Peretti Agreement") with Ms. Peretti, which largely
reflects the long-standing rights and marketing and royalty obligations of the parties. Pursuant to the Peretti
Agreement, Ms. Peretti grants 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
$8.0 million and to take certain actions to protect Ms. Peretti's intellectual property, including to maintain
trademark registrations reasonably necessary to sell the licensed products in the markets in which the licensed
products are sold by Tiffany.
The Peretti Agreement has a term that expires in 2032 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
TIFFANY & CO.
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provisions of the Peretti Agreement. The Peretti Agreement is terminable by Ms. Peretti 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).
PRODUCT SUPPLY CHAIN
The Company's strategic priorities include maintaining substantial control over its product supply chain through
internal jewelry manufacturing and direct diamond sourcing. The Company manufactures jewelry in New York, Rhode
Island and Kentucky, polishes and performs certain assembly work on jewelry in the Dominican Republic and crafts
silver hollowware in Rhode Island. In total, these internal manufacturing facilities produce approximately 60% of the
jewelry sold by the Company. The balance, and 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 access to or mastery of various product-making skills and technology, support
for alternative capacity, product cost and the cost of capital investments. To supply its internal manufacturing
facilities, the Company processes, cuts and polishes rough diamonds at its facilities outside the U.S. and sources
precious metals, rough diamonds, polished diamonds and other gemstones, as well as certain fabricated
components, from third parties.
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Supply of Diamonds. The Company regularly purchases parcels of rough diamonds for polishing and further
processing. The vast majority of diamonds acquired by the Company originate from Botswana, Canada, Namibia,
Russia and South Africa. The Company has diamond processing operations in Belgium, Botswana, Cambodia,
Mauritius and Vietnam that prepare and/or cut and polish rough diamonds for its use. The Company conducts
operations in Botswana through a subsidiary in which local third parties own minority, non-controlling interests,
allowing the Company to access rough diamond allocations reserved for local manufacturers. The Company maintains
a relationship and has an arrangement with these local third parties; however, if circumstances warrant, the Company
could seek to replace its existing local partners or operate without local partners.
The Company secures supplies of rough diamonds primarily through arrangements with diamond producers and, to a
lesser extent, on the secondary market. Most of this supply comes from arrangements in which the Company
accesses rough diamonds that are offered for sale (including as a sightholder), although with no contractual purchase
obligation for such rough diamonds. A smaller portion of rough diamond purchases is made through agreements in
which the Company is required to purchase a minimum volume of rough diamonds (anticipated to be approximately
$30.0 million in 2020). All such supply arrangements are generally at the market price prevailing at the time of
purchase.
As a result of the manner in which rough diamonds are typically assorted for sale, it is occasionally necessary for the
Company to knowingly purchase, as part of a larger assortment, rough diamonds that do not meet the Company's
quality standards or assortment needs. The Company seeks to recover its costs related to these diamonds by selling
such diamonds to third parties (generally other diamond polishers), which has the effect of modestly reducing the
Company's overall gross margins. Any such sales are included in the Other non-reportable segment.
In recent years, an average of approximately 75% (by volume) of the polished diamonds used in the Company's
jewelry that are 0.18 carats and larger and individually registered ("individually registered diamonds") has been
produced from rough diamonds that the Company has purchased. The balance of the Company's needs for
individually registered diamonds is purchased from polishers or polished-diamond dealers generally through purchase
orders for fixed quantities. The Company's relationships with polishers and polished-diamond dealers 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. It is the Company's intention to continue to supply the
substantial majority of its needs for individually registered diamonds, as well as a majority of its needs for melee
diamonds of less than 0.18 carats used in the Company's jewelry, by purchasing rough diamonds.
Conflict Diamonds. Media attention has been drawn to the issue of "conflict" diamonds. This term is 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 diamonds produced in conflict regions from diamonds produced
in other regions once they have been polished. Therefore, concerned participants in the diamond trade, including the
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Company and nongovernment organizations, seek to exclude "conflict" 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, Angola
and the Democratic Republic of the Congo underscore that the aforementioned system has not deterred the
production of diamonds in state-sanctioned mines under poor working conditions. The Company has informed its
vendors that it does not intend to purchase Zimbabwean, Angolan or Congolese-produced diamonds. Accordingly, the
Company has implemented the Diamond Source Warranty Protocol, which requires vendors to provide a warranty,
and a qualified independent audit certificate, that loose polished diamonds were not obtained from Zimbabwean,
Angolan or Congolese mines. As part of its diamond source initiative, the Company also requires its vendors to
affirmatively state the region or country of origin of any polished diamonds sold to the Company that are 0.18 carats
and larger and individually registered.
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.
In addition, the supply and prices of rough and polished diamonds in the principal world markets have been and
continue to be influenced by the Diamond Trading Company ("DTC"), an affiliate of the De Beers Group. Although the
DTC's historical ability to control worldwide production has diminished due to its lower share of worldwide production
and changing policies in diamond-producing countries, the DTC continues to supply a meaningful portion of the
world market for rough, gem-quality diamonds and continues to impact diamond supply through its marketing and
advertising initiatives. A significant portion of the diamonds that the Company purchased in 2019 had their source
with the DTC.
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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.
The Company purchases conflict-free rough and polished diamonds, in highly graded color and clarity ranges.
Management does not foresee a shortage of diamonds in these quality ranges 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.
Synthetic and Treated Diamonds. Synthetic diamonds (diamonds manufactured but not naturally occurring) and
treated diamonds (naturally occurring diamonds subject to treatment processes, such as irradiation) are produced in
growing quantities. Although significant questions remain as to the ability of producers to generate synthetic and/or
treated diamonds economically within a full range of sizes and natural diamond colors, and as to consumer
acceptance of these diamonds, such diamonds are becoming a larger factor in the market. Should synthetic and/or
treated 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 such diamonds.
Purchases of Precious Metals and Other Polished Gemstones. Precious metals and other polished gemstones used in
making jewelry are purchased from a variety of sources for use in the Company's internal manufacturing operations
and/or for use by third-party manufacturers contracted to supply Tiffany merchandise. The silver, gold and platinum
sourced directly by the Company principally come from two sources: (i) in-ground, large-scale deposits of metals,
primarily in the U.S., that meet the Company's standards for responsible mining and (ii) metals from recycled
sources. 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 Company-
supplied precious metals.
The Company generally enters into purchase orders for fixed quantities with precious metals and other polished
gemstone vendors. Purchases are generally made at prevailing market prices, which have, with respect to precious
metals, experienced substantial volatility in recent years. These relationships may be terminated at any time by
TIFFANY & CO.
K-11
either party; such termination would not discharge either party's obligations under unfulfilled purchase orders
accepted prior to the termination. 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 50 manufacturers. However, the Company does
not enter into long-term supply arrangements with its finished goods vendors. The Company does enter into
merchandise vendor agreements with nearly all of its finished goods vendors. The merchandise vendor 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 generally enters into purchase orders for
fixed quantities of merchandise with its 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 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.
Watches. The Company sells TIFFANY & CO. brand watches, which are designed, produced, marketed and
distributed through certain of the Company's subsidiaries. The Company has relationships with approximately 30
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. Sales of these
TIFFANY & CO. brand watches represented approximately 1% of worldwide net sales in 2019, 2018 and 2017.
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COMPETITION
The global jewelry industry is competitively fragmented. The Company encounters significant competition in all
product categories. 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 prices for
diamond jewelry reflect 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 diamonds, but which also increase the
Company's cost. The Company competes in this market by emphasizing quality.
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.
SEASONALITY
EMPLOYEES
As of January 31, 2020, the Company employed an aggregate of approximately 14,100 full-time and part-time
persons. Of those employees, approximately 5,500 are employed in the United States.
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. Copies of these reports and statements may be obtained, free
of charge, on the Company's website at https://investor.tiffany.com/financial-information.
TIFFANY & CO.
K-12
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. The risk factors described below are not the only ones faced by the Company and additional risks and
uncertainties not presently known or that are currently deemed immaterial also may impair the Company's business
operations. Management's strategies are subject to the risks described herein and may be subject to other risks that
have not yet been identified.
(i) The announcement and pendency of the proposed Merger may adversely affect the Company's business, financial
condition and results of operations.
Uncertainty about the effect of the proposed Merger on the Company's employees, customers, and other parties may
have an adverse effect on the Company's business, financial condition and results of operations regardless of
whether the proposed Merger is completed. These risks to the Company's business include, among others, the
following, all of which may be exacerbated by a delay in the completion of the proposed Merger: (i) the impairment
of the Company's ability to attract, retain, and motivate its employees; (ii) the diversion of significant management
time and attention from ongoing business operations towards the completion of the proposed Merger; (iii) difficulties
maintaining relationships with customers, suppliers and other business partners; (iv) delays or deferments of certain
business decisions by the Company's customers, suppliers and other business partners; (v) the inability to pursue
alternative business opportunities or make appropriate changes to the Company's business because the Merger
Agreement requires the Company to, subject to certain exceptions, including as required by a Governmental Entity or
by applicable Law (in each case as defined in the Merger Agreement), conduct its business in the ordinary course of
business and to not engage in certain kinds of transactions prior to the completion of the proposed Merger without
the prior written consent of Parent (such consent not to be unreasonably conditioned, withheld or delayed), even if
such actions could prove beneficial; (vi) litigation relating to the proposed Merger and the costs related thereto; and
(vii) the incurrence of significant costs, expenses and fees for professional services and other transaction costs in
connection with the proposed Merger.
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(ii) Failure to consummate the proposed Merger within the expected time frame or at all may have a material adverse
impact on the Company's business, financial condition and results of operations.
There can be no assurance that the proposed Merger will be consummated. The consummation of the proposed
Merger is subject to various conditions, including, among others, customary conditions relating to (i) the receipt of
certain non-U.S. regulatory approvals; (ii) clearance by the CFIUS; (iii) the absence of a law or order in effect that
enjoins, prevents or otherwise prohibits the consummation of the proposed Merger or any other transactions
contemplated under the Merger Agreement issued by a governmental entity; (iv) the absence of any legal proceeding
seeking to enjoin, prevent or otherwise prohibit the consummation of the proposed Merger or any other transactions
contemplated under the Merger Agreement instituted by a governmental entity of competent jurisdiction; and (v) the
absence of a Material Adverse Effect (as defined in the Merger Agreement). There can be no assurance that these
and other conditions to closing will be satisfied in a timely manner or at all.
In connection with the proposed Merger, the Registrant and its directors were named as defendants in four lawsuits
brought by purported stockholders challenging the proposed Merger and seeking various forms of injunctive relief
and money damages. While the plaintiffs of these lawsuits have voluntarily dismissed their claims, the Registrant
may be subject to additional future litigation challenging the proposed Merger. If any future plaintiffs are successful
in obtaining an injunction prohibiting the consummation of the proposed Merger, then such injunction may prevent
the Merger from becoming effective within the expected time frame or at all, either of which could have a material
adverse impact on the Company's business, financial condition and results of operations.
The Merger Agreement also provides that the Merger Agreement may be terminated by the Company or Parent under
certain circumstances, and in certain specified circumstances upon termination of the Merger Agreement, the
Company will be required to pay Parent a termination fee of $575.0 million. Depending on the circumstances
requiring the Company to make this payment, doing so may materially adversely affect its business, financial
condition and results of operations.
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There can be no assurance that an adequate remedy will be available to the Company in the event of a breach of the
Merger Agreement by Parent or its affiliates or that the Company will, wholly or partially, recover for any damages
incurred by it in connection with the proposed Merger. A failed transaction may result in negative publicity and a
negative impression of the Company among its customers or in the investment community or business community
generally. Further, any disruptions to the Company's business resulting from the announcement and pendency of the
proposed Merger, including any adverse changes in the Company's relationships with its customers, partners,
suppliers and employees, may continue or accelerate in the event of a failed transaction. In addition, if the proposed
Merger is not completed, and there are no other parties willing and able to acquire the Company at a price of
$135.00 per share or higher, on terms acceptable to the Company, the share price of the Company's Common Stock
will likely decline to the extent that the current market price of the Company's Common Stock reflects an assumption
that the proposed Merger will be completed. Also, the Company has incurred, and will continue to incur, significant
costs, expenses, and fees for professional services and other transaction costs in connection with the proposed
Merger, for which it will have received little or no benefit if the proposed Merger is not completed. Many of these
fees and costs will be payable by the Company if the proposed Merger is not completed and may relate to activities
that the Company would not have undertaken other than to complete the proposed Merger.
(iii) The recent outbreak of the novel coronavirus has had a significant effect on the Company's sales results to date in
fiscal 2020, and could have a significant negative impact on the Company's business, revenues, financial condition and
results of operations in that year.
An outbreak of a novel strain of coronavirus, COVID-19, was identified in Wuhan, China in December 2019 and was
subsequently recognized as a pandemic by the World Health Organization on March 11, 2020. This coronavirus
outbreak has severely restricted the level of economic activity around the world. In response to this coronavirus
outbreak, the governments of many countries, states, cities and other geographic regions have taken preventative or
protective actions, such as imposing restrictions on travel and business operations and advising or requiring
individuals to limit or forego their time outside of their homes. Temporary closures of businesses have been ordered
and numerous other businesses have temporarily closed voluntarily. Further, individuals' ability to travel has been
curtailed through mandated travel restrictions and may be further limited through additional voluntary or mandated
closures of travel-related businesses. These actions have expanded significantly in the past several weeks and are
expected to continue to expand in scope, type and impact. For example, on March 15, 2020, following an
unscheduled meeting of the Federal Open Market Committee, the United States Federal Reserve reduced the target
range for the federal funds rate to 0 to 0.25 percent, down from a range of 1 to 1.25 percent, in connection with the
coronavirus's impact on the United States' economy.
In recent weeks, this coronavirus outbreak and the related preventative and protective actions have impacted the
Company's business globally, including through store closures, reductions in operating hours and/or decreased store
traffic. For example, from January 24 through March 19, 2020, management estimates that this coronavirus
outbreak contributed to the loss of approximately 30 out of 54 retail trading days (accounting for the effect of
individual store closures as well as reductions in store operating hours) across all of the Company's stores in the
Chinese Mainland. In addition, as of March 19, 2020, the Company has temporarily closed all of its stores in the
United States and Canada, and has temporarily closed nearly all of its stores across Europe and the United Kingdom.
The Company has also experienced significantly reduced customer traffic from January 24 through March 19 in its
stores that have been open during such period, which management believes has resulted in part from a reduction in
tourism as well as restrictions on travel and limitations affecting individuals' ability to spend time in public areas. All
of the foregoing developments have had a significant effect on the Company's sales results to date in its fiscal year
ending January 31, 2021 ("fiscal 2020") and are expected to continue to have a significant effect on its financial
results. These developments and effects are expected to continue and may also significantly affect the Company's
business in other geographic areas where this coronavirus has spread and may continue to spread.
The Company's business is particularly sensitive to reductions in discretionary consumer spending. The Company
cannot predict the degree to, or the time period over, which its business will be affected by this coronavirus
outbreak. For example, this coronavirus outbreak could continue to impede global economic activity, leading to a
further decline in discretionary spending by local customers and tourists, and resulting in additional significant
effects on the Company's business, revenues, financial condition and results of operations. There are numerous
uncertainties associated with this coronavirus outbreak, including the number of individuals who will become
infected, whether a vaccine or cure that mitigates the effect of the virus will be synthesized, and, if so, when such
vaccine or cure will be ready to be used, the extent of the protective and preventative measures that have been put
in place by both governmental entities and other businesses and those that may be put in place in the future,
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whether the virus's impact will be seasonal and numerous other uncertainties. The Company intends to continue to
execute on its strategic plans and operational initiatives during the coronavirus outbreak. However, the
aforementioned uncertainties may result in delays or modifications to these plans and initiatives.
This coronavirus outbreak has also impacted, and may continue to impact, the Company's office locations,
manufacturing and servicing facilities and distribution centers, as well as those of its third party vendors, including
through the effects of facility closures, reductions in operating hours, staggered shifts and other social distancing
efforts, labor shortages, decreased productivity and unavailability of raw materials or components. For example, the
Company has experienced reduced capacity in its manufacturing and servicing facilities in New York as a result of
state-imposed temporary occupancy restrictions, as well as a government-mandated temporary closure of its diamond
processing operation in Mauritius. This coronavirus outbreak may also impact distribution and logistics providers'
ability to operate or increase their operating costs. These supply chain effects may negatively affect the Company's
ability to meet consumer demand and may increase the Company's costs of production and distribution.
For the reasons set forth above and other reasons that may come to light if this coronavirus outbreak and any
associated protective or preventative measures expand, as of the date hereof, the Company cannot reasonably
estimate the impact to the Company's business, revenues, financial condition or results of operations; however, such
impact could be significantly negative.
(iv) 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; domestic and international political uncertainties and/or developments; changes in the market value of
equity 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.
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.
The Company has invested in and operates a significant number of stores in Greater China and anticipates
continuing to do so. Any slowdown in the Chinese economy could have a negative impact on the sales and
profitability of stores in Greater China as well as stores in other markets that serve Chinese tourists.
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.
(v) 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 inventories in the short term.
(vi) The Company conducts operations globally, the risks of which could increase its costs, reduce its profits or disrupt its
business.
The Company operates globally and generates a majority of its worldwide net sales outside the United States. It also
has both U.S. and foreign manufacturing operations, and relies on certain U.S. and foreign third-party vendors and
suppliers. As a result, the Company is subject to the risks of doing business globally, including:
•
the laws, regulations and policies of 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;
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• uncertainties from changes in U.S. or foreign taxation policies;
• compliance by third party vendors and suppliers with the Company's sourcing and quality standards,
codes of conduct, or contractual requirements as well as applicable laws and regulations;
•
import and export licensing requirements and regulations, as well as unforeseen changes in regulatory
requirements;
• political or economic instability in foreign countries, including the potential for rapid and unexpected
changes in government, economic and political policies, such as the U.K.'s recent exit from the
European Union ("E.U."), as discussed below;
• political or civil unrest, including protests and other civil disruption, such as the ongoing business
disruption in Hong Kong;
• acts of terrorism or the threat of international boycotts or U.S. anti-boycott legislation as a result of, for
example, changes in government policies of foreign countries in response to actions taken by the U.S.
government;
•
the imposition of additional duties, tariffs, taxes and other charges or other barriers to trade, including
as a result of changes in diplomatic and trade relations or agreements with other countries;
• challenges inherent in oversight of foreign operations, systems and controls;
• potential negative consequences from foreign governments' currency management practices;
• uncertainties as to enforcement of certain contract and other rights; and
•
inventory risk exposures.
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Changes in these regulatory, political, economic, or monetary policies and other factors could require the Company to
significantly modify its current business practices and may adversely affect its future financial results. For example,
the Company could be adversely impacted by U.S. trade policies, legislation, treaties and tariffs, including trade
policies and tariffs affecting China and, the E.U., as well as retaliatory tariffs by such countries. Such tariffs and, if
enacted, any further legislation or actions taken by the U.S. government that restrict trade, such as additional tariffs
or trade barriers, and other protectionist or retaliatory measures taken by governments in Europe, Asia and elsewhere,
could have a negative effect on the Company's ability to sell products in those markets.
Additionally, in June 2016, voters in the U.K. approved an advisory referendum to withdraw from the E.U.,
commonly referred to as "Brexit." On January 31, 2020, the U.K. officially terminated its membership in the E.U.
pursuant to the terms of a withdrawal agreement concluded between the U.K. and E.U. Among other terms, the
withdrawal agreement provides for a transition period through December 31, 2020, during which the U.K.'s existing
trade relationship with the E.U. will remain in place and the U.K. will continue to follow the E.U.'s rules.
Negotiations during the transition period to determine the U.K.'s future relationship with the E.U., including the
terms of a future trade deal, are expected to be complex and it is not clear at this time what, if any, agreements will
be reached by the current December 31, 2020 transition period deadline. Changes related to Brexit could
significantly disrupt the free movement of goods, services, and people between the U.K. and the E.U., and result in
potential higher costs of conducting business in Europe. Brexit could also lead to legal uncertainty and potentially
divergent national laws and regulations in the U.K. and the E.U. The Company may incur additional costs and
expenses as it adapts to these potentially divergent regulatory frameworks, and may face additional complexity with
regard to immigration and travel rights for its employees located in the U.K. and the E.U. There may also be similar
referendums or votes in other European countries in which the Company does business. The U.K.'s withdrawal from
the E.U. and the uncertainty surrounding the terms of this withdrawal, as well as the impact of any similar
circumstances that may arise elsewhere in Europe, could increase the Company's costs and adversely impact
consumer and investor confidence.
While these factors, and the effect thereof, 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.
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(vii) Revisions to the U.S. tax code, including changes in the guidance related to, or interpretation and application of, such
revisions could materially affect the Company's tax obligations, provision for income taxes and effective tax rate.
On December 22, 2017, the U.S. enacted comprehensive tax legislation, commonly referred to as the 2017 U.S. Tax
Cuts and Jobs Act (the "2017 Tax Act"), which significantly affected U.S. tax law by changing how the U.S. imposes
income tax on U.S. taxpayers. In particular, these changes impact the U.S. taxation of earnings in the jurisdictions in
which the Company operates, the measurement of its deferred tax assets and liabilities and the tax impact in the
event the Company were to repatriate the earnings of its non-U.S. subsidiaries to the U.S. The provisions of the
2017 Tax Act may be subject to further interpretation by the U.S. Treasury Department and the Internal Revenue
Service, which have broad authority to issue regulations and interpretative guidance that may significantly impact
how the Company will apply such provisions. Further regulatory or accounting guidance regarding the 2017 Tax Act
could materially affect the Company's future financial results.
(viii) A strengthening of the U.S. dollar against foreign currencies would negatively affect the Company's sales and
profitability.
The Company operates retail stores in more than 20 markets outside of the U.S. and, as a result, is exposed to
market risk from fluctuations in foreign currency exchange rates, including, among others, the Japanese Yen, Euro,
British Pound and Chinese Yuan. In 2019, sales in countries outside of the U.S. in aggregate represented a
substantial portion of the Company's net sales and earnings from operations. A strengthening of the U.S. dollar
against foreign currencies would require the Company to raise its retail prices in various locations outside of the U.S.
in order to maintain its worldwide relative pricing structure, or reduce its profit margins. Consumers in those markets
may not accept significant price increases on the Company's goods; thus, there is a risk that a strengthening of the
U.S. dollar would result in reduced sales and profitability. In addition, a weakening of any foreign currency relative to
other currencies 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.
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The reported 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.
(ix) Political activities, regional instability and/or conflict, public health crises or similar events could disrupt tourist travel
and local consumer spending.
Regional and global conflicts or crises, such as military actions, terrorist activities and natural disasters, geopolitical
or regulatory developments (and any related protests), public health crises and other similar events and conditions in
the various regions and cities where the Company operates retail stores may negatively affect spending by both
foreign tourists and local consumers. The Company's retail stores, many of which are located in major metropolitan
areas globally, may in fact have close proximity to the locations of such events – for example, the Company's
operations in Hong Kong have experienced significant business disruptions since the beginning of the protests in
that market in 2019. The occurrence of the types of events or conditions described above, or the related effect of
security measures implemented to address the possibility of such occurrences, could affect consumer traffic and/or
spending in one or more of the Company's locations, which could adversely affect the Company's sales and earnings.
(x) 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. The increasing availability of, and ease of access to, retail price information
across markets, primarily through the Internet, may affect consumers' decisions regarding in which geographies to
shop. 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.
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(xi) Metrics the Company may report that are based on customer data it collects are subject to inherent challenges in
measurement, and inaccuracies in that data or the resulting metrics could lead to decisions that adversely impact the
Company's business.
The Company regularly reviews customer sales and similar data to evaluate retail sales trends, measure its
performance and make strategic decisions. The Company reviews its sales data attributed to local customers, which
the Company defines as sales to customers who identify themselves as being residents of the same country as the
retail store in which the applicable sale was completed, and sales attributed to foreign tourists, which the Company
defines as sales to customers who identify themselves as being residents of a different country than the country of
the retail store in which the applicable sale was completed, to evaluate growth and other sales trends within the
Company's global customer base. These metrics are calculated using internal Company data that reflects residency
information self-reported by its customers at the time of sale, or, for customers who do not self-report, that is based
on certain pre-established default assumptions. While the Company believes this to be a reasonable method for
collecting the applicable data, there are inherent challenges in collecting such data and measuring these aspects of
its sales performance across its global customer population. For example, the default assumptions referred to above
could result in a significant understatement or overstatement of sales attributed to local customers or foreign
tourists. In addition, the collected data has not been validated by an independent third party, and the resulting
metrics may differ from similar estimates published by third parties or from similarly titled metrics of other retailers.
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Errors or inaccuracies in the Company's data or metrics could result in incomplete or inaccurate internal analyses,
which may compromise the validity and reliability of conclusions the Company draws from such analyses and may
further result in ineffective decision-making. For instance, such inaccuracies could result in an overstatement of
sales to foreign tourists, which could lead the Company to allocate sales and marketing resources in a manner that
would not result in optimal retail sales performance. If these metrics or the underlying data are used to inform
management's strategies or initiatives, but reflect material errors or inaccuracies, the Company's business may be
negatively affected.
(xii) Increases in costs of diamonds, other gemstones 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 offerings are made with diamonds, other gemstones and/or precious metals. A
significant increase in the costs or change in the 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 precious metals, high-quality rough and polished diamonds (within the quality
grades, colors and sizes that customers demand) and/or other gemstones could affect, negatively or positively,
customer demand, sales and gross profit margins. Additionally, should synthetic diamonds (diamonds manufactured
but not naturally occurring) and/or treated diamonds (naturally occurring diamonds subject to treatment processes,
such as irradiation) be offered in significant quantities and gain consumer acceptance, the supply of, demand for
and prices for natural diamonds may be affected.
(xiii) The Company may be unable to secure and retain sufficient space for its retail stores in prime locations, and
maintaining the Company's brand image and desirability to consumers requires significant investment in store construction,
maintenance and periodic renovation.
The Company, positioned as a luxury goods retailer, has established its retail presence in choice store locations.
Management regularly evaluates opportunities to optimize its retail store base, including potential markets for new
TIFFANY & CO. stores, as well as the renovation and relocation of its existing stores. Maintaining the Company's
brand image and desirability to consumers requires that stores be constructed and maintained in a manner
consistent with that brand image. This requires significant capital investment, including for periodic renovations of
existing stores. Renovations of existing stores may also result in temporary disruptions to an individual store's
business. If the Company cannot secure and retain store locations on suitable terms in prime and desired luxury
shopping locations, or if its investments to construct and/or renovate existing stores do not generate sufficient
incremental sales and/or profitability or significantly disrupt sales and/or profitability during renovations, the
Company's sales and/or earnings performance could be jeopardized.
For example, in 2018, the Company announced its plans to undertake a complete renovation of the New York
Flagship store. The New York Flagship store closed in January 2020, at which time the Company began its complete
renovation and temporarily moved its operations to the "Tiffany Flagship Next Door" at 6 East 57th Street. This
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renovation is expected to be completed in the fourth quarter of 2021. The full renovation project will require
significant capital investment and may result in business and/or consumer traffic disruptions. Significant delays or
cost overruns are also possible during the construction period, which could significantly increase the cost of this
renovation project and adversely impact the Company's future financial results. There can be no assurance that the
results of this renovation project will appeal to the Company's customers or will increase the Company's sales or
profitability.
(xiv) 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 or merchandise that infringes the
Company's trademarks 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.
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(xv) The Company's business is dependent upon the distinctive appeal of the TIFFANY & CO. brand.
The TIFFANY & CO. brand's association with quality and luxury is integral to the success of the Company's business.
The Company's expansion plans for retail, e-commerce and other 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 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. and its products, as well as adverse publicity in respect of, or
resulting from, the Company's third-party vendors or the diamond or jewelry industries more generally, could
adversely affect the Company's business. For example, the Company sources from third-party vendors certain
products that, from time to time, may not, or may contain raw materials that do not, meet the Company's sourcing
and quality standards as well as applicable requirements and regulations. In such instances, although the Company
may have recourse against such third-party vendors, the Company may self-report to the relevant regulatory agencies,
recall affected products and/or pay potential fines.
Any of the above could harm the TIFFANY & CO. brand and reputation, cause a loss of consumer confidence in the
TIFFANY & CO. brand, its products and the industry, and/or negatively affect the Company's results of operations.
The considerable expansion in the use of social media in recent years has compounded the potential scope of any
negative publicity.
(xvi) 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, systems failures, security breaches or natural
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disasters. Damage, disruption or shutdown of the Company's information systems may require a significant
investment to repair 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 is in the process of executing its 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 be implemented without delays, that such changes will
occur without disruptions to its operations or that the new or upgraded systems will achieve the desired business
objectives.
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, could undermine the Company's ability to execute on its strategic and operational
initiatives, and could also affect the Company's reputation, its ability to compete effectively, its relationship with
customers and the TIFFANY & CO. brand, which could result in reduced sales and profitability.
(xvii) New and existing data privacy laws and/or a significant data security breach of the Company's information systems
could increase the Company's operational costs, subject the Company to claims and otherwise adversely affect its
business.
The protection of customer, employee and Company information is important to the Company, and its customers and
employees expect that their personal data will be adequately protected. In addition, the regulatory environment
surrounding information security and data privacy is becoming increasingly demanding, with evolving requirements
in respect of personal data use and processing, including significant penalties for non-compliance, in the various
jurisdictions in which the Company does business. For example, the E.U. General Data Protection Regulation that
came into force in 2018, as well as the California Consumer Privacy Act that came into force on January 1, 2020,
have caused, and will continue to cause, the Company to incur additional compliance costs related thereto. Although
the Company has developed and implemented systems, policies, procedures and internal controls that are designed
to protect personal data and Company information, prevent data loss and other security breaches, and otherwise
identify, assess and analyze cybersecurity risks, such measures cannot provide absolute security. For example, the
Company faces a complex and evolving threat landscape in which cybercriminals, nation-states and "hacktivists"
employ a complex array of techniques designed to access personal data and other information, including the use of
stolen access credentials, malware, ransomware, phishing, structured query language ("SQL") injection attacks and
distributed denial-of-service attacks, which may penetrate the Company's systems despite its extensive and evolving
protective information security measures. Further, the Company relies on its software and hardware providers to issue
timely patches for known vulnerabilities; however, the failure of software and hardware companies to release or to
timely release effective patching and the Company's reliance on patches or inability to patch software and hardware
vulnerabilities, could expose it to increased risk of attack, data loss and data breach. The Company has experienced,
and expects to continue to experience, attempts from cybercriminals and other third parties to gain unauthorized
access to its information technology and other information systems. Although these attempts have not had a material
impact on the Company to date, in the future the Company could experience attacks that could have a material
adverse effect on its business, financial condition or results of operations.
Additionally, the Company's implementation of new information technology or information systems and/or 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 personal data, 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 data and Company information may also be adversely impacted by data security or privacy breaches that
occur at its third-party vendors. While the Company's contractual arrangements with such third-party vendors provide
for the protection of personal data and Company information, the Company cannot control these vendors or their
systems and cannot guarantee that a data security or privacy breach of their systems will not occur in the future.
A significant violation of applicable privacy laws or the occurrence of a cybersecurity incident resulting in breach of
personal data or Company information could result in the temporary suspension of some or all of the Company's
operating and/or information systems, damage the Company's reputation, its relationships with customers, vendors
TIFFANY & CO.
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and service providers and the TIFFANY & CO. brand and could result in lost data, lost sales, sizable fines, increased
insurance premiums, substantial breach-notification and other remediation 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, to comply with
state, federal and international laws that may be enacted to address personal data processing risks and data security
threats or to investigate or address potential or actual data security or privacy breaches.
(xviii) 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.
(xix) 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 approximately 60% of the jewelry 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.
(xx) If the Company is unable to effectively anticipate and respond to changes in consumer preferences and shopping
patterns, or introduce new products or programs that appeal to new or existing customers, the Company's sales and
profitability could be adversely affected.
The Company's continued success depends on its ability to anticipate and respond in a timely and cost-effective
manner to changes in consumer preferences for jewelry and other luxury goods, attitudes towards the global jewelry
industry as a whole, as well as the manner and locations in which consumers purchase such goods. The Company
recognizes that consumer tastes cannot be predicted with certainty and are subject to change, which is compounded
by the expanding use of digital and social media by consumers and the speed by which information and opinions are
shared. The Company's product development strategy is to introduce new design collections, primarily jewelry, and/or
expand certain existing collections annually. If the Company is unable to anticipate and respond in a timely and
cost-effective manner to changes in consumer preferences and shopping patterns, including the development of an
engaging omnichannel experience for its customers, the Company's sales and profitability could be adversely
affected.
In addition, approximately 75% of the Company's stores are located within luxury department stores and shopping
malls and benefit from the ability of those locations to generate consumer traffic. A substantial decline in
department store and/or mall traffic may negatively impact the Company's ability to maintain or increase its sales in
existing stores, as well as its ability to open new stores.
(xxi) Environmental and climate changes could affect the Company's business.
The Company operates retail stores in more than 20 markets and has both domestic and foreign manufacturing
operations that are susceptible to the risks associated with climate change. Such risks include those related to the
physical impacts of climate change, such as more frequent and severe weather events and/or long term shifts in
climate patterns, and risks related to the transition to a lower-carbon economy, such as reputational, market and/or
regulatory risks. Climate change and climate events could result in social, cultural and economic disruptions in these
areas, including supply chain disruptions, the disruption of local infrastructure and transportation systems that could
limit the ability of the Company's employees and/or its customers to access the Company's stores or manufacturing
locations, damage to such stores or locations or reductions in material availability and quality. These events could
also compound adverse economic conditions and impact consumer confidence and discretionary spending. Despite
the fact that the Company is pursuing numerous initiatives to reduce its environmental footprint, including efforts
related to energy efficiency, renewable energy use and carbon offsets, there remains the risk that insufficient global
cooperation could lead to increased negative impacts from climate change. While the Company has an ongoing
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program for reviewing its vulnerability to the impacts of severe weather events and other risks associated with climate
change, these events could nonetheless negatively affect the Company's business and operations.
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, 2020:
Total Stores
Total Gross Retail
Square Footage
Gross Retail
Square Footage
Range
Average Gross
Retail Square
Footage
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Americas*:
New York Flagship
Other stores
Asia-Pacific
Japan:
Tokyo Ginza
Other stores
Europe:
London Old Bond Street
Other stores
Emerging Markets
Total
1
123
91
1
57
1
47
5
45,500
690,000
282,400
13,300
149,000
22,400
165,700
9,200
45,500
1,100-17,600
700-13,400
13,300
700-7,500
22,400
400-18,200
400-3,600
326
1,377,500
400-45,500
45,500
5,600
3,100
13,300
2,600
22,400
3,500
1,800
4,200
* The total gross retail square footage for the New York Flagship is through its closure for renovation in January
2020, and Other stores does not include the total gross retail square footage for the Tiffany Flagship Next Door.
Excluded from the store count and square footage amounts above are pop-up stores (stores with lease terms of 24
months or less).
NEW YORK FLAGSHIP STORE
The Company owns the building, but not the air rights above 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. In 2018,
the Company announced its plans to undertake a complete renovation of the New York Flagship store. The New York
Flagship store closed in January 2020, at which time the Company began its complete renovation and temporarily
moved its operations to the "Tiffany Flagship Next Door" at 6 East 57th Street. This renovation is expected to be
completed in the fourth quarter of 2021. Sales in this store represented less than 10% of worldwide net sales in
2019, 2018 and 2017.
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.
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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 AND DESIGN FACILITIES
The Company owns and operates jewelry manufacturing facilities in Cumberland, Rhode Island and Lexington,
Kentucky, leases a jewelry manufacturing facility in Pelham, New York, leases a facility in the Dominican Republic
which performs certain functions such as jewelry polishing and assembly and leases a facility containing its Jewelry
Design and Innovation Workshop in New York, New York. Lease expiration dates range from 2023 to 2029. The
owned and leased facilities total approximately 244,000 square feet.
The Company leases a facility in Belgium and owns facilities in Botswana, Cambodia, Mauritius and Vietnam
(although the land in Botswana, Cambodia and Vietnam is leased) that prepare, cut and/or polish rough diamonds for
use by Tiffany. These facilities total approximately 277,000 square feet and the lease expiration dates range from
2020 to 2062.
Item 3. Legal Proceedings.
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 such as
those 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.
Merger-related Litigation. As previously disclosed, on December 30, 2019 and January 3, 2020, purported
stockholders of the Registrant filed complaints against the Registrant and the members of the Board of Directors of
the Registrant in the United States District Court for the Southern District of New York and in the United States
District Court for the District of Delaware, captioned Stein v. Tiffany & Co., et al., Case No. 1:19-cv-11926
(S.D.N.Y.), and Thompson v. Tiffany & Co., et al., Case No. 1:20-cv-00009 (D. Del.), respectively. The complaints
alleged that a preliminary version of the proxy statement that the Registrant filed with the SEC on December 18,
2019 was materially incomplete, false or misleading in certain respects. On January 8, 2020, two additional
complaints were filed against the Registrant and the members of the Board of Directors of the Registrant in the
United States District Court for the Southern District of New York by purported stockholders of the Registrant,
captioned Federman v. Tiffany & Co., et al., Case No. 1:20-cv-00159 (S.D.N.Y.), and Daka v. Tiffany & Co., et al.,
Case No. 1:20-cv-00170 (S.D.N.Y.), respectively. The complaints alleged that the Definitive Proxy Statement was
materially incomplete, false or misleading in certain respects. Each of the four aforementioned Stein, Thompson,
Federman and Daka actions purported to seek injunctive relief and money damages. The plaintiffs in all of the Stein,
Thompson, Federman and Daka actions have since voluntarily dismissed their actions.
Gain Contingency. On February 14, 2013, Tiffany and Company and Tiffany (NJ) LLC (collectively, the "Tiffany
plaintiffs") initiated a lawsuit against Costco Wholesale Corp. ("Costco") for trademark infringement, false designation
of origin and unfair competition, trademark dilution and trademark counterfeiting (the "Costco Litigation"). The
Tiffany plaintiffs sought injunctive relief, monetary recovery and statutory damages on account of Costco's use of
"Tiffany" on signs in the jewelry cases at Costco stores used to describe certain diamond engagement rings that were
not manufactured by Tiffany. Costco filed a counterclaim arguing that the TIFFANY trademark was a generic term for
multi-pronged ring settings and seeking to have the trademark invalidated, modified or partially canceled in that
respect. On September 8, 2015, the U.S. District Court for the Southern District of New York (the "Court") granted
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the Tiffany plaintiffs' motion for summary judgment of liability in its entirety, dismissing Costco's genericism
counterclaim and finding that Costco was liable for trademark infringement, trademark counterfeiting and unfair
competition under New York law in its use of "Tiffany" on the above-referenced signs. On September 29, 2016, a
civil jury rendered its verdict, finding that Costco's profits on the sale of the infringing rings should be awarded at
$5.5 million, and further finding that an award of punitive damages was warranted. On October 5, 2016, the jury
awarded $8.25 million in punitive damages. The aggregate award of $13.75 million was not final, as it was subject
to post-verdict motion practice and ultimately to adjustment by the Court. On August 14, 2017, the Court issued its
ruling, finding that the Tiffany plaintiffs are entitled to recover (i) $11.1 million in respect of Costco's profits on the
sale of the infringing rings (which amount is three times the amount of such profits, as determined by the Court), (ii)
prejudgment interest on such amount (calculated at the applicable statutory rate) from February 15, 2013 through
August 14, 2017, (iii) an additional $8.25 million in punitive damages, and (iv) Tiffany's reasonable attorneys' fees,
and, on August 24, 2017, the Court entered judgment in the amount of $21.0 million in favor of the Tiffany
plaintiffs (reflecting items (i) through (iii) above). On February 7, 2019, the Court awarded the Tiffany plaintiffs $5.9
million in respect of the aforementioned attorneys' fees and costs, bringing the total judgment to $26.9 million. The
Court has denied a motion made by Costco for a new trial; however, Costco has also filed an appeal from the
judgment before the Second Circuit Court of Appeals. A three-judge panel presided over an appellate hearing on
January 23, 2020, and that panel's decision is pending. As the Tiffany plaintiffs may not enforce the Court's
judgment during the appeals process, the Company has not recorded any amount in its consolidated financial
statements related to this gain contingency as of January 31, 2020. The Company expects that this matter will not
ultimately be resolved until, at the earliest, a future date during the Company's fiscal year ending January 31, 2021.
Item 4. Mine Safety Disclosures.
Not Applicable.
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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, 761,162 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 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, as amended.
The Company's Common Stock is traded on the New York Stock Exchange under the symbol "TIF". On March 16,
2020, the high and low selling prices quoted on such exchange were $126.42 and $115.09. On March 16, 2020,
there were 13,106 holders of record of the Company's Common Stock.
The following graph compares changes in the cumulative total shareholder return on the Company's Common 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 and such indices, plus the reinvestment of any dividends paid. The graph
assumes an investment of $100 on January 31, 2015 in the Company's Common Stock and in each of the two
indices, as well as the reinvestment of any subsequent dividends. The increase in the cumulative shareholder return
on the Company's Common Stock for the year ended January 31, 2020 primarily reflects the acquisition price of
$135.00 per share of Common Stock related to the proposed Merger. See "Item 1. Business - Entry into Merger
Agreement" for additional information regarding the proposed Merger.
Total returns are based on market capitalization; indices are weighted at the beginning of each period for which a
return is indicated. The stock performance shown in the graph is not intended to forecast or to be indicative of future
performance.
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TIFFANY & CO.
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Tiffany & Co.
S&P 500 Stock Index
S&P 500 Consumer
Discretionary Index
1/31/15
1/31/16
1/31/17
1/31/18
1/31/19
1/31/20
$ 100.00
$ 75.10
$ 94.93
$ 131.35
$ 111.54
$ 172.32
100.00
99.33
119.24
150.73
147.24
179.17
100.00
107.77
125.53
161.93
164.71
192.26
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 2018, a dividend of $0.50 per share of Common Stock was paid on April 10, 2018. On May 24, 2018,
the Company announced a 10% increase in its regular quarterly dividend rate to a new rate of $0.55 per share of
Common Stock, which was paid on July 10, 2018, October 10, 2018 and January 10, 2019.
A dividend of $0.55 per share of Common Stock was paid on April 10, 2019. On June 4, 2019, the Company
announced a 5% increase in its regular quarterly dividend rate to a new rate of $0.58 per share of Common Stock,
which was paid on July 10, 2019, October 10, 2019 and January 10, 2020.
Issuer Purchases of Equity Securities
In May 2018, the Registrant's Board of Directors approved a new share repurchase program (the "2018 Program").
The 2018 Program, which became effective June 1, 2018 and expires on January 31, 2022, authorizes the
Company to repurchase up to $1.0 billion of its Common Stock through open market transactions, including through
Rule 10b5-1 plans and one or more accelerated share repurchase ("ASR") or other structured repurchase
transactions, and/or privately negotiated transactions. As of January 31, 2020, $471.6 million remained available
under the 2018 Program; however, pursuant to the terms of the Merger Agreement, and subject to certain limited
exceptions, the Company may not repurchase its Common Stock other than in connection with the forfeiture
provisions of Company equity awards or the cashless exercise or tax withholding provisions of such Company equity
awards, in each case, granted under the Company's stock-based compensation plans. Accordingly, the Company did
not repurchase any shares of its Common Stock during the fourth quarter of 2019 pursuant to the 2018 Program,
and does not expect to repurchase any shares of its Common Stock in connection with the 2018 Program prior to the
Merger or earlier termination of the Merger Agreement.
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Item 6. Selected Financial Data.
The following table sets forth selected financial data, certain of which have been derived from the Company's
consolidated financial statements for fiscal years 2015-2019, which ended on January 31 of the following calendar
year:
(in millions, except per share amounts,
percentages, ratios, stores and employees)
2019 b, c
2018 c
2017 d
2016 e
2015 f
EARNINGS DATA
Net sales
Gross profit
Selling, general & administrative expenses
Earnings from operations
Net earnings
Net earnings per diluted share
Weighted-average number of diluted
common shares
BALANCE SHEET AND CASH FLOW DATA
$
4,424.0
$
4,442.1
$
4,169.8
$
4,001.8
$
4,104.9
2,761.9
2,029.3
732.6
541.1
4.45
2,811.0
2,020.7
790.3
586.4
4.75
2,610.7
1,801.3
809.4
370.1
2.96
2,499.0
1,752.6
746.4
446.1
3.55
2,505.2
1,706.1
799.1
463.9
3.59
121.6
123.5
125.1
125.5
129.1
Total assets a
$
6,660.1
$
5,333.0
$
5,468.1
$
5,097.6
$
5,121.6
Cash and cash equivalents
874.7
792.6
970.7
928.0
843.6
Inventories, net
2,463.9
2,428.0
2,253.5
2,157.6
2,225.0
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Short-term borrowings and long-term debt
(including current portion)
Stockholders' equity
Working capital a
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
Earnings from operations
Net earnings
Capital expenditures
Return on average assets a
Return on average stockholders' equity
Total debt-to-equity ratio
Dividends as a percentage of net earnings
Company-operated TIFFANY & CO. stores
1,032.0
3,335.4
2,905.1
670.9
320.6
27.53
2.29
996.8
3,130.9
3,041.4
531.8
282.1
25.77
2.15
1,003.5
3,248.2
3,258.5
932.2
239.3
26.10
1.95
1,107.1
3,028.4
2,940.8
705.7
222.8
24.33
1.75
1,095.8
2,929.5
2,778.5
817.4
252.7
23.10
1.58
62.4%
45.9%
16.6%
12.2%
7.2%
9.0%
16.7%
30.9%
51.1%
326
63.3%
45.5%
17.8%
13.2%
6.4%
10.9%
18.4%
31.8%
45.0%
321
62.6%
43.2%
19.4%
8.9%
5.7%
7.0%
11.8%
30.9%
65.5%
315
62.4%
43.8%
18.7%
11.1%
5.6%
8.7%
15.0%
36.6%
49.0%
313
61.0%
41.6%
19.5%
11.3%
6.2%
9.0%
16.1%
37.4%
43.8%
307
Number of employees
14,100
14,200
13,100
11,900
12,200
TIFFANY & CO.
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NOTES TO SELECTED FINANCIAL DATA
a.
In connection with the adoption of ASC 842 – Leases on February 1, 2019, the Company established a lease
liability and corresponding right-of-use asset on the Consolidated Balance Sheet. The following amounts are
recorded on the Consolidated Balance Sheet for operating leases as of January 31, 2020: (i) Operating lease
right-of-use asset of $1.1 billion; (ii) Current portion of operating lease liabilities of $202.8 million and (iii)
Long-term portion of operating lease liabilities of $1.0 billion. See "Item 8. Financial Statements and
Supplementary Data - Note C. Summary of Significant Accounting Policies and Note K. Leases" for additional
information.
b. Financial information and ratios for 2019 include $21.2 million of pre-tax expense ($17.1 million after tax
expense, or $0.14 per diluted share) related to the proposed Merger. See "Item 8. Financial Statements and
Supplementary Data - Note B. Entry into Merger Agreement" for additional information.
c. Financial information and ratios for 2019 and 2018 reflect a lower effective income tax rate, primarily resulting
from the 2017 U.S. Tax Cuts and Jobs Act. See "Item 8. Financial Statements and Supplementary Data - Note P.
Income Taxes" for additional information.
d. Financial information and ratios for 2017 include $146.2 million, or $1.17 per diluted share, of net tax expense
related to the enactment of the 2017 U.S. Tax Cuts and Jobs Act. See "Item 8. Financial Statements and
Supplementary Data - Note P. Income Taxes" for additional information.
e. Financial information and ratios for 2016 include the following amounts, totaling $38.0 million of pre-tax
expense ($24.0 million after tax expense, or $0.19 per diluted share):
• $25.4 million of pre-tax expense ($16.0 million after tax expense, or $0.13 per diluted share) associated
with an asset impairment charge related to software costs capitalized in connection with the development of
a finished goods inventory management and merchandising information system; and
• $12.6 million of pre-tax expense ($8.0 million after tax expense, or $0.06 per diluted share) associated with
impairment charges related to financing arrangements with diamond mining and exploration companies.
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f. Financial information and ratios for 2015 include the following amounts, totaling $46.7 million of pre-tax
expense ($29.9 million after tax expense, or $0.24 per diluted share):
• $37.9 million of pre-tax expense ($24.3 million after tax expense, or $0.19 per diluted share) associated
with impairment charges related to a financing arrangement with Koidu Limited, a diamond mining and
exploration company; and
• $8.8 million of pre-tax expense ($5.6 million after tax expense, or $0.05 per diluted share) 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 would be recovered.
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Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis should be read in conjunction with the Company's consolidated financial
statements and related notes. All references to years relate to fiscal years which ended on January 31 of the
following calendar year.
ENTRY INTO MERGER AGREEMENT
On November 24, 2019, Tiffany & Co. (the "Registrant") entered into an Agreement and Plan of Merger (the "Merger
Agreement") by and among the Registrant, LVMH Moët Hennessy - Louis Vuitton SE, a societas Europaea (European
company) organized under the laws of France ("Parent"), Breakfast Holdings Acquisition Corp., a Delaware
corporation and an indirect wholly owned subsidiary of Parent ("Holding"), and Breakfast Acquisition Corp., a
Delaware corporation and a direct wholly owned subsidiary of Holding ("Merger Sub"). Pursuant to the Merger
Agreement, Merger Sub will be merged with and into the Registrant (the "Merger"), with the Registrant continuing as
the surviving company in the Merger and a wholly owned indirect subsidiary of Parent.
For additional information related to the Merger Agreement, please refer to the Registrant's Definitive Proxy
Statement on Schedule 14A filed with the U.S. Securities and Exchange Commission (the "SEC") on January 6,
2020 and "Item 1. Business – Entry into Merger Agreement."
KEY STRATEGIC PRIORITIES
The Company's key strategic priorities are to:
• Amplify an evolved brand message.
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The Brand is the single most important asset of Tiffany and, indirectly, of the Company. Management
intends to increasingly invest in and evolve marketing and public relations programs through a variety of
media designed to build awareness of the Brand, its heritage and its products, as well as to enhance the
Brand's association with quality and luxury by consumers.
• Renew the Company's product offerings and enhance in-store presentations.
The Company's product development strategy is to accelerate the introduction of new design collections,
primarily in jewelry, but also in non-jewelry products, and/or expand certain existing collections annually, all
of which are intended to appeal to existing and new customers.
To ensure a superior shopping experience, the Company is focused 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.
• Deliver an exciting omnichannel customer experience.
Management intends to continue to expand and optimize its global store base by evaluating potential
markets for new TIFFANY & CO. stores, as well as through the renovation, relocation, or closing of existing
stores. Management will also continue to pursue opportunities to grow sales through its e-commerce
websites and utilize the websites to drive store traffic. In addition, the Company employs highly qualified
sales and customer service professionals and is focused on developing effective omnichannel relationships
with its customers.
• Strengthen the Company's competitive position and lead in key markets.
The global jewelry industry is competitively fragmented. While the Company enjoys a strong reputation and
large customer base, it encounters significant competition in all product categories and geographies. By
focusing on enhanced marketing communications, product development and optimization of its store base
and digital capabilities, the Company's objective is to be an industry leader in key markets.
TIFFANY & CO.
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• Cultivate a more efficient operating model.
The Company is focused on improving its business operations through new systems, more effective processes
and cost restraint, to drive margin growth. This includes realizing greater efficiencies in its product supply
chain and other operations, and enhancing its global procurement capabilities. The Company has developed
a substantial product supply infrastructure for the procurement and processing of diamonds and the
manufacturing of jewelry. This infrastructure is intended to ensure adequate product supply and favorable
product costs while adhering to the Company's quality and ethical standards.
•
Inspire an aligned and agile organization to win.
The Company's success depends upon its people and their effective execution of the Company's strategic
priorities. The Company's management strives to motivate and develop employees with the core
competencies and adaptability needed to achieve its objectives.
By pursuing these key strategic priorities, management is committed to the following long-term financial objectives:
• To achieve sustainable sales growth.
Management's objective is to generate mid-single-digit percentage worldwide sales increases, primarily
through comparable sales growth, as well as through modest store square footage growth.
• To increase retail productivity and profitability.
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Management is focused on increasing the frequency of store and website visits and the percentage of store
and website visitors who make a purchase, as well as optimizing utilization of store square footage, and
growing sales, average price per unit sold and sales per square foot.
• To achieve improved operating margins, through both improved gross margins and efficient expense
management.
Management's long-term objective is to improve gross margins, including through controlling product input
costs, realizing greater efficiencies in its product supply chain and adjusting retail prices when appropriate.
Additionally, management is focused on efficient selling, general and administrative expense management,
thereby generating sales leverage on fixed costs. These efforts are collectively intended to generate a higher
rate of operating earnings growth relative to sales growth, and management targets an improvement in
operating margin of 50 basis points per year over the long term.
• To improve inventory and other 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 the ability to invest in strategic
initiatives.
2019 SUMMARY
• Worldwide net sales were approximately unchanged compared to the prior year. Comparable sales decreased
1% from the prior year. On a constant-exchange-rate basis (see "Non-GAAP Measures" below), worldwide net
sales increased 1% and comparable sales were approximately unchanged.
• The Company added a net of five TIFFANY & CO. stores (opening four in Japan, two in the Americas, two in
Asia-Pacific and one in Europe, while closing two stores in the Americas, one store in Asia-Pacific and one
store in Japan) and relocated or renovated 18 existing stores. Gross retail square footage increased 3%, net.
TIFFANY & CO.
K-30
• Earnings from operations as a percentage of net sales ("operating margin") decreased 120 basis points,
which included the impact of costs recorded in 2019 related to the proposed Merger, as described below
under "Non-GAAP Measures." Excluding these costs, operating margin decreased 80 basis points due to a
decrease in gross margin.
• The Company's effective income tax rate increased to 21.6% in 2019 from 21.1% in 2018.
• Net earnings decreased to $541.1 million, or $4.45 per diluted share, in 2019 from $586.4 million, or
$4.75 per diluted share, in 2018. Net earnings in 2019 included the impact of costs related to the
proposed Merger, as described below under "Non-GAAP Measures." Excluding these costs, net earnings
decreased to $558.2 million, or $4.59 per diluted share.
•
Inventories, net did not change significantly from 2018.
• Cash flow from operating activities was $670.9 million in 2019, compared with $531.8 million in 2018.
Free cash flow (see "Non-GAAP Measures") was $350.3 million in 2019, compared with $249.7 million in
2018.
• The Company returned capital to shareholders by paying regular quarterly dividends (which were increased
5% effective July 2019 to $0.58 per share, or an annualized rate of $2.32 per share) and by repurchasing
1.8 million shares of its Common Stock for $163.4 million.
NOVEL CORONAVIRUS
As discussed under "Item 1A. Risk Factors," an outbreak of a novel strain of the coronavirus, COVID-19, was recently
identified in China and has subsequently been recognized as a pandemic by the World Health Organization. This
coronavirus outbreak has severely restricted the level of economic activity around the world. In response to this
coronavirus outbreak the governments of many countries, states, cities and other geographic regions have taken
preventative or protective actions, such as imposing restrictions on travel and business operations and advising or
requiring individuals to limit or forego their time outside of their homes. Management expects that these actions
could have a negative impact on local and tourist spending around the world. Temporary closures of businesses have
been ordered and numerous other businesses have temporarily closed voluntarily. Further, individuals' ability to
travel has been curtailed through mandated travel restrictions and may be further limited through additional
voluntary or mandated closures of travel-related businesses. These actions have expanded significantly in the past
several weeks and are expected to continue to expand. Given the uncertainty regarding the spread of this
coronavirus, the related financial impact cannot be reasonably estimated at this time, although the aforementioned
actions and related impacts are expected to continue and may also significantly affect the Company's business in
other geographic areas in which the coronavirus has spread and may continue to spread. The Company intends to
continue to execute on its strategic plans and operational initiatives during the coronavirus outbreak. However, the
uncertainties associated with the protective and preventative measures being put in place or recommended by both
governmental entities and other businesses, among other uncertainties, may result in delays or modifications to
these plans and initiatives.
As a result, this coronavirus outbreak has had a significant effect on the Company's sales results to date in fiscal
2020 and is expected to continue to have a significant effect on its financial results during the current fiscal year.
For example, from January 24 through March 19, 2020, management estimates that this coronavirus outbreak
contributed to the loss of approximately 30 out of 54 retail trading days (accounting for the effect of individual store
closures as well as reductions in store operating hours) across all of the Company's stores in the Chinese Mainland.
In addition, as of March 19, 2020, the Company has temporarily closed all of its stores in the United States and
Canada, and has temporarily closed nearly all of its stores across Europe and the United Kingdom. The Company has
also experienced significantly reduced customer traffic from January 24 through March 19 in its stores that have
been open during such period, which management believes has resulted in part from a reduction in tourism as well
as restrictions on travel and limitations affecting individuals' ability to spend time in public areas, with attendant
sales declines to date in fiscal 2020 in those stores.
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RESULTS OF OPERATIONS
See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations – Results of
Operations" in the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2019 for a
comparative discussion of the Company's operating results and financial condition for its fiscal years ended January
31, 2019 and 2018.
Non-GAAP Measures
The Company reports information in accordance with U.S. Generally Accepted Accounting Principles ("GAAP").
Internally, management also monitors and measures its performance using certain sales and earnings measures that
include or exclude amounts, or are subject to adjustments that have the effect of including or excluding amounts,
from the most directly comparable GAAP measure ("non-GAAP financial measures"). The Company presents such
non-GAAP financial measures in reporting its financial results to provide investors with useful supplemental
information that will allow them to evaluate the Company's operating results using the same measures that
management uses to monitor and measure its performance. 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. These non-GAAP financial measures presented here may
not be comparable to similarly-titled measures used by other companies.
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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"). Sales on a constant-exchange-rate basis are
calculated by taking the current year's sales in local currencies and translating them into U.S. dollars using the prior
year's foreign currency exchange rates. Management believes this constant-exchange-rate basis provides a useful
supplemental basis for the assessment of sales performance and of 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.
2019
2018
GAAP
Reported
Translation
Effect
Constant-
Exchange-
Rate Basis
GAAP
Reported
Translation
Effect
Constant-
Exchange-
Rate Basis
Net Sales:
Worldwide
Americas
Asia-Pacific
Japan
Europe
Other
Comparable Sales:
Worldwide
Americas
Asia-Pacific
Japan
Europe
Other
7%
1%
6%
— %
(2)
2
1
(1)
(2)
(1)%
—
(3)
1
(3)
—
1%
(2)
5
—
2
(2)
5
13
8
3
(20)
—
—
2
1
—
(1)%
(1)%
—%
4%
—%
(2)
(1)
—
(1)
(9)
—
(4)
1
(3)
—
(2)
3
(1)
2
(9)
5
5
7
(2)
(15)
—
—
2
1
—
TIFFANY & CO.
K-32
5
13
6
2
(20)
4%
5
5
5
(3)
(15)
2019
2018
GAAP
Reported
Translation
Effect
Constant-
Exchange-
Rate Basis
GAAP
Reported
Translation
Effect
Constant-
Exchange-
Rate Basis
Jewelry sales by product
category:
Jewelry collections
Engagement jewelry
Designer jewelry
2%
(2)
(6)
(1)%
(2)
(1)
3%
—
(5)
11%
4
(1)
—%
—
—
11%
4
(1)
Statements of Earnings. Internally, management monitors and measures its earnings performance excluding certain
items listed below. Management believes excluding such items provides a useful supplemental basis for the
assessment of the Company's results relative to the corresponding period in the prior year. The following tables
reconcile certain GAAP amounts to non-GAAP amounts:
(in millions, except per share amounts)
GAAP
Charges related to
the proposed
Merger a
Non-GAAP
Year Ended January 31, 2020
Gross Profit
As a % of sales
Selling, general & administrative expenses
As a % of sales
Earnings from operations
As a % of sales
Provision for income taxes
Effective income tax rate
Net earnings
Diluted earnings per share
$
2,761.9
$
1.0
$
2,762.9
62.4%
2,029.3
$
$
45.9%
732.6
16.6%
149.2
21.6%
541.1
4.45
0.1 %
(20.2)
(0.5)%
21.2
0.4 %
4.1
(0.1)
17.1
0.14
62.5%
2,009.1
45.4%
753.8
17.0%
153.3
21.5%
558.2
4.59
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a Costs recorded in 2019 related to the proposed Merger. See "Item 8. Financial Statements and Supplementary
Data - Note B. Entry into Merger Agreement" for additional information.
Free Cash Flow. Internally, management monitors its cash flow on a non-GAAP basis. Free cash flow is calculated by
deducting capital expenditures from net cash provided by operating activities. The ability to generate free cash flow
demonstrates how much cash the Company has available for discretionary and non-discretionary purposes 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 useful supplemental basis for assessing the Company's
operating cash flows. The following table reconciles GAAP net cash provided by operating activities to non-GAAP free
cash flow:
(in millions)
2019
2018
Net cash provided by operating activities a
$
670.9 $
531.8 $
Less: Capital expenditures a
Free cash flow
(320.6)
(282.1)
$
350.3 $
249.7 $
2017
932.2
(239.3)
692.9
a See "Liquidity and Capital Resources" below for further information on the Company's cash flows.
TIFFANY & CO.
K-33
Comparable Sales
Comparable sales include sales transacted in Company-operated stores open for more than 12 months. Sales from e-
commerce sites are included in comparable sales for those sites that have been operating for more than 12 months.
Sales for relocated stores are included in comparable sales if the relocation occurs within the same geographical
market. In all markets, the results of a store in which the square footage has been expanded or reduced remain in
the comparable sales base.
Net Sales
The Company generates sales through its retail, Internet, wholesale, business-to-business and catalog channels (see
"Item 1. Business - Reportable Segments").
Net sales by segment were as follows:
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% of
Total
Net
Sales
% of
Total
Net
Sales
2018
2019
% of
Total
Net
Sales
2019 vs
2018
% Change
in Net
Sales
2018 vs
2017
% Change
in Net
Sales
2017
$ 1,924.0
43% $ 1,960.3
44% $ 1,870.9
45%
(2)%
5%
(in millions)
Americas
Asia-Pacific
1,258.2
Japan
Europe
Other
649.8
498.3
93.7
28
15
11
2
1,239.0
643.0
504.4
95.4
28
15
11
2
1,095.0
596.3
489.0
118.6
26
14
12
3
$ 4,424.0
$ 4,442.1
$ 4,169.8
2
1
(1)
(2)
— %
13
8
3
(20)
7%
Net Sales — 2019 compared with 2018. In 2019, worldwide net sales were approximately unchanged compared to
2018. On a constant-exchange-rate basis, worldwide sales increased 1%.
In 2019, jewelry sales represented 92% of worldwide net sales. Jewelry sales by product category were as follows:
(in millions)
Jewelry collections
Engagement jewelry
Designer jewelry
2019
2018
$ Change
% Change
$
2,420.2 $
2,374.3 $
1,139.5
514.1
1,157.4
544.5
45.9
(17.9)
(30.4)
2%
(2)
(6)
The increase in net sales in the Jewelry collections category was driven primarily by the Tiffany T collection and High
jewelry, partially offset by softness in other collections, while net sales in the Engagement jewelry and Designer
jewelry categories reflected decreases across the categories.
Changes in net sales by reportable segment were as follows:
(in millions)
Americas
Asia-Pacific
Japan
Europe
Comparable Sales
Non-comparable
Sales
Wholesale/
Other
$
(39.4) $
3.4 $
(0.3) $
(5.7)
2.4
(6.9)
0.6
4.7
2.3
24.3
(0.3)
(1.5)
Total
(36.3)
19.2
6.8
(6.1)
TIFFANY & CO.
K-34
In 2019, jewelry sales represented 89%, 98%, 93% and 96% of total net sales in the Americas, Asia-Pacific, Japan
and Europe, respectively. Changes in jewelry sales relative to the prior year were as follows:
Change in Jewelry Sales
Americas
Asia-Pacific
Japan
Europe
Average Price per Unit Sold
As Reported
Impact of
Currency
Translation
Number of
Units Sold
10%
8
3
10
—%
(3)
1
(3)
(12)%
(7)
(4)
(10)
Management believes the changes in average price per jewelry unit sold and the number of jewelry units sold include
the effect of the Company's strategy of increasing average price per unit sold by growing sales of High jewelry and
other gold and diamond jewelry within the Jewelry collections category at a faster rate than sales within the
Engagement jewelry category and silver jewelry within the Jewelry collections category.
Americas. In 2019, total net sales decreased $36.3 million, or 2%, which included comparable sales decreasing
$39.4 million, or 2%. Sales decreased across most of the region, which management attributed to lower spending by
foreign tourists. On a constant-exchange-rate basis, total net sales and comparable sales decreased 2%.
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Management attributed the increase in the average price per jewelry unit sold to a shift in sales mix to gold jewelry
and High jewelry within the Jewelry collections category. The decrease in the number of jewelry units sold reflected
decreases in all product categories.
Asia-Pacific. In 2019, total net sales increased $19.2 million, or 2%, which included comparable sales decreasing
$5.7 million, or 1%. Total sales growth reflected increased wholesale sales and business sales. Additionally, total
sales growth reflected double-digit sales growth in the Chinese Mainland, which was partially offset by a decrease in
net sales in Hong Kong of 30%, which management attributed to significant disruptions that began earlier in 2019.
Sales performance was mixed in other markets in the region. Management attributed these sales results to higher
spending by local customers, partially offset by lower spending by foreign tourists. On a constant-exchange-rate
basis, total net sales increased 5% and comparable sales increased 3%.
Management attributed the increase in the average price per jewelry unit sold to a shift in sales mix to High jewelry
and gold jewelry within the Jewelry collections category. The decrease in the number of jewelry units sold reflected
decreases in all product categories.
Japan. In 2019, total net sales increased $6.8 million, or 1%, and comparable sales were largely unchanged from
the prior year. On a constant-exchange-rate basis, total net sales were largely unchanged and comparable sales
decreased 1%.
Management attributed the increase in the average price per jewelry unit sold to a shift in sales mix to gold jewelry
within the Jewelry collections category and to Engagement jewelry. The decrease in the number of jewelry units sold
primarily reflected a decrease in the Jewelry collections and Designer jewelry categories, partly offset by an increase
in the Engagement jewelry category.
Europe. In 2019, total net sales decreased $6.1 million, or 1%, which included comparable sales decreasing $6.9
million, or 1%. Management attributed the decrease in total net sales to the effect of foreign currency translation.
On a constant-exchange-rate basis, total net sales and comparable sales increased 2%. Management attributed these
sales results to modest changes in spending by local customers and foreign tourists.
Management attributed the increase in the average price per jewelry unit sold to a shift in sales mix to gold jewelry
within the Jewelry collections category. The decrease in the number of jewelry units sold reflected decreases in the
Jewelry collections and Designer jewelry categories.
TIFFANY & CO.
K-35
Other. In 2019, total net sales decreased $1.7 million, or 2%, primarily due to a decrease in wholesale sales of
diamonds and lower comparable sales.
Store Data. In 2019, the Company increased gross retail square footage by 3%, net, through store openings, closings
and relocations. The Company opened 9 stores and closed four: opening four in Japan, two in Asia-Pacific (in China),
two in the Americas (in the U.S.), and one in Europe (in the U.K.), while closing two stores in the Americas (one
each in the U.S. and Latin America), one store in Asia-Pacific (in China) and one store in Japan. In addition, the
Company relocated or renovated 18 existing stores.
Sales per gross square foot generated by all company-operated stores were approximately $2,700 in 2019 and
$2,800 in 2018.
Excluded from the store counts and sales per gross square foot amounts above are pop-up stores (stores with lease
terms of 24 months or less).
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As reported:
Gross profit
Gross profit as a percentage of net sales
On a Non-GAAP basis*:
Gross profit
Gross profit as a percentage of net sales
Gross Margin
$
$
2019
2018
2017
2,761.9
$
2,811.0
$
2,610.7
62.4%
63.3%
62.6%
2,762.9
62.5%
*See "Non-GAAP Measures" above for additional information.
Gross margin (gross profit as a percentage of net sales) decreased 90 basis points in 2019, partly reflecting a shift
in sales mix toward higher price point jewelry, as well as sales deleverage on operating expenses. Additionally, the
prior year period included the impact of an $8.5 million charge recorded in the third quarter of 2018 related to the
bankruptcy filing of a metal refiner to which the Company entrusted precious scrap metal.
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 long-term
strategy is to continue that approach, although significant increases in product input costs or weakening foreign
currencies can affect gross margin negatively over the short-term until management makes necessary price
adjustments. 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 I. Hedging Instruments"). Management adjusted
retail prices in both 2019 and 2018 across most geographic regions and product categories, some of which were
intended to mitigate the impact of foreign currency fluctuations.
TIFFANY & CO.
K-36
Selling, General and Administrative Expenses
(in millions)
As reported:
SG&A expenses
SG&A expenses as a percentage of net sales ("SG&A
expense ratio")
On a Non-GAAP basis*:
SG&A expenses
SG&A expense ratio
$
$
*See "Non-GAAP Measures" above for additional information.
2019
2018
2017
2,029.3
$
2,020.7
$
1,801.3
45.9%
45.5%
43.2%
2,009.1
45.4%
SG&A expenses did not change significantly in 2019, which included certain costs related to the proposed Merger
(see "Non-GAAP Measures" for further details). In addition to those costs, SG&A expenses in 2019 reflected
decreased labor and incentive compensation costs, decreased marketing costs and decreased professional services
costs, largely offset by increased store occupancy and depreciation expenses.
Excluding the 2019 items noted in "Non-GAAP Measures", SG&A expenses in 2019 decreased $11.6 million, or
1%, compared to 2018.
There was no significant effect on SG&A expense changes from foreign currency translation. SG&A expenses as a
percentage of net sales increased 40 basis points compared to 2018. SG&A expenses as a percentage of net sales
decreased 10 basis points when excluding the aforementioned costs related to the proposed Merger (see "Non-GAAP
Measures").
The Company's SG&A expenses are largely fixed or controllable in nature (including, but not limited to, marketing
costs, employees' salaries and benefits, fixed store rent and depreciation expenses), with the total of such costs
representing approximately 80 - 85% of total SG&A expenses, and the remainder comprised of variable items
(including, but not limited to, variable store rent, sales commissions and fees paid to credit card companies).
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As reported:
Earnings from operations
Operating margin
On a Non-GAAP basis*:
Earnings from operations
Operating margin
Earnings from Operations
2019
2018
2017
732.6
$
790.3
$
809.4
16.6%
17.8%
19.4%
753.8
17.0%
$
$
*See "Non-GAAP Measures" above for additional information.
Earnings from operations decreased $57.7 million, or 7%, in 2019 and operating margin decreased 120 basis points,
which included the impact of costs related to the proposed Merger (see "Non-GAAP Measures"), as well as a decrease
in gross margin. Excluding these costs, operating margin decreased 80 basis points.
TIFFANY & CO.
K-37
Results by segment were as follows:
(in millions)
Earnings from operations*:
2019
% of Net
Sales
2018
% of Net
Sales
2017
% of Net
Sales
Americas
Asia-Pacific
Japan
Europe
Other
Unallocated corporate
expenses
Earnings from operations
before other operating
expenses
$
382.2
254.3
229.7
83.1
11.3
960.6
19.9 % $
20.2
35.4
16.7
12.1
386.7
311.5
237.2
86.2
19.7 % $
25.1
36.9
17.1
(6.4)
(6.7)
1,015.2
399.0
287.7
209.3
90.4
3.6
990.0
21.3 %
26.3
35.1
18.5
3.0
(206.8)
(4.7)%
(224.9)
(5.1)%
(180.6)
(4.3)%
753.8
17.0 %
790.3
17.8 %
809.4
19.4 %
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Other operating expenses
(21.2)
—
—
Earnings from operations
$
732.6
16.6 % $
790.3
17.8 % $
809.4
19.4 %
* Percentages represent earnings from operations as a percentage of each segment's net sales.
On a segment basis, the ratio of earnings from operations to each segment's net sales in 2019 compared with
2018 was as follows:
• Americas – the ratio increased 20 basis points due to a decrease in the SG&A expense ratio, primarily
resulting from decreased labor and incentive compensation costs and decreased marketing spending,
largely offset by a decrease in gross margin;
• Asia-Pacific – the ratio decreased 490 basis points due to sales deleverage on operating expenses
largely attributed to business disruptions in Hong Kong, with store-related expenses in Asia Pacific
growing at a higher rate than net sales, and a decrease in gross margin;
•
Japan – the ratio decreased 150 basis points primarily due to sales deleverage on operating expenses;
and
• Europe – the ratio decreased 40 basis points due to a decrease in gross margin, largely offset by a
decrease in the SG&A expense ratio attributable to a decrease in marketing spending.
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 $18.1 million, or 8%, in
2019, due to decreased labor and incentive compensation costs. Additionally, the prior year period included the
impact of an $8.5 million charge recorded in the third quarter of 2018 related to the bankruptcy filing of a metal
refiner to which the Company entrusted precious scrap metal.
The 2019 amount included in other operating expenses in the table above reflects $21.2 million for costs incurred
related to the proposed Merger (see "Item 8. Financial Statements and Supplementary Data - Note B. Entry into
Merger Agreement").
Interest expense and financing costs decreased $1.2 million, or 3%, in 2019.
Interest Expense and Financing Costs
TIFFANY & CO.
K-38
Other Expense, Net
Other expense, net includes the non-service cost components of net periodic benefit cost, interest income and gains/
losses on investment activities and foreign currency transactions. Other expense, net decreased $3.3 million, or
46%, in 2019.
The effective income tax rate was 21.6% in 2019 compared with 21.1% in 2018.
Provision for Income Taxes
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 priorities. Management regularly assesses its working capital needs, capital expenditure requirements, debt
service, dividend payouts and future investments. Management believes that cash on hand, internally generated cash
flows and the funds available under its revolving credit facilities are sufficient to support the Company's liquidity and
capital requirements for the foreseeable future.
At January 31, 2020, the Company's cash and cash equivalents totaled $874.7 million, of which approximately
30% was held in locations outside the U.S. where the Company has determined to maintain its assertion to
indefinitely reinvest undistributed earnings to support its continued expansion and investments in such foreign
locations. To the extent the Company were to repatriate such funds, it may incur withholding taxes, state income
taxes and the tax expense or benefit associated with foreign currency gains or losses. The Company believes it has
sufficient sources of cash in the U.S. to fund its U.S. operations without the need to repatriate those funds held
outside the U.S. See "Item 8. Financial Statements and Supplementary Data - Note P. Income Taxes" for additional
information. In addition, the Company had Short-term investments of $22.7 million at January 31, 2020.
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The following table summarizes cash flows from operating, investing and financing activities:
(in millions)
Net cash provided by (used in):
Operating activities
Investing activities
Financing activities
Effect of exchange rate changes on cash and cash equivalents
2019
2018
2017
$
670.9 $
531.8 $
(279.3)
(307.9)
(1.6)
(29.9)
(674.3)
(5.7)
932.2
(481.1)
(421.1)
12.7
42.7
Net increase (decrease) in cash and cash equivalents
$
82.1 $
(178.1) $
Operating Activities
The Company had net cash inflows from operating activities of $670.9 million in 2019 and $531.8 million in 2018.
The increase in 2019 compared to 2018 primarily reflected decreases in inventory purchases, partly offset by a
decrease in earnings.
Working Capital. Working capital (current assets less current liabilities) decreased to $2.9 billion at January 31,
2020 from $3.0 billion at January 31, 2019. The decrease in 2019 compared with 2018 included an increase in
current liabilities (which reflects the adoption of ASC 842 – Leases in the current period, which established the
Current portion of operating lease liabilities on the Consolidated Balance Sheet).
Accounts receivable, net at January 31, 2020 decreased 2% from January 31, 2019. Currency translation had no
significant effect on the change compared to the prior year.
Inventories, net at January 31, 2020 did not change significantly from January 31, 2019. Currency translation had
no significant effect on the change compared to the prior year.
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Accounts payable and accrued liabilities at January 31, 2020 were 5% higher than at January 31, 2019, which
primarily reflected an increase in accounts payable for store-related expenditures and professional services.
Investing Activities
The Company had net cash outflows from investing activities of $279.3 million in 2019 and $29.9 million in 2018.
The increase in net cash outflows in 2019 compared to 2018 was driven by net cash flows resulting from purchases
and sales of marketable securities and short-term investments and an increase in capital expenditures in 2019.
Marketable Securities and Short-Term Investments. The Company invests a portion of its cash in marketable
securities and short-term investments. The Company had $37.0 million of net sales of marketable securities and
short-term investments during 2019, compared with $240.0 million in 2018.
Capital Expenditures. Capital expenditures are typically related to the opening, renovation and/or relocation of stores
(which represented approximately 55% and 60% of capital expenditures in 2019 and 2018, respectively), as well as
distribution and manufacturing facilities and ongoing investments in information technology. Capital expenditures
were $320.6 million in 2019 and $282.1 million in 2018, representing 7% and 6% of worldwide net sales in 2019
and 2018, respectively.
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The Company's New York Flagship store closed in January 2020, at which time the Company began its complete
renovation and temporarily moved its operations to the "Tiffany Flagship Next Door" at 6 East 57th Street. The
renovation of the New York Flagship store is expected to lower diluted earnings per share by approximately $0.10 -
$0.12 in fiscal years 2020 and 2021, due to the incremental costs associated with the adjacent space, and is
expected to be completed in the fourth quarter of 2021.
Financing Activities
The Company had net cash outflows from financing activities of $307.9 million in 2019 and $674.3 million in 2018.
Borrowings. The Company had net proceeds from (repayments of) borrowings as follows:
(in millions)
Short-term borrowings:
Proceeds from (repayments of) credit facility
borrowings, net
Proceeds from other credit facility borrowings
Repayments of other credit facility borrowings
Net proceeds from (repayments of) total borrowings
2019
2018
2017
$
$
1.5 $
(18.4) $
133.1
(96.1)
49.3
(32.0)
(67.8)
39.2
(96.1)
38.5 $
(1.1) $
(124.7)
Credit Facilities. On October 25, 2018, the Registrant, along with certain of its subsidiaries designated as borrowers
thereunder, entered into a five-year multi-bank, multi-currency committed unsecured revolving credit facility,
including a letter of credit subfacility, consisting of basic commitments in an amount up to $750.0 million (which
commitments may be increased, subject to certain conditions and limitations, at the request of the Registrant) (the
"Credit Facility"). The Credit Facility replaced the Registrant's previously existing $375.0 million four-year unsecured
revolving credit facility and $375.0 million five-year unsecured revolving credit facility, which were each terminated
and repaid in connection with the Registrant's entry into the Credit Facility.
The Credit Facility matures in 2023, provided that such maturity may be extended for one or two additional one-year
periods at any time with the consent of the applicable lenders, as further described in the agreement governing such
facility.
Commercial Paper. In August 2017, the Registrant and one of its wholly owned subsidiaries established a
commercial paper program (the "Commercial Paper Program") for the issuance of commercial paper in the form of
short-term promissory notes in an aggregate principal amount not to exceed $750.0 million. Borrowings under the
Commercial Paper Program may be used for general corporate purposes. The aggregate amount of borrowings that
the Company is currently authorized to have outstanding under the Commercial Paper Program and the Registrant's
TIFFANY & CO.
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Credit Facility is $750.0 million. The Registrant guarantees the obligations of its wholly owned subsidiary under the
Commercial Paper Program. Maturities of commercial paper notes may vary, but cannot exceed 397 days from the
date of issuance. Notes issued under the Commercial Paper Program rank equally with the Registrant's present and
future unsecured and unsubordinated indebtedness.
Other Credit Facilities. Tiffany-Shanghai Credit Agreement. In June 2019, the Registrant's indirect, 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 408.0 million ($59.0 million at January 31, 2020), which may
be increased to the RMB equivalent of $100.0 million, subject to certain conditions and limitations, at the request
of Tiffany-Shanghai. The Tiffany-Shanghai Credit Agreement, which matures in July 2022, was made available to
refinance amounts outstanding under Tiffany-Shanghai's previously existing RMB 990.0 million three-year multi-
bank revolving credit agreement (the "2016 Agreement"), which expired pursuant to its terms on July 11, 2019, as
well as for Tiffany-Shanghai's ongoing general working capital requirements. The participating lenders make loans,
upon Tiffany-Shanghai's request, for periods of up to 12 months at the applicable interest rates equal to 95% of the
applicable rate as announced by the People's Bank of China (provided, that if such announced rate is below zero, the
applicable interest rate shall be deemed to be zero). In June 2019, in connection with the Tiffany-Shanghai Credit
Agreement, the Registrant entered into a Guaranty Agreement by and between the Registrant and the facility agent
under the Tiffany-Shanghai Credit Agreement (the "Guaranty"). At January 31, 2020, there was $33.0 million
available to be borrowed under the Tiffany-Shanghai Credit Agreement and $26.0 million was outstanding.
The weighted-average interest rate for borrowings outstanding under all of the Company's credit facilities was 4.7%
at January 31, 2020 and 3.7% at January 31, 2019.
The ratio of total debt (short-term borrowings and long-term debt) to stockholders' equity was 31% at January 31,
2020 and 32% at January 31, 2019.
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At January 31, 2020, the Company was in compliance with all debt covenants.
Once consummated, the proposed Merger may result in certain of the Company's outstanding indebtedness
becoming due, and the Company will need to comply with certain covenants of the agreements governing its
outstanding indebtedness relating to the proposed Merger. Under the terms of the Merger Agreement, if reasonably
requested by Parent, the Company must use its commercially reasonable efforts to, among other things, take actions
required to facilitate repayment of the Company's outstanding indebtedness.
For additional information regarding all of the Company's credit facilities, senior note issuances and other
outstanding indebtedness, including the impact of the proposed Merger on the covenants in respect thereof, see
"Item 8. Financial Statements and Supplementary Data - Note H. Debt."
Share Repurchases. In May 2018, the Registrant's Board of Directors approved a new share repurchase program (the
"2018 Program"). The 2018 Program, which became effective June 1, 2018 and expires on January 31, 2022,
authorizes the Company to repurchase up to $1.0 billion of its Common Stock through open market transactions,
including through Rule 10b5-1 plans and one or more accelerated share repurchase ("ASR") or other structured
repurchase transactions, and/or privately negotiated transactions. As of January 31, 2020, $471.6 million remained
available under the 2018 Program; however, pursuant to the terms of the Merger Agreement, and subject to certain
limited exceptions, the Company may not repurchase its Common Stock other than in connection with the forfeiture
provisions of Company equity awards or the cashless exercise or tax withholding provisions of such Company equity
awards, in each case, granted under the Company's stock-based compensation plans. Accordingly, the Company does
not expect to repurchase any shares of its Common Stock in connection with the 2018 Program prior to the
consummation of the proposed Merger or earlier termination of the Merger Agreement.
During 2018, the Company entered into ASR agreements with two third-party financial institutions to repurchase an
aggregate of $250.0 million of its Common Stock. The ASR agreements were entered into under the 2018 Program.
Pursuant to the ASR agreements, the Company made an aggregate payment of $250.0 million from available cash
on hand in exchange for an initial delivery of 1,529,286 shares of its Common Stock. Final settlement of the ASR
agreements was completed in July 2018, pursuant to which the Company received an additional 353,112 shares of
its Common Stock. In total, 1,882,398 shares of the Company's Common Stock were repurchased under these ASR
agreements at an average cost per share of $132.81 over the term of the agreements.
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The Company's share repurchase activity was as follows:
(in millions, except per share amounts)
Cost of repurchases
Shares repurchased and retired
Average cost per share
$
$
2019
163.4 $
1.8
2018
421.4 $
3.5
91.15 $
121.28 $
2017
99.2
1.0
94.86
Proceeds from exercised stock options. The Company's proceeds from exercised stock options were $108.4 million
and $23.1 million in 2019 and 2018, respectively.
Dividends. The cash dividend on the Company's Common Stock was increased once in each of 2019 and 2018. The
Company's Board of Directors declared quarterly dividends which totaled $2.29 and $2.15 per common share in
2019 and 2018, respectively, with cash dividends paid of $276.3 million and $263.8 million in those respective
years. The dividend payout ratio (dividends as a percentage of net earnings) was 51% and 45% in 2019 and 2018,
respectively. Dividends as a percentage of adjusted net earnings (see "Non-GAAP Measures") were 49% in 2019.
Contractual Cash Obligations and Commercial Commitments
The following is a summary of the Company's contractual cash obligations at January 31, 2020:
(in millions)
Total
2020
2021-2022
2023-2024
Thereafter
Recorded contractual obligations:
Operating leases a
Short-term borrowings
Long-term debt b
Unrecorded contractual obligations:
Inventory purchase obligations c
Interest on debt d
Other contractual obligations e
$
1,403.6 $
245.1 $
466.3 $
323.7 $
368.5
147.9
891.9
229.8
557.4
152.1
147.9
—
229.8
35.9
97.3
—
50.0
—
70.7
44.9
—
250.0
—
67.4
6.2
—
591.9
—
383.4
3.7
$
3,382.7 $
756.0 $
631.9 $
647.3 $
1,347.5
a) Includes the minimum rental commitments under non-cancelable operating leases primarily for retail stores,
offices, warehouses and distribution facilities (includes imputed interest of $192.4 million, which is not
reflected within operating lease liabilities on the Consolidated Balance Sheet as of January 31, 2020). See "Item
8. Financial Statements and Supplementary Data - Note K. Leases" for a discussion of the Company's operating
leases.
b) Amounts exclude any unamortized discount or premium.
c) The Company will, from time to time, enter into arrangements to purchase rough diamonds that contain
minimum purchase obligations. Inventory purchase obligations associated with these agreements have been
estimated at approximately $30.0 million for 2020 and are included in this table. Purchases beyond 2020 that
are contingent upon mine production have been excluded as they cannot be reasonably estimated.
d) Excludes interest payments on amounts outstanding under available lines of credit, as the outstanding amounts
fluctuate based on the Company's working capital needs.
e) Consists primarily of technology licensing and service contracts, fixed royalty commitments, construction-in-
progress and packaging supplies.
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 its U.S. pension 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
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accruals. To the extent that these requirements are fully covered by assets in the Qualified Plan (as defined
under "Item 8. Financial Statements and Supplementary Data – Note O. Employee Benefit Plans"), the
Company may elect not to make any contribution in a particular year. No cash contribution was required in
2019 and none is required in 2020 to meet the minimum funding requirements of the Employee Retirement
Income Security Act. However, the Company periodically evaluates whether to make discretionary cash
contributions to the Qualified Plan and made voluntary cash contributions of $30.0 million in 2019 and
$11.8 million in 2018. The Company does not currently expect to make any contributions to the Qualified
Plan in 2020.
• Unrecognized tax benefits of $19.7 million and accrued interest and penalties of $2.9 million at
January 31, 2020. 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.
The following is a summary of the Company's outstanding borrowings and available capacity under its credit facilities
at January 31, 2020:
(in millions)
Five-year revolving credit facility a, b
Other credit facilities c
a) Matures in 2023.
Total
Capacity
Borrowings
Outstanding
Letters of
Credit Issued
Available
Capacity
$
$
750.0 $
247.9
13.8 $
134.1
997.9 $
147.9 $
3.6 $
—
3.6 $
732.6
113.8
846.4
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b) The aggregate amount of borrowings that the Company is currently authorized to have outstanding under the
Commercial Paper Program and the Credit Facility is $750.0 million. As of January 31, 2020, there were no
borrowings outstanding under the Commercial Paper Program.
c) Maturities through 2022.
In addition, the Company has other available letters of credit and financial guarantees of $73.7 million, of which
$48.5 million was outstanding at January 31, 2020. Of those available letters of credit and financial guarantees,
$46.5 million 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 net realizable value, and is based on assumptions about
future demand and market conditions. Net realizable value is the estimated selling prices in the ordinary course of
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business, less reasonably predictable costs of completion, disposal and transportation. 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, 2020, a 10% change in the reserve for discontinued and slow-
moving products would have resulted in a change of $8.1 million in inventory and cost of sales.
Property, plant and equipment and intangible assets and key money. The Company reviews its property, plant and
equipment and intangible 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 significant impairment charges in 2019 or 2018.
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, a quantitative evaluation is performed and
an impairment charge is recognized for the amount by which the carrying amount exceeds the reporting unit's fair
value during that period. The 2019 and 2018 evaluations resulted in no impairment charges.
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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,
interpretations 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 current and 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 income and 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 tax benefits related to the 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. At January 31, 2020, total unrecognized
tax benefits were $19.7 million. As of January 31, 2020, unrecognized tax benefits are not expected to change
materially in the next 12 months. Future developments may result in a change in this assessment.
In evaluating the Company's likelihood 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.
Following the enactment of the U.S. Tax Cuts and Jobs Act (the "2017 Tax Act") on December 22, 2017, the SEC
issued SAB 118 to address the application of U.S. GAAP in situations when a registrant did not have the necessary
information available, prepared, or analyzed (including computations) in reasonable detail to complete the
accounting for certain income tax effects of the 2017 Tax Act. Specifically, SAB 118 provided a measurement
period for companies to evaluate the impacts of the 2017 Tax Act on their financial statements. This measurement
period began in the reporting period that included the enactment date and ended when an entity obtained, prepared
and analyzed the information that was needed in order to complete the accounting requirements, but could not
exceed one year. The Company adopted the provisions of SAB 118 with respect to the impact of the 2017 Tax Act on
its 2017 consolidated financial statements.
Consistent with SAB 118, the Company calculated and recorded reasonable estimates in its 2017 consolidated
financial statements for the impact of the one-time transition tax via a mandatory deemed repatriation of post-1986
undistributed foreign earnings and profits (the "Transition Tax") and the remeasurement of its deferred tax assets and
deferred tax liabilities. The Company also adopted the provisions of SAB 118 as it related to the assertion of the
indefinite reinvestment of foreign earnings and profits. The charges recorded during the fourth quarter of 2017
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associated with the Transition Tax and the remeasurement of the Company's deferred tax assets and deferred tax
liabilities, as a result of applying the 2017 Tax Act, represented provisional amounts for which the Company's
analysis was incomplete but reasonable estimates could be determined. Further, the impact of the 2017 Tax Act on
the Company's assertion to indefinitely reinvest foreign earnings and profits was incomplete, as the Company
continued to analyze the relevant provisions of the 2017 Tax Act and related accounting guidance.
During 2018, as permitted by SAB 118, the Company completed its analyses under the 2017 Tax Act, including
those related to: (i) the provisional estimate recorded during 2017 for the Transition Tax; (ii) the provisional estimate
recorded during 2017 to remeasure the Company's deferred tax assets and liabilities; and (iii) the Company's
assertion to indefinitely reinvest undistributed foreign earnings and profits.
As a result of completing these analyses, during 2018, the Company: (i) recorded tax benefits totaling $12.6 million
to adjust the provisional estimate recorded in 2017 to remeasure the Company's deferred tax assets and liabilities;
(ii) recorded tax benefits totaling $3.3 million to adjust the provisional estimate recorded in 2017 for the Transition
Tax; and (iii) determined to maintain its assertion to indefinitely reinvest undistributed foreign earnings and profits.
For additional information, see "Item 8. Financial Statements and Supplementary Data - Note P. Income Taxes."
Employee benefit plans. The Company maintains several pension and retirement plans and provides certain
postretirement healthcare and life insurance benefits for retired employees. The Company makes certain
assumptions that affect the underlying estimates related to pension and other postretirement costs. Significant
changes in interest rates, the market value of securities and projected healthcare costs would require the Company
to revise key assumptions and could result in a higher or lower charge to earnings.
The Company used a discount rate of 4.25% to determine 2019 expense for its U.S. Qualified Plan, 4.50% for its
postretirement plans and 4.25% for its Excess Plan/SRIP (as defined under "Item 8. Financial Statements and
Supplementary Data – Note O. Employee Benefit Plans"). Holding all other assumptions constant, a 0.5% increase
in the discount rates would have decreased 2019 pension and postretirement expenses by $6.3 million and $0.8
million, respectively. A decrease of 0.5% in the discount rates would have increased the 2019 pension and
postretirement expenses by $7.1 million and $0.4 million, respectively. 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 7.00% to determine its 2019
pension expense. Holding all other assumptions constant, a 0.5% change in the long-term rate of return would have
changed the 2019 pension expense by $2.5 million. The expected long-term rate of return on pension plan assets is
selected by taking into account the average rate of return expected on the funds invested or to be invested to provide
for the benefits included in the projected benefit obligation. More specifically, consideration is given to the expected
rates of return (including reinvestment asset return rates) based upon the plan's current asset mix, investment
strategy and the historical performance of plan assets.
For postretirement benefit measurement purposes, a 6.50% annual rate of increase in the per capita cost of covered
health care was assumed for 2020. The rate was assumed to decrease gradually to 4.75% by 2023 and remain at
that level thereafter. A one-percentage-point change in the assumed health-care cost trend rate would not have a
significant effect on the Company's accumulated postretirement benefit obligation for the year ended January 31,
2020 or aggregate service and interest cost components of the 2019 postretirement expense.
See "Item 8. Financial Statements and Supplementary Data - Note C. Summary of Significant Accounting Policies."
NEW ACCOUNTING STANDARDS
The Company does not have any off-balance sheet arrangements.
OFF-BALANCE SHEET ARRANGEMENTS
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Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
The Company is exposed to market risk from fluctuations in foreign currency exchange rates, 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
The Company uses foreign exchange forward 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, 2020 is 12 months. At January 31, 2020 and 2019, the
aggregate fair value of the Company's outstanding foreign exchange forwards was a net asset of $1.4 million and a
net liability of $2.1 million, respectively.
The Company entered into cross-currency swaps to hedge the foreign currency exchange risk associated with
Japanese yen-denominated and Euro-denominated intercompany loans. These cross-currency swaps are designated
and accounted for as cash flow hedges. As of January 31, 2020, the notional amounts of cross-currency swaps
accounted for as cash flow hedges and the respective maturity dates were as follows:
Cross-Currency Swap
Effective Date
July 2016
March 2017
May 2017
August 2019
Maturity Date
October 2024
April 2027
April 2027
August 2026
Notional Amount
(in millions)
(in millions)
¥ 10,620.0 $
100.0
¥ 11,000.0
¥
€
5,634.5
21.1
96.1
50.0
23.6
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At January 31, 2020 and 2019, the aggregate fair value of the Company's outstanding cross-currency swaps was a
net asset of $1.0 million and a net liability of $19.9 million, respectively.
At January 31, 2020, for all of the contracts and swaps noted above, a 10% decrease in the hedged foreign currency
exchange rates from the prevailing market rates would have resulted in a liability with a fair value of approximately
$91.3 million.
Precious Metal Price Risk
The Company periodically hedges a portion of its forecasted purchases of precious metals for use in its internal
manufacturing operations in order to manage the effect of volatility in precious metal prices. The Company may use
a combination of call and put option contracts in net-zero-cost collar arrangements ("precious metal collars") or
forward contracts. If the price of the precious metal at the time of the expiration of the precious metal collar is
within the call and put price, the precious metal collar would expire at no cost to the Company. The maximum term
of the Company's outstanding precious metal forward contracts and collars as of January 31, 2020 is 18 months. At
January 31, 2020 and 2019, the aggregate fair value of the Company's outstanding precious metal derivative
instruments was a net asset of $12.8 million and $2.5 million, respectively. At January 31, 2020, a 10% decrease
in precious metal prices from the prevailing market rates would have resulted in a liability with a fair value of
approximately $4.1 million.
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Item 8. Financial Statements and Supplementary Data.
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors of Tiffany & Co.
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Tiffany & Co. and its subsidiaries (the "Company")
as of January 31, 2020 and 2019, and the related consolidated statements of earnings, of comprehensive earnings,
of stockholders' equity and of cash flows for each of the three years in the period ended January 31, 2020, including
the related notes and financial statement schedule listed in the index appearing under Item 15(a)(2) (collectively
referred to as the "consolidated financial statements"). We also have audited the Company's internal control over
financial reporting as of January 31, 2020, based on criteria established in Internal Control - Integrated Framework
(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the
financial position of the Company as of January 31, 2020 and 2019, and the results of its operations and its cash
flows for each of the three years in the period ended January 31, 2020 in conformity with accounting principles
generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material
respects, effective internal control over financial reporting as of January 31, 2020, based on criteria established in
Internal Control - Integrated Framework (2013) issued by the COSO.
Change in Accounting Principle
As discussed in Note C to the consolidated financial statements, the Company changed the manner in which it
accounts for leases as of February 1, 2019.
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Basis for Opinions
The Company's management is responsible for these consolidated financial statements, 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 the Company's consolidated financial statements and on the Company's
internal control over financial reporting based on our audits. We are a public accounting firm registered with the
Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with
respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations
of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of
material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting
was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material
misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles
used and significant estimates made by management, as well as evaluating the overall presentation of the
consolidated financial statements. 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.
TIFFANY & CO.
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Definition and Limitations of Internal Control over Financial Reporting
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.
Critical Audit Matters
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The critical audit matter communicated below is a matter arising from the current period audit of the consolidated
financial statements that was communicated or required to be communicated to the audit committee and that (i)
relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our
especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter
in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by
communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the
accounts or disclosures to which it relates.
Income Taxes
As described in Notes C and P to the consolidated financial statements, the Company recorded a provision for
income taxes of $149 million for the year ended January 31, 2020. As disclosed by management, the calculation of
the Company's tax liabilities involves uncertainties in the application of complex tax laws and regulations in a
multitude of jurisdictions across the Company's global operations. Significant judgments, interpretations and
estimates are required by management 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 current and future taxes to be paid.
The principal considerations for our determination that performing procedures relating to accounting for income
taxes is a critical audit matter are there was significant judgment by management when evaluating complex tax laws
and regulations in a multitude of jurisdictions. This in turn led to a high degree of auditor judgment, subjectivity,
and effort in evaluating the Company's accounting for complex tax laws and regulations in a multitude of
jurisdictions, including deferred tax assets and liabilities and management's assessment of the estimated current
and future taxes to be paid. Professionals with specialized skill and knowledge were used to assist in evaluating the
audit evidence obtained.
TIFFANY & CO.
K-48
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our
overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of
controls relating to accounting for income taxes, including evaluation of permanent and temporary differences within
jurisdictions, the rate reconciliation and the provision to tax return reconciliation. Professionals with specialized skill
and knowledge were used to assist in (i) evaluating the provision for income taxes, including the reasonableness of
management's judgments and estimates in the application of tax laws and regulations in certain jurisdictions; (ii)
testing the current and deferred income tax provision, including evaluation of permanent and temporary differences
within certain jurisdictions and management's assessment of the technical merits of the differences; (iii) performing
procedures over the Company's rate reconciliation; and (iv) testing the reconciliation of the provision to the tax
returns.
/s/ PricewaterhouseCoopers LLP
New York, New York
March 20, 2020
We have served as the Company's auditor since 1984.
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TIFFANY & CO.
K-49
CONSOLIDATED BALANCE SHEETS
(in millions, except per share amounts)
ASSETS
Current assets:
Cash and cash equivalents
Short-term investments
Accounts receivable, net
Inventories, net
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Prepaid expenses and other current assets
Total current assets
Operating lease right-of-use 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
Current portion of operating lease liabilities
Income taxes payable
Merchandise credits and deferred revenue
Total current liabilities
Long-term debt
Pension/postretirement benefit obligations
Deferred gains on sale-leasebacks
Long-term portion of operating lease liabilities
Other long-term liabilities
Commitments and contingencies
Stockholders' equity:
Preferred Stock, $0.01 par value; authorized 2.0 shares, none issued and
outstanding
Common Stock, $0.01 par value; authorized 240.0 shares, issued and
outstanding 121.2 and 121.5
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss, net of tax
Total Tiffany & Co. stockholders' equity
Non-controlling interests
Total stockholders' equity
See notes to consolidated financial statements.
TIFFANY & CO.
K-50
2020
January 31,
2019
$
874.7 $
22.7
240.0
2,463.9
274.2
3,875.5
1,102.7
1,098.8
225.2
357.9
792.6
62.7
245.4
2,428.0
230.8
3,759.5
—
1,026.7
215.8
331.0
6,660.1 $
5,333.0
$
$
147.9 $
541.5
202.8
16.4
61.8
970.4
884.1
374.5
—
1,008.4
87.3
—
1.2
1,387.3
2,207.6
(273.2)
3,322.9
12.5
3,335.4
113.4
513.4
—
21.4
69.9
718.1
883.4
312.4
31.1
—
257.1
—
1.2
1,275.4
2,045.6
(204.8)
3,117.4
13.5
3,130.9
5,333.0
$
6,660.1 $
CONSOLIDATED STATEMENTS OF EARNINGS
(in millions, except per share amounts)
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Earnings from operations
Interest expense and financing costs
Other expense, net
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.
Years Ended January 31,
2020
2019
$
4,424.0 $
4,442.1 $
1,662.1
2,761.9
2,029.3
732.6
38.5
3.8
690.3
149.2
1,631.1
2,811.0
2,020.7
790.3
39.7
7.1
743.5
157.1
$
$
$
541.1 $
586.4 $
4.47 $
4.45 $
4.77 $
4.75 $
121.1
121.6
122.9
123.5
2018
4,169.8
1,559.1
2,610.7
1,801.3
809.4
42.0
6.9
760.5
390.4
370.1
2.97
2.96
124.5
125.1
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TIFFANY & CO.
K-51
CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS
Years Ended January 31,
(in millions)
Net earnings
Other comprehensive (loss) earnings, net of tax
Foreign currency translation adjustments
Unrealized loss on marketable securities
Unrealized gain (loss) on hedging instruments
Unrealized (loss) gain on benefit plans
Total other comprehensive (loss) earnings, net of tax
2020
2019
$
541.1 $
586.4 $
(22.4)
—
34.7
(54.7)
(42.4)
(60.2)
—
(1.6)
(6.8)
(68.6)
Comprehensive earnings
$
498.7 $
517.8 $
2018
370.1
95.7
(2.6)
(6.8)
31.9
118.2
488.3
See notes to consolidated financial statements.
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TIFFANY & CO.
K-52
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(in millions)
Total
Stockholders'
Equity
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Common Stock
Shares
Amount
Additional
Paid-In
Capital
Non-
Controlling
Interests
Balance at January 31, 2017
$
3,028.4 $
2,078.3 $
(256.2)
124.5 $
1.2
$
1,190.2 $
14.9
Exercise of stock options and
vesting of restricted stock units
("RSUs")
Shares withheld related to net share
settlement of share-based
compensation
Share-based compensation expense
Purchase and retirement of
Common Stock
Cash dividends on Common Stock
Accrued dividends on share-based
awards
Other comprehensive earnings, net
of tax
Net earnings
Non-controlling interests
54.6
(8.6)
28.2
—
—
—
(99.2)
(242.6)
(90.8)
(242.6)
(0.8)
(0.8)
118.2
370.1
(0.1)
—
370.1
—
—
—
—
—
—
—
118.2
—
—
1.1
(0.1)
—
(1.0)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
54.6
(8.6)
28.2
(8.4)
—
—
—
—
—
Balance at January 31, 2018
3,248.2
2,114.2
(138.0)
124.5
1.2
1,256.0
Exercise of stock options and
vesting of RSUs
Shares withheld related to net share
settlement of share-based
compensation
Share-based compensation expense
Purchase and retirement of
Common Stock
Cash dividends on Common Stock
Accrued dividends on share-based
awards
Cumulative effect adjustment from
adoption of new accounting
standards
Other comprehensive loss, net of
tax
Net earnings
Non-controlling interests
23.1
(8.6)
34.1
—
—
—
(421.4)
(263.8)
(392.1)
(263.8)
(1.1)
(1.2)
3.9
(68.6)
586.4
(1.3)
2.1
—
586.4
—
—
—
—
—
—
—
1.8
(68.6)
—
—
0.6
(0.1)
—
(3.5)
—
—
—
—
—
Balance at January 31, 2019
3,130.9
2,045.6
(204.8)
121.5
Exercise of stock options and
vesting of RSUs
Shares withheld related to net share
settlement of share-based
compensation
Share-based compensation expense
Purchase and retirement of
Common Stock
Cash dividends on Common Stock
Accrued dividends on share-based
awards
Cumulative effect adjustment from
adoption of new accounting
standards
Other comprehensive loss, net of
tax
Net earnings
Non-controlling interests
108.4
(15.2)
33.4
(163.4)
(276.3)
—
—
—
(148.0)
(276.3)
(1.9)
(2.6)
21.8
(42.4)
541.1
(1.0)
47.8
—
541.1
—
—
—
—
—
—
—
(26.0)
(42.4)
—
—
1.6
(0.1)
—
(1.8)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
1.2
—
—
—
—
—
—
—
—
—
—
23.1
(8.6)
34.1
(29.3)
—
0.1
—
—
—
1,275.4
108.4
(15.2)
33.4
(15.4)
—
0.7
—
—
—
—
Balance at January 31, 2020
$
3,335.4 $
2,207.6 $
(273.2)
121.2 $
1.2
$
1,387.3 $
See notes to consolidated financial statements.
—
—
—
—
—
—
—
—
(0.1)
14.8
—
—
—
—
—
—
—
—
(1.3)
13.5
—
—
—
—
—
—
—
—
—
(1.0)
12.5
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TIFFANY & CO.
K-53
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings
Adjustments to reconcile net earnings to net cash provided by operating activities:
2020
Years Ended January 31,
2019
2018
$
541.1
$
586.4
$
370.1
Depreciation and amortization
Amortization of gain on sale-leasebacks
Provision for inventories
Deferred income taxes
Provision for pension/postretirement benefits
Share-based compensation expense
Loan impairment charges
Asset impairment charges
(Gains) losses on sales of marketable securities
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 credits and deferred revenue
Other long-term liabilities
Net cash provided by operating activities
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of marketable securities and short-term investments
Proceeds from sales of marketable securities and short-term investments
Capital expenditures
Other, net
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from (repayment of) credit facility borrowings, net
Proceeds from other credit facility borrowings
Repayment of other credit facility borrowings
Repurchase of Common Stock
Proceeds from exercised stock options
Payments related to tax withholding for share-based payment arrangements
Cash dividends on Common Stock
Distribution to non-controlling interest
Financing fees
Net cash used in 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.
259.7
—
21.6
6.6
29.4
33.2
—
—
(2.6)
3.7
(72.7)
(36.3)
(35.6)
33.0
(90.9)
(7.3)
(12.0)
670.9
(53.0)
90.0
(320.6)
4.3
(279.3)
1.5
133.1
(96.1)
(163.4)
108.4
(15.1)
(276.3)
—
—
(307.9)
(1.6)
82.1
792.6
874.7
$
229.0
(8.4)
54.4
(21.3)
35.7
34.1
—
—
2.3
(30.8)
(270.5)
(11.3)
(22.2)
53.7
(104.6)
(1.0)
6.3
531.8
(154.1)
394.1
(282.1)
12.2
(29.9)
(18.4)
49.3
(32.0)
(421.4)
23.1
(8.6)
(263.8)
(0.3)
(2.2)
(674.3)
(5.7)
(178.1)
970.7
792.6
$
206.9
(8.2)
28.9
96.8
35.0
28.0
3.0
10.0
(3.5)
7.0
(52.9)
(28.8)
(3.7)
98.8
149.7
6.2
(11.1)
932.2
(598.0)
351.4
(239.3)
4.8
(481.1)
(67.8)
39.2
(96.1)
(99.2)
54.6
(8.7)
(242.6)
(0.5)
—
(421.1)
12.7
42.7
928.0
970.7
$
TIFFANY & CO.
K-54
A.
NATURE OF BUSINESS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Tiffany & Co. (the "Registrant") is a holding company that operates through Tiffany and Company ("Tiffany") and the
Registrant's other subsidiary companies (collectively, the "Company"). The Registrant, through its subsidiaries,
designs and manufactures products and operates TIFFANY & CO. retail stores worldwide, and also sells its products
through Internet, catalog, business-to-business and wholesale distribution. The Company's principal merchandise
offering is jewelry (representing 92% of worldwide net sales in 2019); it also sells watches, home and accessories
products and fragrances.
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 Internet, catalog,
business-to-business 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, business-to-business and wholesale operations;
•
Japan includes sales in Company-operated TIFFANY & CO. stores, as well as sales of TIFFANY & CO.
products through Internet, business-to-business and wholesale operations;
• Europe includes sales in Company-operated TIFFANY & CO. stores, as well as sales of TIFFANY & CO.
products in certain markets through Internet and wholesale operations; and
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• Other consists of all non-reportable segments. Other includes the Emerging Markets region, which
includes sales in Company-operated TIFFANY & CO. stores and wholesale operations in the Middle East.
In addition, Other includes wholesale sales of diamonds as well as earnings from third-party licensing
agreements.
B.
ENTRY INTO MERGER AGREEMENT
On November 24, 2019, the Registrant entered into an Agreement and Plan of Merger (the "Merger Agreement") by
and among the Registrant, LVMH Moët Hennessy - Louis Vuitton SE, a societas Europaea (European company)
organized under the laws of France ("Parent"), Breakfast Holdings Acquisition Corp., a Delaware corporation and an
indirect wholly owned subsidiary of Parent ("Holding"), and Breakfast Acquisition Corp., a Delaware corporation and a
direct wholly owned subsidiary of Holding ("Merger Sub"). Pursuant to the Merger Agreement, Merger Sub will be
merged with and into the Registrant (the "Merger"), with the Registrant continuing as the surviving company in the
Merger and a wholly owned indirect subsidiary of Parent.
Subject to the terms and conditions set forth in the Merger Agreement, at the effective time of the Merger (the
"Effective Time"), each share of Common Stock issued and outstanding immediately prior to the Effective Time (other
than shares of Common Stock owned by the Registrant, Parent or any of their respective wholly owned subsidiaries,
and shares of Common Stock owned by stockholders of the Registrant who have properly demanded and not
withdrawn a demand for appraisal rights under Delaware law) will be converted into the right to receive $135.00 in
cash, without interest and less any required tax withholding.
The consummation of the proposed Merger is subject to various conditions, including, among others, customary
conditions relating to (a) the adoption of the Merger Agreement by holders of a majority of the outstanding shares of
the Registrant's Common Stock entitled to vote on such matter at the meeting of stockholders of the Registrant (the
"Special Meeting") held to vote on the adoption of the Merger Agreement and (b) the expiration or earlier termination
of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (as amended, and
all rules and regulations promulgated thereunder, collectively, the "HSR Act"). As previously announced, on February
3, 2020, the waiting period under the HSR Act in connection with the proposed Merger expired, and on February 4,
2020, the Company held the Special Meeting, at which the holders of shares of Common Stock issued and
outstanding as of the close of business on the record date for the Special Meeting considered and voted to approve
TIFFANY & CO.
K-55
(i) the adoption of the Merger Agreement and (ii) by non-binding, advisory vote, certain compensation arrangements
for the Company's named executive officers in connection with the proposed Merger. The proposed Merger remains
subject to satisfaction or waiver of the remaining customary closing conditions, including, among others, (A) certain
non-U.S. regulatory approvals, (B) clearance by the Committee on Foreign Investment in the United States
("CFIUS"), (C) the absence of a law or order in effect that enjoins, prevents or otherwise prohibits the consummation
of the proposed Merger or any other transactions contemplated under the Merger Agreement issued by a
governmental entity; (D) the absence of any legal proceeding seeking to enjoin, prevent or otherwise prohibit the
consummation of the proposed Merger or any other transactions contemplated under the Merger Agreement
instituted by a governmental entity of competent jurisdiction; and (E) the absence of a Material Adverse Effect (as
defined in the Merger Agreement). The obligation of each party to consummate the proposed Merger is also
conditioned on the accuracy of the other party's representations and warranties (subject to certain materiality
exceptions) and the other party's compliance, in all material respects, with its covenants and agreements under the
Merger Agreement.
The Merger Agreement provides for certain customary termination rights of the Registrant and Parent, including the
right of either party to terminate the Merger Agreement if the Merger is not completed on or before August 24, 2020
(the "Outside Date"), provided that the Outside Date may be extended up to an additional 90 days by either party if
all conditions are satisfied other than the receipt of regulatory approvals and CFIUS clearance or absence of legal
restraints. The Merger Agreement also provides that the Registrant will be required to pay Parent a termination fee of
$575.0 million in certain circumstances.
During the three months ended January 31, 2020, the Company incurred expenses of $21.2 million related to the
proposed Merger for professional fees and incentive compensation costs.
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C.
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.
Use of Estimates
These financial statements have been prepared in accordance with accounting principles generally accepted in the
United States of America ("U.S. GAAP"); 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 consolidated
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 financial institution.
TIFFANY & CO.
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Short-Term Investments
The Company's short-term investments consist of time deposits and are carried at fair value. 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's Accounts receivable, net primarily consists of amounts due from Credit Receivables
(defined below), department store operators that host TIFFANY & CO. boutiques in their stores, third-party credit
card issuers and wholesale customers. The Company maintains an allowance for doubtful accounts for estimated
losses associated with outstanding accounts receivable. 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. Certain customers may be granted payment terms which
permit purchases above a minimum amount to be paid for in equal monthly installments over a period not to exceed
12 months (together with Credit Card Receivables, "Credit Receivables"). Credit Receivables require minimum
balance payments. An 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. In order for the account
to return to current status, full payment on all past due amounts must be received by the Company. For all Credit
Receivables, 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, 2020 and
2019, the carrying amount of Credit Receivables (recorded in Accounts receivable, net) was $98.5 million and
$87.0 million, respectively, of which 97% and 98% was considered current. Finance charges earned on Credit
Receivables accounts were not significant.
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At January 31, 2020, accounts receivable allowances totaled $33.0 million compared to $31.5 million at January
31, 2019.
Inventories
Inventories are valued at the lower of cost or net realizable value using the average cost method, except for certain
diamond and gemstone jewelry, which uses the specific identification method.
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:
Property, Plant and Equipment
Buildings
Machinery and equipment
Office equipment
Software
Furniture and fixtures
39 years
5-15 years
3-8 years
5-10 years
3-10 years
Leasehold improvements and building improvements are amortized over the shorter of their estimated useful lives
(primarily 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.
TIFFANY & CO.
K-57
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 2019, 2018 or 2017.
Information Systems Development Costs
Eligible costs incurred during the development stage of information systems projects are capitalized and amortized
over the estimated useful life of the related project. Eligible costs include those related to the purchase,
development, and installation of the related software. Costs incurred prior to the development stage, as well as costs
for maintenance, data conversion, training, and other general and administrative costs, are expensed as incurred.
Costs that are capitalized are included in Property, plant and equipment, net in Construction-in-progress while in the
development stage and in Software once placed into service.
Capitalized software costs are subject to the Company's accounting policy related to the review of long-lived assets
for impairment. See "Impairment of Long-Lived Assets" below for further details.
Intangible Assets and Key Money
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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:
(in millions)
Product rights
Key money
Trademarks
January 31, 2020
January 31, 2019
Gross Carrying
Amount
Accumulated
Amortization
Gross Carrying
Amount
Accumulated
Amortization
$
$
48.9 $
(18.4) $
48.9 $
32.2
2.5
(6.3)
(2.5)
34.1
2.5
83.6 $
(27.2) $
85.5 $
(16.0)
(6.0)
(2.5)
(24.5)
Amortization of intangible assets and key money was $3.3 million for year ended January 31, 2020 and $3.4 million
for the years ended January 31, 2019 and 2018. Amortization expense is estimated to be $3.2 million in each of
the next five years.
TIFFANY & CO.
K-58
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 is performed and an impairment charge is recognized for
the amount by which the carrying amount exceeds the reporting unit's fair value during that period. Goodwill,
included in Other assets, net, consisted of the following by reportable segment:
(in millions)
Americas
Asia-Pacific
Japan
Europe
Other
Total
January 31, 2018
$
12.2 $
0.3 $
1.0 $
1.1 $
24.5 $
Translation
January 31, 2019
Translation
(0.1)
12.1
(0.1)
—
0.3
—
—
1.0
(0.1)
—
1.1
—
(0.3)
24.2
(0.1)
January 31, 2020
$
12.0 $
0.3 $
0.9 $
1.1 $
24.1 $
39.1
(0.4)
38.7
(0.3)
38.4
The Company recorded no impairment charges related to goodwill in 2019, 2018 or 2017.
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 its 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. There were no significant impairment charges related
to long-lived assets during 2019 or 2018. In 2017, the Company recorded aggregate impairment charges of $10.0
million within Selling, general and administrative expenses related to property, plant and equipment.
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Leases
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.
The Company determines its lease payments based on predetermined rent escalations (including escalations based
on consumer price indices), rent-free periods and other incentives. The Company recognizes rent expense on a
straight-line basis over the related terms of such leases, beginning from when the Company takes possession of the
leased facility. Variable rents, including contingent rent based on a percentage of sales and adjustments to consumer
price indices, are recorded in the period such amounts and adjustments are determined. Lease terms include
renewal options when exercise of such options is reasonably certain and within the control of the Company. There is
generally no readily determinable discount rate implicit in the Company's leases. Accordingly, the Company uses its
incremental borrowing rate for a term that corresponds to the applicable lease term in order to measure its lease
liabilities.
The amounts of the Company's right-of-use asset and current and non-current lease liabilities are presented
separately on the Consolidated Balance Sheet as of January 31, 2020. Substantially all of the Company's leases are
operating leases as of January 31, 2020. The Company records lease expense within Cost of sales for leases of
manufacturing facilities and within Selling, general and administrative expenses for all other leases.
TIFFANY & CO.
K-59
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 other 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 primarily consist of investments in mutual funds and are recorded within Other
assets, net, at fair value with realized and unrealized gains and losses recorded in earnings. 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 marketable securities is determined based on prevailing market prices.
Merchandise Credits and Deferred Revenue
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Merchandise credits and deferred revenue primarily represent outstanding gift cards sold to customers and
outstanding credits issued to customers for returned merchandise. All such outstanding items may be tendered for
future merchandise purchases. A gift card liability is established when the gift card is sold. 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. These liabilities are relieved when revenue is recognized for transactions in which a 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 (for example, approximately
three to five years in the U.S.), the value associated with the merchandise credits or gift cards may be subject to
remittance to the applicable jurisdiction in accordance with unclaimed property laws. The Company determines the
amount of breakage income to be recognized on gift cards and merchandise credits using historical experience to
estimate amounts that will ultimately not be redeemed. The Company recognizes such breakage income in proportion
to redemption rates of the overall population of gift cards and merchandise credits.
In 2019, the Company recognized net sales of approximately $33.0 million related to the Merchandise credits and
deferred revenue balance that existed at January 31, 2019.
The following table disaggregates the Company's net sales by major source:
Revenue Recognition
(in millions)
Net sales*:
Jewelry collections
Engagement jewelry
Designer jewelry
All other
Years Ended January 31,
2020
2019
2018
$
2,420.2 $
2,374.3 $
2,146.6
1,139.5
1,157.4
1,111.9
514.1
350.2
544.5
365.9
551.2
360.1
$
4,424.0 $
4,442.1 $
4,169.8
*Certain reclassifications within the jewelry categories have been made to the prior year amounts to conform to the
current year category presentation.
The Company's performance obligations consist primarily of transferring control of merchandise to customers. Sales
are recognized upon transfer of control, 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. Sales are
reported net of returns, sales tax and other similar taxes. The Company excludes from the measurement of the
transaction price all taxes assessed by a governmental authority and collected by the entity from a customer.
TIFFANY & CO.
K-60
Shipping and handling fees billed to customers are recognized in net sales when control of the underlying
merchandise is transferred to the customer. The related shipping and handling charges incurred by the Company
represent fulfillment activities and are included in Cost of sales.
The Company maintains a reserve for potential product returns and records (as a reduction to sales and cost of sales)
its provision for estimated product returns, which is determined based on historical experience.
As a practical expedient, the Company does not adjust the promised amount of consideration for the effects of a
significant financing component when management expects, at contract inception, that the period between the
transfer of a product to a customer and when the customer pays for that product is one year or less.
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 upon transfer of control, which occurs when
merchandise is taken in an "over-the-counter" transaction. 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 rent expense
within Selling, general and administrative expenses.
Cost of Sales
Cost of sales includes costs to internally manufacture merchandise (primarily metals, 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.
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 2019, 2018 and 2017,
these costs totaled $378.8 million, $394.1 million and $314.9 million, respectively, representing 8.6%, 8.9% and
7.6% of worldwide net sales, respectively. Media and production costs for print and digital advertising are expensed
as incurred, while catalog costs are expensed upon first distribution.
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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 units, are measured at fair value and recognized as compensation expense over the requisite service period.
Compensation expense recognized reflects an estimate of the number of awards expected to vest and incorporates an
estimate of award forfeitures based on actual experience. Compensation expense is recognized on a straight-line
basis over the requisite service period, which is generally the vesting period required to obtain full vesting.
TIFFANY & CO.
K-61
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.
Merchandise Design Activities
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 Accumulated other comprehensive loss, net of tax within
stockholders' equity. The Company also recognizes gains and losses associated with transactions that are
denominated in foreign currencies. The Company recorded net losses resulting from foreign currency transactions of
$4.6 million, $5.3 million and $5.3 million within Other expense, net in 2019, 2018 and 2017, respectively.
Income Taxes
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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.
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 results. 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 amounts, 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 Registrant, 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 millions)
Net earnings for basic and diluted EPS
Weighted-average shares for basic EPS
2020
2019
$
541.1 $
586.4 $
121.1
122.9
Incremental shares based upon the assumed exercise of stock
options and unvested restricted stock units
Weighted-average shares for diluted EPS
0.5
121.6
0.6
123.5
2018
370.1
124.5
0.6
125.1
Years Ended January 31,
TIFFANY & CO.
K-62
For the years ended January 31, 2020, 2019 and 2018, there were 1.3 million, 0.7 million and 0.6 million stock
options and restricted stock units excluded from the computations of earnings per diluted share due to their
antidilutive effect, respectively.
New Accounting Standards
In June 2016, the FASB issued ASU 2016-13 – Financial Instruments – Credit Losses: Measurement of Credit
Losses on Financial Instruments. ASU 2016-13 amends the impairment model to utilize an expected loss
methodology in place of the currently used incurred loss methodology, which will result in more timely recognition of
losses. The new standard applies to financial assets measured at amortized cost basis, including receivables that
result from revenue transactions and held-to-maturity debt securities. This ASU is effective for fiscal years, and
interim periods within those fiscal years, beginning after December 15, 2019, and early adoption was permitted for
fiscal years beginning after December 15, 2018. The Company's allowances for doubtful accounts have historically
not been significant and management does not expect the adoption of this ASU will have a significant impact on its
consolidated financial statements.
In August 2018, the FASB issued ASU 2018-15 – Intangibles – Goodwill and Other – Internal-Use Software:
Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service
Contract. ASU 2018-15 aligns the requirements for capitalizing implementation costs in such cloud computing
arrangements with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use
software. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after
December 15, 2019 and early adoption was permitted. Entities can choose to adopt the new guidance prospectively
or retrospectively. The Company does not expect that the adoption of ASU 2018-15 will have a significant impact on
its consolidated financial statements. However, the impact of adopting this ASU will ultimately depend on the
composition of the Company's cloud computing software arrangements under development at that time.
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In December 2019, the FASB issued ASU 2019-12 – Income Taxes (ASC 740): Simplifying the Accounting for
Income Taxes. This guidance simplifies the approach for intraperiod tax allocations, the methodology for calculating
income taxes in an interim period, and the recognition of deferred tax liabilities for outside basis differences. This
guidance also clarifies and simplifies other areas of ASC 740. This ASU is effective for fiscal years, and interim
periods within those fiscal years, beginning after December 15, 2020. Early adoption is permitted. Management is
currently evaluating the impact of this ASU on the consolidated financial statements.
Recently Adopted Accounting Standards
In February 2016, the FASB issued ASU 2016-02 – Leases (ASC 842), which was amended in January 2018 and
requires an entity that leases assets to recognize on the balance sheet the assets and liabilities for the rights and
obligations created by those leases. Leases are classified as either financing or operating with the applicable
classification determining the pattern of expense recognition in the statement of earnings.
The Company adopted this ASU on February 1, 2019 by applying its provisions prospectively and recognizing a
cumulative-effect adjustment to the opening balance of retained earnings as of February 1, 2019. The Company also
elected the package of practical expedients permitted under the transition guidance, which provided that an entity
need not reassess: (i) whether any expired or existing contracts are or contain leases, (ii) the lease classification for
any expired or existing leases, and (iii) initial direct costs for any existing leases. The Company also elected to not
reassess lease terms using hindsight and to combine lease and non-lease components for new leases subsequent to
February 1, 2019. Additionally, the Company used its incremental borrowing rate for a term that corresponded to
lease terms remaining as of February 1, 2019 to measure its lease liabilities as of that date.
The adoption of ASU 2016-02 resulted in the following impacts to the Company's Consolidated Balance Sheet as of
February 1, 2019:
• The establishment of a lease liability of approximately $1.2 billion and a corresponding right-of-use asset;
• The reclassification of existing balances in respect of unamortized lease incentives and lease straight-line
liabilities from Other long-term liabilities to Operating lease right-of-use assets; and
• The reclassification of $31.1 million of deferred gains on sale-leasebacks, and related deferred tax assets of
$9.5 million, to opening retained earnings.
TIFFANY & CO.
K-63
In August 2017, the FASB issued ASU 2017-12 – Derivatives and Hedging: Targeted Improvements to Accounting
for Hedging Activities, which expanded and refined hedge accounting for both financial and non-financial risk
components, aligned the recognition and presentation of the effects of hedging instruments and hedged items in the
financial statements, and included certain targeted improvements to ease the application of previous guidance
related to the assessment of hedge effectiveness. This ASU was effective for fiscal years and interim periods within
those fiscal years beginning after December 15, 2018, with early adoption permitted. The amendments in this ASU
were required to be applied on a modified retrospective basis, while presentation and disclosure requirements set
forth under this ASU are required prospectively after the date of adoption. Management adopted this ASU on
February 1, 2019. The adoption of this ASU did not have any impact on the consolidated financial statements. The
disclosures required by this ASU are included in "Note I. Hedging Instruments."
In February 2018, the FASB issued ASU 2018-02 – Income Statement – Reporting Comprehensive Income:
Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which allowed for the
reclassification from accumulated other comprehensive income ("AOCI") to retained earnings for the tax effects on
deferred tax items included within AOCI (referred to in the ASU as "stranded tax effects") resulting from the
reduction of the U.S. federal statutory income tax rate to 21% from 35% that was effected by the 2017 U.S. Tax
Cuts and Jobs Act. ASU 2018-02 was effective for fiscal years beginning after December 15, 2018, and interim
periods within those fiscal years, with early adoption permitted. Management adopted this ASU on February 1,
2019. The adoption of ASU 2018-02 resulted in a reclassification of $26.2 million from AOCI to retained
earnings, and had no impact on the Company's results of operations, financial position or cash flows.
D.
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the year for:
(in millions)
2020
2019
Interest, net of interest capitalization
$
40.8 $
40.6 $
2018
41.5
Income taxes
$
232.8 $
291.4 $
156.2
Years Ended January 31,
Supplemental noncash investing and financing activities:
(in millions)
2020
2019
Accrued capital expenditures
$
26.1 $
11.0 $
2018
20.1
January 31,
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INVENTORIES
(in millions)
Finished goods
Raw materials
Work-in-process
Inventories, net
2020
January 31,
2019
$
1,532.5 $
1,484.3
776.8
154.6
781.8
161.9
$
2,463.9 $
2,428.0
TIFFANY & CO.
K-64
F.
PROPERTY, PLANT AND EQUIPMENT
(in millions)
Land
Buildings
Leasehold and building improvements
Office equipment
Software
Furniture and fixtures
Machinery and equipment
Construction-in-progress
Accumulated depreciation and amortization
2020
$
41.7 $
122.3
1,489.9
300.1
506.0
333.1
208.2
158.0
3,159.3
(2,060.5)
January 31,
2019
41.8
122.6
1,378.1
286.0
452.2
315.0
197.8
98.7
2,892.2
(1,865.5)
Depreciation and amortization expense for the years ended January 31, 2020, 2019 and 2018 was $253.8 million,
$223.6 million and $200.8 million, respectively.
$
1,098.8 $
1,026.7
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G.
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
(in millions)
Accounts payable - trade
Accrued compensation and commissions
Other
2020
$
261.3 $
90.8
189.4
$
541.5 $
January 31,
2019
217.1
120.9
175.4
513.4
TIFFANY & CO.
K-65
H.
DEBT
(in millions)
Short-term borrowings:
Credit Facilities
Other credit facilities
Long-term debt:
Unsecured Senior Notes:
2020
January 31,
2019
$
13.8 $
134.1
$
147.9 $
13.5
99.9
113.4
250.0
250.0
300.0
91.8
891.8
(8.4)
883.4
2012 4.40% Series B Notes, due July 2042 a
$
250.0 $
2014 3.80% Senior Notes, due October 2024 b, c
2014 4.90% Senior Notes, due October 2044 b, c
2016 0.78% Senior Notes, due August 2026 b, d
Less: unamortized discounts and debt issuance costs
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250.0
300.0
91.9
891.9
(7.8)
$
884.1 $
a The agreements governing these Senior Notes require repayments of $50.0 million in aggregate every five years
beginning in July 2022.
b These agreements require lump sum repayments upon maturity.
c These Senior Notes were issued at a discount, which will be amortized until the debt maturity.
d These Senior Notes were issued at par, ¥10.0 billion.
Credit Facilities
On October 25, 2018, the Registrant, along with certain of its subsidiaries designated as borrowers thereunder,
entered into a five-year multi-bank, multi-currency committed unsecured revolving credit facility, including a letter of
credit subfacility, consisting of basic commitments in an amount up to $750.0 million (which commitments may be
increased, subject to certain conditions and limitations, at the request of the Registrant) ("Credit Facility"). The
Credit Facility replaced the Registrant's previously existing $375.0 million four-year unsecured revolving credit
facility and $375.0 million five-year unsecured revolving credit facility, which were each terminated and repaid in
connection with the Registrant's entry into the Credit Facility.
Borrowings under the Credit Facility bear interest at a rate per annum equal to, at the option of the Registrant, (1)
LIBOR (or other applicable or successor reference rate) for the relevant currency plus an applicable margin based
upon the more favorable to the Registrant of (i) a leverage financial metric of the Registrant and (ii) the Registrant's
debt rating for long-term unsecured senior, non-credit enhanced debt, or (2) an alternate base rate equal to the
highest of (i) the federal funds effective rate plus 0.50%, (ii) MUFG Bank, Ltd.'s prime rate and (iii) one-month
LIBOR plus 1.00%, plus an applicable margin based upon the more favorable to the Registrant of (x) a leverage
financial metric of the Registrant and (y) the Registrant's debt rating for long-term unsecured senior, non-credit
enhanced debt.
The Credit Facility also requires payment to the lenders of a facility fee on the amount of the lenders' commitments
under the credit facility from time to time at rates based upon the more favorable to the Registrant of (1) a leverage
financial metric of the Registrant and (2) the Registrant's debt rating for long-term unsecured senior, non-credit
enhanced debt. Voluntary prepayments of the loans and voluntary reductions of the unutilized portion of the
commitments under the Credit Facility are permissible without penalty, subject to certain conditions pertaining to
minimum notice and minimum reduction amounts.
TIFFANY & CO.
K-66
The Credit Facility is available for working capital and other corporate purposes.
The Credit Facility matures in 2023, provided that such maturity may be extended for one or two additional one-year
periods at any time with the consent of the applicable lenders, as further described in the agreement governing such
facility.
At January 31, 2020, there were $13.8 million of borrowings outstanding, $3.6 million of letters of credit issued
and $732.6 million available for borrowing under the Credit Facility. At January 31, 2019, there were $13.5 million
of borrowings outstanding, $6.1 million of letters of credit issued and $730.4 million available for borrowing under
the previously existing revolving credit facilities. The weighted-average interest rate for borrowings outstanding was
0.90% at January 31, 2020 and 1.05% at January 31, 2019.
Commercial Paper
In August 2017, the Registrant and one of its wholly owned subsidiaries established a commercial paper program
(the "Commercial Paper Program") for the issuance of commercial paper in the form of short-term promissory notes
in an aggregate principal amount not to exceed $750.0 million. Borrowings under the Commercial Paper Program
may be used for general corporate purposes. The aggregate amount of borrowings that the Company is currently
authorized to have outstanding under the Commercial Paper Program and the Registrant's Credit Facility is $750.0
million. The Registrant guarantees the obligations of its wholly owned subsidiary under the Commercial Paper
Program. Maturities of commercial paper notes may vary, but cannot exceed 397 days from the date of issuance.
Notes issued under the Commercial Paper Program rank equally with the Registrant's present and future unsecured
and unsubordinated indebtedness. As of January 31, 2020 and 2019, there were no borrowings outstanding under
the Commercial Paper Program.
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Other Credit Facilities
Tiffany-Shanghai Credit Agreement. In June 2019, the Registrant's indirect, 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 408.0 million ($59.0 million at January 31, 2020), which may be increased to the RMB
equivalent of $100.0 million, subject to certain conditions and limitations, at the request of Tiffany-Shanghai. The
Tiffany-Shanghai Credit Agreement, which matures in July 2022, was made available to refinance amounts
outstanding under Tiffany-Shanghai's previously existing RMB 990.0 million three-year multi-bank revolving credit
agreement (the "2016 Agreement"), which expired pursuant to its terms on July 11, 2019, as well as for Tiffany-
Shanghai's ongoing general working capital requirements. The participating lenders will make loans, upon Tiffany-
Shanghai's request, for periods of up to 12 months at the applicable interest rates equal to 95% of the applicable
rate as announced by the People's Bank of China (provided, that if such announced rate is below zero, the applicable
interest rate shall be deemed to be zero). In connection with the Tiffany-Shanghai Credit Agreement, in June 2019,
the Registrant entered into a Guaranty Agreement by and between the Registrant and the facility agent under the
Tiffany-Shanghai Credit Agreement (the "Guaranty"). At January 31, 2020, there was $33.0 million available to be
borrowed under the Tiffany-Shanghai Credit Agreement and $26.1 million was outstanding at a weighted-average
interest rate of 4.13%.
Other. The Company has various other revolving credit facilities, primarily in Japan and China. At January 31, 2020,
the facilities totaled $188.8 million and $108.0 million was outstanding at a weighted-average interest rate of
5.36%. At January 31, 2019, the facilities totaled $135.6 million and $73.1 million was outstanding at a weighted-
average interest rate of 3.93%.
Debt Covenants
The agreement governing the Credit Facility includes a specific financial covenant, as well as other covenants that
limit the ability of the Company to incur certain subsidiary indebtedness, incur liens and engage in mergers,
consolidations and sales of all or substantially all of its and its subsidiaries' assets, in addition to other requirements.
The agreement governing the Credit Facility also includes certain "Events of Default" (as defined in the agreement
governing the Credit Facility) customary to such borrowings, including a "Change of Control" (as defined in the
agreement governing the Credit Facility) of the Registrant, such as the proposed Merger.
TIFFANY & CO.
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The Tiffany-Shanghai Credit Agreement includes certain covenants that limit Tiffany-Shanghai's ability to incur liens
and incur certain indebtedness, and the Guaranty requires maintenance by the Registrant of a specific leverage ratio.
The Tiffany Shanghai Credit Agreement also includes certain other requirements and "Events of Default" (as defined
in the Tiffany-Shanghai Credit Agreement) customary to such borrowings, including the Registrant's shares ceasing to
be listed on New York Stock Exchange for 14 consecutive trading days, such as following the proposed Merger.
The indenture governing the 2014 3.80% Senior Notes and 2014 4.90% Senior Notes, as amended and
supplemented in respect of each such series of Notes (the "Indenture"), contains covenants that, among other things,
limit the ability of the Registrant and its subsidiaries under certain circumstances to create liens and impose
conditions on the Registrant'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 2012 4.40% Series B Senior Notes and the Yen Notes require maintenance of a
specific financial covenant and limit certain changes to indebtedness of the Registrant and its subsidiaries and the
general nature of the business, in addition to other requirements customary to such borrowings.
At January 31, 2020, 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 as set forth in the agreements
governing the Company's applicable debt instruments, such agreements may be terminated or payment of the
applicable debt may be accelerated. Further, each of the Credit Facility, the Tiffany-Shanghai Credit Agreement, the
agreements governing the 2012 4.40% Series B Senior Notes and the Yen 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.
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Once consummated, the proposed Merger may result in certain of the Company's outstanding indebtedness
becoming due, and the Company will need to comply with certain covenants of the agreements governing its
outstanding indebtedness relating to the proposed Merger. Under the terms of the Merger Agreement, if reasonably
requested by Parent, the Company must use its commercially reasonable efforts to, among other things, take actions
required to facilitate repayment of the Company's outstanding indebtedness.
Aggregate maturities of long-term debt as of January 31, 2020 are as follows:
Long-Term Debt Maturities
Years Ending January 31,
2021
2022
2023
2024
2025
Thereafter
$
$
Amount a
(in millions)
—
—
50.0
—
250.0
591.9
891.9
a
Amounts exclude any unamortized discount or premium.
Letters of Credit
The Company has available letters of credit and financial guarantees of $73.7 million, of which $48.5 million was
outstanding at January 31, 2020. Of those available letters of credit and financial guarantees, $46.5 million expires
within one year. These amounts do not include letters of credit issued under the Credit Facility.
TIFFANY & CO.
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I.
HEDGING INSTRUMENTS
Background Information
The Company uses derivative financial instruments, including interest rate swaps, cross-currency swaps, forward
contracts and net-zero-cost collar arrangements (combination of call and put option contracts) to mitigate a portion
of its exposures to changes in interest rates, foreign currency exchange rates and precious metal prices.
Derivative Instruments Designated as Hedging Instruments. If a derivative instrument meets certain hedge
accounting criteria, it is recorded on the Consolidated Balance Sheet at its fair value, as either an asset or a liability,
with an offset to current or other comprehensive earnings, depending on whether the hedge 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, 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.
• 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 changes in fair value of derivatives is
reported as other comprehensive income ("OCI") and is recognized in current earnings in the period or
periods during which the hedged transaction affects 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.
Derivative Instruments Not Designated as Hedging Instruments. Derivative instruments which do not meet the
criteria to be designated as a hedge are recorded on the Consolidated Balance Sheet at their fair values, as either
assets or liabilities, with an offset to current earnings. The gains or losses on undesignated foreign exchange forward
contracts substantially offset foreign exchange losses or gains on the underlying liabilities or transactions being
hedged.
The Company does not use derivative financial instruments for trading or speculative purposes.
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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 $250.0 million of
debt which was incurred in July 2012. The Company accounted for the forward-starting interest rate swaps as cash
flow hedges. The Company settled the interest rate swaps in 2012 and recorded a loss within accumulated other
comprehensive loss. As of January 31, 2020, $16.1 million remains recorded as a loss in accumulated other
comprehensive loss, which is being amortized over the term of the 2042 Notes to which the interest rate swaps
related.
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. The Company accounted for the forward-starting interest rate swaps as cash flow hedges. The
Company settled the interest rate swaps in 2014 and recorded a loss within accumulated other comprehensive loss.
As of January 31, 2020, $3.3 million remains recorded as a loss in 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.
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Cross-currency Swaps – In 2016, 2017 and 2019, the Company entered into cross-currency swaps to hedge the
foreign currency exchange risk associated with Japanese yen-denominated and Euro-denominated intercompany
loans. These cross-currency swaps are designated and accounted for as cash flow hedges. As of January 31, 2020,
the notional amounts of cross-currency swaps accounted for as cash flow hedges and the respective maturity dates
were as follows:
Cross-Currency Swap
Effective Date
July 2016
March 2017
May 2017
August 2019
Maturity Date
October 2024
April 2027
April 2027
August 2026
Notional Amount
(in millions)
(in millions)
¥ 10,620.0 $
100.0
¥ 11,000.0 $
¥
€
5,634.5 $
21.1 $
96.1
50.0
23.6
Foreign Exchange Forward Contracts – The Company uses foreign exchange forward 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
Company assesses hedge effectiveness based on the total changes in the foreign exchange forward contracts' cash
flows. These foreign exchange forward 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, 2020, the notional amounts of foreign exchange forward contracts were as follows:
(in millions)
Notional Amount
USD Equivalent
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Derivatives designated as hedging instruments:
Japanese yen
British pound
Derivatives not designated as hedging instruments:
U.S. dollar
Euro
Australian dollar
Czech koruna
Japanese yen
New Zealand dollar
Singapore dollar
Chinese renminbi
Canadian dollar
Danish kroner
Korean won
¥
£
$
€
AU$
CZK
¥
NZ$
S$
CNY
CAD
DKK
KRW
19,917.3
$
13.2
130.0
$
6.8
23.2
142.7
2,320.5
10.2
20.9
361.2
15.9
52.6
29,019.0
187.4
17.1
130.0
7.6
15.7
6.1
21.2
6.8
15.2
51.6
12.2
7.8
24.8
The maximum term of the Company's outstanding foreign exchange forward contracts as of January 31, 2020 is 12
months.
Precious Metal Collars and Forward Contracts – The Company periodically hedges a portion of its forecasted
purchases of precious metals for use in its internal manufacturing operations in order to manage the effect of
volatility in precious metal prices. The Company may use either a combination of call and put option contracts in
net-zero-cost collar arrangements ("precious metal collars") or forward contracts. For precious metal collars, if the
price of the precious metal at the time of the expiration of the precious metal collar is within the call and put price,
the precious metal collar expires at no cost to the Company. The Company accounts for its precious metal collars
and forward contracts as cash flow hedges. The Company assesses hedge effectiveness based on the total changes in
the precious metal collars and forward contracts' cash flows. As of January 31, 2020, the maximum term over which
TIFFANY & CO.
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the Company is hedging its exposure to the variability of future cash flows for all forecasted precious metals
transactions is 18 months. As of January 31, 2020, there were precious metal derivative instruments outstanding for
approximately 29,000 ounces of platinum, 557,000 ounces of silver and 84,000 ounces of gold.
Information on the location and amounts of derivative gains and losses in the consolidated financial statements is as
follows:
(in millions)
Reported amounts of financial statement line
items in which effects of cash flow hedges
are recorded
Derivatives in Cash Flow Hedging
Relationships:
Foreign exchange forward contracts
Pre-tax gain recognized in OCI
Pre-tax gain reclassified from accumulated
OCI into earnings
Precious metal collars
Pre-tax gain reclassified from accumulated
OCI into earnings
Precious metal forward contracts
Pre-tax gain recognized in OCI
Pre-tax loss reclassified from accumulated
OCI into earnings
Cross-currency swaps
Pre-tax gain recognized in OCI
Pre-tax gain reclassified from accumulated
OCI into earnings
Forward-starting interest rate swaps
Pre-tax loss reclassified from accumulated
OCI into earnings
Year Ended January 31, 2020
Cost of sales
Interest
expense and
financing costs
Other expense,
net
Other
comprehensive
loss, net of tax
$
1,662.1 $
38.5 $
3.8 $
(42.4)
—
(4.1)
(0.3)
—
2.8
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(6.1)
(0.1)
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5.4
4.1
0.3
18.1
(2.8)
27.0
6.2
1.3
—
(1.3)
TIFFANY & CO.
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(in millions)
Reported amounts of financial statement line
items in which effects of cash flow hedges
are recorded
Derivatives in Cash Flow Hedging
Relationships:
Foreign exchange forward contracts
Pre-tax gain recognized in OCI
Pre-tax gain reclassified from accumulated
OCI into earnings
Precious metal collars
Pre-tax gain reclassified from accumulated
OCI into earnings
Precious metal forward contracts
Pre-tax loss recognized in OCI
Pre-tax loss reclassified from accumulated
OCI into earnings
Cross-currency swaps
Pre-tax gain recognized in OCI
Pre-tax gain reclassified from accumulated
OCI into earnings
Forward-starting interest rate swaps
Pre-tax loss reclassified from accumulated
OCI into earnings
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Year Ended January 31, 2019
Cost of sales
Interest
expense and
financing costs
Other expense,
net
Other
comprehensive
loss, net of tax
$
1,631.1 $
39.7 $
7.1 $
(68.6)
—
(2.6)
(0.6)
—
1.0
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(0.4)
5.8
2.6
0.6
(7.2)
(1.0)
0.3
0.4
1.4
—
(1.4)
The pre-tax gains or losses on derivatives not designated as hedging instruments were not significant for the years
ended January 31, 2020 and 2019 and were included in Other expense, net. The Company expects approximately
$6.7 million of net pre-tax derivative gains included in accumulated other comprehensive loss at January 31, 2020
will be reclassified into earnings within the next 12 months. The actual amount reclassified 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 J. 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 (an investment grade credit rating 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.
TIFFANY & CO.
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J.
FAIR VALUE OF FINANCIAL INSTRUMENTS
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, which are considered to be most reliable.
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, which require the most judgment.
The Company's derivative instruments are considered Level 2 instruments for the purpose of determining fair value.
The Company's foreign exchange forward contracts, as well as its put option contracts and cross-currency swaps, are
primarily valued using the appropriate foreign exchange spot rates. The Company's precious metal forward contracts
and collars are primarily valued using the relevant precious metal spot rate. For further information on the Company's
hedging instruments and program, see "Note I. Hedging Instruments."
Financial assets and liabilities carried at fair value at January 31, 2020 are classified in the table below in one of
the three categories described above:
(in millions)
Financial assets
Time deposits a
Marketable securities b
Estimated Fair Value
Level 1
Level 2
Level 3
Total Fair
Value
$
22.7 $
39.3
— $
—
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— $
—
—
—
—
—
22.7
39.3
13.0
2.7
2.9
2.1
82.7
Derivatives designated as hedging instruments:
Precious metal forward contracts c
Foreign exchange forward contracts c
Cross-currency swaps c
Derivatives not designated as hedging instruments:
Foreign exchange forward contracts c
—
—
—
—
13.0
2.7
2.9
2.1
Total financial assets
$
62.0 $
20.7 $
— $
(in millions)
Financial liabilities
Derivatives designated as hedging instruments:
Estimated Fair Value
Level 1
Level 2
Level 3
Total Fair
Value
Precious metal forward contracts d
$
— $
0.2 $
— $
Foreign exchange forward contracts d
Cross-currency swaps d
Derivatives not designated as hedging instruments:
Foreign exchange forward contracts d
—
—
—
0.5
1.9
2.9
—
—
—
Total financial liabilities
$
— $
5.5 $
— $
0.2
0.5
1.9
2.9
5.5
TIFFANY & CO.
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Financial assets and liabilities carried at fair value at January 31, 2019 are classified in the table below in one of
the three categories described above:
(in millions)
Financial assets
Time deposits a
Marketable securities b
Estimated Fair Value
Level 1
Level 2
Level 3
Total Fair
Value
$
62.7 $
36.3
— $
—
— $
— $
62.7
36.3
Derivatives designated as hedging instruments:
Precious metal forward contracts c
Foreign exchange forward contracts c
Derivatives not designated as hedging instruments:
Foreign exchange forward contracts c
—
—
—
5.2
1.8
0.9
—
—
—
5.2
1.8
0.9
Total financial assets
$
99.0 $
7.9 $
— $
106.9
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(in millions)
Financial liabilities
Derivatives designated as hedging instruments:
Estimated Fair Value
Level 1
Level 2
Level 3
Total Fair
Value
Precious metal forward contracts d
$
— $
2.7 $
— $
Foreign exchange forward contracts d
Cross-currency swaps d
Derivatives not designated as hedging instruments:
Foreign exchange forward contracts d
—
—
—
2.1
19.9
2.7
—
—
—
Total financial liabilities
$
— $
27.4 $
— $
2.7
2.1
19.9
2.7
27.4
a
b
c
d
Included within Short-term investments.
Included within Other assets, net.
Included within Prepaid expenses and other current assets or Other assets, net based on the maturity of the
contract.
Included within Accounts payable and accrued liabilities or Other long-term liabilities based on the maturity of
the contract.
The fair values of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities
approximate their carrying values due to the short-term maturities of these assets and liabilities and as such are
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 approximately $1.0 billion at January 31, 2020 and
2019 and the corresponding fair value was approximately $1.2 billion at January 31, 2020 and $1.0 billion at
January 31, 2019.
TIFFANY & CO.
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K.
LEASES
Amounts recognized in the Consolidated Statement of Earnings were as follows:
(in millions)
Fixed operating lease expense
Variable operating lease expense
Sublease income
Net lease expense
Year Ended January 31, 2020
$
$
313.8
156.4
(5.3)
464.9
The weighted average remaining lease term was seven years and the weighted average discount rate was 3.8% for all
of the Company's operating leases as of January 31, 2020.
The following table provides supplemental cash flow information related to the Company's operating leases:
(in millions)
Year Ended January 31, 2020
Cash outflows from operating activities attributable to operating leases
$
Right-of-use assets obtained in exchange for operating leases liabilities
314.1
312.4
The following table reconciles the undiscounted cash flows expected to be paid in each of the next five fiscal years
and thereafter to the operating lease liability recorded on the Consolidated Balance Sheet for operating leases
existing as of January 31, 2020.
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Years ending January 31,
2021
2022
2023
2024
2025
Thereafter
Total minimum lease payments
Less: amount of total minimum lease payments representing interest
Present value of future total minimum lease payments
Less: current portion of operating lease liabilities
Long-term portion of operating lease liabilities
Minimum Lease Payments as
of January 31, 2020
(in millions)
$
$
245.1
255.2
211.1
178.9
144.8
368.5
1,403.6
(192.4)
1,211.2
(202.8)
1,008.4
As of January 31, 2020, there were nine executed agreements in respect of store relocations, new stores, office
space and other facilities without commencement dates, which had total commitments of $88.7 million.
TIFFANY & CO.
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As previously disclosed in "Note J. Commitments and Contingencies" to the consolidated financial statements
included in the Company's Annual Report on Form 10-K for the year ended January 31, 2019, under previous lease
accounting, future minimum lease payments for operating leases having an initial or remaining non-cancelable lease
term in excess of one year were as follows:
Years ending January 31,
2020
2021
2022
2023
2024
Thereafter
Minimum Lease Payments as
of January 31, 2019
(in millions)
$
292.8
239.2
212.8
177.4
146.8
438.0
Total minimum lease payments
$
1,507.0
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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 $144.5 million, which were amortized in SG&A expenses over periods ranging from 15 to 20 years. As of
January 31, 2019, $31.1 million of these deferred gains remained on the Company's Consolidated Balance Sheet
and were reclassified to opening retained earnings in the first quarter of 2019 in accordance with ASU 2016-02
(see "Note C. Summary of Significant Accounting Policies – New Accounting Standards" for additional information).
Rent expense for the Company's operating leases consisted of the following:
(in millions)
Minimum rent for retail locations
Contingent rent based on sales
Office, distribution and manufacturing facilities and equipment
Gains on sale-leaseback arrangements
Sublease income
Years Ended January 31,
2019
$
225.1 $
167.9
43.8
(8.4)
(5.2)
2018
206.6
151.6
44.8
(8.2)
(4.5)
$
423.2 $
390.3
L.
COMMITMENTS AND CONTINGENCIES
Diamond Sourcing Activities
The Company has agreements with various diamond producers to purchase a minimum volume of rough diamonds at
prevailing fair market prices. Under those agreements, management anticipates that it will purchase approximately
$30.0 million of rough diamonds in 2020. The Company also regularly purchases rough and polished diamonds from
other suppliers, although it has no contractual obligations to do so. Purchases beyond 2020 under the
aforementioned agreements cannot be reasonably estimated.
Contractual Cash Obligations and Contingent Funding Commitments
At January 31, 2020, the Company's contractual cash obligations and contingent funding commitments were for
inventory purchases of $229.8 million (which includes the $30.0 million obligation discussed in Diamond Sourcing
Activities above), as well as for other contractual obligations of $152.1 million (primarily for construction-in-
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progress, technology licensing and service contracts, advertising and media agreements and fixed royalty
commitments).
Litigation
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 such as
those 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.
Gain Contingency. On February 14, 2013, Tiffany and Company and Tiffany (NJ) LLC (collectively, the "Tiffany
plaintiffs") initiated a lawsuit against Costco Wholesale Corp. ("Costco") for trademark infringement, false designation
of origin and unfair competition, trademark dilution and trademark counterfeiting (the "Costco Litigation"). The
Tiffany plaintiffs sought injunctive relief, monetary recovery and statutory damages on account of Costco's use of
"Tiffany" on signs in the jewelry cases at Costco stores used to describe certain diamond engagement rings that were
not manufactured by Tiffany. Costco filed a counterclaim arguing that the TIFFANY trademark was a generic term for
multi-pronged ring settings and seeking to have the trademark invalidated, modified or partially canceled in that
respect. On September 8, 2015, the U.S. District Court for the Southern District of New York (the "Court") granted
the Tiffany plaintiffs' motion for summary judgment of liability in its entirety, dismissing Costco's genericism
counterclaim and finding that Costco was liable for trademark infringement, trademark counterfeiting and unfair
competition under New York law in its use of "Tiffany" on the above-referenced signs. On September 29, 2016, a
civil jury rendered its verdict, finding that Costco's profits on the sale of the infringing rings should be awarded at
$5.5 million, and further finding that an award of punitive damages was warranted. On October 5, 2016, the jury
awarded $8.25 million in punitive damages. The aggregate award of $13.75 million was not final, as it was subject
to post-verdict motion practice and ultimately to adjustment by the Court. On August 14, 2017, the Court issued its
ruling, finding that the Tiffany plaintiffs are entitled to recover (i) $11.1 million in respect of Costco's profits on the
sale of the infringing rings (which amount is three times the amount of such profits, as determined by the Court); (ii)
prejudgment interest on such amount (calculated at the applicable statutory rate) from February 15, 2013 through
August 14, 2017; (iii) an additional $8.25 million in punitive damages; and (iv) Tiffany's reasonable attorneys' fees,
and, on August 24, 2017, the Court entered judgment in the amount of $21.0 million in favor of the Tiffany
plaintiffs (reflecting items (i) through (iii) above). On February 7, 2019, the Court awarded the Tiffany plaintiffs $5.9
million in respect of the aforementioned attorneys' fees and costs, bringing the total judgment to $26.9 million. The
Court has denied a motion made by Costco for a new trial; however, Costco has also filed an appeal from the
judgment before the Second Circuit Court of Appeals. A three-judge panel presided over an appellate hearing on
January 23, 2020, and that panel's decision is pending. As the Tiffany plaintiffs may not enforce the Court's
judgment during the appeals process, the Company has not recorded any amount in its consolidated financial
statements related to this gain contingency as of January 31, 2020. The Company expects that this matter will not
ultimately be resolved until, at the earliest, a future date during the Company's fiscal year ending January 31, 2021.
Environmental Matter
In 2005, the U.S. 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 emanating from 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 and may also enter into settlement agreements pursuant to
an allocation process.
The Company, which operated a silverware manufacturing facility near a tributary of the River from approximately
1897 to 1985, is one of more than 300 parties (the "Potentially Responsible Parties") designated in litigation as
potentially responsible parties with respect to the River. The EPA issued general notice letters to 125 of these
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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, most of 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 complete (except for
continued monitoring), the Remedial Investigation ("RI") portion of the RI/FS was submitted to the EPA on February
19, 2015, and the Feasibility Study ("FS") portion of the RI/FS was submitted to the EPA on April 30, 2015. The
Company nonetheless remained in the CPG until October 24, 2017. 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.
The FS presented and evaluated three options for remediating the lower 17 miles of the River, including the
approach recommended by the EPA in its Focused Feasibility Study discussed below, as well as a fourth option of
taking no action, and recommended an approach for a targeted remediation of the entire 17-mile stretch of the
River. The estimated cost of the approach recommended by the CPG in the FS is approximately $483.0 million. The
RI and FS are being reviewed by the EPA and other governmental agencies and stakeholders. Ultimately, the
Company expects that the EPA will identify and negotiate with any or all of the potentially responsible parties
regarding any remediation action that may be necessary, and issue a Record of Decision with a proposed approach to
remediating the entire lower 17-mile stretch of the River.
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Separately, on April 11, 2014, the EPA issued a proposed plan for remediating the lower eight miles of the River,
which is supported by a Focused Feasibility Study (the "FFS"). The FFS evaluated three remediation options, as well
as a fourth option of taking no action. Following a public review and comment period and the EPA's review of
comments received, the EPA issued a Record of Decision on March 4, 2016 that set forth a remediation plan for the
lower eight miles of the River (the "RoD Remediation"). The RoD Remediation is estimated by the EPA to cost $1.38
billion. The Record of Decision did not identify any party or parties as being responsible for the design of the
remediation or for the remediation itself. The EPA did note that it estimates the design of the necessary remediation
activities will take three to four years, with the remediation to follow, which is estimated to take an additional six
years to complete.
On March 31, 2016, the EPA issued a letter to approximately 100 companies (including the Company) (collectively,
the "notified companies") notifying them of potential liability for the RoD Remediation and of the EPA's planned
approach to addressing the cost of the RoD Remediation, which included the possibility of a de-minimis cash-out
settlement (the "settlement option") for certain parties. In April of 2016, the Company notified the EPA of its interest
in pursuing the settlement option, and accordingly recorded an immaterial liability representing its best estimate of
its minimum liability for the RoD Remediation, which was based on the amount of a potential de-minimis settlement.
On March 30, 2017, the EPA issued offers related to the settlement option to 20 parties; while the Company was not
one of the parties receiving such an offer, the EPA indicated at that time that the settlement option might be made
available to additional parties beyond those notified on March 30, 2017. On October 24, 2019, the EPA informed
certain of the notified parties (including the Company) that the early settlement option would not be made available
to them at that time.
In the absence of a viable settlement option with the EPA, the Company is unable to determine its participation in
the overall RoD Remediation, if any, relative to the other potentially responsible parties, or the allocation of the
estimated cost thereof among the potentially responsible parties, until such time as the EPA reaches an agreement
with any potentially responsible party or parties to fund the RoD Remediation (or pursues legal or administrative
action to require any potentially responsible party or parties to perform, or pay for, the RoD Remediation). With
respect to the RI/FS (which is distinct from the RoD Remediation), until a Record of Decision is issued with respect
to the RI/FS, neither the ultimate remedial approach for the remaining upper nine miles of the relevant 17-mile
stretch of the River and its cost, nor the Company's participation, if any, relative to the other potentially responsible
parties in this approach and cost, can be determined.
In October 2016, the EPA announced that it entered into a legal agreement with Occidental Chemical Corporation
("OCC"), pursuant to which OCC agreed to spend $165.0 million to perform the engineering and design work required
in advance of the clean-up contemplated by the RoD Remediation. OCC has waived any rights to collect contribution
from the Company (the "Waiver") for certain costs, including those associated with such engineering and design work,
incurred by OCC through July 14, 2016. However, on June 29, 2018, OCC filed a lawsuit in the United States
District Court for the District of New Jersey against Tiffany and Company and 119 other companies (the "defendant
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companies") seeking to have the defendant companies reimburse OCC for certain response costs incurred by OCC in
connection with its and its predecessors' remediation work relating to the River, other than those costs subject to the
Waiver. OCC is also seeking a declaratory judgment to hold the defendant companies liable for their alleged shares of
future response costs, including costs related to the RoD Remediation. The suit does not quantify damages sought,
and the Company is unable to determine at this time whether, or to what extent, the OCC lawsuit will impact the cost
allocation described in the immediately preceding paragraph or will otherwise result in any liabilities for the
Company.
Given the uncertainties described above, the Company's liability, if any, beyond that already recorded for its
obligation under the 2007 AOC and the Mile 10.9 AOC, cannot be determined at this time. However, the Company
does not expect that its ultimate liability related to the relevant 17-mile stretch of the River will be material to its
financial position, in light of the number of companies that have previously been identified as Potentially
Responsible Parties (i.e., the more than 300 parties that were initially designated in litigation as potentially
responsible parties), which includes, but goes well beyond those approximately 70 CPG member companies that
participated in the 2007 AOC and the Mile 10.9 AOC, and the Company's relative participation in the costs related
to the 2007 AOC and Mile 10.9 AOC. It is nonetheless possible that any resulting liability when the uncertainties
discussed above are resolved could be material to the Company's results of operations or cash flows in the period in
which such uncertainties are resolved.
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Other
In the normal course of business, the Company entrusts precious scrap metals generated through its internal
manufacturing operations to metal refiners. In November 2018, one such refiner filed for relief under chapter 11 of
the U.S. Bankruptcy Code. As a result, the Company recognized a charge of $8.5 million during the three months
ended October 31, 2018, which represented the carrying value of such precious scrap metals entrusted to the
refiner, net of expected insurance recoveries.
During 2018, the Company received an offer of AUD $48.0 million as compensation for the previous acquisition of
the premises containing one of its leased retail stores and an administrative office in Sydney, Australia under
compulsory acquisition laws in Australia. The Company did not accept the offer of compensation and has filed an
appeal of the compensation amount with the Land and Environment Court in Australia. In accordance with local law,
the Company received an advance payment of 90% ($31.1 million, based on foreign currency exchange rates on the
date of receipt) of the offered compensation during the fourth quarter of 2018. The appeal process is inherently
uncertain and the Land and Environment Court will make an independent assessment of the amount of
compensation in this matter, which may require the Company to repay all or a portion of the advance payment.
Therefore, the Company cannot currently determine an amount, or any minimum amount, it ultimately expects to
realize in connection with this matter. Accordingly, the Company did not recognize any gain in the accompanying
Consolidated Statement of Earnings for the year ended January 31, 2020 or 2019. Instead, the Company recognized
the advance payment within Cash and cash equivalents and as a liability within Accounts payable and accrued
liabilities as of January 31, 2019. The Company classified $19.2 million of the advance payment within operating
cash flows and $11.9 million within investing cash flows on the Consolidated Statement of Cash Flows for the year
ended January 31, 2019, with such classification determined by the nature of the underlying components of the
cash receipt.
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M.
STOCKHOLDERS' EQUITY
Accumulated Other Comprehensive Loss
(in millions)
Accumulated other comprehensive loss, net of tax:
Foreign currency translation adjustments
Deferred hedging gain (loss)
Net unrealized loss on benefit plans
2020
(130.4) $
5.4
(148.2)
(273.2) $
January 31,
2019
(108.2)
(24.5)
(72.1)
(204.8)
$
$
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Additions to and reclassifications out of accumulated other comprehensive earnings (loss) were as follows:
Years Ended January 31,
(in millions)
2020
2019
Foreign currency translation adjustments
$
(21.3) $
(62.9) $
Income tax (expense) benefit
Foreign currency translation adjustments, net of tax
Unrealized gain on marketable securities
Reclassification for gain included in net earnings
Income tax benefit
Unrealized loss on marketable securities, net of tax
Unrealized gain (loss) on hedging instruments
Reclassification adjustment for (gain) loss included in
net earnings a
Income tax (expense) benefit
Unrealized gain (loss) on hedging instruments, net of tax
Net actuarial (loss) gain
Amortization of net loss included in net earnings b
Amortization of prior service credit included in net earnings b
Income tax benefit (expense)
Net unrealized (loss) gain on benefit plans, net of tax
(1.1)
(22.4)
2.7
(60.2)
—
—
—
—
50.5
(6.5)
(9.3)
34.7
(82.0)
11.2
(0.5)
16.6
(54.7)
—
—
—
—
(1.1)
(1.2)
0.7
(1.6)
(24.2)
15.1
(0.6)
2.9
(6.8)
Total other comprehensive (loss) earnings, net of tax
$
(42.4) $
(68.6) $
2018
97.9
(2.2)
95.7
0.2
(3.5)
0.7
(2.6)
(21.0)
13.0
1.2
(6.8)
30.6
13.3
(0.5)
(11.5)
31.9
118.2
a These (gains) losses are reclassified into Interest expense and financing costs and Cost of sales (see "Note I.
Hedging Instruments" for additional details).
b These losses (gains) are included in the computation of net periodic benefit cost (see "Note O. Employee Benefit
Plans" for additional details) and are reclassified into Other expense, net.
Stock Repurchase Program
In May 2018, the Registrant's Board of Directors approved a new share repurchase program (the "2018 Program").
The 2018 Program, which became effective June 1, 2018 and expires on January 31, 2022, authorizes the
Company to repurchase up to $1.0 billion of its Common Stock through open market transactions, including
through Rule 10b5-1 plans and one or more accelerated share repurchase ("ASR") or other structured repurchase
transactions, and/or privately negotiated transactions. The 2018 Program replaced the Company's previous share
repurchase program approved in January 2016, under which the Company was authorized to repurchase up to
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$500.0 million of its Common Stock. As of January 31, 2020, $471.6 million remained available under the 2018
Program; however, pursuant to the terms of the Merger Agreement, and subject to certain limited exceptions, the
Company may not repurchase its Common Stock other than in connection with the forfeiture provisions of Company
equity awards or the cashless exercise or tax withholding provisions of such Company equity awards, in each case,
granted under the Company's stock-based compensation plans.
During 2018, the Company entered into ASR agreements with two third-party financial institutions to repurchase an
aggregate of $250.0 million of its Common Stock. The ASR agreements were entered into under the 2018 Program.
Pursuant to the ASR agreements, the Company made an aggregate payment of $250.0 million from available cash
on hand in exchange for an initial delivery of 1,529,286 shares of its Common Stock. Final settlement of the ASR
agreements was completed in July 2018, pursuant to which the Company received an additional 353,112 shares of
its Common Stock. In total, 1,882,398 shares of the Company's Common Stock were repurchased under these
ASR agreements at an average cost per share of $132.81 over the term of the agreements.
The Company's share repurchase activity was as follows:
(in millions, except per share amounts)
Cost of repurchases
Shares repurchased and retired
Average cost per share
Years Ended January 31,
2020
2019
163.4 $
421.4 $
1.8
3.5
2018
99.2
1.0
91.15 $
121.28 $
94.86
$
$
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Cash Dividends
The Company's Board of Directors declared quarterly dividends which, on an annual basis, totaled $2.29, $2.15
and $1.95 per share of Common Stock in 2019, 2018 and 2017, respectively.
On February 20, 2020, the Company's Board of Directors declared a quarterly dividend of $0.58 per share of
Common Stock. This dividend will be paid on April 10, 2020 to stockholders of record on March 20, 2020.
Cumulative Effect Adjustment From Adoption of New Accounting Standards
The amounts presented within this line item on the Consolidated Statements of Stockholders' Equity represent the
effects of the Company's adoption, on a modified retrospective basis, of ASU 2016-02 - Leases and ASU 2018-02
- Income Statement - Reporting Comprehensive Income: Reclassification of Certain Tax Effects from Accumulated
Other Comprehensive Income (each as discussed in "Note C. Summary of Significant Accounting Policies") for the
year ended January 31, 2020, and ASU 2014-09 - Revenue from Contracts with Customers and ASU 2016-01 -
Recognition and Measurement of Financial Assets and Financial Liabilities for the year ended January 31, 2019.
N.
STOCK COMPENSATION PLANS
The Company has two stock compensation plans under which awards may be made: the Employee Incentive Plan
and the Directors Equity Compensation Plan, both of which were approved by the Company's stockholders. No award
may be made under the Employee Incentive Plan after May 22, 2024 or under the Directors Equity Compensation
Plan after May 25, 2027.
Under the Employee Incentive Plan, the maximum number of common shares authorized for issuance is 8.7 million.
Awards may be made to employees of the Company 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 and RSUs typically vest in increments
of 25% per year over four years. PSUs vest at the end of a three-year period. PSU grant terms provide that vesting is
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contingent on the Company's performance against 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
are in shares of Company stock at vesting (aside from fractional dividend equivalents, which are settled in cash).
Compensation expense is recognized using the fair market value of the award 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 established objectives. Award holders are not entitled to receive
dividends or dividend equivalents on PSUs or RSUs granted prior to January 2017 or on unvested stock options.
PSUs and RSUs granted in or after January 2017 accrue dividend equivalents that may only be paid or delivered
upon vesting of the underlying stock units.
Under the Directors Equity Compensation Plan, the maximum number of shares of Common Stock authorized for
issuance is 1.0 million (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 $750,000 of total compensation (including without
limitation, non-equity compensation and the grant-date fair value of options or stock awards, or any combination of
options and stock awards) that may be awarded to any one participant in any single fiscal year of the Company in
connection with his or her service as a member of the Board of Directors; provided, however, that this limitation shall
not apply to a non-executive chairperson of the Board of Directors. 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. Director options vest immediately. Director RSUs vest at the end of 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 expected term of the option
is based on the U.S. Treasury yield curve in effect at the grant date.
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Dividend yield
Expected volatility
Risk-free interest rate
Expected term in years
Years Ended January 31,
2020
2.2%
24.6%
2.1%
4
2019
2.2%
24.2%
2.5%
4
2018
1.8%
22.0%
2.2%
5
A summary of the Company's stock option activity is presented below:
Number of
Shares
(in millions)
Weighted-
Average
Exercise
Price
Weighted-
Average
Remaining
Contractual
Term in Years
Aggregate
Intrinsic
Value
(in millions)
Outstanding at January 31, 2019
2.4 $
89.84
8.33 $
11.3
Granted
Exercised
Forfeited/canceled
Outstanding at January 31, 2020
Exercisable at January 31, 2020
0.1
(1.3)
—
94.68
88.40
97.13
1.2 $
91.53
0.4 $
88.09
7.64 $
6.27 $
52.8
18.4
The weighted-average grant-date fair value of options granted for the years ended January 31, 2020, 2019 and
2018 was $16.57, $16.97 and $18.33, respectively. The total intrinsic value (market value on date of exercise less
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grant price) of options exercised during the years ended January 31, 2020, 2019 and 2018 was $52.8 million,
$16.3 million and $31.2 million, respectively.
A summary of the Company's RSU activity is presented below:
Non-vested at January 31, 2019
Granted
Vested
Forfeited
Number of Shares
(in millions)
Weighted-Average
Grant-Date Fair Value
0.6 $
88.49
0.5
(0.3)
(0.1)
117.12
86.84
94.86
Non-vested at January 31, 2020
0.7 $
108.28
A summary of the Company's PSU activity is presented below:
Non-vested at January 31, 2019
Granted
Vested
Forfeited/canceled
Non-vested at January 31, 2020
Number of Shares
(in millions)
Weighted-Average
Grant-Date Fair Value
0.5 $
85.30
0.1
(0.1)
—
134.12
63.05
57.08
0.5 $
102.46
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The weighted-average grant-date fair value of RSUs granted for the years ended January 31, 2019 and 2018 was
$103.40 and $91.96, respectively. The weighted-average grant-date fair value of PSUs granted for the years ended
January 31, 2019 and 2018 was $85.26 and $108.99, respectively. The total fair value of RSUs vested during the
years ended January 31, 2020, 2019 and 2018 was $28.1 million, $24.3 million and $22.2 million, respectively.
The total fair value of PSUs vested during the years ended January 31, 2020, 2019 and 2018 was $9.8 million,
$2.7 million and $3.4 million, respectively.
As of January 31, 2020, there was $94.7 million of total unrecognized compensation expense related to non-vested
share-based compensation arrangements granted under the Employee Incentive Plan and Directors Equity
Compensation Plan. The expense is expected to be recognized over a weighted-average period of 3.0 years.
Total compensation cost for stock-based compensation awards recognized in income and the related income tax
benefit was $33.2 million and $6.5 million for the year ended January 31, 2020, $34.1 million and $6.8 million
for the year ended January 31, 2019 and $28.0 million and $8.5 million for the year ended January 31, 2018.
Total stock-based compensation cost capitalized in inventory was not significant.
O.
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").
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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. The normal retirement age under
the Qualified Plan is age 65; however, participants who retire with at least 10 years of service may elect to receive
reduced retirement benefits starting at age 55. 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
2018 and none is required in 2019 to meet the minimum funding requirements of the Employee Retirement Income
Security Act. However, the Company periodically evaluates whether to make discretionary cash contributions to the
Qualified Plan and made voluntary cash contributions of $30.0 million in 2019, $11.8 million in 2018 and $15.0
million in 2017. The Company does not currently expect to make any contributions to the Qualified Plan in 2020.
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 are 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 continue to be eligible for and accrue benefits under
the Qualified Plan.
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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. Under the Excess Plan, participants who retire
with at least 10 years of service may elect to receive reduced retirement benefits starting at age 55.
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 administered by an insurance company, and premiums on life insurance are based on prior
years' claims experience.
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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:
Obligations and Funded Status
(in millions)
Change in benefit obligation:
Pension Benefits
Years Ended January 31,
Other Postretirement
Benefits
2020
2019
2020
2019
Projected benefit obligation at beginning of year
$
795.0 $
795.6 $
76.1 $
78.5
Service cost
Interest cost
Participants' contributions
MMA retiree drug subsidy
Actuarial loss (gain)
Benefits paid
Projected benefit obligation at end of year
Change in plan assets:
Fair value of plan assets at beginning of year
Actual return on plan assets
Employer contributions
Participants' contributions
MMA retiree drug subsidy
Benefits paid
Fair value of plan assets at end of year
17.0
32.5
—
—
139.8
(28.2)
956.1
549.7
109.9
37.3
—
—
(28.2)
668.7
17.9
30.7
—
—
(22.4)
(26.8)
795.0
578.1
(20.1)
18.5
—
—
(26.8)
549.7
2.6
3.3
1.3
0.1
15.4
(2.7)
96.1
—
—
1.3
1.3
0.1
(2.7)
—
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3.0
3.0
1.3
0.1
(7.0)
(2.8)
76.1
—
—
1.4
1.3
0.1
(2.8)
—
Funded status at end of year
$
(287.4) $
(245.3) $
(96.1) $
(76.1)
Actuarial losses in 2019 reflect decreases in the discount rates for all plans.
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 millions)
Projected benefit obligation
Fair value of plan assets
Funded status
Accumulated benefit obligation
Qualified
Excess/SRIP
800.3 $
668.7
(131.6) $
722.1 $
127.8 $
—
(127.8) $
110.6 $
$
$
$
January 31, 2020
Other
28.0 $
—
(28.0) $
22.8 $
Total
956.1
668.7
(287.4)
855.5
TIFFANY & CO.
K-85
(in millions)
Projected benefit obligation
Fair value of plan assets
Funded status
Accumulated benefit obligation
Qualified
Excess/SRIP
658.5 $
549.7
(108.8) $
598.8 $
109.4 $
—
(109.4) $
94.0 $
$
$
$
January 31, 2019
Other
27.1 $
—
(27.1) $
22.2 $
Total
795.0
549.7
(245.3)
715.0
At January 31, 2020, the Company had a current liability of $9.0 million and a non-current liability of $374.5
million for pension and other postretirement benefits. At January 31, 2019, the Company had a current liability of
$9.0 million and a non-current liability of $312.4 million for pension and other postretirement benefits.
Pre-tax amounts recognized in accumulated other comprehensive loss consisted of:
(in millions)
Net actuarial loss (gain)
Prior service cost (credit)
Total before tax
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January 31,
Pension Benefits
Other Postretirement Benefits
2020
2019
2020
$
$
188.0 $
132.7 $
0.4
0.5
188.4 $
133.2 $
9.7 $
(0.4)
9.3 $
2019
(5.8)
(1.0)
(6.8)
Components of Net Periodic Benefit Cost and
Other Amounts Recognized in Other Comprehensive Earnings
(in millions)
Service cost
Interest cost
Expected return on plan assets
Amortization of prior service cost
(credit)
Amortization of net loss (gain)
Net periodic benefit cost
Net actuarial loss (gain)
Recognized actuarial (loss) gain
Recognized prior service (cost)
credit
Total recognized in other
comprehensive earnings
Total recognized in net periodic
benefit cost and other
comprehensive earnings
Pension Benefits
Other Postretirement Benefits
2020
2019
2018
2020
2019
2018
Years Ended January 31,
$
17.0 $
17.9 $
17.3
$
2.6 $
3.0 $
32.5
(36.7)
0.1
11.3
24.2
66.6
(11.3)
30.7
(33.4)
0.1
15.0
30.3
31.2
(15.0)
32.0
(32.9)
0.2
13.2
29.8
(32.1)
(13.2)
3.3
—
(0.6)
(0.1)
5.2
15.4
0.1
3.0
—
(0.7)
0.1
5.4
(7.0)
(0.1)
(0.1)
(0.1)
(0.2)
0.6
0.7
55.2
16.1
(45.5)
16.1
(6.4)
2.8
3.0
—
(0.7)
0.1
5.2
1.5
(0.1)
0.7
2.1
$
79.4 $
46.4 $
(15.7) $
21.3 $
(1.0) $
7.3
The non-service cost components of the net periodic benefit cost are included within Other expense, net on the
Consolidated Statements of Earnings.
TIFFANY & CO.
K-86
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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
2020
3.25%
3.00%
0.76%
3.25%
3.00%
4.25%
6.50%
2.56%
January 31,
2019
4.25%
4.25%
0.81%
4.50%
3.00%
4.25%
6.50%
2.56%
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
2020
2019
2018
Years Ended January 31,
4.25%
4.25%
1.32%
4.50%
7.00%
3.00%
4.25%
6.50%
2.66%
4.00%
3.75%
1.54%
4.00%
7.00%
3.00%
4.25%
6.50%
1.41%
4.25%
4.25%
1.49%
4.25%
7.00%
3.00%
4.25%
6.50%
1.38%
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, a 6.50% annual rate of increase in the per capita cost of covered
health care was assumed for 2020. This rate was assumed to decrease gradually to 4.75% by 2023 and remain at
that level thereafter.
The Company's investment objectives related to the Qualified Plan's assets are the preservation of principal and
balancing the management of interest rate risk associated with the duration of the plan's liabilities with the
achievement of a reasonable rate of return over time. The Qualified Plan's assets are allocated based on an
Plan Assets
TIFFANY & CO.
K-87
expectation that equity securities will outperform debt securities over the long term, but that as the plan's funded
status (assets relative to liabilities) increases, the amount of assets allocated to fixed income securities which match
the interest rate risk profile of the plan's liabilities will increase. The Company's target asset allocation based on its
funded status as of January 31, 2020 is as follows: approximately 50% in equity securities; approximately 35% in
fixed income securities; and approximately 15% in other securities. The Company attempts to mitigate investment
risk by rebalancing the asset allocation periodically.
The fair value of the Qualified Plan's assets at January 31, 2020 and 2019 by asset category is as follows:
(in millions)
Equity securities:
Fair Value at
Fair Value Measurements
Using Inputs Considered as*
January 31, 2020
Level 1
Level 2
Level 3
U.S. equity securities
$
53.0 $
53.0 $
Mutual funds
Fixed income securities:
Government bonds
Corporate bonds
Other types of investments:
Cash and cash equivalents
Mutual funds
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Net assets in fair value hierarchy
Investments at NAV practical expedient a
119.5
119.5
100.5
139.9
2.5
73.9
489.3
179.4
99.3
—
2.5
61.8
336.1
— $
—
1.2
139.9
—
12.1
153.2
Plan assets at fair value
$
668.7 $
336.1 $
153.2 $
(in millions)
Equity securities:
Fair Value at
Fair Value Measurements
Using Inputs Considered as*
January 31, 2019
Level 1
Level 2
Level 3
U.S. equity securities
$
Mutual fund
Fixed income securities:
Government bonds
Corporate bonds
Other types of investments:
Cash and cash equivalents
Mutual funds
Net assets in fair value hierarchy
Investments at NAV practical expedient a
63.4 $
38.7
63.4 $
38.7
— $
—
80.8
122.7
2.7
52.0
360.3
189.4
79.6
—
2.7
52.0
236.4
1.2
122.7
—
—
123.9
Plan assets at fair value
$
549.7 $
236.4 $
123.9 $
* See "Note J. Fair Value of Financial Instruments" for a description of the levels of inputs.
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
a
In accordance with ASC 820-10, certain investments that are measured at fair value using the net asset value
("NAV") per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The
fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the
Qualified Plan's fair value of plan assets at the end of each respective year.
TIFFANY & CO.
K-88
Valuation Techniques
Investments within the fair value hierarchy. 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.
Certain fixed income investments are held in separately managed accounts and those investments are valued using
the underlying securities in the accounts.
Investments in mutual funds are stated at fair value as determined by quoted market prices based on the NAV of
shares held by the Qualified Plan at year-end. Investments in U.S. equity securities are valued at the closing price
reported on the active market on which the individual securities are traded.
Investments measured at NAV. This category consists of common/collective trusts and limited partnerships.
Common/collective trusts include investments in U.S. and international large, middle and small capitalization
equities. Investments in common/collective trusts are stated at estimated fair value, which represents the NAV of
shares held by the Qualified Plan as reported by the investment advisor. The NAV is based on the value of the
underlying assets owned by the common/collective trust, minus its liabilities and then divided by the number of
shares outstanding. The NAV is used as a practical expedient to estimate fair value.
The Qualified Plan maintains investments in limited partnerships that are valued at estimated fair value based on
financial information received from the investment advisor and/or general partner. The NAV 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.
The NAV is used as a practical expedient to estimate fair value.
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The Company estimates the following future benefit payments:
Benefit Payments
Years Ending January 31,
Pension Benefits
(in millions)
Other Postretirement Benefits
(in millions)
2021
2022
2023
2024
2025
2026-2030
$
29.3 $
30.4
31.1
32.6
33.9
197.5
2.0
2.1
2.2
2.4
2.5
16.1
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 were made in cash. The EPSRS Plan provides a retirement savings feature, a profit sharing feature and
a defined contribution retirement benefit ("DCRB"). The DCRB is provided to eligible employees hired on or after
January 1, 2006. Contributions related to the retirement savings feature and profit sharing feature for a particular
plan year are made the following year.
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, not to exceed Internal Revenue Service limits,
and the Company may provide a matching cash contribution of 50% of each participant's contributions, with a
maximum matching contribution of 3% of each participant's total compensation. The Company recorded expense of
$9.2 million, $8.6 million and $8.2 million in 2019, 2018 and 2017, respectively, related to the retirement
savings feature of the EPSRS Plan.
TIFFANY & CO.
K-89
Under the profit-sharing feature of the EPSRS Plan, contributions are made in cash and are allocated within the
respective participant's account based on investment elections made 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, employees may invest their
contributions and the related matching contribution to their accounts in a similar manner. Under both the profit-
sharing and retirement savings features, employees may elect to invest a portion of the contributions to their
accounts in Company stock. At January 31, 2020, investments in Company stock represented 19% of total EPSRS
Plan assets. The Company recorded expense of $4.9 million and $3.9 million in 2018 and 2017, respectively,
related to the profit sharing feature of the EPSRS Plan and did not record any such expense in 2019.
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 profit-sharing and retirement savings portions of the EPSRS Plan (except that
DCRB contributions may not be invested in Company stock). The Company recorded expense of $7.2 million, $4.7
million and $5.2 million in 2019, 2018 and 2017, respectively, related to the DCRB.
Deferred Compensation Plan
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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 contributions 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
$27.6 million and $22.6 million at January 31, 2020 and 2019, respectively, and are reflected in Other long-term
liabilities. The Company does not promise or guarantee any rate of return on amounts deferred.
P.
INCOME TAXES
U.S. Federal Income Tax Reform
On December 22, 2017, the U.S. Tax Cuts and Jobs Act (the "2017 Tax Act") was enacted in the U.S. This
enactment resulted in a number of significant changes to U.S. federal income tax law for U.S. taxpayers. Changes in
tax law are accounted for in the period of enactment. As such, the Company's 2017 consolidated financial
statements reflected the estimated immediate tax effect of the 2017 Tax Act. The 2017 Tax Act contains a number
of key provisions, including, among other items:
• The reduction of the statutory U.S. federal corporate income tax rate from 35.0% to 21.0% effective
January 1, 2018;
• A one-time transition tax via a mandatory deemed repatriation of post-1986 undistributed foreign earnings
and profits (the "Transition Tax");
• A deduction for Foreign Derived Intangible Income ("FDII") for tax years beginning after December 31,
2017;
• A tax on global intangible low-taxed income ("GILTI") for tax years beginning after December 31, 2017;
• A limitation on net interest expense deductions to 30% of adjusted taxable income for tax years beginning
after December 31, 2017;
• Broader limitations on the deductibility of compensation of certain highly compensated employees;
• The ability to elect to accelerate tax depreciation on certain qualified assets;
• A territorial tax system providing a 100% dividends received deduction on certain qualified dividends from
foreign subsidiaries for tax years beginning after December 31, 2017;
• The Base Erosion and Anti-Abuse Tax ("BEAT") for tax years beginning after December 31, 2017; and
• Changes in the application of the U.S. foreign tax credit regulations for tax years beginning after December
31, 2017.
TIFFANY & CO.
K-90
Additionally, on December 22, 2017, the SEC issued SAB 118 to address the application of U.S. GAAP in situations
when a registrant did not have the necessary information available, prepared, or analyzed (including computations) in
reasonable detail to complete the accounting for certain income tax effects of the 2017 Tax Act. Specifically, SAB
118 provided a measurement period for companies to evaluate the impacts of the 2017 Tax Act on their financial
statements. This measurement period began in the reporting period that included the enactment date and ended
when an entity obtained, prepared and analyzed the information that was needed in order to complete the
accounting requirements, but could not exceed one year. The Company adopted the provisions of SAB 118 with
respect to the impact of the 2017 Tax Act on its 2017 consolidated financial statements.
During the year ended January 31, 2018, the Company recorded an estimated net tax expense of $146.2 million as
a result of the effects of the 2017 Tax Act. The tax effects recorded included:
• Estimated tax expense of $94.8 million for the impact of the reduction in the U.S. statutory tax rate on the
Company's deferred tax assets and liabilities;
• Estimated tax expense of $56.0 million for the Transition Tax; and
• A tax benefit of $4.6 million resulting from the effect of the 21% statutory income tax rate for the month of
January 2018 on the Company's annual statutory income tax rate for the year ended January 31, 2018.
Because the Company's fiscal year ended on January 31, 2018, the Company's statutory income tax rate for
fiscal 2017 was 33.8% rather than 35.0%.
Consistent with SAB 118, the Company calculated and recorded reasonable estimates for the impact of the
Transition Tax and the remeasurement of its deferred tax assets and deferred tax liabilities, as set forth above. The
Company also adopted the provisions of SAB 118 as it related to the assertion of the indefinite reinvestment of
foreign earnings and profits. The charges associated with the Transition Tax and the remeasurement of the
Company's deferred tax assets and deferred tax liabilities, as a result of applying the 2017 Tax Act, represented
provisional amounts for which the Company's analysis was incomplete but reasonable estimates could be determined
and were recorded during the fourth quarter of 2017. Further, the impact of the 2017 Tax Act on the Company's
assertion to indefinitely reinvest foreign earnings was incomplete as the Company was analyzing the relevant
provisions of the 2017 Tax Act and related accounting guidance.
During the year ended January 31, 2019, as permitted by SAB 118, the Company completed its analyses under the
2017 Tax Act, including those related to: (i) the provisional estimate recorded during the year ended January 31,
2018 for the Transition Tax; (ii) the provisional estimate recorded during the year ended January 31, 2018 to
remeasure the Company's deferred tax assets and liabilities; and (iii) the Company's assertion to indefinitely reinvest
undistributed foreign earnings and profits.
As a result of completing these analyses, during the year ended January 31, 2019, the Company: (i) recorded tax
benefits totaling $12.6 million to adjust the provisional estimate recorded in the year ended January 31, 2018 to
remeasure the Company's deferred tax assets and liabilities; (ii) recorded tax benefits totaling $3.3 million to adjust
the provisional estimate recorded in the year ended January 31, 2018 for the Transition Tax; and (iii) determined to
maintain its assertion to indefinitely reinvest undistributed foreign earnings and profits.
The Company continues to maintain its assertion to indefinitely reinvest undistributed foreign earnings and profits,
which amounted to approximately $1.0 billion as of January 31,2020.
Upon distribution of those foreign earnings and profits in the form of dividends or otherwise, the Company would be
subject to U.S. state and local taxes, taxes on foreign currency gains and withholding taxes payable in various
jurisdictions, which may be partially offset by foreign tax credits. Determination of the amount of the unrecognized
deferred tax liability is not practicable because of the complexities associated with its hypothetical calculation.
The Company expects to continue to account for the tax on GILTI as a period cost and therefore has not adjusted any
of the deferred tax assets and liabilities of its foreign subsidiaries in connection with the 2017 Tax Act.
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TIFFANY & CO.
K-91
Earnings from operations before income taxes consisted of the following:
Income Taxes
(in millions)
United States
Foreign
Years Ended January 31,
2020
520.1 $
170.2
690.3 $
2019
584.5 $
159.0
743.5 $
2018
597.1
163.4
760.5
$
$
Components of the provision for income taxes were as follows:
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(in millions)
Current:
Federal
State
Foreign
Deferred:
Federal
State
Foreign
2020
2019
2018
Years Ended January 31,
$
79.7 $
112.5 $
11.7
51.2
142.6
10.9
0.6
(4.9)
6.6
18.2
47.7
178.4
(23.2)
(2.0)
3.9
(21.3)
$
149.2 $
157.1 $
227.9
16.7
49.0
293.6
94.1
1.1
1.6
96.8
390.4
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
Effect of Foreign Operations
Net change in uncertain tax positions
Domestic manufacturing deduction
Foreign Derived Intangible Income deduction
Impact of the 2017 Tax Act
Other
Years Ended January 31,
2020
21.0%
1.4
—
1.8
1.1
—
(4.0)
—
0.3
2019
21.0%
1.5
—
1.1
(0.4)
—
(2.6)
1.3
(0.8)
21.6%
21.1%
2018
33.8%
1.5
0.2
(1.4)
0.2
(1.8)
—
19.8
(1.0)
51.3%
TIFFANY & CO.
K-92
Deferred tax assets (liabilities) consisted of the following:
(in millions)
Deferred tax assets:
Operating lease liabilities
Pension/postretirement benefits
Accrued expenses
Share-based compensation
Depreciation and amortization
Foreign and state net operating losses
Sale-leasebacks
Inventory
Unearned income
Other
Valuation allowance
Deferred tax liabilities:
Operating lease right-of-use assets
Foreign tax credit and other tax liabilities
Net deferred tax asset
$
$
2020
293.7 $
101.9
21.7
5.7
54.7
6.5
—
33.3
7.9
22.2
547.6
(10.9)
536.7
(301.2)
(12.3)
223.2 $
January 31,
2019
—
82.1
31.3
7.9
18.1
7.0
13.1
42.5
7.2
28.8
238.0
(8.5)
229.5
—
(21.5)
208.0
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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 $21.8 million exist in certain foreign
jurisdictions. Whereas some of these tax loss carryforwards do not have an expiration date, others expire at various
times from 2020 through 2036.
The following table reconciles the unrecognized tax benefits:
Years ended January 31,
(in millions)
Unrecognized tax benefits at beginning of year
$
2020
17.3 $
2019
10.1 $
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
6.3
(0.7)
1.9
(5.2)
0.1
Unrecognized tax benefits at end of year
$
19.7 $
8.0
—
1.3
—
(2.1)
17.3 $
2018
7.2
3.2
(0.9)
0.6
—
—
10.1
The amount of tax benefits included in the balance of unrecognized tax benefits at January 31, 2020 that, if
recognized, would affect the effective income tax rate was $18.5 million.
The Company recognizes expense for interest and penalties related to unrecognized tax benefits within the provision
for income taxes. The Company recognized a benefit of $1.3 million in 2019, a benefit of $6.2 million in 2018 and
TIFFANY & CO.
K-93
expense of $2.0 million in 2017 for interest and penalties. Accrued interest and penalties, which amounted to $2.9
million and $4.2 million at January 31, 2020 and 2019, respectively, is included within Accounts payable and
accrued liabilities and Other long-term liabilities on the Consolidated Balance Sheets.
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, both in the U.S. and in foreign jurisdictions. Ongoing
audits where subsidiaries have a material presence include New York City (tax years 2011–2015) and New York
State (tax years 2012–2018). Tax years from 2010–present are open to examination in the U.S. Federal jurisdiction
and 2006–present are open in 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, 2020, unrecognized tax
benefits are not expected to change materially in the next 12 months. Future developments may result in a change
in this assessment.
Q.
SEGMENT INFORMATION
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 "Note C. Summary of Significant
Accounting Policies."
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Certain information relating to the Company's segments is set forth below:
(in millions)
Net sales:
Americas
Asia-Pacific
Japan
Europe
Total reportable segments
Other
Earnings from operations*:
Americas
Asia-Pacific
Japan
Europe
Total reportable segments
Other
Years Ended January 31,
2020
2019
2018
$
1,924.0 $
1,960.3 $
1,258.2
649.8
498.3
4,330.3
93.7
1,239.0
643.0
504.4
4,346.7
95.4
$
$
4,424.0 $
4,442.1 $
382.2 $
386.7 $
254.3
229.7
83.1
949.3
11.3
311.5
237.2
86.2
1,021.6
(6.4)
$
960.6 $
1,015.2 $
1,870.9
1,095.0
596.3
489.0
4,051.2
118.6
4,169.8
399.0
287.7
209.3
90.4
986.4
3.6
990.0
* Represents earnings from operations before (i) unallocated corporate expenses, (ii) Interest expense and
financing costs and Other expense, net, and (iii) other operating expenses.
TIFFANY & CO.
K-94
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 millions)
Earnings from operations for segments
$
Unallocated corporate expenses
Interest expense and financing costs and Other
expense, net
Other operating expenses
2020
960.6 $
(206.8)
(42.3)
(21.2)
2019
1,015.2 $
(224.9)
(46.8)
—
Earnings from operations before income taxes
$
690.3 $
743.5 $
2018
990.0
(180.6)
(48.9)
—
760.5
Years Ended January 31,
Unallocated corporate expenses include certain costs related to administrative support functions which the Company
does not allocate to its segments. Such unallocated costs include those for centralized information technology,
finance, legal and human resources departments.
Other operating expenses in the year ended January 31, 2020 represent charges related to the proposed Merger. See
"Note B. Entry into Merger Agreement" for additional details.
Sales to unaffiliated customers by geographic area were as follows:
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(in millions)
Net sales:
United States
Japan
Other countries
2020
2019
2018
Years Ended January 31,
$
$
1,796.9 $
1,837.5 $
649.8
1,977.3
643.0
1,961.6
4,424.0 $
4,442.1 $
1,739.0
596.3
1,834.5
4,169.8
Net sales information for classes of similar products is presented in "Note C. Summary of Significant Accounting
Policies."
Long-lived assets by geographic area were as follows:
(in millions)
Long-lived assets:
United States
Japan
Other countries
2020
819.6 $
17.9
324.8
January 31,
2019
762.9
18.9
306.1
1,162.3 $
1,087.9
$
$
TIFFANY & CO.
K-95
R.
QUARTERLY FINANCIAL DATA (UNAUDITED)
(in millions, except per share amounts)
April 30
July 31
October 31
January 31 a
2019 Quarters Ended
Net sales
Gross profit
Earnings from operations
Net earnings
Net earnings per share:
Basic
Diluted
$
1,003.1 $
1,048.5 $
1,014.6 $
1,357.8
619.2
160.9
125.2
657.7
184.3
136.3
625.7
118.5
78.4
$
$
1.03 $
1.03 $
1.13 $
1.12 $
0.65 $
0.65 $
859.3
268.9
201.2
1.67
1.66
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(in millions, except per share amounts)
April 30
July 31
October 31
January 31
2018 Quarters Ended
Net sales
Gross profit
Earnings from operations
Net earnings
Net earnings per share:
Basic
Diluted
$
1,033.2 $
1,075.9 $
1,012.4 $
1,320.6
650.9
204.3
142.3
688.8
191.2
144.7
629.3
126.4
94.9
$
$
1.14 $
1.14 $
1.17 $
1.17 $
0.78 $
0.77 $
842.0
268.4
204.5
1.68
1.67
a Net earnings included $21.2 million of pre-tax expense ($17.1 million after tax expense, or $0.14 per diluted
share) for expenses incurred related to the proposed Merger (see "Note B. Entry into Merger Agreement") for the
quarter ended January 31, 2020.
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.
S.
SUBSEQUENT EVENT
In March 2020, the World Health Organization recognized the novel strain of coronavirus, COVID-19, as a pandemic.
This coronavirus outbreak has severely restricted the level of economic activity around the world. In response to this
coronavirus outbreak, the governments of many countries, states, cities and other geographic regions have taken
preventative or protective actions, such as imposing restrictions on travel and business operations and advising or
requiring individuals to limit or forego their time outside of their homes. Temporary closures of businesses have been
ordered and numerous other businesses have temporarily closed voluntarily. Further, individuals' ability to travel has
been curtailed through mandated travel restrictions and may be further limited through additional voluntary or
mandated closures of travel-related businesses. This coronavirus outbreak has had a significant effect on the
Company's sales results to date in fiscal 2020. For example, as of March 19, 2020, the Company has temporarily
closed all of its stores in the United States and Canada, and has temporarily closed nearly all of its stores across
Europe and the United Kingdom. Given the uncertainty regarding the spread of this coronavirus, the related financial
impact cannot be reasonably estimated at this time.
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 the effectiveness 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 principal
executive officer and principal 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 principal executive officer and principal
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.
The Registrant's principal executive officer and principal 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.
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The Registrant's management, including its principal executive officer and principal 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 principal executive officer and our principal financial officer have concluded
that the Registrant's disclosure controls and procedures are (i) designed to provide such reasonable assurance and
(ii) 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.
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The consolidated financial statements have been audited by PricewaterhouseCoopers LLP, an independent registered
public accounting firm. Their report is shown on page K-47. The Audit Committee of the Board of Directors, which is
composed solely of independent directors, reviewed and discussed with the Company's management and the
independent registered public accounting firm, as appropriate, 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. 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. Based on this evaluation, management
concluded that internal control over financial reporting was effective as of January 31, 2020 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, 2020 has been audited by PricewaterhouseCoopers LLP, an independent
registered public accounting firm, as stated in their report which is shown on page K-47.
/s/ Alessandro Bogliolo
Chief Executive Officer
/s/ Mark J. Erceg
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 "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 20, 2020.
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, https://investor.tiffany.com/index.php/corporate-governance; go to "Code of
Conduct."
See Registrant's Proxy Statement dated April 20, 2020, for additional information within the section titled "Business
Conduct Policy and Code of Ethics."
Item 11. Executive Compensation.
Incorporated by reference from the sections titled "Board of Directors and Corporate Governance" and "Compensation
of the CEO and Other Executive Officers" in Registrant's Proxy Statement dated April 20, 2020.
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Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
Incorporated by reference from the sections titled "Ownership of the Company" and "Compensation of the CEO and
Other Executive Officers" in Registrant's Proxy Statement dated April 20, 2020.
Item 13. Certain Relationships and Related Transactions, and Director Independence.
Incorporated by reference from the sections titled "Board of Directors and Corporate Governance" and "Transactions
with Related Persons" in Registrant's Proxy Statement dated April 20, 2020.
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 20, 2020.
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, 2020 and 2019.
Consolidated Statements of Earnings for the years ended January 31, 2020, 2019 and 2018.
Consolidated Statements of Comprehensive Earnings for the years ended January 31, 2020, 2019 and 2018.
Consolidated Statements of Stockholders' Equity for the years ended January 31, 2020, 2019 and 2018.
Consolidated Statements of Cash Flows for the years ended January 31, 2020, 2019 and 2018.
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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 for the years ended January 31, 2020, 2019 and
2018.
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.
Item 16. Form 10-K Summary.
Not Applicable.
TIFFANY & CO.
K-100
Exhibit Table (numbered in accordance with Item 601 of Regulation S-K)
EXHIBIT INDEX
Exhibit No.
Description
2.1
3.1
3.1a
3.2
4.5
4.6
4.7
4.8
4.9
10.1
10.2
10.2a
10.3
Agreement and Plan of Merger, dated as of November 24, 2019, by and among Registrant, LVMH
Moët Hennessy - Louis Vuitton SE, Breakfast Holdings Acquisition Corp. and Breakfast
Acquisition Corp. Incorporated by reference from Exhibit 2.1 to Registrant’s Report on Form 8-K
dated November 25, 2019.
Restated Certificate of Incorporation of Registrant. Incorporated by reference from Exhibit 3.1
filed with 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 filed with Registrant's Annual Report on Form 10-K for the Fiscal
Year ended January 31, 2001.
Restated By-laws of Registrant, as last amended November 24, 2019.
Indenture, dated September 25, 2014, between Registrant, as issuer, and The Bank of New York
Mellon Trust Company, N.A., as trustee. Incorporated by reference from Exhibit 4.5 filed with
Registrant’s Report on Form 8-K dated September 26, 2014.
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, N.A., as trustee. Incorporated by reference from Exhibit 4.6 filed with 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, N.A., as trustee. Incorporated by reference from Exhibit 4.7 filed with Registrant’s
Report on Form 8-K dated September 26, 2014.
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Description of Registrant's Common Stock.
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.
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.
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.
TIFFANY & CO.
K-101
Exhibit No.
Description
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10.4
10.5
10.5a
10.6
10.6a
10.7
14.1
21.1
23.1
31.1
31.2
32.1
32.2
Five Year Credit Agreement dated as of October 25, 2018 by and among Registrant and each
other Subsidiary of Registrant that is a Borrower and is a signatory thereto and MUFG Bank Ltd.,
as Administrative Agent, and various lenders party thereto. Incorporated by reference from Exhibit
10.43 filed with Registrant’s Report on Form 8-K dated October 31, 2018.
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 10.5 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 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 10.6 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.
Note Purchase Agreement dated as of August 26, 2016 by and between Registrant and the
institutional note purchasers with respect to Registrant’s ¥ 10,000,000,000 principal amount of
0.78% Senior Notes due August 26, 2026. Incorporated by reference from Exhibit 10.37 filed
with Registrant’s Report on Form 8-K dated September 1, 2016.
Code of Business and Ethical Conduct. Incorporated by reference from Exhibit 14.1 filed with
Registrant’s Report on Form 8-K dated September 27, 2017.
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-102
Exhibit No.
Description
101
The following financial information from Registrant’s Annual Report on Form 10-K for the fiscal
year ended January 31, 2020, filed with the SEC, formatted in Inline 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.
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
Executive Compensation Plans and Arrangements
Exhibit No.
Description
10.8
10.9
10.10
10.11
10.12
10.12a
10.12b
10.12c
10.13
Form of Indemnity Agreement, approved by the Board of Directors on March 15, 2018 for use
with directors, officers and certain other employees of the Registrant or its subsidiaries.
Incorporated by reference from Exhibit 10.13 filed with Registrant’s Report on Form 10-Q for the
Fiscal Quarter ended April 30, 2018.
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Tiffany and Company Executive Deferral Plan originally made effective October 1, 1989, as
amended and restated effective October 17, 2019. Incorporated by reference from Exhibit 10.38
filed with Registrant’s Report on Form 8-K dated October 22, 2019.
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.
1994 Tiffany and Company Supplemental Retirement Income Plan, Amended and Restated as of
March 17, 2016. Incorporated by reference from Exhibit 10.21 filed with Registrant’s Report on
Form 8-K dated March 22, 2016.
Summary of Executive Long Term Disability Plan available to executive officers. Incorporated by
reference from Exhibit 10.24 filed with Registrant’s Annual Report on Form 10-K for the Fiscal
Year ended January 31, 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 Annual
Report on Form 10-K for the Fiscal Year ended January 31, 2013.
Individual Disability Insurance Policy issued by Provident Life and Casualty Insurance Company.
Incorporated by reference from Exhibit 10.24b filed with Registrant’s Annual Report on Form 10-
K for the Fiscal Year ended January 31, 2013.
Individual Disability Insurance Policy issued by Lloyd’s of London. Incorporated by reference from
Exhibit 10.24c filed with Registrant’s Annual Report on Form 10-K for the Fiscal Year ended
January 31, 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.
TIFFANY & CO.
K-103
Exhibit No.
Description
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10.14
10.15
10.15a
10.15b
10.15c
10.16
10.16a
10.16b
10.17
10.17a
10.17b
10.17c
10.17d
2004 Tiffany and Company Un-funded Retirement Income Plan to Recognize Compensation in
Excess of Internal Revenue Code Limits, Amended and Restated as of November 16, 2017.
Incorporated by reference from Exhibit 10.22 filed with Registrant’s Report on Form 8-K dated
November 21, 2017.
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 Annual Report on Form 10-K for the Fiscal Year ended January 31, 2013.
Terms of Stock Option Award (Transferable Non-Qualified Option) under Registrant’s 2008
Directors Equity Compensation Plan, effective May 26, 2016. Incorporated by reference from
Exhibit 10.28c filed with Registrant's Report on Form 8-K dated June 2, 2016.
Terms of Stock Option Award (Transferable Non-Qualified Option) under Registrant’s 2008
Directors Equity Compensation Plan, effective March 16, 2017. Incorporated by reference from
Exhibit 10.25d filed with Registrant’s Annual Report on Form 10-K for the Fiscal Year ended
January 31 2017.
Registrant’s 2017 Directors Equity Compensation Plan. Incorporated by reference from Exhibit
10.38 filed with Registrant's Report on Form 8-K dated June 1, 2017.
Terms of Stock Option Award (Transferable Non-Qualified Option) under Registrant's 2017
Directors Equity Compensation Plan, effective November 16, 2017. Incorporated by reference
from Exhibit 10.38a filed with Registrant’s Report on Form 8-K dated November 21, 2017.
Terms of Restricted Stock Unit Grant under Registrant's 2017 Directors Equity Compensation
Plan, effective November 16, 2017. Incorporated by reference from Exhibit 10.38b filed with
Registrant’s Report on Form 8-K dated November 21, 2017.
Registrant’s 2014 Employee Incentive Plan, amended and restated as of March 16, 2016.
Incorporated by reference from Exhibit 10.29 filed with Registrant’s Report on Form 8-K dated
March 22, 2016.
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.
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.
Terms of Stock Option Award (Transferable Non-Qualified Option) under Registrant’s 2014
Employee Incentive Plan, as revised March 16, 2016. Incorporated by reference from Exhibit
10.29g filed with Registrant’s Report on Form 8-K dated March 22, 2016.
Terms of Tranche-Vesting Restricted Stock Grant (Non-Transferable) under Registrant’s 2014
Employee Incentive Plan, as revised March 16, 2016. Incorporated by reference from Exhibit
10.29j filed with Registrant’s Report on Form 8-K dated March 22, 2016.
TIFFANY & CO.
K-104
Exhibit No.
Description
10.17e
10.17f
10.17g
10.17h
10.17i
10.17j
10.17k
10.17l
10.17m
10.17n
10.17o
10.17p
Form of Cash Incentive Award Agreement for executive officers as adopted on January 19, 2017
under Registrant’s 2014 Employee Incentive Plan. Incorporated by reference from Exhibit 10.29l
filed with Registrant’s Report on Form 8-K dated January 25, 2017.
Terms of Stock Option Award (Transferable Non-Qualified Option) under Registrant’s 2014
Employee Incentive Plan, as revised January 19, 2017. Incorporated by reference from Exhibit
10.29n filed with Registrant’s Report on Form 8-K dated January 25, 2017.
Terms of Performance-Based Restricted Stock Unit Grant (Non-Transferable) to executive officers
under Registrant’s 2014 Employee Incentive Plan, as revised January 19, 2017. Incorporated by
reference from Exhibit 10.29o filed with Registrant’s Report on Form 8-K dated January 25,
2017.
Terms of Restricted Stock Unit Grant (Non-Transferable) under Registrant’s 2014 Employee
Incentive Plan, as revised January 19, 2017. Incorporated by reference from Exhibit 10.29p filed
with Registrant’s Report on Form 8-K dated January 25, 2017.
Terms of Stock Option Award (Transferable Non-Qualified Option) under Registrant's 2014
Employee Incentive Plan, approved March 16, 2017. Incorporated by reference from Exhibit
10.25q filed with Registrant's Annual Report on Form 10-K for the Fiscal Year ended January 31,
2018.
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Terms of Restricted Stock Unit Grant (Non-Transferable) under Registrant's 2014 Employee
Incentive Plan, approved March 16, 2017. Incorporated by reference from Exhibit 10.25r filed
with Registrant's Annual Report on Form 10-K for the Fiscal Year ended January 31, 2018.
Terms of Restricted Stock Unit Grant (Non-Transferable) under Registrant's 2014 Employee
Incentive Plan, as revised January 17, 2018. Incorporated by reference from Exhibit 10.26q filed
with Registrant’s Report on Form 8-K dated January 19, 2018.
Terms of Performance-Based Restricted Stock Unit Grant (Non-Transferable) to executive officers
under Registrant's 2014 Employee Incentive Plan, as revised January 17, 2018. Incorporated by
reference from Exhibit 10.26r filed with Registrant’s Report on Form 8-K dated January 19,
2018.
Terms of Stock Option Award (Transferable Non-Qualified Option) under Registrant's 2014
Employee Incentive Plan, as revised January 17, 2018. Incorporated by reference from Exhibit
10.26s filed with Registrant’s Report on Form 8-K dated January 19, 2018.
Terms of Restricted Stock Unit Grant (Non-Transferable) under Registrant’s 2014 Employee
Incentive Plan, as revised September 20, 2018. Incorporated by reference from Exhibit 10.25v
filed with Registrant’s Report on Form 8-K dated September 26, 2018.
Terms of Stock Option Award (Transferable Non-Qualified Option) under Registrant’s 2014
Employee Incentive Plan, as revised September 20, 2018. Incorporated by reference from Exhibit
10.25w filed with Registrant’s Report on Form 8-K dated September 26, 2018.
Terms of Performance-Based Restricted Stock Unit Grant (Non-Transferable) under Registrant's
2014 Employee Incentive Plan, as amended January 17, 2019. Incorporated by reference from
Exhibit 10.25x filed with Registrant's Report on Form 8-K dated January 24, 2019.
TIFFANY & CO.
K-105
Exhibit No.
Description
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10.17q
10.17r
10.17s
10.17t
10.18
10.19
10.20
10.21
10.22
10.23
10.24
10.25
10.26
10.27
Terms of Restricted Stock Unit Grant (Non-Transferable) under Registrant’s 2014 Employee
Incentive Plan, as revised October 16, 2019. Incorporated by reference from Exhibit 10.24s filed
with Registrant’s Report on Form 8-K dated October 22, 2019.
Terms of Performance-Based Restricted Stock Unit Grant (Non-Transferable) under Registrant’s
2014 Employee Incentive Plan, as revised October 16, 2019. Incorporated by reference from
Exhibit 10.24t filed with Registrant’s Report on Form 8-K dated October 22, 2019.
Terms of Stock Option Award (Transferable Non-Qualified Option) under Registrant’s 2014
Employee Incentive Plan, as revised October 16, 2019. Incorporated by reference from Exhibit
10.24u filed with Registrant’s Report on Form 8-K dated October 22, 2019.
Form of Non-Competition and Confidentiality Covenants, as revised October 16, 2019.
Incorporated by reference from Exhibit 10.24v filed with Registrant’s Report on Form 8-K dated
October 22, 2019.
Employment offer letter, dated as of September 7, 2016, between Mark J. Erceg and Tiffany and
Company. Incorporated by reference from Exhibit 10.29 filed with Registrant’s Annual Report on
Form 10-K for the Fiscal Year ended January 31, 2017.
Employment offer letter, dated as of June 15, 2015, between Philippe Galtie and Tiffany and
Company. Incorporated by reference from Exhibit 10.32 filed with Registrant’s Annual Report on
Form 10-K for the Fiscal Year ended January 31, 2017.
Employment offer letter, dated as of July 12, 2017, by and among Alessandro Bogliolo,
Registrant and Tiffany and Company. Incorporated by reference from Exhibit 10.39 filed with
Registrant's Report on Form 8-K dated July 12, 2017.
Employment offer letter, dated as of October 11, 2019, between Daniella Vitale and Tiffany and
Company.
Share Ownership Policy for Executive Officers and Directors, amended and restated effective June
4, 2019. Incorporated by reference from Exhibit 10.35 filed with Registrant’s Report on Form 8-
K dated June 7, 2019.
Form of Retention Agreement with Registrant and Tiffany and Company, adopted September 20,
2018. Incorporated by reference from Exhibit 10.40 filed with Registrant's Report on Form 8-K
dated September 26, 2018.
Tiffany & Co. Executive Severance Plan, as amended October 16, 2019. Incorporated by
reference from Exhibit 10.37 filed with the Registrant’s Report on Form 8-K dated October 22,
2019.
Tiffany & Co. Director Compensation Deferral Plan, amended and restated effective June 4,
2019. Incorporated by reference from Exhibit 10.35 filed with Registrant’s Report on Form 8-K
dated June 7, 2019.
Form of Special Bonus Agreement for executive officers, effective December 13, 2019.
Form of Non-Competition and Confidentiality Covenants for executive officers, effective December
13, 2019.
TIFFANY & CO.
K-106
Exhibit No.
Description
10.28
Corporate Governance Principles, amended and restated effective December 3, 2019.
Incorporated by reference from Exhibit 10.39 filed with Registrant’s Report on Form 8-K dated
December 5, 2019.
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K-107
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.
SIGNATURES
Date: March 20, 2020
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TIFFANY & CO.
(Registrant)
By: /s/ Alessandro Bogliolo
Alessandro Bogliolo
Chief Executive Officer
TIFFANY & CO.
K-108
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the date indicated.
By:
/s/ Alessandro Bogliolo
Alessandro Bogliolo
Chief Executive Officer
(Principal Executive Officer) (Director)
By:
/s/ Michael Rinaldo
Michael Rinaldo
Vice President, Controller
(Principal Accounting Officer)
By:
/s/ Mark J. Erceg
Mark J. Erceg
Executive Vice President,
Chief Financial Officer
(Principal Financial Officer)
By:
/s/ Rose Marie Bravo
Rose Marie Bravo
Director
By:
/s/ Hafize Gaye Erkan
By:
/s/ Roger N. Farah
Hafize Gaye Erkan
Director
Roger N. Farah
Director
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By:
/s/ Jane Hertzmark Hudis
By:
/s/ Abby F. Kohnstamm
Jane Hertzmark Hudis
Director
Abby F. Kohnstamm
Director
By:
/s/ James E. Lillie
By:
/s/ William A. Shutzer
James E. Lillie
Director
William A. Shutzer
Director
By:
/s/ Robert S. Singer
Robert S. Singer
Director
By:
/s/ Annie Young - Scrivner
Annie Young - Scrivner
Director
March 20, 2020
TIFFANY & CO.
K-109
Tiffany & Co. and Subsidiaries
Schedule II - Valuation and Qualifying Accounts and Reserves
(in millions)
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, 2020:
Reserves deducted from assets:
Accounts receivable allowances:
Doubtful accounts
$
1.6 $
3.7 $
— $
Sales returns
Allowance for inventory liquidation
and obsolescence
Allowance for inventory shrinkage
Deferred tax valuation allowance
a) Uncollectible accounts written off.
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17.5
81.5
1.3
8.5
4.1
21.6
3.3
3.2
—
—
—
—
3.4 a $
4.4 b
22.5 c
3.2 d
0.8 e
1.9
17.2
80.6
1.4
10.9
b) Adjustment related to sales returns previously provided for.
c) Liquidation of inventory previously written down to net realizable value.
d) Physical inventory losses.
e) Reversal of deferred tax valuation allowance and recognition of deferred tax asset.
TIFFANY & CO.
K-110
Tiffany & Co. and Subsidiaries
Schedule II - Valuation and Qualifying Accounts and Reserves
(in millions)
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, 2019:
Reserves deducted from assets:
Accounts receivable allowances:
Doubtful accounts
$
2.2 $
4.1 $
— $
Sales returns
15.0
12.6
Allowance for inventory liquidation
and obsolescence
Allowance for inventory shrinkage
Deferred tax valuation allowance
a) Uncollectible accounts written off.
75.0
0.7
9.6
31.9
1.7
0.2
b) Adjustment related to sales returns previously provided for.
c) Liquidation of inventory previously written down to net realizable value.
d) Physical inventory losses.
—
—
—
—
4.7 a $
10.1 b
25.4 c
1.1 d
1.3 e
1.6
17.5
81.5
1.3
8.5
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e) Reversal of deferred tax valuation allowance and utilization of deferred tax loss carryforward.
TIFFANY & CO.
K-111
Tiffany & Co. and Subsidiaries
Schedule II - Valuation and Qualifying Accounts and Reserves
(in millions)
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, 2018:
Reserves deducted from assets:
Accounts receivable allowances:
Doubtful accounts
$
1.9 $
3.3 $
— $
Sales returns
9.6
7.5
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Allowance for inventory liquidation
and obsolescence
Allowance for inventory shrinkage
Deferred tax valuation allowance
a) Uncollectible accounts written off.
65.4
1.0
24.1
28.9
1.1
2.3
—
—
—
—
3.0 a $
2.1 b
19.3 c
1.4 d
16.8 e
2.2
15.0
75.0
0.7
9.6
b) Adjustment related to sales returns previously provided for.
c) Liquidation of inventory previously written down to net realizable value.
d) Physical inventory losses.
e) Reversal of deferred tax valuation allowance and utilization of deferred tax loss carryforward.
TIFFANY & CO.
K-112
2020 Annual Meeting of Shareholders
PROXY STATEMENT
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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.
ANNUAL MEETING OF SHAREHOLDERS
Date
Time
Place
Monday, June 1, 2020
2:30 p.m.
200 Fifth Avenue
New York, New York
Record Date
April 2, 2020
Voting
Shareholders as of the record date are entitled to vote.
Each share of common stock of Tiffany & Co., a Delaware corporation (the "Company"), has one
vote.
Admission
Attendance at the 2020 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 2020 Annual Meeting. Registration confirmation and
photo identification are also required for admission.
Shareholders of record will have the opportunity to vote by ballot at the 2020 Annual Meeting.
Beneficial owners of shares held in street name must contact their broker before the 2020 Annual
Meeting to obtain a legal proxy and bring the legal proxy with them to the meeting.
MATTERS TO BE VOTED ON AT THE 2020 ANNUAL MEETING
There are three matters scheduled to be voted on at the 2020 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
No
Yes
No
Item No. 2: Ratification of the selection of the
independent registered public accounting firm
to audit our Fiscal 2020 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
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ELECTION OF THE BOARD
The following table provides summary information about each director nominee. Each director is elected annually by a
majority of votes cast "for" or "against" his or her candidacy. See "Item 1. Election of the Board" at PS-17 for more
information.
Compensation
Committee
& Stock
Option Sub-
Committee
Corporate
Social
Responsibility
Committee
Audit
Committee
Dividend
Committee
Finance
Committee
Nominating/
Corporate
Governance
Committee
Other
Public
Company
Boards
Chair
Chair
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Name
Alessandro
Bogliolo
Rose Marie
Bravo
Hafize Gaye
Erkan
Roger N.
Farah
Jane
Hertzmark
Hudis
Abby F.
Kohnstamm
Director
Since
Age
55
2017
Principal Occupation
Independent
Chief Executive Officer
("CEO") of Tiffany & Co.
69
1997 Retired CEO of Burberry
Chair
Limited
41
2019
President of First
Republic Bank
67
2017
Chairman of the Board of
Tiffany & Co.; Former Co-
CEO of Tory Burch LLC
60
2019 Group President of The
Estée Lauder Companies
Inc.
66
2001 Retired Executive Vice
President and Chief
Marketing Officer at
Pitney Bowes Inc.
James E.
Lillie
58
2017
Vice Chairman of
Mariposa Capital
Chair
William A.
Shutzer
Robert S.
Singer
Annie
Young-
Scrivner
73
1984
Senior Advisor of Evercore
Partners
68
2012
Consultant for IDG
Capital
51
2018
CEO of Godiva
Chocolatier
Chair
TIFFANY & CO.
PS-3
Each director who served on the Company's Board of Directors (the "Board") as of March 20, 2020 attended at least
81% of the aggregate number of meetings of the Board and those committees on which he or she served during the
period from February 1, 2019 to January 31, 2020 ("Fiscal 2019").
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 the period from February 1, 2020 to January 31, 2021 ("Fiscal 2020"). As a matter of good corporate
governance, we are asking you to ratify this selection.
See "Item 2. Ratification of the Selection of the Independent Registered Public Accounting Firm to Audit Our Fiscal
2020 Financial Statements" at PS-35 and "Relationship with Independent Registered Public Accounting Firm" at
PS-37 for more information.
EXECUTIVE COMPENSATION MATTERS
See "Item 1. Election of the Board" at PS-17 and "Compensation of the CEO and Other Executive Officers" at PS-39
for more information.
LVMH MERGER AGREEMENT
On November 24, 2019, the Company entered into an Agreement and Plan of Merger (as it may be amended from
time to time, the "Merger Agreement"), by and among the Company, LVMH Moët Hennessy-Louis Vuitton SE, a
societas Europaea (European company) organized under the laws of France ("Parent"), Breakfast Holdings
Acquisition Corp., a Delaware corporation and an indirect wholly owned subsidiary of Parent ("Holding"), and
Breakfast Acquisition Corp., a Delaware corporation and a direct wholly owned subsidiary of Holding ("Merger Sub").
Pursuant to the Merger Agreement, Merger Sub will be merged with and into the Company (the "Merger"), with the
Company continuing as the surviving corporation in the Merger and an indirect wholly owned subsidiary of Parent.
For additional information concerning the Merger Agreement, see "Item 1. Business - Entry into Merger Agreement"
in the Company's Annual Report on Form 10-K for Fiscal 2019. For information concerning the treatment of
outstanding equity awards under the Merger Agreement, see "LVMH Merger Agreement" below at PS-40.
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BUSINESS HIGHLIGHTS
Key highlights of Fiscal 2019 performance were as follows:
Sales:
Profitability:
Store Expansion:
Cash Flow:
Returning Capital to
Shareholders:
Worldwide net sales were approximately unchanged compared to the prior year.
Comparable sales decreased 1% from the prior year. On a constant-exchange-rate basis
(see Appendix I at PS-93), worldwide net sales increased 1% and comparable sales were
approximately unchanged.
Net earnings decreased to $541.1 million, or $4.45 per diluted share, in Fiscal 2019
from $586.4 million, or $4.75 per diluted share, in the Company's fiscal year ended
January 31, 2019 ("Fiscal 2018"). Net earnings in Fiscal 2019 included the impact of
costs related to the proposed Merger, as described in Appendix I at PS-93. Excluding
these charges, net earnings decreased to $558.2 million, or $4.59 per diluted share.
The Company added a net of five TIFFANY & CO. stores (opening four in Japan, two in
the Americas, two in Asia-Pacific and one in Europe, while closing two stores in the
Americas, one store in Asia-Pacific and one store in Japan) and relocated or renovated
18 existing stores. Gross retail square footage increased 3%, net.
Cash flow from operating activities was $670.9 million in Fiscal 2019, compared with
$531.8 million in Fiscal 2018. Free cash flow (see Appendix I at PS-93) was $350.3
million in Fiscal 2019, compared with $249.7 million in Fiscal 2018.
The Company returned capital to shareholders by paying regular quarterly dividends
(which were increased 5% effective July 2019 to $0.58 per share, or an annualized rate
of $2.32 per share) and by repurchasing 1.8 million shares of its common stock for
$163.4 million.
TIFFANY & CO.
PS-4
EXECUTIVE COMPENSATION HIGHLIGHTS
The Board's continued commitment to pay for performance, and other leading compensation practices, was
demonstrated in Fiscal 2019 by the following highlights:
• A significant portion of the compensation payable to the CEO and other named executive officers is tied to
the Company's financial performance and/or the performance of the stock price (53.2% for the CEO and
46.6% for the other named executive officers, on average), with emphasis on long-term incentives.
• Short-term and long-term incentive awards granted in January 2020 are payable contingent on key
performance measures: operating earnings, growth in annual net sales on a constant-exchange-rate basis
that excludes the effect of translating foreign-currency-denominated sales into U.S. dollars ("Constant
Currency Sales Growth," see Appendix I at PS-93), net earnings per diluted share, and operating cash flow.
• Short-term incentive awards for Fiscal 2019 were paid out to the named executive officers at levels ranging
from 52.8% to 74.8% of target, based on achievement of operating earnings and Constant Currency Sales
Growth goals for the year relative to target and individual performance factors.
•
Incentive-based compensation (such as cash incentive awards and performance-based restricted stock units
("PSUs"), but excluding stock options and time-vesting restricted stock units ("RSUs")) 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 their annual base salary for the CEO and two to three times their annual base salary for
other named executive officers.
• The Compensation Committee of the Board periodically retains an independent compensation consultant to
advise on the executive compensation program and related policies and practices.
2021 ANNUAL MEETING
If you wish to nominate a candidate for election as a director to be included in the Company's Proxy Statement for
our 2021 Annual Meeting, we must receive notice of such nomination no earlier than November 21, 2020 and no
later than December 21, 2020. If you wish to submit a proposal of other business to be included in the Company's
Proxy Statement for our 2021 Annual Meeting, we must receive such proposal no later than December 21, 2020.
Proposals should be sent to the Company at 200 Fifth Avenue, New York, New York 10010 to the attention of the
Corporate Secretary (Legal Department).
If you wish to nominate a candidate for election as a director at an annual meeting or propose other business for
consideration at an annual meeting, but do not intend for such nomination or proposal to be included in the
Company's Proxy Statement for the 2021 Annual Meeting, written notice complying with the requirements set forth
in our By-laws generally must be delivered to the Company at 200 Fifth Avenue, New York, New York 10010 to the
attention of the Corporate Secretary (Legal Department), not later than 90 days, and not earlier than 120 days, prior
to the first anniversary of the preceding year's annual meeting. Accordingly, a shareholder nomination or proposal
intended to be considered at the 2021 Annual Meeting, but not intended to be included in the Company's Proxy
Statement, must be received by the Company no earlier than February 1, 2021 and no later than March 3, 2021.
Except as required by applicable law, the Company will consider only proposals that are received by the Company
within the applicable time frames set forth above, and that meet the applicable requirements of the Securities and
Exchange Commission (the "SEC") and our By-laws.
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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 20, 2020, in connection with
the 2020 Annual Meeting of the shareholders of the Company to be held on Monday, June 1, 2020, at 2:30 p.m. at
200 Fifth Avenue, New York, New York.
As part of the precautions taken by the Company regarding the recent outbreak of the novel coronavirus, COVID-19,
the Company is planning for the possibility that the 2020 Annual Meeting may be held by means of remote
communication. If the Company decides to take this step, it will announce the decision to do so in advance, and
details on how to participate and inspect a list of shareholders of record will be issued by press release, posted on
the Company's website, and filed with the SEC. Please monitor the Company's website, www.tiffany.com, by clicking
on "Investors" and then selecting "News & Events" for updated information.
You are entitled to vote at our 2020 Annual Meeting because you were a shareholder, or held Company stock through
a broker, bank or other nominee, at the close of business on April 2, 2020, 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 2020
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 2019.
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.
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 request as instructed above on or before May 18, 2020 to facilitate timely delivery.
You may also find important information about the Company, with its principal executive offices at 200 Fifth Avenue,
New York, New York 10010, on our website at www.tiffany.com. By clicking "Investors" on that website, you will find
additional information concerning some of the subjects addressed in this document.
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PS-6
Important Notice Regarding Internet Availability of Proxy Materials for the Shareholder Meeting To
Be Held on June 1, 2020
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 2020 ANNUAL MEETING?
There are three matters scheduled to be voted on at the 2020 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 2020 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 2020 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 nominees for director set forth in Item 1 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 April 2,
2020, 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 the 2020
Annual Meeting is indicated on the enclosed proxy card or notice.
HOW DO I VOTE MY SHARES?
You can vote your shares at the 2020 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:
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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, or if your shares are held in the Tiffany and Company
Employee Profit Sharing and Retirement Savings Plan (the "401K Plan"), then you are the "beneficial owner"
of shares held in "street name." The organization holding, or trustee of, your account is considered the
shareholder of record for purposes of voting at the 2020 Annual Meeting. As a beneficial owner, you have
the right to instruct that organization or trustee on how to vote the shares held in your account. Those
instructions are contained in the "voting instruction form" sent to you and are summarized below.
TIFFANY & CO.
PS-7
HOW DO I VOTE MY SHARES BEFORE THE 2020 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 2020 Annual Meeting vote your shares for
you. These individuals are called "proxies," and using them to cast your ballot at the 2020 Annual Meeting is called
voting "by proxy."
Proxies will extend to, and be voted at, any adjournment or postponement of the 2020 Annual Meeting.
If you vote by proxy, you will have designated three officers of the Company to act as your proxies at the 2020
Annual Meeting. One of them will then vote your shares at the 2020 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 the 2020 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 2020 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 2020 Annual Meeting and vote in person.
HOW DO I VOTE MY SHARES BEFORE THE 2020 ANNUAL MEETING IF I AM A BENEFICIAL OWNER OF SHARES HELD IN STREET
NAME?
You may instruct your broker or the 401K Plan's trustee, as applicable, how to vote on your behalf in any of the
following ways:
• Via the Internet. You may instruct your broker or the 401K Plan's trustee, as applicable, 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 or the 401K Plan's trustee, as applicable, 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 or the 401K Plan's trustee, as applicable, as to your vote by mail by
filling out the voting instruction form provided to you and returning it in the envelope provided.
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.
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TIFFANY & CO.
PS-8
Shares held in the 401K Plan will be voted by the 401K Plan's trustee in accordance with specific instructions given
by 401K Plan participants to whose accounts such shares have been allocated.
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 matters.
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, but will have no effect on any of the proposals set forth herein. See "WHAT CONSTITUTES A
QUORUM?" and "WHAT VOTE IS REQUIRED TO APPROVE EACH PROPOSAL?" below.
CAN I CHANGE THE INSTRUCTION TO MY BROKER OR THE 401K PLAN TRUSTEE?
You may vote in person at the 2020 Annual Meeting, or you may change your instruction to your broker or the 401K
Plan trustee, as applicable, by submitting a subsequent instruction through one of the means set forth above under
"HOW DO I VOTE MY SHARES BEFORE THE 2020 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 are a shareholder of record and 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 2020 financial statements; and
FOR approval of the compensation provided to the Company's named executive officers in Fiscal 2019.
Shares held in a broker's name for which no instructions are received 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?"
above. Any shares held in the 401K Plan for which no instructions are received will be voted in the same proportion
as those shares for which instructions are received.
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DO I NEED TO ATTEND THE 2020 ANNUAL MEETING?
No. You may authorize your shares to be voted by following the instructions presented in the notice, proxy card or
voting instruction form.
IF I WISH TO ATTEND THE 2020 ANNUAL MEETING AND VOTE IN PERSON, WHAT DO I NEED TO DO?
To attend the 2020 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 2020 Annual Meeting. To vote in person at the 2020 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 or the 401K Plan trustee before the
2020 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.
TIFFANY & CO.
PS-9
WHAT CONSTITUTES A QUORUM?
A "quorum" is the minimum number of shares that must be present at the 2020 Annual Meeting for a valid vote. For
the 2020 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 April 2, 2020, the record date, was
121,335,094. Therefore, 60,667,548 shares must be present at the 2020 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 2020 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 2020 Annual Meeting, including, for any beneficial owner of
shares held in street name, by the organization holding, or trustee of, such shareholder's account.
If a shareholder is represented by proxy at the 2020 Annual Meeting as described above, 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 2020
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 to audit our
consolidated financial statements for Fiscal 2020 will be decided by the affirmative vote of the majority of shares
present in person or represented by proxy at the 2020 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
2020 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.
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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 2020 Annual Meeting and entitled to
vote on the matter. That means that the advisory proposal will be approved if more than half of those shares present
in person or represented by proxy at the 2020 Annual Meeting and entitled to vote on the matter vote "for" the
proposal. Therefore, if you abstain from voting, 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 re-election 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
directors standing for re-election has tendered a resignation letter to the Nominating/Corporate Governance
Committee to be considered in the event that he or she does not receive such a majority vote. Under the Corporate
Governance Principles adopted by the Board, the Nominating/Corporate Governance Committee will make a
TIFFANY & CO.
PS-10
recommendation to the Board on whether to accept or reject such resignation or whether other action should be
taken.
HOW ARE PROXIES SOLICITED?
The Company has hired the firm of Georgeson LLC to assist in the solicitation of proxies on behalf of the Board.
Georgeson LLC has agreed to perform this service for a fee of not more than $8,500, plus out-of-pocket expenses.
Employees of Tiffany and Company, a New York corporation and a 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 2020
Annual Meeting.
WHERE CAN I FIND THE VOTING RESULTS OF THE 2020 ANNUAL MEETING?
The Company will announce preliminary voting results at the 2020 Annual Meeting and publish final results in a
Form 8-K filed with the SEC within four business days after the 2020 Annual Meeting.
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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 20, 2020, at which time there were 121,234,719 shares of Company common stock
issued and outstanding. Except as specified below, each person or entity below has the sole voting and investment
power with respect to the shares of Company common stock listed next to their name. 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
The Vanguard Group
100 Vanguard Boulevard
Malvern, Pennsylvania 19355
Qatar Investment Authority
Ooredoo Tower
Diplomatic Area Street, West Bay
P.O. Box 23224, Doha, State of Qatar
BlackRock, Inc.
55 East 52nd Street
New York, New York 10055
Amount and
Nature of Beneficial
Ownership (a)
Percentage of
Class
13,340,783 (b)
11.00%
11,822,436 (c)
9.75%
7,847,227 (d)
6.47%
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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 circumstances 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) The Vanguard Group reported such beneficial ownership to the SEC on its Schedule 13G/A as of February 12,
2020 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 163,873 shares of the Company's common stock, shared power to
vote 32,216 shares, sole power to dispose or direct the disposition of 13,155,426 shares, and shared power to
dispose or direct the disposition of 185,357 shares.
c) Qatar Investment Authority, a citizen of Qatar, reported such beneficial ownership to the SEC on its Schedule
13G/A as of September 14, 2017 and stated that it had sole voting and disposition power with respect to all such
shares.
d) Blackrock, Inc. reported such beneficial ownership to the SEC on its Schedule 13G/A as of February 6, 2020 and
stated that, as a parent holding company of the subsidiaries identified in that Schedule, it beneficially owned the
number of shares referred to above. This Schedule stated that Blackrock, Inc. had sole power to vote 6,600,308
shares of the Company's common stock and sole power to dispose or direct the disposition of 7,847,227 shares.
TIFFANY & CO.
PS-12
OWNERSHIP BY DIRECTORS/DIRECTOR NOMINEES AND EXECUTIVE OFFICERS
The following table shows the number of shares of the Company's common stock beneficially owned as of March 20,
2020 by: each of the Company's directors/director nominees on such date; the principal executive officer and the
principal financial officer during Fiscal 2019; the three next most highly compensated executive officers of the
Company as of the end of Fiscal 2019; and the directors and executive officers on March 20, 2020 (see "Executive
Officers of the Company" at PS-15) as a group. In the notes to the table below, "Vested Stock Options" refer to stock
options that are exercisable as of March 20, 2020 or will become exercisable within 60 days of that date.
Name
Directors/Director Nominees
Alessandro Bogliolo (CEO)
Rose Marie Bravo
Hafize Gaye Erkan
Roger N. Farah
Jane Hertzmark Hudis
Abby F. Kohnstamm
James E. Lillie
William A. Shutzer
Robert S. Singer
Annie Young-Scrivner
Executive Officers
Mark J. Erceg (CFO)
Philippe Galtie
Leigh M. Harlan
Daniella Vitale
All executive officers and
directors as a group (17 persons):
Amount and Nature of
Beneficial Ownership
Percentage
of Class a
39,372
42,233 b
4,951 c
44,633 d
4,951 e
55,056 f
37,815 g
354,913 h
40,062 i
8,287 j
143,114 k
36,609
37,033 l
—
896,726 m
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
a) An asterisk (*) is used to indicate less than 1% of the class outstanding.
b) Includes 38,233 shares issuable upon the exercise of Vested Stock Options.
c) Includes 4,951 shares issuable upon the exercise of Vested Stock Options.
d) Includes 24,633 shares issuable upon the exercise of Vested Stock Options and 10,000 shares held in a family
trust.
e) Includes 4,951 shares issuable upon the exercise of Vested Stock Options.
f)
Includes 34,373 shares issuable upon the exercise of Vested Stock Options.
g) Includes 15,026 shares issuable upon the exercise of Vested Stock Options.
h) Includes 38,233 shares issuable upon the exercise of Vested Stock Options; 107,250 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; and
32,210 shares held in trust for one adult child of which trust Mr. Shutzer's wife is sole trustee. Mr. Shutzer
disclaims beneficial ownership of Company shares held by KJC Ltd. and shares held in the aforementioned trust.
i)
j)
Includes 31,896 shares issuable upon the exercise of Vested Stock Options.
Includes 8,277 shares issuable upon the exercise of Vested Stock Options.
k) Includes 73,914 shares issuable upon the exercise of Vested Stock Options.
l)
Includes 12 shares held in Ms. Harlan's account under the 401K Plan.
TIFFANY & CO.
PS-13
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m) Includes 274,487 shares issuable upon the exercise of Vested Stock Options; 2,719 shares held in accounts
under the 401K Plan; and three shares held in the Tiffany Employee Stock Purchase Plan.
See "Equity Ownership by Executive Officers," beginning at PS-59 for a discussion of the Company's share ownership
policy.
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TIFFANY & CO.
PS-14
The executive officers of the Company are:
EXECUTIVE OFFICERS OF THE COMPANY
Name
Age
Position
Alessandro Bogliolo
Mark J. Erceg
Philippe Galtie
Daniella Vitale
Andrea C. Davey
Leigh M. Harlan
Andrew W. Hart
Gretchen Koback-Pursel
55
51
59
58
51
43
52
47
Chief Executive Officer
Executive Vice President–Chief Financial Officer
Executive Vice President–Global Sales
Executive Vice President–Chief Brand Officer
Senior Vice President–Global Marketing
Senior Vice President–Secretary & General Counsel
Senior Vice President–Diamond & Jewelry Supply
Senior Vice President–Chief Human Resources Officer
Year Joined
Tiffany
2017
2016
2015
2019
2013
2012
1999
1997
Alessandro Bogliolo. Mr. Bogliolo joined Tiffany in October 2017 as CEO, and was concurrently appointed as a
director of Tiffany & Co. Prior to joining Tiffany, Mr. Bogliolo served as CEO of Diesel SpA, a global apparel and
accessories company, from 2013 to 2017. Previously, he was Chief Operating Officer, North America, at Sephora
USA Inc. from 2012 to 2013. Mr. Bogliolo also spent 16 years at Bulgari SpA from 1996 to 2012, serving in
various management roles, including as Chief Operating Officer and Executive Vice President, Jewelry, Watches &
Accessories.
Mark J. Erceg. Mr. Erceg joined Tiffany in October 2016 as Executive Vice President–Chief Financial Officer. Prior to
joining Tiffany, Mr. Erceg held the role of Executive Vice President and Chief Financial Officer for Canadian Pacific
Railway Limited, a transcontinental railway, from 2015 to 2016, and for Masonite International Corporation, a global
manufacturer of commercial and residential doors, from 2010 to 2015. Previously, Mr. Erceg held finance, market
strategy, customer response, general management and global investor relations positions at The Procter & Gamble
Company during his tenure there from 1992 to 2010.
Philippe Galtie. Mr. Galtie joined Tiffany in August 2015 as Senior Vice President–International, with responsibility
for all sales channels in the Company's Asia-Pacific, Europe, Japan and Emerging Markets regions, as well as
oversight of global store development and global sales operations. In 2016, Mr. Galtie assumed responsibility for
global customer and omnichannel management, and in 2017 he also assumed responsibility for global customer and
sales service, as well as the Company's Americas region. Following these changes, he was responsible for sales
channels in every region, as well as global store planning, global sales operations, global customer and omnichannel
management and global customer and sales service. Mr. Galtie was promoted to Executive Vice President–Global
Sales effective February 1, 2018. Prior to joining Tiffany, Mr. Galtie held the role of International Retail Director at
Cartier since 2011, where he was responsible for oversight of retail and client strategy, client relations and services,
operations, store design and merchandising.
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Daniella Vitale. Ms. Vitale joined Tiffany on December 1, 2019 as Executive Vice President–Chief Brand Officer, with
responsibility for overseeing the global strategic initiatives of the Company's Merchandising and Marketing divisions.
Prior to joining Tiffany, Ms. Vitale held roles of increasing responsibility at Barney's New York, which filed for
protection under Chapter 11 of the U.S. Bankruptcy Code in August 2019 and was acquired by Authentic Brands
Group in October 2019. During her employment at Barney's New York, Ms. Vitale served as Chief Executive Officer
from February 2017 through October 2019, Chief Operating Officer from 2013 to 2017, and Chief Merchandising
Officer and Executive Vice President–Digital from 2010 to 2013.
Andrea C. Davey. Ms. Davey joined Tiffany in 2013 as Vice President–Marketing for Northern America, and in 2014
was named Vice President–Global Marketing, with responsibility for marketing brand management, marketing
production and consumer insights. In 2016, Ms. Davey was named Divisional Vice President–Jewelry Collections,
where she was responsible for overseeing the management of Tiffany's various jewelry collections. She was promoted
to Senior Vice President–Global Marketing effective February 1, 2018. Prior to joining Tiffany, Ms. Davey held
TIFFANY & CO.
PS-15
marketing and brand management positions of increasing responsibility at The Procter & Gamble Company from
1996 to 2013.
Leigh M. Harlan. Ms. Harlan joined Tiffany in 2012 as Associate General Counsel. In 2014, she was promoted to
Senior Vice President–Secretary & General Counsel, with responsibility for the Company's worldwide legal affairs. In
2017, Ms. Harlan's responsibilities were expanded to include global compliance. 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, and in 2018 he also assumed responsibility for watch
manufacturing. His current title is Senior Vice President–Diamond & Jewelry Supply.
Gretchen Koback-Pursel. Ms. Koback-Pursel joined Tiffany in 1997 as a Human Resources Representative and
advanced through positions of increasing management responsibility. In 2012, Ms. Koback-Pursel was promoted to
Vice President–Global Human Resources, serving as the primary human resources business partner for the Tiffany &
Co. executive team and the Company's creative and operational corporate groups. She was promoted to Senior Vice
President–Chief Human Resources Officer in June 2017.
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TIFFANY & CO.
PS-16
ITEM 1. ELECTION OF THE BOARD
Each year, the Company elects directors at an annual meeting of its shareholders. Pursuant to the Company's By-
laws, directors are required 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.
At the 2020 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. Pursuant to the terms of the
Merger Agreement, each of the Company's then-current directors will be required to resign from the Board
immediately prior to the effective time of the Merger.
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 2020 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
2020 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. All nominees have previously been elected as directors by the Company's shareholders.
In February 2017, JANA Partners LLC ("JANA") and the Company entered into a Cooperation Agreement (the
"Cooperation Agreement"), pursuant to which the Company agreed that, subject to the conditions set forth therein,
the Board would appoint (i) Roger N. Farah, James E. Lillie and Francesco Trapani to the Board and (ii) Mr. Trapani
to the Nominating/Corporate Governance Committee and the then-existing Search Committee, in each case no later
than 10 business days after the date of the Cooperation Agreement. Mr. Farah, Mr. Lillie and Mr. Trapani were
subsequently appointed to the aforementioned positions in March 2017. Pursuant to the Cooperation Agreement, the
Company also agreed that, subject to the conditions set forth therein, the Board would nominate each of Mr. Farah,
Mr. Lillie and Mr. Trapani for election to the Board at the Company's 2017 Annual Meeting. Mr. Farah, Mr. Lillie and
Mr. Trapani were so nominated, and were each subsequently elected as directors by the Company's shareholders at
the 2017 Annual Meeting. Mr. Farah, Mr. Lillie and Mr. Trapani were also included, at the determination of the
Board and with the subsequent agreement of JANA, on the Company's slate of directors for the 2018 and 2019
Annual Meetings and were elected at each of those meetings. Pursuant to the Cooperation Agreement and a separate
cooperation agreement, entered into in February 2017 between the Company and Mr. Trapani (the "Trapani
Cooperation Agreement"), JANA and Mr. Trapani were each committed to be independent of each other following the
date of such agreements. On November 26, 2019, Mr. Trapani resigned from the Board with immediate effect in
order to pursue other opportunities.
The foregoing summary of the Cooperation Agreement and Trapani Cooperation Agreement is not complete and is
subject to, and is qualified by reference to, the full text of the Cooperation Agreement and Trapani Cooperation
Agreement, which are filed as Exhibits 10.37 and 10.38, respectively, to the Company's Current Report on Form 8-K
filed with the SEC on February 21, 2017.
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TIFFANY & CO.
PS-17
The following chart summarizes the balance of skills, experience and qualifications that each director nominee
brings to the Board. The fact that a particular skill, experience or qualification is not designated does not mean that
the nominees do not also possess that specific skill, experience or qualification. Each of the director nominees has
many diverse skills, but the chart below highlights those skills that are most noteworthy for each such nominee.
Luxury Retail
Experience
Brand
Management
Global
Management
Strategic
Planning
Accounting/
Finance
CEO/CFO
Experience
Product
Development/
Merchandising
Digital and
Marketing
Other Public
Company
Board(s)
(Last five
years)
Alessandro
Bogliolo
Rose Marie
Bravo
Hafize Gaye
Erkan
Roger N. Farah
Jane Hertzmark
Hudis
Abby F.
Kohnstamm
James E. Lillie
William A.
Shutzer
Robert S. Singer
Annie Young-
Scrivner
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TIFFANY & CO.
PS-18
Information concerning each of the nominees of the Board, including a description of the specific experience,
qualifications and key skills of each such nominee, is set forth below:
Alessandro
Bogliolo
Rose Marie Bravo
Hafize Gaye Erkan
Roger N. Farah
Mr. Bogliolo, 55, became a director of Tiffany & Co. in October 2017, concurrently with the
commencement of his employment as CEO. Prior to joining Tiffany, Mr. Bogliolo served as
CEO of Diesel SpA, a global apparel and accessories company, from 2013 to 2017.
Previously, he was Chief Operating Officer, North America, at Sephora USA Inc. from 2012
to 2013. Mr. Bogliolo also spent 16 years at Bulgari SpA from 1996 to 2012, serving in
various management roles, including as Chief Operating Officer and Executive Vice
President, Jewelry, Watches & Accessories.
Key Skills: retail and luxury brand management, product development, merchandising,
marketing, global management and strategic planning.
Ms. Bravo, CBE, 69, became a director of Tiffany & Co. in 1997. Ms. Bravo previously
served as CEO 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
positions at Macy's, culminating in the Chairman & CEO role at I. Magnin, which was a
division of R. H. Macy & Co. Ms. Bravo serves on the Board of Directors of The Estée
Lauder Companies Inc. She also served on the Board of Directors of the following public
company during the past five years: Williams-Sonoma, Inc.
Key Skills: retail and brand management, global management, merchandising and product
development.
Ms. Erkan, 41, is the President of First Republic Bank ("First Republic"). Ms. Erkan also
became a member of the Board of Directors of First Republic in 2019. Prior to becoming
President in 2017, she served as Chief Investment Officer and Chief Deposit Officer of
First Republic from January 2016 to May 2017, as Chief Investment Officer from
September to December 2015 and as Chief Investment Officer and Co-Chief Risk Officer
from June 2014 to August 2015. Prior to First Republic, she held the position of Managing
Director and Head of Financial Institutions Group Strategies at Goldman Sachs, where she
worked in roles of increasing responsibility for nearly a decade, advising boards and
executive management of large U.S. banks and insurance companies. Ms. Erkan holds a
B.Sc. from Bogazici University (Turkey) and a Ph.D. from Princeton University.
Key Skills: finance, strategic planning, risk management, brand management, data and
analytics and strategic transactions.
Mr. Farah, 67, became a director of Tiffany & Co. in March 2017 and was elected
Chairman of the Board in October 2017. He served as the Co-CEO of Tory Burch LLC from
2014 to March 2017, when he transitioned to the role of Executive Director, which he held
through December 2017. He also served as a member of the Board of Directors of Tory
Burch LLC from 2014 to 2017. Mr. Farah served as President and Chief Operating Officer
of Ralph Lauren Corporation from 2000 to 2013 and as Executive Vice Chairman from
November 2013 to May 2014. He was a member of the Board of Directors of Ralph Lauren
Corporation from 2000 to 2014. Prior to joining Ralph Lauren Corporation, he served as
Chairman of the Board and CEO of Venator Group, Inc. (now Foot Locker, Inc.), as
President and Chief Operating Officer of R.H. Macy & Co., Inc. and as Chairman and CEO
of Federated Merchandising Services. Mr. Farah currently serves on the Board of Directors
of The Progressive Corporation and CVS Health Corporation. He also served on the Board of
Directors of the following public companies during the past five years: Aetna, Inc. (which
was acquired by CVS Health Corporation in November 2018) and Metro Bank PLC. Mr.
Farah holds a B.S. in Economics from the University of Pennsylvania, Wharton School of
Business.
Key Skills: luxury brand management, global management, marketing and product
development.
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PS-19
Jane Hertzmark
Hudis
Abby F. Kohnstamm
James E. Lillie
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William A. Shutzer
Ms. Hertzmark Hudis, 60, is the Group President of The Estée Lauder Companies Inc.
("Estée Lauder"). In this role, in which she has served since January 2015, she is
responsible for leading the company's Estée Lauder, La Mer, Bobbi Brown, AERIN, Darphin,
Origins, Aveda, Bumble and bumble, Dr. Jart+ and Do The Right Thing brands globally.
From 2009 to 2014, Ms. Hertzmark Hudis served as the Global President of the Estée
Lauder brand. Since joining Estée Lauder in 1986, she has served in management
positions of increasing responsibility, including as President of Origins and President of
BeautyBank, a brand innovation think tank she co-founded in 2003. Ms. Hertzmark Hudis
serves as a director of the Fashion Institute of Technology ("FIT") Foundation as well as a
member of FIT's executive committee of the cosmetics and fragrance marketing and
management graduate program. She holds a B.A. from Vassar College and an M.B.A. from
Columbia Business School.
Key Skills: retail and brand management, global management, strategic planning, product
innovation and digital marketing.
Ms. Kohnstamm, 66, became a director of Tiffany & Co. in 2001. Ms. Kohnstamm
previously served as the Executive Vice President and Chief Marketing Officer at Pitney
Bowes Inc. ("Pitney Bowes") from 2013 until her retirement in July 2018. In this role, she
managed Pitney Bowes's worldwide marketing and communications, pitneybowes.com, as
well as citizenship and philanthropy for Pitney Bowes. Before joining Pitney Bowes, Ms.
Kohnstamm was the President and founder of Abby F. Kohnstamm & Associates, Inc., a
marketing and consulting firm. Prior to establishing her company in 2006, Ms. Kohnstamm
served as Senior Vice President, Marketing (Chief Marketing Officer) of IBM Corporation
from 1993 through 2005. In that capacity, she had overall responsibility for all aspects of
marketing and corporate philanthropy across IBM on a global basis. Before joining IBM,
Ms. Kohnstamm held a number of senior marketing positions at American Express from
1979 through 1993. Ms. Kohnstamm is a member of the Board of Directors of the
Roundabout Theatre Company and Sanctuary for Families, as well as Trustee Emeritus of
Tufts University. 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 Stern School of Business.
Key Skills: brand management, global management, strategic planning, digital marketing
and e-commerce.
Mr. Lillie, 58, became a director of Tiffany & Co. in March 2017. He is the Vice Chairman
of Mariposa Capital, a private investment office. Prior to April 2019, he served as a
consultant for Newell Brands, which acquired Jarden Corporation in April 2016. He held
senior positions at Jarden Corporation from 2003 through the aforementioned acquisition
of the company, including as President and Chief Operating Officer and, beginning in
2011, CEO. He also served as a member of the Board of Directors of Jarden Corporation
from 2011 until the aforementioned acquisition. Prior to joining Jarden Corporation, Mr.
Lillie served as Executive Vice President of Operations at Moore Corporation Limited and
held several senior level management positions at portfolio companies of Kohlberg, Kravis,
Roberts & Company. Mr. Lillie serves on the Board of Directors of APi Group Corporation
(formerly J2 Acquisition Limited) and Nomad Foods Limited, and previously served on the
Board of Directors of Radio Prisa in Spain and the US-China Business Council. Mr. Lillie
holds a B.A. from the University of Wisconsin.
Key Skills: global management, strategic planning, finance, product innovation and
business process optimization.
Mr. Shutzer, 73, became a director of Tiffany & Co. in 1984. He has been a Senior Advisor
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. Mr. Shutzer serves on the
Board of Directors of ExamWorks Group, Inc. and Evercore Trust Company.
Key Skills: finance, investor relations and strategic planning.
TIFFANY & CO.
PS-20
Robert S. Singer
Annie Young-
Scrivner
Mr. Singer, 68, became a director of Tiffany & Co. in 2012. He has been a consultant for
IDG Capital, a private equity firm, since November 2018, and previously served as CEO of
Barilla Holding S.p.A, a major Italian food company, from 2006 to 2009. From 2004 to
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 1995 to 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 2006 to 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 Coty Inc. and Keurig Dr. Pepper Inc., and served on the
Board of Directors of the following public companies during the past five years: Mead
Johnson Nutrition Company and Jimmy Choo PLC. Mr. Singer also currently serves on the
Board of Directors of several non-public companies.
Key Skills: accounting, global retail, financial and general management of luxury brands.
Ms. Young-Scrivner, 51, became a director of Tiffany & Co. in May 2018. She is the CEO of
Godiva Chocolatier ("Godiva"). Prior to joining Godiva in August 2017, Ms. Young-Scrivner
held senior positions at Starbucks Corporation ("Starbucks") beginning in 2009, including
as Global Chief Marketing Officer & President of Tazo Tea from 2009 to 2012, President of
Starbucks Canada from 2012 to 2014, President, Teavana & Executive Vice President of
Global Tea from 2014 to 2015, and Executive Vice President, Global Digital & Loyalty
Development from 2015 until her departure in April 2017. Prior to joining Starbucks, Ms.
Young-Scrivner held senior leadership positions at PepsiCo, Inc. in sales, marketing and
general management, including her role as Region President of PepsiCo Foods Greater
China from 2006 to 2008. Ms. Young-Scrivner holds a B.A. from the Foster School of
Business, University of Washington and an Executive M.B.A. from the Carlson School of
Business, University of Minnesota. Ms. Young-Scrivner currently serves on the Board of
Directors of Yum! Brands, Inc., and served on the Board of Directors of the following public
company during the past five years: Macy's Inc.
Key Skills: omnichannel brand management, digital marketing, global management,
consumer insights and data analytics, and strategic planning.
In the event that any of the current directors standing for re-election 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 such
director standing for re-election has tendered a resignation letter to the Nominating/Corporate Governance Committee
to be considered in the event that he or she does not receive such a majority vote. 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.h 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" and then selecting "Corporate Governance."
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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:
•
Independent Chairman–Roger N. Farah, an independent director, has served as Chairman of the Board since
October 2017;
• 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 directors standing for re-election has tendered a resignation letter to
the Nominating/Corporate Governance Committee to be considered 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–8 of the Company's 10 directors up for election are independent;
• Proxy access by-law–adopted by the Board during the Company's fiscal year ended January 31, 2018 ("Fiscal
2017");
• Director overboarding policy–directors may not serve on a total of more than five public company boards, and
no director who is serving as CEO of a public company or who is otherwise employed full time may serve on a
total of more than three public company boards (in each case, 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, upon accepting a directorship
with another public company (or any other organization that would require a significant time commitment)
or, in the case of a director who is a Company employee, upon retirement or other termination of his or her
active employment with the Company. The Nominating/Corporate Governance Committee may then accept or
decline such resignation;
• Annual self-evaluation–the Company's non-management directors participate in an annual assessment and
evaluation of the workings and efficiency of the Board and each of the committees on which they serve, the
results of which are discussed by the full Board;
Long-standing policies governing business and ethical conduct;
•
• Commitment to corporate social responsibility; and
•
Leading compensation practices–see "Corporate Governance Best Practices" at PS-45.
THE BOARD, IN GENERAL
The Board is currently composed of 10 members. The Board can fill vacancies and newly created directorships, as
well as amend the Company's 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 five public
company boards. In addition, no director who is serving as the CEO of a public company, or who is otherwise
employed full time, may serve on more than three public company boards. Service on the Board is included in each
of those totals.
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" and then selecting "Corporate Governance." The responsibilities of the
Board include:
• Review and approval of the annual operating plan prepared by management;
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• Monitoring of performance in comparison to the annual operating plan;
• Review and approval of the Company's multi-year strategic plan prepared by management;
• Consideration of topics of relevance to the Company's ability to carry out its strategic plan;
• Selection and evaluation of, and determination of whether to retain or replace, the Company's CEO;
• Participation in succession planning for the Company's other executive officers;
• 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 appropriate, modification of Board committee charters;
• Review and approval of the Company's policies or programs with respect to payment of dividends and the
repurchase of common stock; and
• Review and approval of other significant actions by the Company.
BOARD LEADERSHIP STRUCTURE
Pursuant to the Company's Corporate Governance Principles, it is the responsibility of the Board to determine
whether the offices of Chairman of the Board and CEO shall be held by one person or by separate persons, and to
further determine whether the person holding the office of Chairman of the Board shall be "independent." In
determining which director is elected to serve as Chairman of the Board, the Board broadly considers all relevant
facts and circumstances, as well as candidates' business experience, specific areas of expertise and skill set,
including their ability to effectively moderate discussions during Board meetings and their responsiveness to the
Board's suggestions for agenda items and information to be provided by management to the Board.
Roger N. Farah, an independent director, has served as the non-executive Chairman of the Board since 2017. The
Board continues to believe that having an independent, non-executive Chairman is in the best interest of the
Company and its shareholders. In particular, the Board believes that a clear division of responsibilities between the
leadership of the Board and the Company's CEO, Alessandro Bogliolo, will best enable Mr. Bogliolo to focus his time
and attention on managing the Company, and allow Mr. Farah to dedicate his efforts to Board governance matters
and to leading the Board in its fundamental role of providing oversight and guidance regarding the business,
operations and strategy of the Company. The Board also believes the non-executive Chairman role is important to
provide additional independent oversight of the Company's management, including enhanced accountability of the
Company's CEO to the Board, and to serve in an advisory capacity to the CEO. In addition, the existence of an
independent, non-executive Chairman facilitates communication among the Company's other directors, or between
any of them, as well as communication between shareholders and the Company's independent and other non-
management directors.
In electing Mr. Farah as the Company's non-executive Chairman, the Board considered Mr. Farah's extensive
experience as an executive in the luxury retail industry, believing his in-depth understanding of the industry,
consumer behavior and the competitive environment in which the Company operates to be invaluable in advising the
Company's CEO and in guiding the Board through key matters within its purview, including the strategic planning
process. Additionally, the Board focused on Mr. Farah's service as a director and an executive of multiple U.S. public
companies with global operations, noting that such experience has enabled him to develop knowledge of public
company governance, compensation, investor relations, regulatory and reporting matters. Based on the
considerations above, as well as the expertise Mr. Farah has demonstrated and the insights he has provided during
his tenure on the Board to date, the Board continues to believe that he is the appropriate individual to serve as the
Company's non-executive Chairman.
As non-executive Chairman of the Board, Mr. Farah works closely with the CEO, providing advice to Mr. Bogliolo on
operational, strategic, organizational and executive management matters. In this capacity, he facilitates
communications between the directors and the Company's management. Mr. Farah also approves the schedule of
Board meetings, sets the agenda for each Board meeting, after consideration of any items submitted for inclusion by
the other directors and Company management, and consults with management regarding the materials to be
presented to the Board to ensure such materials are responsive to the Board's requests and needs. As non-executive
Chairman, Mr. Farah presides over meetings of the Board as well as meetings of the non-management and
independent directors, and has the authority to call such meetings. Both in and outside of Board meetings, Mr.
Farah facilitates communication among the directors. Consistent with this role, and his position as the chair of the
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PS-23
Nominating/Corporate Governance Committee, Mr. Farah leads the annual evaluation of the performance of the
Board and its committees and provides oversight with respect to the Board's compliance with corporate governance
requirements and best practices.
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
Non-management directors meet regularly in executive session without the participation of management directors or
executive officers. This encourages open discussion. In addition, at least once per year the independent directors
meet separately in executive session.
SHAREHOLDER ENGAGEMENT AND COMMUNICATION WITH NON-MANAGEMENT DIRECTORS
The Company's Board and management are strongly committed to proactive and ongoing communications with
current, potential and former shareholders. The Company's approach to shareholder engagement revolves around
providing informative, candid, credible and consistent communications to shareholders, as well as soliciting their
feedback. The Company's CEO, Chief Financial Officer ("CFO") and Vice President–Treasurer and Investor Relations,
regularly communicate with Company shareholders through one-on-one and group meetings and in conferences in an
effort to remain informed regarding shareholder perspectives on strategic, operational and governance matters
(including with respect to executive compensation) and to address any questions or concerns from shareholders. The
Company's Board and management may also undertake enhanced shareholder outreach in response to specific
feedback conveyed by Company shareholders.
Through the foregoing shareholder engagement practices, the Company's management serves as a liaison between
shareholders and the Board. However, shareholders and other interested persons may also contact the Board directly
by sending written communications to the entire Board or to any of the non-management directors by addressing
their concerns to Roger N. Farah, Chairman of the Board, at the following address: Corporate Secretary (Legal
Department), Tiffany & Co., 200 Fifth Avenue, New York, New York 10010. 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
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, Hafize Gaye Erkan, Roger N. Farah, Jane Hertzmark Hudis, Abby F. Kohnstamm,
James E. Lillie, Robert S. Singer and Annie Young-Scrivner. The Board had also previously determined that Lawrence
K. Fish, who was a director for a portion of Fiscal 2019 but did not stand for re-election at the 2019 Annual
Meeting, and Francesco Trapani, who resigned from the Board in November 2019, were "independent."
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 Mr. Singer, Ms. Erkan and Mr. Lillie meet the additional,
heightened independence criteria applicable to audit committee members under the New York Stock Exchange rules.
The Board had also previously determined that Mr. Fish and Mr. Trapani, who each served on the Audit Committee
during Fiscal 2019, met such additional, heightened independence criteria.
In determining that Mr. Farah and Mr. Lillie are independent, the Board specifically considered the Cooperation
Agreement. In determining that Mr. Trapani was independent, the Board had specifically considered the Cooperation
Agreement, the Trapani Cooperation Agreement and the Nomination Agreement (as defined on PS-90). See "Item 1.
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PS-24
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Election of the Board" at PS-17 for additional information regarding the Cooperation Agreement and Trapani
Cooperation Agreement. See "Additional Compensation from JANA Partners LLC" at PS-90 for additional information
regarding the Nomination Agreement.
To the Company's knowledge, none of the other independent directors/director nominees has any direct or indirect
relationship with the Company, other than as a director.
BOARD AND COMMITTEE MEETINGS AND ATTENDANCE DURING FISCAL 2019
Pursuant to the Company's Corporate Governance Principles, directors are expected to attend the regularly scheduled
Board meetings, as well as all regularly scheduled meetings for those committees on which they serve. Directors are
expected to attend such meetings in person or, if such attendance in person is not practicable, by telephone or other
communications equipment.
The Board holds one of its regularly scheduled meetings on the date of the annual meeting of its shareholders to
facilitate attendance at the annual meeting by the directors. Nine of the Company's 10 directors up for election at
the 2020 Annual Meeting attended the 2019 Annual Meeting. Francesco Trapani, who resigned from the Board in
November 2019, also attended the 2019 Annual Meeting.
Each director who served on the Board as of March 20, 2020 attended at least 81% of the aggregate number of
meetings of the Board and those committees (including the Audit Committee, Compensation Committee and Stock
Option Subcommittee, Nominating/Corporate Governance Committee, Finance Committee and Corporate Social
Responsibility Committee) on which he or she served during Fiscal 2019.
• The full Board held five regular meetings and six special meetings. Attendance averaged 99% amongst all
members.
• The Audit Committee held seven meetings. All members attended all meetings.
• The Compensation Committee and its Stock Option Subcommittee held three regular meetings and one
special meeting. Attendance averaged 94% amongst all members.
• The Nominating/Corporate Governance Committee held three meetings. Attendance averaged 89% amongst
all members.
• The Finance Committee held three regular meetings and one special meeting. All members attended all
meetings.
• The Corporate Social Responsibility Committee held three meetings. Attendance averaged 94% amongst all
members.
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Board Committee Membership
COMMITTEES OF THE BOARD
The committees of the Board, as well as the memberships thereof, consisted of the following as of March 20, 2020:
Director
Audit*
Compensation
Committee &
Stock Option Sub-
committee*
Corporate
Social
Responsibility
Dividend
Finance
Nominating/
Corporate
Governance*
Alessandro Bogliolo
Rose Marie Bravo
Hafize Gaye Erkan
Roger N. Farah
Jane Hertzmark Hudis
Abby F. Kohnstamm
James E. Lillie
William A. Shutzer
Chair
Chair
Chair
Chair
Robert S. Singer
Chair
Annie Young-Scrivner
* Composed solely of independent directors.
Audit Committee
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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, as amended ("Exchange Act"). The primary purpose of the Audit Committee is to
assist the Board in fulfilling its oversight responsibilities with respect to the (i) integrity of the Company's financial
statements, (ii) Company's compliance with legal and regulatory requirements, (iii) Company's process to assess,
monitor and control major financial risk exposures, (iv) independent auditor's qualifications and independence, and
(v) performance of the Company's internal audit function and independent auditor. 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" and then selecting "Corporate Governance." Under its charter, the Audit Committee's
responsibilities and related oversight processes include:
• Appointing, compensating, retaining and providing oversight of the Company's independent registered public
accounting firm retained to audit the Company's consolidated financial statements;
• Reviewing the quality-control procedures and independence of the Company's independent registered public
accounting firm and evaluating their proposed audit scope, performance and fee arrangements;
• Reviewing and evaluating the lead partner of the independent auditor;
• Approving in advance all audit and non-audit services to be rendered by the independent registered public
accounting firm;
• Reviewing and discussing the Company's financial statements and audit findings, including the impact of
significant events, transactions or changes in accounting principles thereon, with management and the
independent auditor in advance of filing;
• Reviewing and discussing significant proposed changes in the Company's auditing and accounting
principles, policies, controls, procedures and practices with management and the independent auditor;
• Discussing the Company's earnings press releases in advance of filing, as well as financial information and
earnings guidance provided to analysts and rating agencies;
• Reviewing the adequacy of the Company's system of internal accounting and financial controls;
• Discussing guidelines and policies with respect to risk assessment and risk management, including the steps
management has taken to monitor and control major risk exposures in the following areas: financial and
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PS-26
financial reporting risks, risks related to litigation or other legal or compliance matters, employee safety
risks, global security risks, information security and technology risks, and data privacy and data protection
risks;
• Reviewing and discussing the overall adequacy and effectiveness of the Company's legal, regulatory and
ethical compliance programs, including the Company's policy governing business conduct for Company
employees worldwide (see "Business Conduct Policy and Code of Ethics" at PS-32);
• Reviewing and discussing the status of income tax returns and related government audits, if any, and the
Company's overall tax strategy;
• Meeting separately, periodically, with management, the Company's internal audit function and the
independent auditor;
• Discussing with the Company's internal audit function and the independent auditor the overall scope and
plans for their respective audit work;
• Discussing with management, the Company's internal audit function and, as appropriate, the independent
auditor the adequacy and effectiveness of the Company’s financial reporting process and system for
monitoring and managing business risk and legal compliance programs;
• 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
• Reviewing the responsibilities, budget and staffing of the Company's internal audit function, as well as the
compensation and performance of the person responsible for that function.
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., Mead Johnson Nutrition
Company and Jimmy Choo PLC. The Board also considered Mr. Singer's role as chairman of the audit committee for
Coty Inc. and Keurig Dr. Pepper Inc. The Board has determined that Mr. Singer's simultaneous service on the audit
committee of two 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-36.
For additional information regarding the Company's relationship with its independent registered public accounting
firm, see "Relationship with Independent Registered Public Accounting Firm" at PS-37.
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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" and then selecting "Corporate Governance."
Under its charter, the Compensation Committee's responsibilities include:
• Reviewing and approving corporate goals and objectives relevant to the compensation of our CEO;
• Evaluating our CEO's performance in light of those corporate goals and objectives;
• Determining and approving our CEO's compensation level based on such evaluation;
• Where Board action is required, 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;
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• Considering the expressed view of shareholders on executive compensation matters, including shareholder
proposals and advisory votes, and considering 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.
Pursuant to its charter, the Compensation Committee may delegate any of its functions to one or more
subcommittees composed entirely of members of the Compensation Committee.
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
The Compensation Committee periodically engages and consults with Frederic W. Cook & Co., Inc. ("FW Cook"), an
independent advisor, to provide advice with respect to the amount and form of executive compensation. FW Cook
also provides advice to the Nominating/Corporate Governance Committee with respect to non-management director
compensation. Independence factors as reflected in the Compensation Committee charter were considered in
selecting FW Cook, and FW Cook was found to be independent. For additional information regarding the operation of
the Compensation Committee, including the role of consultants and management in the process of determining the
amount and form of executive compensation, see "Compensation Evaluation Process" at PS-48 and "Report of the
Compensation Committee" at PS-62.
Stock Option Subcommittee
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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 2019, the members of the Compensation Committee and its Stock Option Subcommittee were Rose Marie
Bravo, Roger N. Farah, Abby F. Kohnstamm and Annie Young-Scrivner. No director serving on the Compensation
Committee or its Stock Option Subcommittee during any part of Fiscal 2019 was, at any time either during or before
such fiscal year, an officer or employee of Tiffany & Co. or any of its subsidiaries. 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 identify individuals to become Board
members consistent with criteria approved by the Board, and 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" and then selecting "Corporate
Governance." Under its charter, the responsibilities of the Nominating/Corporate Governance Committee include:
• Developing and recommending to the Board policies on Board composition;
• Developing and recommending to the Board criteria for the selection of director nominees;
•
Identifying nominees to fill vacancies on the Board;
Identifying nominees for election to the Board;
•
• Recommending to the Board the optimal number of directors constituting the entire Board;
• Developing and recommending to the Board corporate governance principles applicable to the Company;
• Determining non-management director compensation;
• Approving related person transactions that the Committee determines to be in the best interests of the
Company; and
• Assisting the Board in its evaluation of management performance and succession planning.
TIFFANY & CO.
PS-28
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., 200 Fifth Avenue, New York,
New York 10010.
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.
See our Corporate Governance Principles which are available on our website, www.tiffany.com, and may be viewed by
clicking "Investors" on that website, and then selecting "Corporate Governance." In accordance with these principles,
candidates for director shall be selected on the basis of their business experience, expertise and skills, with a view to
supplementing the business experience, expertise and skills of management and adding further substance and
insight into Board discussions and oversight of management.
The candidate identification and evaluation process includes discussions at meetings of the Nominating/Corporate
Governance Committee and 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
process other than the process described under "Board Self-Evaluation and Refreshment" below.
While the Company's Corporate Governance Principles do not prescribe diversity standards, as a matter of practice,
the Nominating/Corporate Governance Committee considers the diversity of the Board as a whole when considering
candidates for director. In this context, diversity is broadly construed to include differences in personal and
professional experience, perspective, ways of thinking, education, skill and other individual qualities and attributes
(including any such qualities and attributes that are self-identified by the applicable candidate) that contribute to a
more diversified mindset among the directors. In addition, one of the factors that the Board considers during its
annual self-evaluation is whether the membership of the Board provides an appropriate mix of skills, experience and
backgrounds.
Roger N. Farah and James E. Lillie were originally appointed to the Board pursuant to the Cooperation Agreement, as
discussed under "Item 1. Election of the Board" at PS-17.
Corporate Social Responsibility Committee
The Corporate Social Responsibility Committee assists the Board in its oversight of the Company's initiatives, plans
and practices with respect to corporate social responsibility matters of significance to the Company and the
communities in which it operates. These matters are presently defined as ethical and sustainable sourcing, human
rights, the environment, supplier conduct, labor conditions, climate change, diversity in employment, charitable
giving, government relations and political spending. 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" and then selecting "Corporate Governance."
Dividend Committee
The Dividend Committee exercises the power otherwise vested in the Board with respect to the declaration of regular
quarterly dividends in accordance with the dividend policy established by the Board. The Dividend 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", and then selecting "Corporate Governance." Alessandro Bogliolo is the sole
member of the Dividend Committee.
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TIFFANY & CO.
PS-29
Finance Committee
The Finance Committee assists the Board with its oversight of the Company's capital structure, liquidity risk,
dividend policy, purchase and repurchase of the Company's common stock, debt and equity financings, the retention
of investment bankers and other financial advisors to the Board or to the Company, the Company's schedule of, and
strategy with respect to, insurance coverage, 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", and then selecting
"Corporate Governance."
BOARD SELF-EVALUATION AND REFRESHMENT
Annually, each non-management director participates in an assessment and evaluation of the Board's performance
and the performance of each of the Board committees on which he or she serves. The results of such self-
assessments are then discussed by the full Board.
Changes to Board composition may result from the Board's self-evaluation practices and related discussions;
however, the Board also ensures refreshment through By-law provisions requiring that directors be less than age 74
when elected or appointed, unless the Board waives such provisions with respect to an individual director whose
continued service is deemed uniquely important to the Company. The Board carefully considers its decisions with
respect to its optimal size and the selection, nomination and election of individuals to serve as directors.
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 (i) on a change in employment or significant change in job
responsibilities, (ii) upon accepting or resolving to accept a directorship with another public company (or any other
organization that would require a significant time commitment) or (iii) in the case of a director who is a Company
employee, upon retirement or other termination of his or her active employment with the Company. The Nominating/
Corporate Governance Committee must promptly determine, in light of the circumstances, whether to accept or
decline such resignation. In certain instances, taking into account all relevant factors and circumstances, the
Nominating/Corporate Governance Committee may decline such resignation, but recommend to the Board that such
director cease participation in one or more committees or that such director not be re-nominated to the Board. If the
Nominating/Corporate Governance Committee does not accept such resignation within 10 days of receipt, the
resignation will not be effective.
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 the Company's CEO. Pursuant to the
Company's 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 CEO regarding the Company's
long-term strategic plan and long-term financial performance.
The Board will, at least annually, evaluate Alessandro Bogliolo's performance as CEO in connection with a self-
assessment performed by Mr. Bogliolo. The Board also evaluates, at least annually, in conjunction with the CEO, the
performance and potential of the Company's other executive officers. The Board, assisted by the Nominating/
Corporate Governance Committee, also participates in the planning for the succession of the Company's other
executive officers.
BOARD ROLE IN RISK OVERSIGHT
The Board believes that (i) 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) the Board has a role in overseeing management in the risk management function.
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TIFFANY & CO.
PS-30
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; an annual enterprise risk assessment
process; annual operating planning; strategic planning; and nurturing a corporate culture that encourages and
rewards ethical behavior and supports the TIFFANY & CO. brand image. This approach to risk management reflects
these goals: that every risk should, when possible and practicable, be identified, quantified as to impact, assigned a
probability factor, and properly delegated to the appropriate member of management for a response. This approach
helps to ensure that the Company's enterprise risk management process informs the Company's approach to strategic
planning, as well as to managing the day-to-day operations of the business. Operational risks so categorized are also
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 specifically 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 strategic, 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 annually
reviews management's enterprise risk management assessment and results. In addition, as part of its general
oversight role, the Board has responsibility for assessing material risks that arise in the Company's operations as
identified by management and reviews mitigation plans for addressing such risks. These risk areas include, for
example, risks related to competition, competitive brand positioning and execution on the Company's strategic
initiatives, as well as sourcing, distribution and inventory risks.
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 risks related to employee safety, global security, fraud, litigation and other legal and
compliance matters, and data privacy and data protection. The Audit Committee more generally reviews any litigation
or other legal or compliance matters that could have a significant impact on the Company's financial results, as well
as the status of the Company's income tax returns, any government audits related thereto, and the Company's overall
tax strategy. The Audit Committee is further responsible for reviewing and discussing the Company's cybersecurity,
data privacy and data security programs and regularly engages with management to monitor the risks related to this
complex and evolving area.
The Compensation Committee is responsible for assessing, on an annual basis, potential material risks to the
Company from its compensation programs and plans.
The Nominating/Corporate Governance Committee concerns itself principally with the Company's risks related to
corporate governance, as well as succession planning for executive officers and directors.
The Finance Committee concerns itself principally with liquidity risk, including risks related to foreign currency
exchange rates. The Finance Committee also annually reviews the Company's schedule of, and strategy with respect
to, insurance coverage, as part of the Company's risk mitigation initiatives.
The Corporate Social Responsibility Committee assists the Board in its oversight of management's evaluation of risks
and opportunities related to ethical and sustainable sourcing, human rights, the environment, supplier conduct,
labor conditions, climate change, diversity in employment, charitable giving, government relations and political
spending.
The Company has not designated an overall risk management officer and has no formal policy for coordination of risk
management oversight amongst the Board committees involved. However, the full Board does approve the duties,
responsibilities and procedures with respect to the areas of risk oversight specified in the charter of each committee.
Each committee also shares the minutes of its meetings with the Board and reports regularly to the Board. The
practices and processes set forth in this paragraph represent the Board's approach to coordinating the risk
management oversight function. The committee structure of the Board was not organized specifically for the purpose
of risk management oversight.
TIFFANY & CO.
PS-31
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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, insider information and transactions in Company
securities, 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, protection of computer passwords, political
contributions made through the use of Company funds, prohibition of discrimination or harassment, theft,
unauthorized disposition or unauthorized use of Company assets 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 financial, accounting, internal
controls or auditing matters, as well as incidents of potential or suspected corruption and other legal and regulatory
non-compliance. The toll-free phone number is 877-806-7464, and the hotline may also be accessed via a weblink
on the Company's website referenced below. 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.
The Company also has a Code of Business and Ethical Conduct for the directors, the CEO, the CFO and all other
executive 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 the Company's business conduct
policy. Waivers may only be made by the Board. A summary of the Company's business conduct policy and a copy of
the Code of Business and Ethical Conduct are posted on the Company's website, www.tiffany.com, and may be
viewed by clicking "Investors" on that website, and then selecting "Corporate Governance." 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 the Company's website. Accordingly, the Company 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. The Company 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.
POLITICAL SPENDING
The Board has adopted the Tiffany & Co. Principles Governing Corporate Political Spending, which 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, www.tiffany.com, by clicking "Investors" and then selecting
"Corporate Governance."
In accordance with the Principles Governing Corporate Political Spending, the Company reported the following
expenses for Fiscal 2019: the Company paid $150,000 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 associated
with various mining law, public lands conservation and sustainability issues, including with respect to the proposed
Pebble Mine in Bristol Bay, Alaska, and in communications with certain governmental agencies regarding
international gemstone sourcing as well as actions necessary to protect against wildlife trafficking. Cassidy &
Associates did not use any funds from the Company to assist candidates for any office or to influence the outcome of
ballot initiatives or elections. The Company also seeks to understand whether any membership dues the Company
and its affiliates pay 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. The major trade associations to which the Company and its affiliates paid annual dues in Fiscal 2019
have advised the Company that none of the Company's dues were used by such trade associations for political
expenditures in Fiscal 2019. Additionally, the Company and its affiliates did not make any political expenditures
during Fiscal 2019.
The Tiffany & Co. Principles Governing Corporate Political Spending define "political expenditures" to include
payments of money as well as provision of goods, services or use of facilities to candidates, political parties, political
TIFFANY & CO.
PS-32
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organizations, campaign funds or to any other organization, fund, person or trust, whose purpose, in whole or in part,
is (i) to advance the candidacy of any person or persons seeking elective office, including the candidacies of
nominees of any political party on a federal, national, statewide or local basis; (ii) to influence the outcome of any
ballot initiative; or (iii) to influence the outcome of any election through issues advocacy communications, whether
or not such communications specifically refer to a named candidate or party. Political expenditures also include
indirect expenditures whose purpose includes any of the foregoing.
COMMITMENT TO CORPORATE SOCIAL RESPONSIBILITY
Corporate social responsibility has long been a priority of the Company. The Company strives to protect the interests
of our shareholders, customers, employees 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 we
source, operate and sell our merchandise; improve our environmental performance; and promote responsible
practices within our supply chain and our industry.
Underscoring the importance of sustainability and corporate social 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/sustainability.
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 five-
percent or greater holder of the Company's securities, or any immediate family member of such a director, officer,
nominee or holder, has or will have a direct or indirect material interest. Any such transaction is referred to the
Nominating/Corporate Governance Committee for review. The Nominating/Corporate Governance Committee 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.
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TIFFANY & CO.
PS-33
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 2019. None of the
independent directors serve as an executive officer of these charities:
• Fish Family Foundation: $10,000 cash contribution and merchandise grants of $385 to support the
Champion of Change Japan Award (Lawrence K. Fish, who served as a director of the Company during Fiscal
2019 but did not stand for re-election at the 2019 Annual Meeting, is a Trustee).
• Prep for Prep: merchandise grants of $2,885 (William A. Shutzer is a Trustee).
• Whitney Museum of American Art (the "Whitney"): $1,000,000 sponsorship payment pursuant to the terms
of the sponsorship agreement entered into between Tiffany and the Whitney in 2015. Pursuant to the terms
of the sponsorship agreement, Mr. Bogliolo was proposed for election, and was subsequently elected, to the
Board of Trustees of the Whitney.
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TIFFANY & CO.
PS-34
ITEM 2. RATIFICATION OF THE SELECTION OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM TO AUDIT OUR
FISCAL 2020 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 2020. As a
matter of good corporate governance, we are asking you to ratify 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 2020 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 ratified by the shareholders.
THE BOARD RECOMMENDS A VOTE "FOR" RATIFICATION OF THE SELECTION OF PRICEWATERHOUSECOOPERS LLP AS THE
COMPANY'S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM TO AUDIT OUR CONSOLIDATED FINANCIAL STATEMENTS
FOR FISCAL 2020.
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TIFFANY & CO.
PS-35
REPORT OF THE AUDIT COMMITTEE
The primary purpose of the Audit Committee is to assist the Board in fulfilling its oversight responsibilities with
respect to the (i) integrity of the Company's financial statements, (ii) Company's compliance with legal and regulatory
requirements, (iii) Company's process to assess, monitor and control major financial risk exposures, (iv) independent
auditor's qualifications and independence, and (v) performance of the Company's internal audit function and
independent auditor. 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" and then selecting "Corporate
Governance." The Company's management is responsible for the Company's internal controls and for preparing the
Company's consolidated 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 (United States) (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, 2020 and 2019, 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, 2020. 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 control over financial reporting, as well as the quality, not just acceptability, 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. 1301, "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.
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The Audit Committee also 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. PwC has, directly or through its predecessor firms, served as the Company's independent registered
public accounting firm continuously since 1984. In selecting PwC to serve in this capacity for the fiscal year ending
January 31, 2021, the Audit Committee considered the quality and efficiency of the services provided by PwC,
including PwC's technical expertise and knowledge of the Company's business operations, accounting policies and
internal control over financial reporting. The Audit Committee also considered whether the provision by PwC of the
tax consulting, tax compliance and other non-audit-related services disclosed below under "Relationship with
Independent Registered Public Accounting Firm–Fees and Services of PricewaterhouseCoopers LLP" is compatible
with maintaining PwC's independence and has concluded that providing such services is compatible with PwC's
independence from the Company and its management.
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, 2020.
Signed:
Robert S. Singer, Chair
Hafize Gaye Erkan
James E. Lillie
Members of the Audit Committee
TIFFANY & CO.
PS-36
RELATIONSHIP WITH INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
As noted under "Audit Committee" at PS-26, the Audit Committee is directly responsible for the appointment,
compensation, retention and oversight of the work of any registered public accounting firm engaged by the Company
for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the
Company. Further, the Audit Committee ensures the rotation of the lead audit partner having responsibility for the
audit of the Company's consolidated financial statements and effectiveness of internal control over financial
reporting and further ensures the rotation of the audit partner responsible for reviewing such audit, in each case as
required by law. The Audit Committee also considers whether the audit and non-audit services provided by the
Company's independent registered public accounting firm are compatible with maintaining that firm's independence,
and periodically considers whether, in order to assure continuing auditor independence, there should be regular
rotation of such firm. These processes enable the Audit Committee to ensure the continuing independence of the
Company's independent registered public accounting firm. The Audit Committee also evaluates the quality and
efficiency of the services provided by such firm, including that firm's technical expertise and knowledge of the
Company's business operations, accounting policies and internal control over financial reporting, in determining
whether to appoint or retain such firm.
On the basis of its Fiscal 2019 review of these independence, quality and efficiency considerations, the Audit
Committee has selected PwC as the independent registered public accounting firm to audit the Company's
consolidated financial statements and effectiveness of internal control over financial reporting for the fiscal year
ending January 31, 2021.
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) financial information systems design and implementation, (iii) appraisal or valuation services,
fairness opinions or contribution in kind reports, (iv) actuarial services, (v) internal audit outsourcing services,
(vi) management functions or human resources, (vii) investment advisor or investment banking services, and (viii)
legal and expert services unrelated to the audit. All fees paid to PwC by the Company as shown in the table that
follows were approved by the Audit Committee pursuant to this policy.
FEES AND SERVICES OF PRICEWATERHOUSECOOPERS LLP
The following table presents fees for professional audit services rendered by PwC for the audit of the Company's
consolidated financial statements and the effectiveness of internal control over financial reporting for the years
ended January 31, 2020 and 2019, 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.
Audit Fees
Audit-related Fees
Audit and Audit-related Fees
Tax Fees a
All Other Fees b
Total Fees
January 31, 2020
January 31, 2019
$
4,134,900
$
3,679,700
427,000
4,561,900
1,084,800
180,600
712,800
4,392,500
1,978,400
178,400
$
5,827,300
$
6,549,300
a) Tax fees consist of fees for tax compliance and tax consulting services. These fees include tax compliance fees of
$950,700 for the year ended January 31, 2020 and $1,797,000 for the year ended January 31, 2019.
b) All other fees consist primarily of the Sustainability Assurance, Kimberley Process Agreed Upon Procedures and
costs for research software for the years ended January 31, 2020 and January 31, 2019.
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TIFFANY & CO.
PS-37
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 under the Exchange Act. It requires the Company to include in its proxy
statement, at least once 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 2020 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 (as amended) 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 (Alessandro Bogliolo, Mark J. Erceg,
Philippe Galtie, Leigh M. Harlan and Daniella Vitale) for which your approval is sought may be found at PS-40
through PS-86 of this Proxy Statement.
At the 2019 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 for the fiscal year ended January 31, 2019.
The Company's Say on Pay proposal passed with 95.76% of the shareholder advisory votes in favor of the Company's
executive compensation program.
THE BOARD RECOMMENDS A VOTE "FOR" APPROVAL OF THE COMPENSATION PAID TO THE NAMED EXECUTIVE OFFICERS IN
FISCAL 2019.
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TIFFANY & CO.
PS-38
COMPENSATION OF THE CEO AND OTHER EXECUTIVE OFFICERS
Contents
Compensation Discussion and Analysis
Report of the Compensation Committee
Summary Compensation Table – Fiscal 2019, 2018 and 2017
Grants of Plan-Based Awards Table – Fiscal 2019
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 2019
Pension Benefits
Nonqualified Deferred Compensation Table
Potential Payments on Termination or Change in Control
CEO Pay Ratio
Director Compensation Table – Fiscal 2019
Equity Compensation Plan Information
Page PS-40
Page PS-62
Page PS-63
Page PS-68
Page PS-70
Page PS-75
Page PS-78
Page PS-78
Page PS-78
Page PS-80
Page PS-85
Page PS-87
Page PS-91
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TIFFANY & CO.
PS-39
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 ("NEOs") for Fiscal 2019.
The Company's NEOs for Fiscal 2019 were as follows:
NAMED EXECUTIVE OFFICERS
Alessandro Bogliolo
Chief Executive Officer
Mark J. Erceg
Philippe Galtie
Executive Vice President–Chief Financial Officer
Executive Vice President–Global Sales
Leigh M. Harlan
Senior Vice President–Secretary and General Counsel
Daniella Vitale
Executive Vice President–Chief Brand Officer
LVMH Merger Agreement
EXECUTIVE SUMMARY
As described in more detail at PS-4, on November 24, 2019, the Company entered into the Merger Agreement with
LVMH Moët Hennessy-Louis Vuitton SE, Breakfast Holdings Acquisition Corp. and Breakfast Acquisition Corp. The
Merger Agreement provides for the following treatment of outstanding equity grants at the effective time of the
Merger ("Effective Time"):
• Each award of stock options that is outstanding immediately before the Effective Time, whether vested or
unvested, will be canceled and converted into the right to receive an amount in cash, without interest, equal
to the product of (A) the excess, if any, of (1) $135.00 (the "Per Share Merger Consideration") over (2) the
per share exercise price for such stock option, multiplied by (B) the total number of shares underlying such
stock option, less any required withholding taxes;
• Each PSU that is outstanding immediately before the Effective Time will be canceled and converted into the
right to receive an amount in cash, without interest, equal to the sum of (A) any accrued but unpaid cash in
respect of dividend equivalent rights representing fractional shares with respect to such PSU, plus (B) the
product of (1) the total number of shares subject to such PSU (including, for the avoidance of doubt, any
dividend equivalent units credited in respect of such PSU) immediately prior to the Effective Time,
multiplied by (2) $135.00, less any required withholding taxes; and
• Each RSU that is outstanding immediately before the Effective Time will be canceled and converted into the
right to receive an amount in cash, without interest, equal to the sum of (A) any accrued but unpaid cash in
respect of dividend equivalent rights representing fractional shares with respect to such RSU, plus (B) the
product of (1) the total number of shares underlying such RSU (including, for the avoidance of doubt, any
dividend equivalent units credited in respect of such RSU), multiplied by (2) $135.00, less any required
withholding taxes.
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2019 Retention and Tax Mitigation Actions
To mitigate the potential impact of Sections 280G and 4999 of the Internal Revenue Code on the Company and its
executive officers (including the NEOs), the Board or the Compensation Committee (the "Committee"), as applicable,
approved the following actions on December 13, 2019:
• The Fiscal 2019 annual cash incentive awards that would otherwise have been payable in the first quarter of
Fiscal 2020 were paid in part in December 2019, with the remainder paid in March 2020. The amount paid
in December 2019 to each NEO is shown below in "Short-Term Incentive Award" at PS-43.
• Certain RSUs and stock options that had been scheduled to vest before January 31, 2021, were accelerated
to vest as of December 17, 2019. The following grants were accelerated for the NEOs: Mr. Bogliolo, 4,450
TIFFANY & CO.
PS-40
RSUs and 220,213 stock options; Mr. Erceg, 97,170 stock options; Mr. Galtie, 3,062 RSUs and 70,319
stock options; and Ms. Harlan, 3,762 RSUs and 36,782 stock options.
• A portion of the PSUs awarded in January 2017 ("2017 PSUs") that had been scheduled to vest in March
2020 were accelerated to vest as of December 17, 2019, with the remainder vesting in March 2020. The
number of 2017 PSUs that vested on December 17, 2019, and the remainder that vested in March 2020,
are shown below under "Performance-Based Restricted Stock Units" at PS-43.
In exchange for the actions described above, the NEOs entered into restrictive covenant agreements that include
non-competition and non-solicitation restrictions for a period of 18 months post-employment for Mr. Bogliolo and
one year for the other NEOs, as well as indefinite confidentiality obligations.
In addition, as permitted by the Merger Agreement, cash retention awards were paid in December 2019 to certain of
the NEOs, as follows: Mr. Bogliolo, $2,700,000; Mr. Galtie, $800,000; Ms. Harlan, $2,530,000; and Ms. Vitale
$900,000. Payment of these cash retention awards was subject to the execution of the restrictive covenant
agreements described above, as well as an agreement (the "Special Bonus Agreement") requiring repayment if the
recipient resigns without good reason (or pursuant to a claim of good reason where the claim is based solely upon the
occurrence or anticipated occurrence of the Merger) or is terminated for cause prior to January 31, 2021. The
Company determined to pay these cash retention awards in December 2019, subject to recoupment, in order to
mitigate the potential impact of Sections 280G and 4999 of the Internal Revenue Code with respect to such awards.
2019 Changes in Executive Management
Ms. Vitale was appointed Executive Vice President–Chief Brand Officer, effective December 1, 2019. Pamela
H. Cloud, Senior Vice President–Chief Merchandising Officer, ceased being an executive officer, effective November
26, 2019.
2019 Company Performance
Reflected below are key highlights for Fiscal 2019:
Stock Price at
January 31, 2020
Stock Price at
January 31, 2019
Total Dividends Paid
Per Share
One-Year Total
Shareholder Return
$134.02
$88.73
$2.29
54%
(in millions, except per share
amounts)
Earnings from operations
As reported
As adjusted*
Net earnings
As reported
As adjusted*
Diluted earnings per share
As reported
As adjusted*
Fiscal 2019
Fiscal 2018
$
732.6 $
753.8
541.1
558.2
4.45
4.59
790.3
790.3
586.4
586.4
4.75
4.75
*See Appendix I at PS-93 for Non-GAAP reconciliation.
TIFFANY & CO.
PS-41
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Sales:
Profitability:
Store Expansion:
Worldwide net sales were approximately unchanged compared to the prior year.
Comparable sales decreased 1% from the prior year. On a constant-exchange-rate
basis (see Appendix I at PS-93), worldwide net sales increased 1% and comparable
sales were approximately unchanged.
Net earnings decreased to $541.1 million, or $4.45 per diluted share, in Fiscal 2019
from $586.4 million, or $4.75 per diluted share, in the Company's fiscal year ended
January 31, 2019 ("Fiscal 2018"). Net earnings in Fiscal 2019 included the impact
of costs related to the proposed Merger, as described in Appendix I at PS-93.
Excluding these charges, net earnings decreased to $558.2 million, or $4.59 per
diluted share.
The Company added a net of five TIFFANY & CO. stores (opening four in Japan, two in
the Americas, two in Asia-Pacific and one in Europe, while closing two stores in the
Americas, one store in Asia-Pacific and one store in Japan) and relocated or renovated
18 existing stores. Gross retail square footage increased 3%, net.
Cash Flow:
Cash flow from operating activities was $670.9 million in Fiscal 2019, compared
with $531.8 million in Fiscal 2018. Free cash flow (see Appendix I at PS-93) was
$350.3 million in Fiscal 2019, compared with $249.7 million in Fiscal 2018.
Returning Capital to
Shareholders:
The Company returned capital to shareholders by paying regular quarterly dividends
(which were increased 5% effective July 2019 to $0.58 per share, or an annualized
rate of $2.32 per share) and by repurchasing 1.8 million shares of its common stock
for $163.4 million.
2019 Compensation Overview
Based on Fiscal 2019 results, short-term incentive awards were paid out to the NEOs at levels ranging from 52.8%
to 74.8% of target based on the extent of achievement of operating earnings, Constant Currency Sales Growth and
individual performance targets. This payout reflected net sales approximately unchanged from the prior year,
Constant Currency Sales Growth of 1% and operating earnings of $732.6 million, as reported, and $753.8 million,
as adjusted, for Fiscal 2019 (see Appendix I at PS-93). The 2017 PSUs, granted for the three-year performance
period beginning on February 1, 2017, and ending on January 31, 2020, vested at the maximum level, as
contemplated by the Merger Agreement. (See below under "Performance-Based Restricted Stock Units" at PS-43.)
The design of the short-term and long-term incentive programs for Fiscal 2020 remained generally unchanged from
Fiscal 2019. In reviewing the design of the program and establishing individual compensation for Fiscal 2020, the
Committee took into account individual performance, Company performance, past practice and shareholder
feedback. Following this evaluation, the Committee increased Fiscal 2020 base salaries for the NEOs (other than
Ms. Vitale, due to her appointment in December 2019) by 5%. Target percentages for short-term and long-term
incentive compensation for the NEOs remained unchanged from the prior year.
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TIFFANY & CO.
PS-42
2019 Incentive Compensation
Short-Term Incentive Award
Under the targets and guidelines established by the Committee at the start of Fiscal 2019, the NEOs were eligible to
earn up to 200% of their target short-term incentive awards based on corporate and individual performance. The
performance measures established for the Fiscal 2019 short-term incentive awards, the portion of the target award
that may be paid based on achievement of performance goals at target, and the amounts paid out based on actual
achievement are shown below.
Potential Payout Based on Target Achievement
Target Annual
Incentive Award
Operating
Earnings (60%
of Target)
Constant
Currency
Sales Growth
(20% of
Target)
Individual
Performance
(20% of
Target)
Actual Payout
of Annual
Incentive
Award
(52.8% -
74.8% of
Target)
$
$
$
$
$
2,025,000 $
1,215,000 $
405,000 $
405,000 $ 1,494,450
680,000 $
408,000 $
136,000 $
136,000 $
406,640
640,000 $
384,000 $
128,000 $
128,000 $
337,920
345,000 $
207,000 $
69,000 $
69,000 $
258,060
122,301 $
73,381 $
24,460 $
24,460 $
67,021
Name
Alessandro
Bogliolo
Mark J.
Erceg
Philippe
Galtie
Leigh M.
Harlan
Daniella
Vitale
In accordance with the offer letter provided to her, the target annual incentive award shown above for Ms. Vitale is a
pro-rated amount that reflects her appointment in December 2019. In addition, for each NEO, a portion of the
payout shown above was paid prior to the end of the performance period, in December 2019, with the remainder
paid after the end of the performance period. See "2019 Retention and Tax Mitigation Actions" at PS-40. The
following amounts were paid in December 2019: Mr. Bogliolo, $793,800; Mr. Erceg, $266,560; Mr. Galtie,
$250,880; Ms. Harlan, $135,240; and Ms. Vitale, $47,942.
Performance-Based Restricted Stock Units
The Merger Agreement permits the Company to vest the 2017 PSUs at the maximum level, regardless of actual
performance, in the event that the Effective Time is expected to occur after the vesting date for such PSUs.
Accordingly, in March 2020, the Committee took action to vest the 2017 PSUs at 100% of the maximum award,
resulting in the payouts shown below:
Target Number of
2017 PSUs Awarded1
Maximum Number of
2017 PSUs Awarded1
Percentage of
Maximum 2017 PSUs
Vested
Total Number of 2017
PSUs Vested2
Mark J. Erceg
Philippe Galtie
Leigh M. Harlan
13,411
6,153
5,444
26,822
12,306
10,888
100%
100%
100%
28,520
13,085
11,577
1 Prior to accrual of any dividend equivalent units
2 Includes accrued dividend equivalent units
In addition, as described in "2019 Retention and Tax Mitigation Actions" at PS-40, a portion of the 2017 PSUs
shown above was accelerated to vest in December 2019, while the remainder vested in March 2020. The following
number of 2017 PSUs (including the underlying dividend equivalent units) were accelerated to vest in December
2019: Mr. Erceg, 10,779 PSUs; Mr. Galtie, 4,945 PSUs; and Ms. Harlan, 4,375 PSUs. None of the remaining
NEOs held 2017 PSUs, as they were appointed after January 2017.
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TIFFANY & CO.
PS-43
Target Compensation for Named Executive Officers in Fiscal 2020
At its January 2020 meeting, the Committee approved the target direct compensation for Fiscal 2020 shown below:
Target Short-Term Incentive
Award
Target Long-Term Incentive
Award
2020 Annual
Base Salary
Amount
Percentage
of base
salary
Amount
Percentage
of base
salary
Total Target
Direct
Compensation
Change in Total
Target Direct
Compensation from
Fiscal 2019
Alessandro
Bogliolo
$ 1,417,500 $ 2,126,250
150% $ 7,371,000
520% $ 10,914,750
Mark J. Erceg
$
892,500 $
714,000
80% $ 2,231,250
250% $ 3,837,750
Philippe Galtie $
840,000 $
672,000
80% $ 1,680,000
200% $ 3,192,000
Leigh M.
Harlan
$
603,750 $
362,250
60% $
905,625
150% $ 1,871,625
Daniella Vitale $
900,000 $
720,000
80% $ 2,250,000
250% $ 3,870,000
5%
5%
5%
5%
—%
In light of her appointment in December 2019, no changes were made to Ms. Vitale's target direct compensation for
Fiscal 2020. For the remaining NEOs, based on the considerations described in "Base Salary" at PS-51, the
Committee approved a 5% increase in base salary for Fiscal 2020.
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TIFFANY & CO.
PS-44
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: For Fiscal 2020, as in prior
years, a significant portion (53.2% for the CEO
and 46.6% on average for the remaining NEOs)
of target direct compensation is tied to the
Company's financial performance (that is, is
awarded in the form of cash incentives or PSUs).
Limited use of employment agreements:
Employment agreements are used only as
necessary to attract newly recruited executives.
WHAT WE DON'T DO
Tax gross-ups: No tax gross-ups 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
stock options and are not paid on unvested
RSUs and PSUs until vesting.
Independent Executive Compensation Consultant:
The Committee periodically consults with an
independent compensation consultant to advise
on the executive compensation program and
practices.
Repricing of underwater stock options without
shareholder approval: The Company's
shareholder-approved employee incentive plan
does not permit repricing of underwater stock
options without shareholder approval.
Share Ownership Policy: Executive officers are
expected to acquire and hold Company common
stock worth two to five times their annual base
salary.
Permit pledging of Company stock: The Company's
policy on insider information, applicable to all
employees, officers and directors, prohibits
pledging or margining of Company securities.
"Dual trigger" requirement for Change in Control
severance benefits: Following a change in
control, cash severance benefits will only be
paid in the event of an involuntary termination of
employment. Outstanding equity awards will only
be vested if the change in control is followed by
involuntary termination, or if the Company does
not survive the transaction and the surviving
entity does not assume the obligations in
question (a "Terminating Transaction"). The
Merger will constitute a Terminating Transaction.
Provide limited perquisites: Perquisites are
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 PSUs, but
excluding stock options and RSUs) are subject
to recoupment in the event of an accounting
restatement due to material noncompliance with
financial reporting requirements.
Permit hedging of Company stock: The Company's
policy on insider information 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.
Grant stock options below 100% of fair market
value: The Company's shareholder-approved
employee incentive plan does not permit stock
options to be granted below 100% of fair market
value.
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TIFFANY & CO.
PS-45
OVERVIEW OF THE EXECUTIVE COMPENSATION PROGRAM
Short- And Long-Term Planning
The performance of management in developing and executing operational and strategic plans and initiatives
determines the Company's success in achieving its financial and brand stewardship goals — both short- and long-
term. The executive compensation program is thus informed by the Company's annual planning process, in which
short- and long-term goals are established.
As part of each year's planning process, the executive officers develop and submit to the Board:
• 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 that are both challenging and realistic for sales, gross margins, selling, general and
administrative expenses (including marketing, staffing and other expenses), inventory management, capital spending
and all other elements of the Company's financial performance (including capital allocation). As part of the
development process, management discusses preliminary versions of the plans with the Board and makes revisions
as necessary to incorporate the Board's feedback. The plans are generally finalized and approved at the Board's
March meeting.
"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, craftsmanship, luxury, the highest levels of
customer service, compelling store design and product display and responsible product sourcing practices.
The Committee recognizes that trade-offs between near-term financial objectives and brand stewardship are often
difficult. For example, introducing certain new designs can enhance brand image and attract new customers, but
affect overall margin negatively in the short term; increased staffing can positively affect customer service while
negatively affecting earnings in the short term; and expanding inventory can enhance the customer experience but
also affect operating cash flow negatively in the short term. Through the planning process, management must
balance expectations for annual earnings growth and cash flow generation with its focus on brand stewardship and
sustainable growth.
Objectives of the Executive Compensation Program
The Committee has established the following objectives for the executive 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 align management's interests with those of the Company's shareholders.
The total executive compensation program includes base salary, short- and long-term incentives, special equity
grants and benefits.
Overview of Key Compensation Components
The Fiscal 2020 executive compensation program incorporates the key components shown below. As in past years,
the program incorporates both fixed and performance-based components. Short-term incentive awards, PSUs and
stock options are considered to be performance-based components. Although RSUs are not considered to be
performance-based, the value of the shares awarded varies with the Company's stock price, adding a performance
component. For Fiscal 2020, RSUs were awarded in lieu of stock options in light of the proposed Merger, as
described in more detail in "Types of Equity Awards" at PS-55. Notwithstanding this change, performance-based
components continue to represent a significant portion of target direct compensation for the NEOs (53.2% for the
CEO and 46.6% for the remaining NEOs, on average).
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TIFFANY & CO.
PS-46
The graph and chart below show the average percentage contribution of key compensation components awarded to
the NEOs in January 2020. The chart below also indicates which components are considered to be performance-
based, as well as which components are linked to the Company's stock price.
Target Total Direct Compensation
Long-Term Incentives - 57.0%
Fiscal 2020 long-term incentives split evenly between
PSUs and RSUs
PSUs
RSUs
Reward achievement of long-term financial objectives,
align management and shareholder interests and
encourage retention
PSUs vest upon
achievement of financial
goals over a three-year
period. The Committee
retains discretion to
reduce awards. The value
of earned shares varies
with stock price, adding a
further performance
component.
RSUs granted annually in
January vest ratably over
four years. While the
number of shares that may
be earned is fixed, the
value of earned shares
varies with stock price,
adding a performance
component.
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Component
Base Salary - 23.6%
Compensation
Program
Objective
Attract and retain
management talent
Short-Term Incentives -
19.4%
Reward achievement of
annual financial targets
and individual strategic
leadership
Base salary provides
cash compensation that
is not "at risk" so as to
provide a stable source
of income and financial
security. Amounts are
designed to provide a
reasonable level of fixed
compensation that is
competitive with the
market.
Cash payments are
dependent on the
degree of achievement
of annual operating
earnings, Constant
Currency Sales Growth
and individual
performance targets.
The Committee retains
discretion to reduce
awards.
Description
Performance-
Based
Value Linked to
Stock Price
TIFFANY & CO.
PS-47
The Company also offers the following compensation components in addition to the annual compensation program
described above:
Special time-vesting
restricted stock
units and stock
options
Prior to Fiscal 2019, in addition to being granted as a component of annual
long-term incentive compensation, RSUs and stock options were granted
from time to time on a selective basis, typically in connection with
promotions or new hires or for recognition and retention purposes. These
awards vest according to their terms. In Fiscal 2019, no such grants were
made to the NEOs.
Benefits
Used to attract and retain executives. Composed of a comprehensive
program of benefits, including disability benefits, life insurance benefits,
and retirement benefits that build cash value.
Alignment of Plan Design and Short- and Long-Term Objectives
The metrics established for performance-based compensation are linked to the Company’s short- and long-term
strategic objectives. The performance metrics established for incentive awards provided for Fiscal 2020, and the
strategic objectives to which they are linked, are shown below.
Performance-Based Compensation Linked to the Company's Strategic Objectives
Form of Incentive
Strategic Objective
Performance Metric and Weighting
Increased profitability through sales growth
and margin expansion
Operating earnings (60%)
Annual Incentive Awards
Sales growth through effective brand
positioning and customer engagement
initiatives
Constant Currency Sales Growth (20%)
Individual goals, including strategic thinking
and leadership
Individual factors (20%)
Performance-Based
Restricted Stock Units
Earnings growth through sales growth,
margin expansion, network optimization and
capital allocation decisions
Effective cash generation, excluding impact
of capital expenditures, through focus on
inventory management, procurement strategy
and systems and process enhancements
Ability to return value to shareholders
3-year cumulative EPS (80%)
3-year cumulative operating cash flow (20%)
COMPENSATION DECISION-MAKING PROCESS
Setting Executive Compensation
The Committee determines remuneration arrangements for executive officers and makes awards to executive officers
under the Company's incentive and equity-based plans (currently, the 2014 Employee Incentive Plan), as more fully
described in the Committee Charter. In January of each year, the Committee establishes the target amount of total
compensation for each executive officer for the coming fiscal year. At the same time, the Committee also establishes
the target levels for short- and long-term incentive compensation and approves annual equity grants. This follows a
process in which the Committee conducts a detailed review of each executive officer's compensation.
Compensation Evaluation Process
The following were the key components of the Committee's evaluation process in Fiscal 2019:
Consideration of Say on Pay and Shareholder Feedback
The Committee weighs the level of shareholder support for the compensation program, as demonstrated by the Say
on Pay vote, as well as other shareholder feedback.
TIFFANY & CO.
PS-48
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Independent Compensation Consultant
In connection with carrying out its responsibilities, the Committee periodically consults with FW Cook, its
independent compensation consultant. See "Role of Compensation Consultants" at PS-28 for discussion of the
selection process for FW Cook, which includes an independence analysis.
Tally Sheets
The Committee periodically reviews "tally sheets" prepared by the Company's Human Resources division for each
executive officer. The tally sheets include data concerning historical compensation as well as information regarding
share ownership and other benefits accumulated from employment with Tiffany. The tally sheets provide a historical
view of multiple compensation elements, as further context for compensation decisions.
Consultations with the Chief Executive Officer
In periodic meetings with the Committee, the CEO 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 factors used in determining short-
term incentives, as well as for setting base salary and target incentive compensation as a percentage of base salary.
The Committee also relies on its own business judgment as to its past practice and each executive officer's
experience and skill set, capacity for growth, expected contributions, breadth, scope and complexity of role,
demonstrated success and desirability to other employers.
Coordination with Financial Results and Annual Operating and Strategic Planning Process
In December 2019, the Committee reviewed a forecast of financial results for Fiscal 2019 and approved payment of
a portion of the Fiscal 2019 short-term incentive awards. The amount paid represented only a portion of the full
amount expected to be ultimately payable based on then-forecasted full-year results. The Committee also accelerated
a portion of the 2017 PSUs to vest in December 2019, with the accelerated portion representing the number of
shares expected to be eligible to vest following the end of the performance period, based on then-forecasted full-year
results. See "2019 Retention and Tax Mitigation Actions" at PS-40.
In January 2020, the Committee reviewed an updated forecast of financial results for Fiscal 2019, along with
tentative calculations of the full amounts to be paid out in respect of the Fiscal 2019 short-term incentive awards.
In March 2020, when Fiscal 2019 financial results were nearly final, the Committee reviewed final short-term
incentive payout amounts calculated based on the full year’s actual results, and approved payment of the final
amounts, less the amounts that had been previously paid in December 2019. The Committee additionally took
action in March 2020 to vest the remaining 2017 PSUs in full, notwithstanding actual performance, as
contemplated by the Merger Agreement.
In January 2020, the Committee also granted annual short-term incentive awards for the one-year period beginning
February 1, 2020, with reference to a preliminary draft of the Company's annual operating plan, as well as long-term
incentive awards for the three-year performance period beginning on February 1, 2020, with reference to a
preliminary draft of the Company's three-year strategic plan. Prior to January 2020, long-term incentives included
stock options, PSUs and, for certain executive officers, RSUs. In January 2020, in light of the proposed Merger,
RSUs were awarded in lieu of stock options. The specific financial goals for the short-term and long-term incentives
were established in March 2020, when the annual operating plan and strategic plan were approved by the Board and
adopted by the Company. The Committee has never delegated to management its authority to make such awards.
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No Benchmarks
In establishing NEO compensation for Fiscal 2020, the Committee did not set a "benchmark" to competitive
compensation data or formally review such data, relying instead on the processes and factors described above.
TIFFANY & CO.
PS-49
COMPONENTS OF EXECUTIVE COMPENSATION
Relative Values of Key Compensation Components
In January 2020, as part of its annual review of the target level of short- and long-term incentives for each executive
officer, the Committee adopted the target incentive opportunities (expressed as a percentage of base salary) shown
below. The Committee believes that a minimum of 60% of the target total direct compensation of the CEO and of
approximately 50% of the target total direct compensation of the other executive officers should be composed of
long-term incentives to link realized compensation to the Company's longer-term financial and stock price
performance.
Executive
Position
Target
Short-Term Incentive
as a Percentage of
Salary
Target
Long-Term Incentive
as a Percentage of
Salary
Alessandro Bogliolo Chief Executive Officer
150%
Mark J. Erceg
Philippe Galtie
Leigh M. Harlan
Daniella Vitale
Executive Vice President–
Chief Financial Officer
Executive Vice President–
Global Sales
Senior Vice President–
Secretary and General
Counsel
Executive Vice President–
Chief Brand Officer
80%
80%
60%
80%
520%
250%
200%
150%
250%
In reviewing the target level of short- and long-term incentives, the Committee also considered the relative value of
performance-based compensation compared to other forms of compensation. As in prior years, a significant portion
of total target direct compensation awarded to the NEOs in January 2020 was provided in the form of performance-
based compensation (that is, short-term incentives and PSUs). For more information concerning performance-based
compensation, see "Overview of Key Compensation Components" at PS-46.
Based on target levels for incentive compensation granted in January 2020, the mix of pay for the CEO and other NEOs,
on average, is shown below:
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PS-50
Base Salary
The Committee pays the executive officers competitive base salaries as one part of a total compensation program to
attract and retain talent, but does not use base salary increases as the primary means of recognizing talent and
performance.
In January 2020, the Committee reviewed base salaries for all executive officers. Base salaries for Fiscal 2020 for
executive officers were determined based on multiple factors, including past practice; executive experience and skill
set; expected contributions; breadth, scope and complexity of role; internal equity; and shareholder feedback. The
Committee additionally took into account that base salaries had remained unchanged for Mr. Bogliolo and Mr. Erceg
since their respective appointments in 2017 and 2016, for Mr. Galtie since a promotion in 2018, and for Ms. Harlan
since an increase in 2017, while its past approach had generally been to adjust base salaries every other year.
Accordingly, for Fiscal 2020 the Committee increased base salaries by 5% for each NEO other than Ms. Vitale,
resulting in the base salary levels shown below. In light of her appointment in December 2019, Ms. Vitale's base
salary for Fiscal 2020 remained unchanged from Fiscal 2019.
Executive
Position
Alessandro
Bogliolo
Mark J. Erceg
Philippe Galtie
Chief Executive Officer
Executive Vice President–
Chief Financial Officer
Executive Vice President–
Global Sales
Leigh M. Harlan Senior Vice President–
Secretary and General
Counsel
Daniella Vitale
Executive Vice President–
Chief Brand Officer
$
$
$
$
$
Fiscal 2019
Base Salary
Fiscal 2020
Base Salary
1,350,000 $
1,417,500
850,000 $
892,500
800,000 $
840,000
575,000 $
603,750
900,000 $
900,000
Percentage
Increase from
Fiscal 2019 to
Fiscal 2020
5%
5%
5%
5%
0%
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Short-Term Incentives
The Committee uses short-term incentive opportunities, which are typically established in January of each year, to
motivate executive officers to achieve the annual financial targets established by the Committee and to demonstrate
strategic leadership. Short-term incentives for the executive officers consist of annual cash incentive awards under
the 2014 Employee Incentive Plan. Short-term incentive awards have an individual component but are primarily
formula-driven, with the majority of the award based on achievement of annual financial targets that align with the
Company's annual operating plan.
For short-term incentives for Fiscal 2019, the Committee determined a portion of the awards based on the following
individual performance 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 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 2020.
In January 2020, the Committee established target short-term incentive opportunities for Fiscal 2020 for the
executive officers. The target short-term incentive opportunities provided to the NEOs for Fiscal 2020, as compared
to the target short-term incentive opportunities provided for Fiscal 2019, are shown in the following chart. As shown
below, the target short-term incentive opportunities provided to the NEOs for Fiscal 2020, expressed as a percentage
of base salary, remained unchanged from Fiscal 2019. The maximum short-term incentive established by the
Committee for each NEO is equal to twice the target.
TIFFANY & CO.
PS-51
Executive
Position
Fiscal 2019 Target
Short-Term Incentive
As Percentage of
Base Salary
Fiscal 2020 Target
Short-Term Incentive
As Percentage of
Base Salary
Percentage Increase
from Fiscal 2019 to
Fiscal 2020
Chief Executive Officer
150%
150%
Alessandro
Bogliolo
Mark J. Erceg
Executive Vice President–
Chief Financial Officer
Philippe Galtie Executive Vice President–
Leigh M.
Harlan
Global Sales
Senior Vice President–
Secretary and General
Counsel
Daniella Vitale
Executive Vice President–
Chief Brand Officer
80%
80%
60%
80%
(prorated to reflect
appointment in
December 2019)
80%
80%
60%
80%
0%
0%
0%
0%
0%
Fiscal 2019
Company Performance Goals for Fiscal 2019 Short-Term Incentives
In January 2019, the Committee determined that payment of short-term incentives for Fiscal 2019 would be wholly
contingent on the Company meeting an operating earnings threshold or a threshold level of Constant Currency Sales
Growth. The Committee provided guidance to the executive officers indicating that, if neither threshold was met,
then no short-term incentive would be paid; however, if either threshold was met, then the Committee intended to
calculate the amount to be paid based 60% on achievement of operating earnings goals, 20% on achievement of
Constant Currency Sales Growth goals, and 20% on achievement related to the individual performance factors
described above. Thus, achievement of operating earnings goals, Constant Currency Sales Growth goals and
individual goals, each at maximum goal levels, would result in payment of 120%, 40% and 40%, respectively, of
target. Notwithstanding this guidance, the Committee retained the discretion to pay out the maximum short-term
incentive, or reduce the payout from the maximum to any amount down to $0, provided either the operating earnings
or Constant Currency Sales Growth threshold was met.
The use of operating earnings as a performance metric for short-term incentive awards is intended to reward
increased profitability through sales growth and margin expansion. The use of Constant Currency Sales Growth is
intended to incentivize sales growth through effective brand positioning and customer engagement initiatives.
In March 2019, the Committee established threshold, target and maximum performance goals for operating earnings
and Constant Currency Sales Growth. The performance goals established, and the corresponding percentage of target
short-term incentives eligible to be paid out based on corporate and individual performance, provided at least one of
the levels of threshold corporate performance has been met, are shown in the chart below.
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TIFFANY & CO.
PS-52
Fiscal 2019 Annual Incentive Awards
Operating Earnings
Constant Currency Sales Growth
Operating
earnings
(millions)
Percentage of
target short-term
incentive that may
be paid:*
Threshold
Target
Maximum
Less than or equal
to $702
Within the range
of $818 to $834
Equal to or greater
than $888
0%
60%
120%
Constant Currency
Sales Growth
Less than or equal
to -1%
Within the range
of 3.5% to 4.5%
Equal to or greater
than 6.5%
Percentage of
target short-term
incentive that may
be paid:*
0%
20%
40%
Individual
Performance
Up to 40% of the
target short-term
incentive may be
paid based on
achievement of
individual
performance
factors
Percentage calculated based on operating earnings, Constant Currency Sales Growth and
individual performance = total percentage of target annual incentive paid out*
*Subject to linear interpolation if actual performance falls between the threshold and the bottom of the target range,
or between the top of the target range and the maximum. Target ranges include the ends of the ranges.
Actual Payout of Fiscal 2019 Short-Term Incentives
In March 2020, the Committee determined that Fiscal 2019 operating earnings equaled $732.6 million, as
reported, and $753.8 million, as adjusted, while net sales were approximately unchanged from the prior year and
Constant Currency Sales Growth equaled 1% (see Appendix I at PS-93).
The Committee also evaluated the individual performance of the NEOs other than the CEO, taking into account the
CEO's views. The Committee independently evaluated the performance of the CEO. In these discussions, individual
performance was evaluated against the individual performance factors described on PS-51. Following these
discussions, the Committee determined to pay each NEO an amount ranging from 52.8% to 74.8% of his or her
target award based on individual performance.
Based on the determinations described above, the NEOs were paid the percentages shown below of their target
awards. A portion of those amounts was paid in December 2019, with the remainder paid following the end of the
performance period. See "2019 Retention and Tax Mitigation Actions" at PS-40.
Operating Earnings, As Adjusted
(60% of target award)
Constant Currency Sales Growth
(20% of target award)
Fiscal 2019
operating earnings,
as reported/as
adjusted*
(millions)
As reported - $732.6
As adjusted - $753.8
Percentage of target
short-term incentive
paid:
Fiscal 2019 net
sales growth/
Constant Currency
Sales Growth*
Percentage of target
short-term incentive
paid:
26.8%
—% / 1%
8%
18% - 40%
Total percentage of target annual incentive paid out to NEOs: 52.8% - 74.8%
* See Appendix I at PS-93.
Fiscal 2020
For Fiscal 2020, the Committee generally retained the short-term incentive structure from Fiscal 2019. As such, in
January 2020, the Committee established target and maximum short-term incentive amounts for the NEOs, with the
maximum amount equal to 200% of the target amount. The target short-term incentives established for Fiscal 2020
for the NEOs are shown above under "Relative Values Of Key Compensation Components" at PS-50.
TIFFANY & CO.
PS-53
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Individual
Performance
(20% of target
award)
Percentage of target
short-term incentive
paid based on
achievement of
individual
performance factors:
In March 2020, the Committee established threshold, target and maximum goals for operating earnings and
Constant Currency Sales Growth. The goals are aligned with the Company's annual operating plan. Payment of any
short-term incentive award for Fiscal 2020 will be contingent on achievement of either the operating earnings or
Constant Currency Sales Growth threshold. If neither threshold is met, no short-term incentive will be paid. The
Committee has provided guidance to the executive officers indicating that, if either threshold is met, the Committee
intends to calculate the amount to be paid based 60% on achievement of operating earnings goals, 20% on
achievement of Constant Currency Sales Growth goals, and 20% on achievement of the individual performance
factors described at PS-51. Notwithstanding this guidance, the Committee has retained the discretion to pay out the
maximum short-term incentive, or reduce the payout from the maximum to any amount down to $0, provided either
corporate threshold is met.
Five-Year History of Short-Term Incentive Payouts
The following summarizes average short-term incentive payouts for the executive officers as a group, as a percentage
of target, over the past five fiscal years (without giving effect to payments that were prorated in light of mid-year
individual hire dates):
Fiscal Year
2019
2018
2017
2016
2015
Five-Year Average
Average Total Payout as a
Percentage of Target
Short-Term Incentive
Award
61%
104%
104%
98%
75%
88%
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Permissible Adjustments to Evaluation of Performance
The 2014 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, (v) unusual or infrequently occurring items as described in the Annual Report for the applicable year, (vi)
acquisitions or divestitures, (vii) any other specific unusual or nonrecurring events, or objectively determinable
category thereto, (viii) foreign exchange gains and losses and (ix) a change in the Company's fiscal year.
Long-Term Incentives
The Committee uses long-term incentives to promote retention, align management interests with those of
shareholders, and motivate management to achieve earnings growth and generate operating cash flow. 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 long-term incentive grant each year is based on a percentage of base
salary. The ratio of long-term incentive target to base salary is reviewed annually at the same time that base salaries
are reviewed. The long-term incentive opportunities established for Fiscal 2020 for each of the NEOs compared to
those provided for Fiscal 2019 are shown below. As reflected below, the long-term incentive opportunities provided
to the NEOs for Fiscal 2020, expressed as a percentage of base salary, remained unchanged from the prior year.
TIFFANY & CO.
PS-54
Fiscal 2019 Target Long-
Term Incentive As
Percentage of Base Salary
Fiscal 2020 Target Long-
Term Incentive As
Percentage of Base Salary
Percentage Increase from
Fiscal 2019 to Fiscal 2020
Executive
Alessandro Bogliolo
Mark J. Erceg
Philippe Galtie
Leigh M. Harlan
520%
250%
200%
150%
Daniella Vitale
250%
(prorated to reflect appointment
in December 2019)
Types of Equity Awards
520%
250%
200%
150%
250%
0%
0%
0%
0%
0%
In January 2020, the Committee awarded two types of equity awards to NEOs: PSUs and RSUs.
• PSUs reward executives for meeting key financial goals that are important to the long-term performance of
the Company.
• RSUs reward executives for increases in stock price, and support talent attraction and retention objectives.
RSUs also balance an inherent challenge associated with PSUs, as non-controllable and highly variable
external factors may affect the Company's results during the three-year performance period.
Prior to Fiscal 2017, executive officers were awarded long-term incentives divided evenly between PSUs and stock
options. Starting in Fiscal 2017, executive officers below the level of Executive Vice President were awarded long-
term incentives in the form of 50% PSUs, 25% stock options and 25% RSUs, while the CEO and remaining
executive officers continued to receive 50% PSUs and 50% stock options. For Fiscal 2020, the Committee
recognized at the time that long-term incentives were awarded that stock options were likely to have limited value
because the Company’s stock price was then only slightly less than the Per Share Merger Consideration. Accordingly,
and as permitted by the Merger Agreement, RSUs were awarded in lieu of stock options for Fiscal 2020, with the
result that all executive officers, including the NEOs, received 50% PSUs and 50% RSUs in January 2020.
For purposes of achieving the grant date target value, apportioned according to the above-described mix of long-term
incentives, the Committee values PSUs and RSUs using the higher of (i) the simple arithmetic mean of the high and
low sale price of the Company's common stock on the New York Stock Exchange on the grant date or (ii) the closing
price on such Exchange on the grant date. The Committee also assumes that PSUs will vest at the target value
described under "Performance-Based Restricted Stock Unit Grants" below.
Performance-Based Restricted Stock Unit Grants
The Committee's practice has generally been to award PSUs to executive officers in January of each year. For the
PSUs granted in January 2020, 2019, 2018 and 2017, the Committee established threshold, target and maximum
goals for EPS and operating cash flow at the start of the performance period. Vesting of these PSUs is dependent
upon achievement of either the EPS or operating cash flow threshold. If neither threshold is met, no PSUs will vest.
The Committee has provided guidance to the executive officers indicating that, if either the EPS or operating cash
flow threshold is met, it intends to calculate the number of PSUs to vest based 80% on EPS goals and 20% on
operating cash flow goals. Thus, achievement of the EPS goals and operating cash flow goals at target will result in
vesting of 80% and 20%, respectively, of the target PSUs granted.
• EPS was selected as a performance metric to reward earnings growth and incentivize execution of the
Company's strategic plans relating to sales growth, margin expansion, network optimization and efficient
capital allocation. This metric also aligns with shareholder interests, as the Committee believes the Company's
stock price over the long term is primarily driven by growth in EPS. EPS goals are measured on a diluted basis
and calculated on a cumulative basis for the three-year performance period.
• Operating cash flow was selected as a performance metric to reward cash flow generation from operations
through measures such as inventory management, procurement initiatives intended to reduce costs, and
systems and process enhancements. Operating cash flow goals are also calculated on a cumulative basis for
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PS-55
the three-year performance period. The target goal is expressed as a range in consideration of volatility in the
luxury goods sector and the related challenges of setting goals over a three-year period.
• The EPS and operating cash flow goals were set by the Committee with reference to the Company's strategic
plan as approved by the Board.
In evaluating achievement of performance goals, the Committee is permitted under the 2014 Employee Incentive
Plan to exclude certain events. See "Permissible Adjustments to Evaluation of Performance" at PS-54.
2020 Performance-Based Restricted Stock Units
For the PSUs granted in January 2020 ("2020 PSUs"), the EPS and operating cash flow threshold, target and
maximum goals, and the corresponding percentage of target shares to be paid out at the end of the performance
period (if any), are shown below.
EPS
Operating Cash Flow
EPS
Percentage of target
shares earned*
Operating Cash Flow
(millions)
Percentage of target
shares earned:*
Below Threshold
Less than $11.67
Threshold
Equal to $11.67
Target
Equal to $13.73
Maximum
Equal to or greater
than $14.42
0%
20%
80%
160%
Less than $1,942
Equal to $1,942
Within the range of
$2,378 to $2,451
Equal to or greater
than $2,549
0%
0%
20%
40%
Shares calculated based on EPS goals plus operating cash flow goals =
total percentage of target shares paid out*
*Subject to linear interpolation if actual performance falls between threshold and target (or, in the case of a
target expressed as a range, the bottom of the target range), or between target (or, in the case of a target
expressed as a range, the top of the target range) and maximum. Target ranges include the ends of the ranges.
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Notwithstanding the above guidance, the Committee has retained the discretion to vest the maximum number of
PSUs granted (200% of the target number of shares), or reduce the number to vest from the maximum to any
number down to zero, provided that either the EPS or operating cash flow threshold is met.
The above performance goals were informed by the three-year strategic plan approved by the Board in March 2020.
Both sets of goals are intended to incorporate financial performance goals that are both challenging and realistic, as
well as to balance near-term financial objectives with brand stewardship and sustainable growth. For more
information on the alignment of the performance goals with the three-year strategic plan, see the discussion at
PS-49.
The financial performance goals established by the Committee each year are not intended to be a prediction of how
the Company will perform during the performance period or in any future period. The Committee establishes these
goals solely to help it align pay with performance. The goals are not intended to provide investors or any other party
with guidance about future financial performance or operating results. None of the information contained in this
CD&A should be relied upon as guidance or a prediction of the Company’s future performance.
Performance-Based Restricted Stock Units granted in January 2019, 2018 and 2017
The chart shown above was approved for use with the PSUs granted in January 2019 ("2019 PSUs"), 2018 ("2018
PSUs") and 2017, but in each case it incorporated the threshold, target and maximum performance goals
established by the Committee at the start of the applicable performance period.
In March 2020, the Compensation Committee took action to vest the 2017 PSUs at the maximum level,
notwithstanding actual performance, as contemplated by the Merger Agreement. This resulted in Mr. Erceg, Mr.
Galtie and Ms. Harlan receiving the number of shares shown on PS-43. No other NEOs held 2017 PSUs.
TIFFANY & CO.
PS-56
For additional information about the PSUs, including a description of the circumstances in which the outstanding
PSUs may vest in various circumstances of death, disability, retirement, a change in control or at the initiative of the
Company, see "Equity Incentive Plan Awards–Performance-Based Restricted Stock Units" at PS-70.
Stock Option Grants
Prior to 2020, stock options were granted each year at the January Committee meeting. Special grants were
occasionally made in connection with promotions and new hires, and for recognition purposes. As previously noted,
no stock options were granted in 2020 in light of the proposed Merger.
The 2014 Employee Incentive Plan under which stock options were granted required 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 were to be granted with an exercise price equal to or greater than the fair market value
of a share as of the grant date. The Committee 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 the grant date or
(ii) the closing price on such Exchange on the grant date. The incentive plan does not permit repricing of underwater
options at a later date without shareholder approval.
For more information about stock options, see "Equity Incentive Plan Awards–Stock Options" at PS-71.
Time-Vesting Restricted Stock Unit Awards
The RSUs granted in January 2020 vest ratably over four years. For additional information about the RSUs, see
"Equity Incentive Plan Awards–Time-Vesting Restricted Stock Units" at PS-71. Special grants of RSUs may be made
from time to time in connection with promotions and new hires, and for recognition purposes.
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. However, 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
A defined contribution retirement benefit ("DCRB") is available to the NEOs through the 401K Plan. Excess defined
contribution retirement benefit contributions ("Excess DCRB Contributions") are credited to the Tiffany and Company
Executive Deferral Plan ("Deferral Plan"). Employer contributions credited to the Deferral Plan are calculated to
compensate executives for pay amounts limited by reason of the Internal Revenue Code. All NEOs are eligible to
receive Excess DCRB Contributions.
Mr. Galtie receives additional retirement benefits agreed upon at the time of his recruitment. See "Philippe Galtie
Compensatory Arrangement" at PS-74.
Equity Grants - Retirement Provisions
The terms applicable to grants of stock options and PSUs provide for certain benefits upon retirement. See "Equity
Incentive Plan Awards–Effect of Termination of Employment on Awards" at PS-71 for a description of these benefits.
Outstanding RSUs are forfeited upon retirement.
Life Insurance and Disability 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. Premiums paid on such policies are
taxable to the executives, and no gross-up is paid. For other key features of these life insurance benefits, see "Life
Insurance Benefits" at PS-73. These benefits are provided to all NEOs except Ms. Vitale, who declined these
benefits.
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PS-57
The Company provides executive officers special disability insurance benefits to take into account the income
replacement limits of the Company's standard disability insurance policies. 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.
Severance Benefits Prior to a Change in Control
In September 2018, the Company adopted the Executive Severance Plan, which provides benefits to executive
officers in the event of involuntary termination without cause or resignation for good reason, prior to a change in
control, in exchange for a release of claims and compliance with restrictive covenants. For a description of the
benefits provided under the Executive Severance Plan, see "Executive Severance Plan" at PS-83.
In addition, the offer letter provided to Mr. Bogliolo in connection with his recruitment to the Company provides for
certain severance benefits in the event of involuntary termination without cause or resignation for good reason, prior
to a change in control, before the third anniversary of his commencement date. For a description of the benefits
available under Mr. Bogliolo's offer letter, see "Explanation of Potential Payments on Termination Prior to a Change in
Control" at PS-82.
Retention Agreements
Change in Control Arrangements
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Each executive officer (including each NEO) is party to a retention agreement that provides for certain severance
benefits in the event of a change in control. The agreements are intended to provide financial incentives to the
executive officers to remain in place and remain focused on the business during a period of uncertainty that may
arise from a potential change in control.
The Committee has long believed that the retention agreements serve the best interests of the Company's
shareholders because such agreements:
•
increase the value of the Company to a potential acquirer that requires delivery of an intact management
team;
• help keep management in place and focused pending communication of a change in control or in the
event a change in control is not welcome;
• are a prudent defense to the possibility that 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.
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) termination without cause or resignation for good reason within two years of the
change in control. The Merger will constitute a change in control for purposes of the retention agreements. In
addition, the Merger Agreement provides that Mr. Bogliolo, Mr. Erceg and Ms. Harlan will have a right to resign for
good reason for purposes of their respective retention agreements, subject to their continued employment through
the closing of the Merger and the terms of such agreements. Under the terms of the retention agreements, they
would ordinarily be required to exercise this right within 90 days of the Effective Time; under the terms of the
Special Bonus Agreements signed by Mr. Bogliolo and Ms. Harlan, however, this time was extended for these
executives to the later of February 12, 2021, or 90 days following the Effective Time, provided the Effective Time
occurs no later than November 24, 2020.
The retention agreements provide that any payments and benefits payable to an executive officer will be reduced to
the extent necessary to avoid any excise taxes on "excess parachute payments" that would otherwise be imposed
under Sections 280G and 4999 of the Internal Revenue Code, unless the total payments to be made without such a
TIFFANY & CO.
PS-58
reduction would result in a higher after-tax benefit. The retention agreements do not provide reimbursement of excise
or other taxes in connection with severance payments or amounts relating to the change in control.
For additional information about the retention agreements, including the severance benefits they provide and a
description of events that constitute a change in control, see "Explanation of Potential Payments on Termination
Following a Change in Control" at PS-83.
Other Change in Control Provisions
Equity awards granted to the NEOs provide benefits following a change in control. These benefits will only be
provided on a loss of employment (a "dual trigger") or if the Company does not survive the transaction. For a more
detailed discussion of applicable change in control provisions, see "Explanation of Potential Payments on
Termination Following a Change in Control" at PS-83. For a description of the treatment of equity awards under the
Merger Agreement, see "LVMH Merger Agreement" at PS-40.
Employment Agreements for Named Executive Officers
The Company has provided offer letters to Mr. Bogliolo, Mr. Erceg, Mr. Galtie and Ms. Vitale that capture key terms
negotiated as part of recruitment. For a description of these offer letters, which provide for, among other terms,
initial base salary, short- and long-term incentives, sign-on awards and, in Mr. Bogliolo's case, certain severance
benefits, see "Alessandro Bogliolo Compensatory Arrangement," "Mark J. Erceg Compensatory Arrangement,"
"Philippe Galtie Compensatory Arrangement" and "Daniella Vitale Compensatory Arrangement" at PS-73, PS-74,
PS-74 and PS-74, respectively.
Effect of Termination for Cause
Outstanding stock options, PSUs and RSUs will be forfeited upon a termination for cause, and vested stock options
may not be exercised following a termination for cause.
OTHER INFORMATION
Equity Ownership by Executive Officers
The Company has in place a share ownership policy. The purpose of the policy is to enhance alignment of
management's interests with those of shareholders over the long term.
Significant Portfolio
Under the share ownership policy, executive officers are subject to restrictions on the disposal of shares of the
Company's common stock. For each executive officer, "Significant Portfolio" means ownership of shares having a
total market value equal to or greater than the following multiples of their annual base salaries:
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Position/Level
Chief Executive Officer
Executive Vice President
Senior Vice President
Market Value of Company Stock Holdings as a
Multiple of Base Salary
(Significant Portfolio Requirement)
Five Times
Three Times
Two Times
TIFFANY & CO.
PS-59
Equity Used to Meet Share Ownership Guidelines
The share ownership policy counts shares owned as follows:
Shares Counted:
Outstanding shares that the person beneficially owns or is deemed to beneficially own, directly or
indirectly, under the federal securities laws, including shares held in the 401K Plan.
Shares Not Counted:
Contingent rights to acquire shares of the Company's common stock through derivative securities,
including unvested stock options, unvested RSUs or unearned PSUs.
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. Each
executive's attainment of a Significant Portfolio is measured annually on April 1 or the first trading day thereafter.
However, an executive 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.
Disposal Restrictions
Executive officers who have Significant Portfolios may not dispose of shares of the Company's common stock if the
disposition would cause their holdings to fall below the Significant Portfolio threshold. They may, however, dispose of
any or all shares in excess of the Significant Portfolio threshold.
Executive officers who do not have Significant Portfolios are only permitted to dispose of shares of the Company's
common stock 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 share ownership policy does not contain an express compliance deadline in recognition that the disposal
restrictions ensure that the executive officers are making progress toward meeting the Significant Portfolio
requirements and provide for greater administrative ease. As of January 31, 2020, three NEOs held Significant
Portfolios. The remaining NEOs remain subject to the share disposal restrictions described above that are intended
to ensure continued progress towards share ownership goals.
Hedging and Pledging Not Permitted
The Company maintains a worldwide policy on insider information, applicable to all employees, officers and
directors. The policy, which was adopted by the Board, prohibits trading while in possession of insider information,
and requires the Company’s directors, executive officers and certain other Tiffany employees to obtain pre-clearance
to trade in accordance with the procedures in the policy. The policy also 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, as well as pledging or margining of
Company securities.
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Restrictive Covenants
The NEOs are subject to restrictive covenants with a term of 18 months following the termination of employment for
the CEO and one year following the termination of employment for the remaining NEOs. The restrictive covenants
include a non-compete restriction, a non-solicitation restriction with respect to employees, customers, clients,
vendors, business partners and suppliers, and a no-hire restriction with respect to employees and others engaged by
the Company or its affiliates. In addition, the NEOs are subject to indefinite confidentiality obligations.
TIFFANY & CO.
PS-60
Separately, any severance benefits provided under the Executive Severance Plan and Mr. Bogliolo's offer letter would
be conditioned upon agreement to and compliance with non-competition, non-solicitation and no-hire obligations for
a period of up to 24 months following termination, as well as ongoing confidentiality and cooperation obligations.
See "Explanation of Potential Payments on Termination Prior to a Change in Control" at PS-82.
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 PSUs and cash incentive awards. Time-vesting stock options and RSUs, 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.
Compensation Risk Assessment
The Committee, together with the Audit Committee of the Board, annually reviews an assessment by management of
the Company's compensation policies and practices for employees, including executive and non-executive policies
and practices. Selected key areas that are reviewed, together with management's assessment of these elements,
included pay mix, performance metrics, performance goals and payout curves, payment timing and adjustments,
equity incentives, stock ownership requirements and trading policies, and leadership and culture. Sound practices
are identified in each of these respective areas. As a result of the Committee's Fiscal 2019 review, the Committee
determined that any risks that may result from the Company's compensation policies 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 places a $1 million limit on the amount of compensation
expense a company can deduct in calculating its federal income taxes in any one year with respect to compensation
paid to certain executive officers. Although the Committee has designed the executive compensation program with
tax considerations in mind, the Committee does not believe that it would be in the best interests of the Company to
adopt a policy that would preclude compensation arrangements subject to deduction limitations.
Prior to the enactment of the Tax Cuts and Jobs Act of 2017, the limit in Section 162(m) was subject to an
exception for "performance-based compensation." This performance-based exception was repealed for tax years
beginning after December 31, 2017.
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PS-61
REPORT OF THE COMPENSATION COMMITTEE
We have reviewed and discussed the Compensation Discussion and Analysis section of this Proxy Statement with the
management of Tiffany & Co. Based on our review and discussions, we recommend to the Board of Directors that the
Compensation Discussion and Analysis be included in this Proxy Statement and incorporated by reference into the
Annual Report on Form 10-K for the fiscal year ended January 31, 2020.
Compensation Committee and its Stock Option Subcommittee:
Rose Marie Bravo, Chair
Roger N. Farah
Abby F. Kohnstamm
Annie Young-Scrivner
March 19, 2020
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PS-62
SUMMARY COMPENSATION TABLE
Fiscal 2019, Fiscal 2018 and Fiscal 2017
Name and
Principal Position
Year
Salary
($) (a)
Bonus
($) (b)
Stock
Awards
($) (c), (d)
Option
Awards
($) (d), (e)
Non-
Equity
Incentive
Plan
Compensation
($) (f)
Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($) (g)
All
Other
Compensation
($) (h)
Total
($)
Alessandro Bogliolo
Chief Executive Officer
Mark J. Erceg
Executive Vice President-
Chief Financial Officer
Philippe Galtie
Executive Vice President-
Global Sales
Leigh M. Harlan
Senior Vice President-
Secretary and General
Counsel1
Daniella Vitale
Executive Vice President-
Chief Brand Officer2
2019
1,398,159
2,700,000
7,371,236
—
1,494,450
2018
1,346,375
— 3,510,069
3,514,821
2,118,150
2017
414,269
2,800,000
4,775,179
4,771,638
702,570
2019
2018
2017
2019
2018
2017
2019
2018
2017
880,322
847,718
— 2,231,622
—
406,640
— 1,062,510
1,063,969
704,480
847,718
750,000
1,062,544
1,061,734
705,840
828,538
800,000
1,680,256
—
337,920
797,852
715,286
—
800,080
801,091
663,040
— 1,300,236
1,299,994
584,522
593,945
2,530,000
906,249
—
258,060
568,677
571,892
—
647,209
215,924
360,870
— 1,147,086
715,744
358,110
2019
155,351
1,650,000
2,250,668
—
67,021
1 Ms. Harlan was not an NEO in Fiscal 2018.
2 Ms. Vitale assumed responsibilities as Executive Vice President–Chief Brand Officer on December 1, 2019.
—
—
—
—
—
—
—
—
—
—
—
—
—
536,612
13,500,457
450,724
10,940,139
530,559
13,994,215
210,171
3,728,755
468,064
4,146,741
306,423
4,734,259
301,629
3,948,343
297,424
3,359,487
255,182
4,155,220
91,826
4,380,080
91,508
1,884,188
86,257
2,879,089
775
4,123,815
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PS-63
Notes to Summary Compensation Table
(a) Salary. Salary amounts include amounts deferred at the election of the executive under the Deferral Plan and
under the 401K Plan. Amounts deferred to the Deferral Plan are also shown in the Nonqualified Deferred
Compensation Table at PS-78.
(b) Bonus. For Mr. Bogliolo, Mr. Galtie and Ms. Harlan, the amounts shown for Fiscal 2019 represent cash retention
bonuses paid as permitted by the Merger Agreement, subject to execution of restrictive covenant agreements and
clawback for certain terminations of employment that occur prior to January 31, 2021. See PS-41. For Ms.
Vitale, the amount shown for Fiscal 2019 is a $750,000 cash sign-on bonus provided for in her offer letter, see
"Daniella Vitale Compensatory Arrangement" at PS-74, and a $900,000 cash retention bonus paid as permitted
by the Merger Agreement, subject to execution of restrictive covenant agreements and clawback for certain
terminations of employment prior to January 31, 2021.
(c) Stock Awards. Except to the extent otherwise noted below in this note, 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"), disregarding any estimates of forfeitures related to service-based vesting conditions,
for the fiscal year in which the award was granted. The amounts shown for Fiscal 2019 reflect grants of PSUs
and RSUs made in January 2020, and the amounts shown for the prior fiscal years likewise include grants of
PSUs and RSUs (where applicable) made in January of the applicable fiscal year.
The amounts shown are based on the assumption that applicable performance targets for the three-year
performance period established by the Committee for each respective grant of PSUs were or will be met at
100%. The maximum value of each PSU award, assuming the highest level of performance conditions are met
for the applicable period, calculated in accordance with Codification Topic 718, appears in the chart below.
For Mr. Bogliolo, the Fiscal 2017 amount reflects the grant date fair value of (i) an annual grant of PSUs
awarded on January 17, 2018 ($3,375,093), and (ii) a one-time grant of RSUs awarded on the same date in
connection with his recruitment ($1,400,086).
For Mr. Galtie, the Fiscal 2017 amount reflects the grant date fair value of (i) an annual grant of PSUs awarded
on January 17, 2018 ($800,096), and (ii) a one-time promotional grant of RSUs awarded on July 19, 2017
($500,140).
For Ms. Harlan, the Fiscal 2017 amount reflects the grant date fair value of (i) an annual grant of PSUs awarded
on January 17, 2018 ($431,273), (ii) an annual grant of RSUs awarded on January 17, 2018 ($215,800) and
(iii) a one-time recognition grant of RSUs awarded on March 16, 2017 ($500,013).
Maximum Value of Stock Awards at Grant Date Value
Executive
Alessandro Bogliolo
Mark J. Erceg
Philippe Galtie
Leigh M. Harlan
Daniella Vitale
2019
7,371,235 $
2,231,489 $
1,680,255 $
905,846 $
2,250,265
$
$
$
$
$
2018
7,020,138 $
2,125,020 $
1,600,160 $
1,078,539 $
prior to appointment
2017
6,750,187
2,125,087
1,600,191
862,547
(d) Equity Award Acceleration. In December 2019, the Committee accelerated the vesting of certain stock and option
awards. See "2019 Retention and Tax Mitigation Actions" at PS-40. No value is shown for Fiscal 2019 for such
accelerated vesting, as the acceleration resulted in the Company recognizing expense associated with the
affected grants in December 2019 rather than at the time such grants were ordinarily expected to vest, but it did
not result in the Company incurring an additional amount of expense.
(e) Option Awards. Amounts shown represent the dollar amount of the grant date fair value of the award, calculated
in accordance with Codification Topic 718 for the fiscal year in which the award was granted, disregarding any
TIFFANY & CO.
PS-64
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estimates of forfeitures related to service-based vesting conditions. See Item 8. "Financial Statements and
Supplementary Data-Note N. Stock Compensation Plans" in the Company's Annual Report on Form 10-K for
Fiscal 2019, regarding assumptions underlying valuation of stock option awards. The amounts shown for Fiscal
2018 and Fiscal 2017 include stock option grants made in January 2019 and January 2018, respectively.
For Mr. Bogliolo, the Fiscal 2017 amount is the grant date fair value of (i) an annual grant of stock options
awarded on January 17, 2018 ($3,372,608) and (ii) a one-time grant of stock options awarded on the same
date in connection with his recruitment to the Company ($1,399,030).
For Mr. Galtie, the Fiscal 2017 amount is the grant date fair value of (i) an annual grant of stock options
awarded on January 17, 2018 ($799,491) and (ii) a one-time promotional grant of stock options awarded on
July 19, 2017 ($500,503).
For Ms. Harlan, the Fiscal 2017 amount is the grant date fair value of (i) an annual grant of stock options
awarded on January 17, 2018 ($215,490) and (ii) a one-time recognition grant of stock options awarded on
March 16, 2017 ($500,254).
(f) Non-Equity Incentive Plan Compensation. This column reflects cash short-term incentive awards under the 2014
Employee Incentive Plan. These awards are earned in the fiscal year shown, but are generally payable in the
following fiscal year on the basis of achieved performance goals after the release of the Company's financial
statements for the applicable fiscal year. The cash short-term incentive awards granted in respect of Fiscal 2019
were paid in part in December 2019, with the remainder paid in March 2020. See "2019 Retention and Tax
Mitigation Actions" at PS-40. For a description of the performance goals applicable to the Fiscal 2019 short-
term incentive awards, see "Discussion of Summary Compensation Table and Grants of Plan-Based Awards–Non-
Equity Incentive Plan Awards" at PS-70.
This column includes amounts deferred at the election of the executive under the Deferral Plan. Amounts so
deferred are also shown in the Nonqualified Deferred Compensation Table.
(g) Change in Pension Value and Nonqualified Deferred Compensation Earnings. None of the NEOs participate in the
Company's pension or other defined benefit plans. This column does not include earnings under the Deferral
Plan because it does not pay above-market or preferential earnings on compensation that is deferred.
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PS-65
(h) All Other Compensation. The table below shows a detailed description of all other compensation paid to the NEOs.
In addition to the payments reported below, executive officers are from time to time permitted to borrow
merchandise for their personal use to support the Company's marketing efforts.
Leadership Benefits
Broad-Based Retirement Benefits
Other ($)
Notes
Total ($)
Premium on
Additional
Disability
Insurance ($)
Premium on Life
Insurance ($)
401K Plan
Company
Match ($)
Defined
Contribution
Retirement
Benefit ($) (i)
Excess
Defined
Contribution
Retirement
Benefit ($) (ii)
12,281
12,281
8,301
10,714
10,714
10,714
13,662
13,662
13,662
3,900
3,900
3,900
325
368,634
392,159
2,581
137,681
157,737
168,352
142,220
152,468
124,457
55,991
55,991
55,991
—
2,589
8,100
—
8,250
8,100
6,749
8,250
8,100
7,950
8,250
8,100
7,950
—
8,250
8,100
—
8,250
6,750
3,994
9,625
8,100
7,950
6,875
6,750
6,625
—
137,218
7,640 (iii)
536,612
1,221
28,863 (iv)
—
519,677 (v)
450,724
530,559
38,357
33,193
6,920 (vi)
210,172
251,570 (vii)
468,064
—
116,614 (viii)
306,423
38,758
23,087
11,700
16,360
16,317
11,341
—
89,114 (ix)
92,007 (x)
89,463 (xi)
450 (xii)
450 (xii)
450 (xii)
450 (xii)
301,629
297,424
255,182
91,826
91,508
86,257
775
Name
Alessandro
Bogliolo
Mark J. Erceg
Philippe Galtie
Leigh M. Harlan
Daniella Vitale
Year
2019
2018
2017
2019
2018
2017
2019
2018
2017
2019
2018
2017
2019
(i)
(ii)
The amount shown in this column reflects the benefit paid in the year listed for the prior plan year under the
DCRB feature of the 401K Plan. See "Defined Contribution Retirement Benefit" at PS-57.
The amount shown in this column reflects the benefit paid in the year listed for the prior plan year under the
Excess DCRB feature of the Deferral Plan. See "Defined Contribution Retirement Benefit" at PS-57.
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(iii) For Mr. Bogliolo, the amount reported under "Other" for Fiscal 2019 represents payment of tax consulting
services and legal fees incurred in connection with work and residency authorization. For a more detailed
discussion of Mr. Bogliolo's compensatory arrangements, see "Alessandro Bogliolo Compensatory Arrangement"
at PS-73.
(iv) For Mr. Bogliolo, the amount reported under "Other" for Fiscal 2018 represents payment of legal fees incurred
in connection with obtaining authorization for Mr. Bogliolo to work in the United States and for Mr. Bogliolo
and his family to reside in the United States during his employment, as contemplated in his offer letter.
(v)
For Mr. Bogliolo, the amount reported under "Other" for Fiscal 2017 represents a payment to reimburse
relocation costs ($500,000), payment for tax consultation services ($1,880) and payment of legal fees
incurred in connection with obtaining work and residency authorization ($17,797), each of which was
contemplated in his offer letter.
(vi) For Mr. Erceg, the amount reported under "Other" for Fiscal 2019 represents payment of tax consultation
services. For a more detailed discussion of Mr. Erceg's compensatory arrangements, see "Mark J. Erceg
Compensatory Arrangement" at PS-74.
(vii) For Mr. Erceg, the amount reported under "Other" for Fiscal 2018 represents payment for relocation costs as
contemplated in his offer letter ($250,570) and for tax consultation services ($1,000).
(viii) For Mr. Erceg, the amount reported under "Other" for Fiscal 2017 represents payment for relocation costs as
contemplated in his offer letter ($114,664) and for tax consultation services ($1,950).
TIFFANY & CO.
PS-66
(ix) For Mr. Galtie, the amount reported under "Other" for Fiscal 2019 represents a defined contribution to certain
French social security and pension schemes, as contemplated in his offer letter. For a more detailed discussion
of Mr. Galtie’s compensatory arrangements, see "Philippe Galtie Compensatory Arrangement" at PS-74.
(x)
For Mr. Galtie, the amount reported under "Other" for Fiscal 2018 represents a defined contribution to certain
French social security and pension schemes ($89,921), as contemplated in his offer letter, and payment for
tax consultation services ($2,086).
(xi) For Mr. Galtie, the amount reported under "Other" for Fiscal 2017 represents a defined contribution to certain
French social security and pension schemes ($87,113) as contemplated in his offer letter, and payment for tax
consultation services ($2,350).
(xii) The amount reported under "Other" represents reimbursement of health and fitness expenses.
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GRANTS OF PLAN-BASED AWARDS
Fiscal 2019
2014 Employee Incentive Plan
Name
Award
Type
Grant
Date
Estimated Future/Possible Payouts
Under Non-Equity
Incentive Plan Awards (a)
Alessandro
Bogliolo
Annual
Incentive
1/16/2020
— 2,126,250
4,252,500
Threshold
($)
Target
($)
Maximum
($)
Estimated Future/Possible
Payouts
Under Equity Incentive
Plan Awards (b)
Threshold
Number of
Shares
Target
Number of
Shares
Maximum
Number of
Shares
All Other
Option/
Stock
Awards:
Number of
Securities
Underlying
Options/
Awards
(#)(c)
Exercise
or Base
Price of
Option
Awards
($/Sh)
Grant Date
Fair Value
of Equity
Awards
($)(d)
Mark J.
Erceg
RSU
PSU
Annual
Incentive
RSU
PSU
Philippe
Galtie
Annual
Incentive
RSU
PSU
Leigh M.
Harlan
Annual
Incentive
RSU
PSU
Daniella
Vitale
Annual
Incentive
1/16/2020
1/16/2020
1/16/2020
1/16/2020
1/16/2020
1/16/2020
1/16/2020
1/16/2020
1/16/2020
1/16/2020
1/16/2020
1/16/2020
RSU
PSU
1/16/2020
1/16/2020
—
714,000
1,428,000
5,496 27,480
54,960
—
672,000
1,344,000
1,664
8,319
16,638
—
362,250
724,500
1,253
6,264
12,528
—
720,000
1,440,000
675
3,377
6,754
1,678
8,389
16,778
Notes to Grants of Plan-Based Awards Table
27,480
8,320
6,264
3,380
8,392
3,685,618
3,685,618
1,115,878
1,115,744
840,128
840,128
453,326
452,923
1,125,535
1,125,133
(a) The grants shown in this column reflect annual incentives granted to the NEOs in respect of Fiscal 2020. The
amounts reported in the "Threshold," "Target" and "Maximum" columns reflect estimated future payouts under
these awards.
(b) The grants shown in this column reflect PSUs granted in January 2020 in respect of the three-year performance
period beginning February 1, 2020. For these grants, the Committee established threshold, target and maximum
goals for EPS and operating cash flow at the beginning of the applicable performance period. The Committee has
communicated to the NEOs that, if the EPS threshold or the operating cash flow threshold is attained, the
Committee intends to calculate the number of PSUs to vest as indicated in the chart below, based on actual
results compared to threshold, target and maximum goals shown; however, the Committee retains the discretion to
vest the maximum number of shares granted, or reduce the number to vest to any amount down to zero, provided
either the EPS or operating cash flow threshold is met. For a description of the treatment of outstanding PSU
awards under the Merger Agreement, see "LVMH Merger Agreement" at PS-40.
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PS-68
EPS
Operating Cash Flow
EPS
Percentage of target
shares earned*
Operating Cash Flow
(millions)
Percentage of target
shares earned:*
Below Threshold
Less than $11.67
Threshold
Equal to $11.67
Target
Equal to $13.73
Maximum
Equal to or greater
than $14.42
0%
20%
80%
160%
Less than $1,942
Equal to $1,942
Within the range of
$2,378 to $2,451
Equal to or greater
than $2.549
0%
0%
20%
40%
Shares calculated based on EPS goals plus operating cash flow goals =
total percentage of target shares paid out*
*Subject to linear interpolation if actual performance falls between threshold and target (or, in the case of a target
expressed as a range, the bottom of the target range), or between target (or, in the case of a target expressed as a
range, the top of the target range) and maximum. Target ranges include the ends of the ranges.
Amounts listed in the sub-column labeled "Target Number of Shares" reflect the number of shares awarded
assuming the EPS and operating cash flow targets are met at 100%. By contrast, if the EPS target is met at
100% and the operating cash flow threshold is not met, exercise of the Committee's discretion in accordance with
the chart above would result in vesting of 80% of target stock units for each NEO, corresponding to an aggregate
number of shares as follows: Mr. Bogliolo - 21,984 shares, Mr. Erceg - 6,655 shares, Mr. Galtie - 5,011 shares,
Ms. Harlan - 2,702 shares and Ms. Vitale - 6,711 shares. Conversely, if the EPS threshold is not met and the
operating cash flow target is met at 100%, exercise of the Committee's discretion in accordance with the chart
above would result in vesting of 20% of target stock units for each NEO, corresponding to an aggregate number of
shares as follows: Mr. Bogliolo - 5,496 shares, Mr. Erceg - 1,664 shares, Mr. Galtie - 1,253 shares, Ms. Harlan -
675 shares and Ms. Vitale - 1,678 shares. Amounts listed in the sub-column labeled "Maximum Number of
Shares" reflects the number of shares awarded assuming the EPS and operating cash flow maximums are met.
(c) The RSUs shown in this column were granted in January 2020 in respect of Fiscal 2020. These RSUs are
scheduled to vest in equal installments on the first, second, third and fourth anniversaries of the grant date. For a
description of the treatment of outstanding RSUs under the Merger Agreement, see "LVMH Merger Agreement" at
PS-40.
(d) The fair value of the RSU and PSU awards shown in this column was computed as of the grant date in accordance
with Codification Topic 718 for the fiscal year in which the award was granted, disregarding any estimates of
forfeitures related to service-based vesting conditions. The fair value of the PSU awards was computed assuming
that the EPS target and operating cash flow target were each met at 100% but not exceeded, resulting in vesting
of the target number of PSUs. For additional information regarding PSU awards, see the table titled "Outstanding
Equity Awards at Fiscal Year-End" at PS-75.
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DISCUSSION OF SUMMARY COMPENSATION TABLE
AND GRANTS OF PLAN-BASED AWARDS
NON-EQUITY INCENTIVE PLAN AWARDS
Fiscal 2019 Grants - Performance and Payout
Payout amounts for the short-term incentive awards granted for Fiscal 2019 are shown in the Summary
Compensation Table under the column headed "Non-Equity Incentive Plan Compensation." For a description of these
awards, including the performance goals established at the start of the performance period for the corporate and
individual portions, see "Short-Term Incentives–Fiscal 2019" at PS-51.
In March 2020, the Committee determined that the operating earnings threshold of $702 million and the constant
currency sales growth threshold of -1% had been met. The Committee further determined that the payout percentage
for the corporate portions of the award would be 34.8% of the overall target award, based on Fiscal 2019 operating
earnings of $732.6 million, as reported, and $753.8 million, as adjusted, net sales approximately unchanged from
the prior year, and Constant Currency Sales Growth of 1% (see Appendix I at PS-93).
Based on achievement of individual goals, the Committee determined that the payout percentage of the Individual
Portion would be 18% to 40% of the overall target award for the NEOs.
As a result of the determinations described above, each of the NEOs was paid 52.8% to 74.8% of his or her overall
target award. A portion of these amounts was paid in December 2019, with the remainder paid following the end of
the performance period. See "2019 Retention and Tax Mitigation Actions" at PS-40.
Fiscal 2018 and Fiscal 2017 Grants
In Fiscal 2018 and 2017, short-term incentive awards were paid out to the executive officers as follows:
•
•
In Fiscal 2018, the Company's consolidated operating earnings exceeded the threshold established by the
Committee, and short-term incentive awards were paid out at 102.6% to 104% of the target amount.
In Fiscal 2017, the Company's consolidated operating earnings exceeded the threshold established by the
Committee, and short-term incentive awards were paid out at 104% of the target amount.
EQUITY INCENTIVE PLAN AWARDS – PERFORMANCE-BASED RESTRICTED STOCK UNITS
The PSUs awarded in January 2020 are reflected in the Grants of Plan-Based Awards table under the column
headed "Estimated Future/Possible Payouts Under Equity Incentive Plan Awards."
General Terms of PSU Grants
PSU grants have the following general features:
• PSUs included in the grant are exchanged on a one-to-one basis for shares of the Company's common stock if
the PSUs vest.
• Vesting is determined at the end of a three-year performance period.
• Dividends are not paid on PSUs. However, PSUs accrue dividend equivalent units that will only be paid out
upon vesting of the underlying PSUs, if any. Whole dividend equivalent units are paid out in shares, and
fractional dividend equivalent units are paid out in cash.
• Under the applicable grant terms, vesting of PSUs (for reasons other than a change in control) is dependent
upon achievement of one or more threshold performance goals established by the Committee within 90 days
of the start of the performance period.
• Under no combination of circumstances will vesting occur for more than the number of PSUs granted (twice
the number of target PSUs).
For a further description of the PSUs granted in January 2019, 2018 and 2017, see "Performance-Based Restricted
Stock Unit Grants" at PS-55 to PS-57. For a description of the effect of termination of employment on PSU awards,
TIFFANY & CO.
PS-70
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see "Equity Incentive Plan Awards–Effect of Termination of Employment on Awards" below. For a description of the
effect of a change in control on PSU awards, see "Explanation of Potential Payments on Termination or Change in
Control–Vesting of Equity Grants" at PS-84. For a description of the treatment of PSU awards under the Merger
Agreement, see "LVMH Merger Agreement" at PS-40.
Vesting of the 2017 Performance-Based Restricted Stock Units
To mitigate the impact of Sections 280G and 4999 of the Internal Revenue Code, a portion of the 2017 PSUs was
accelerated to vest in December 2019. In addition, the Committee took action in March 2020 to vest the remainder
of the 2017 PSUs at the maximum level notwithstanding actual performance, as contemplated by the Merger
Agreement. See "2019 Retention and Tax Mitigation Actions" at PS-40.
Stock option grants have the following features:
EQUITY INCENTIVE PLAN AWARDS – STOCK OPTIONS
• Stock options granted in January 2016, 2017, 2018 and 2019 to executive officers vest (become
exercisable) in four equal annual installments. Stock options may also be granted from time to time in
connection with promotions and new hires and for recognition purposes, and may be awarded in those cases
on a cliff-vesting basis.
• For an explanation of the method of determining the exercise price of options, see "Stock Option Grants" at
PS-57.
• Stock options expire no later than the tenth anniversary of the grant date.
For a description of the effect of termination of employment on the vesting schedule and expiration date of stock
option awards, see "Equity Incentive Plan Awards–Effect of Termination of Employment on Awards" below. For a
description of actions taken in December 2019 to accelerate certain stock options, see "2019 Retention and Tax
Mitigation Actions" at PS-40. For a description of the effect of a change in control on stock option awards, see
"Explanation of Potential Payments on Termination or Change in Control–Vesting of Equity Grants" at PS-84. For a
description of the treatment of stock option awards under the Merger Agreement, see "LVMH Merger Agreement" at
PS-40.
EQUITY INCENTIVE PLAN AWARDS – TIME-VESTING RESTRICTED STOCK UNITS
RSU grants have the following features:
• Annual grants of RSUs vest in four equal annual installments. RSUs may also be granted from time in
connection with promotions and new hires and for recognition purposes, and may be awarded in those cases
on a cliff-vesting basis.
• Dividends are not paid on RSUs. However, RSUs granted in January 2017 and later accrue dividend
equivalent units that will only be paid out upon vesting of the underlying RSUs, with whole dividend
equivalent units to be paid out in shares, and fractional dividend equivalent units to be paid out in cash.
For a description of the effect of termination of employment on RSU awards, see "Equity Incentive Plan Awards–
Effect of Termination of Employment on Awards" below. For a description of actions taken in December 2019 to
accelerate certain RSUs, see "2019 Retention and Tax Mitigation Actions" at PS-40. For a description of the effect
of a change in control on RSU awards, see "Explanation of Potential Payments on Termination or Change in Control–
Vesting of Equity Grants" at PS-84. For a description of the treatment of RSU awards under the Merger Agreement,
see "LVMH Merger Agreement" at PS-40.
EQUITY INCENTIVE PLAN AWARDS - EFFECT OF TERMINATION OF EMPLOYMENT ON AWARDS
The grant terms applicable to certain equity awards provide for benefits, prior to a change in control, in the event of
retirement and certain instances of involuntary termination without cause. In addition, the Executive Severance Plan
provides for equity benefits in the event of involuntary termination without cause or resignation for good reason, prior
to a change in control, to the extent such benefits are not already provided by the applicable grant terms or
otherwise. See "Severance Benefits Prior to a Change in Control" at PS-58. The chart below illustrates the effect of
termination of employment under various circumstances, prior to a change in control, on grants of stock options,
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PS-71
PSUs and RSUs. Definitions of "cause," "good reason," "retirement" and "disability," as those terms are used below,
are provided in the applicable grant terms and the Executive Severance Plan. For information on the effect of
termination following a change in control, see "Explanation of Potential Payments on Termination Following a Change
in Control" at PS-83.
Reason for termination1 Stock Options
Death or disability
Unvested options vest on the
date of death or disability and
remain exercisable for two years
thereafter.
Retirement
Involuntary
termination without
cause or resignation
for good reason6
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For options granted in January
2017 and later, unvested options
continue to vest if granted at
least six months prior to
retirement, and the exercise
period for such vested options
expires five years after
retirement.2
For options granted before
January 2017, unvested options
are forfeited, and the exercise
period for such vested options
expires two years from
retirement.2
Options that would have vested
within 12 months of termination
vest on termination. The exercise
period for vested options expires
one year from termination.4,5
Remaining unvested options are
forfeited.
RSUs
Unvested RSUs vest on
the date of death or
disability.
PSUs
If death or disability
occurs before the start of
the applicable
performance period, then
unvested PSUs are
forfeited. If death or
disability occurs after the
start of the applicable
performance period, then
all or a percentage of
unvested PSUs will vest
based on a schedule
provided in the applicable
grant terms.
PSUs continue to vest if
granted at least six months
prior to retirement.2,3
Unvested RSUs are
forfeited.
Remaining unvested PSUs
are forfeited.
RSUs that would have
vested within 12 months
of termination will vest at
or shortly after
termination.4,5,7
Remaining unvested
RSUs are forfeited.
PSUs for which the
performance period will
end within 12 months of
termination continue to
vest on a pro rata
basis.3,4,5
Remaining unvested PSUs
are forfeited, subject to
the Committee’s ability to
permit continued vesting
under certain
circumstances.3,4
Termination for cause Unvested options are forfeited
Termination for any
other reason
and the exercise period for vested
options expires on termination.
Unvested options are forfeited
and the exercise period for vested
options expires three months
from termination.
Unvested PSUs are
forfeited.
Unvested RSUs are
forfeited.
Unvested PSUs are
forfeited.
Unvested RSUs are
forfeited.
1 Except where otherwise indicated, the benefits described are provided for in the applicable grant terms.
2 Subject to compliance with applicable restrictive covenants.
3 Vesting of PSUs remains subject to pre-determined performance goals.
4 Subject to execution of a release of claims and compliance with applicable restrictive covenants.
5 Pursuant to the terms of the Executive Severance Plan.
6 The offer letter provided to Mr. Bogliolo provides for continued vesting of certain equity grants in the event of
involuntary termination without cause or resignation for good reason prior to October 17, 2020. For a description
of these benefits, see "Alessandro Bogliolo Compensatory Arrangements" at PS-73.
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PS-72
7 RSUs granted to Ms. Harlan in March 2017 allow for continued vesting if Ms. Harlan is involuntarily terminated
without cause, subject to compliance with certain restrictive covenants.
LIFE INSURANCE BENEFITS
The key features of the life insurance benefit that the Company provides to its executive officers are:
• executive officers own whole life policies on their own lives;
•
•
the pre-retirement death benefit is three times annual base salary and target short-term incentive award;
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 average of the executive officer's annual base salary
and target short-term incentive award for his or her final three years;
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.
Ms. Vitale declined this benefit. See the table shown under note (h) to the Summary Compensation Table at PS-66
for information concerning life insurance premiums paid for the benefit of the remaining NEOs.
ALESSANDRO BOGLIOLO COMPENSATORY ARRANGEMENT
Elements of Mr. Bogliolo's compensation disclosed in the Summary Compensation Table are provided pursuant to the
offer letter extended to him in connection with his recruitment. The key terms of the offer letter were:
• Initial base salary: $1,350,000 per year;
•
Initial target annual incentive award (beginning on a prorated basis for Fiscal 2017, reflecting his
commencement in the role of CEO in October 2017): 150% of base salary;
•
Initial target long-term incentive award (beginning in Fiscal 2018): 500% of base salary;
• One-time sign-on awards of: (i) stock options with a grant date value of $1,400,000, (ii) RSUs with a grant
date value of $1,400,000, in each case to vest in equal installments on the first three anniversaries of the
date Mr. Bogliolo commenced employment, and (iii) $2,800,000 in cash. These sign-on awards were
intended to replace amounts forfeited at Mr. Bogliolo's prior employer and to provide further inducement to
join the Company;
• A one-time payment of $500,000 to reimburse Mr. Bogliolo's expenses in relocating to the United States, as
well as reimbursement of certain expenses for tax and legal advice;
• The following severance benefits, absent a change in control, in the event of termination without cause or
resignation for good reason prior to the third anniversary of his commencement date:
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• Lump sum payment equal to 24 months of then-current annual base salary;
• Prorated portion of the annual incentive award for the fiscal year in which the termination occurs (to
be calculated based on actual performance);
• Payment of any earned but unpaid annual incentive award for the prior fiscal year;
• Reimbursement of the cost of continued health care coverage for up to 18 months; and
• Amendment of equity grants to provide for continued vesting of stock options and RSUs that would
have vested during the 24-month period following termination, with the options remaining
exercisable for 12 months following the vesting date, and for continued vesting of PSUs, with the
payout based on actual performance and calculated on a pro rata basis to reflect employment during
the applicable performance period.
TIFFANY & CO.
PS-73
The offer letter incorporates definitions of "change in control," "cause" and "good reason," and has been filed with the
SEC as Exhibit 10.39 to the Company's Current Report on Form 8-K filed with the SEC on July 13, 2017.
MARK J. ERCEG COMPENSATORY ARRANGEMENT
Elements of Mr. Erceg's compensation disclosed in the Summary Compensation Table are provided pursuant to the
offer letter extended to him in connection with his recruitment. The key terms of the offer letter included:
•
•
•
Initial base salary: $850,000 per year;
Initial target annual incentive award (beginning in Fiscal 2017): 80% of base salary;
Initial target long-term incentive award (beginning in Fiscal 2017): 250% of base salary;
• One-time sign-on awards of (i) RSUs with a grant date value of $2,000,000, to vest in equal installments on
the first three anniversaries of the grant date; (ii) stock options with a grant date value of $2,000,000, to
vest in equal installments on the first three anniversaries of the grant date; and (iii) a $750,000 cash bonus,
and an additional cash payment of $750,000 as reimbursement for the repayment of a sign-on award to his
prior employer; and
• Certain relocation costs.
The offer letter has been filed with the SEC as Exhibit 10.29 to the Company’s Annual Report on Form 10-K dated
March 17, 2017.
PHILIPPE GALTIE COMPENSATORY ARRANGEMENT
Elements of Mr. Galtie's compensation disclosed in the Summary Compensation Table are provided pursuant to the
terms of the offer letter extended to him in connection with his recruitment. The key terms of the offer letter
included:
•
•
•
Initial base salary: $500,000 per year;
Initial target annual incentive award: 50% of base salary;
Initial target long-term incentive award: 150% of base salary;
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• One-time sign-on awards of (i) RSUs with a grant date value of $375,000, to vest in equal installments on
the first four anniversaries of the grant date; and (ii) stock options with a grant date value of $375,000, to
vest in equal installments on the first four anniversaries of the grant date;
• French pension scheme payments: payment of contributions for the benefit of Mr. Galtie's account with
certain French social security and pension schemes. This payment is intended to avoid loss of Mr. Galtie's
accrual under such schemes; and
• Certain relocation costs.
The offer letter has been filed with the SEC as Exhibit 10.32 to the Company's Annual Report on Form 10-K dated
March 17, 2017.
DANIELLA VITALE COMPENSATORY ARRANGEMENT
Elements of Ms. Vitale's compensation disclosed in the Summary Compensation Table are provided pursuant to the
offer letter extended to her in connection with her recruitment. The key terms of the offer letter included:
•
•
•
Initial base salary: $900,000 per year;
Initial target annual incentive award: 80% of base salary;
Initial target long-term incentive award: 250% of base salary; and
• One-time sign-on awards of equity grants with an aggregate target value of $750,000, or alternatively,
$750,000 in cash.
The offer letter has been filed with the SEC as Exhibit 10.21 to the Company's Annual Report on Form 10-K filed
with the SEC on March 20, 2020.
TIFFANY & CO.
PS-74
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
January 31, 2020
Option Awards
Stock Awards
Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#)
Number of
Securities
Underlying
Unexercised
Options
Unexercis-
able (#)
Name
Alessandro Bogliolo
Option
Exercise
Price
($)
Option
Expiration
Date (a)
Number of Shares
or Units of Stock
That Have Not
Vested (#)
Market Value of
Shares or Units
of Stock That
Have Not Vested
($)
Equity Incentive Plan
Awards: Number of
Unearned Shares,
Units, or Other
Rights That Have Not
Vested (#) (b)
Equity Incentive
Plan Awards:
Market or Payout
Value of
Unearned Shares,
Units, or Other
Rights That Have
Not Vested ($)
—
—
42,273
108.99
1/17/2028
112,286
85.26
1/17/2029
6,464/64,640 (c)
866,305 (d)
8,419/84,192 (e)
1,128,314 (f)
5,496/54,960 (g)
736,574 (h)
27,480
(i)
3,682,870 (j)
Mark J. Erceg
39,924
13,308
108.99
1/17/2028
33,990
33,990
85.26
1/17/2029
Philippe Galtie
—
—
—
8,328
91.87
7/19/2027
10,021
108.99
1/17/2028
25,592
85.26
1/17/2029
2,035/20,350 (c)
272,731 (d)
2,549/25,485 (e)
341,617 (f)
1,664/16,638 (g)
223,009 (h)
1,532/15,324 (c)
205,319 (d)
1,919/19,191 (e)
257,184 (f)
1,253/12,528 (g)
167,927 (h)
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17,740 (k)
2,377,515 (j)
8,320
(i)
1,115,046 (j)
8,140 (k)
1,090,923 (j)
1,435
6,264
(l)
(i)
192,319 (j)
839,501 (j)
TIFFANY & CO.
PS-75
Option Awards
Stock Awards
Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#)
Number of
Securities
Underlying
Unexercised
Options
Unexercis-
able (#)
Name
Leigh M. Harlan
Option
Exercise
Price
($)
Option
Expiration
Date (a)
Number of Shares
or Units of Stock
That Have Not
Vested (#)
Market Value of
Shares or Units
of Stock That
Have Not Vested
($)
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 ($)
—
—
2,701
108.99
1/17/2028
6,898
85.26
1/17/2029
826/8,260 (c)
110,701 (d)
1,035/10,346 (e)
138,711 (f)
675/6,754 (g)
90,464 (h)
7,202 (k)
965,212 (j)
1,968 (m)
263,751 (j)
517 (n)
69,288 (j)
1,295 (o)
173,556 (j)
3,380
(i)
452,988 (j)
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8,392
(i)
1,124,696 (j)
Notes to Outstanding Equity Awards at Fiscal Year-End Table
1,678/16,778 (g)
224,886 (h)
(a) For all option grants shown, the grant date was 10 years prior to the expiration date shown. The options
granted on the dates so indicated were scheduled to vest 25% per year over the four-year period following the
grant date. However, a portion of these grants were accelerated to vest in December 2019. See "2019
Retention and Tax Mitigation Actions" at PS-40. The number of shares shown is the portion of such grants
that had not vested as of January 31, 2020.
(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 (c), (d), (e), (f), (g), (h) and (k) 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 at the maximum goal level over the three-year performance period. Both numbers
include dividend equivalent units accrued as of January 31, 2020.
(c) This January 2018 grant of PSUs is scheduled to vest three business days following the date on which the
Company's audited financial results for Fiscal 2020 are publicly reported.
(d) This value has been computed at 10% of maximum on the assumption that the EPS and operating cash flow
thresholds are reached but not exceeded for the performance period of Fiscal 2018 through Fiscal 2020. The
resulting value was computed on the basis of the closing stock price of $134.02 on January 31, 2020. If the
EPS and operating cash flow targets are both met at 100%, the value would be computed at 50% of
maximum, corresponding to an aggregate number of shares as follows: Mr. Bogliolo - 32,320 shares, Mr.
Erceg - 10,175 shares, Mr. Galtie - 7,662 shares and Ms. Harlan - 4,130 shares.
(e) This January 2019 grant of PSUs is scheduled to vest three business days following the date on which the
Company's audited financial results for the fiscal year ending January 31, 2022 ("Fiscal 2021") are publicly
reported.
(f) This value has been computed at 10% of maximum on the assumption that the EPS and operating cash flow
thresholds are reached but not exceeded for the performance period of Fiscal 2019 through Fiscal 2021. The
resulting value was computed on the basis of the closing stock price of $134.02 on January 31, 2020. If the
EPS and operating cash flow targets are both met at 100%, the value would be computed at 50% of
TIFFANY & CO.
PS-76
maximum, corresponding to an aggregate number of shares as follows: Mr. Bogliolo - 42,096 shares, Mr.
Erceg - 12,743 shares, Mr. Galtie - 9,595 shares and Ms. Harlan - 5,173 shares.
(g) This January 2020 grant of PSUs is scheduled to vest three business days following the date on which the
Company's audited financial results for the fiscal year ending January 31, 2023 ("Fiscal 2022") are publicly
reported.
(h) This value has been computed at 10% of maximum on the assumption that the EPS and operating cash flow
thresholds are reached but not exceeded for the performance period of Fiscal 2020 through Fiscal 2022. The
resulting value was computed on the basis of the closing stock price of $134.02 on January 31, 2020. If the
EPS and operating cash flow targets are both met at 100%, the value would be computed at 50% of
maximum, corresponding to an aggregate number of shares as follows: Mr. Bogliolo - 27,480 shares, Mr.
Erceg - 8,319 shares, Mr. Galtie - 6,264 shares, Ms. Harlan - 3,377 shares and Ms. Vitale - 8,389 shares.
(i) This January 2020 grant of RSUs is scheduled to vest in equal installments over a four-year period ending
January 17, 2024. The number of shares shown is the portion of the award that had not vested as of January
31, 2020.
(j) The value was computed on the basis of the Company's closing stock price of $134.02 on January 31, 2020.
(k) This January 2017 grant of PSUs was scheduled to vest in March 2020, three business days following the
date on which the Company's audited financial results for Fiscal 2019 were publicly reported. A portion of
this grant was accelerated to vest in December 2019. See "2019 Retention and Tax Mitigation Actions" at
PS-40. The number of shares shown is the number of shares that remained outstanding as of January 31,
2020. In March 2020, the Committee took action to vest the full number of the remaining shares.
(l) This one-time RSU award, granted to Mr. Galtie in July 2017 in connection with his assumption of additional
responsibilities, is scheduled to vest in equal installments over a four-year period ending July 19, 2021. A
portion of the award was accelerated to vest in December 2019. See "2019 Retention and Tax Mitigation
Actions" at PS-40. The number of shares shown is the portion of the award that remained outstanding as of
January 31, 2020.
(m) This one-time RSU award, granted to Ms. Harlan in March 2017 in furtherance of recognition and retention
goals, was scheduled to vest in equal installments over a three-year period ending March 16, 2020. The
number of shares shown is the portion of the award that remained outstanding as of January 31, 2020.
(n) This January 2018 grant of RSUs is scheduled to vest in equal installments over a four-year period ending
January 17, 2022. A portion of the award was accelerated to vest in December 2019. See "2019 Retention
and Tax Mitigation Actions" at PS-40. The number of shares shown is the portion of the award that remained
outstanding as of January 31, 2020.
(o) This January 2019 grant of RSUs is scheduled to vest in equal installments over a four-year period ending
January 17, 2023. A portion of the award was accelerated to vest in December 2019. See "2019 Retention
and Tax Mitigation Actions" at PS-40. The number of shares shown is the portion of the award that remained
outstanding as of January 31, 2020.
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TIFFANY & CO.
PS-77
OPTION EXERCISES AND STOCK VESTED
Fiscal 2019
Option Awards
Stock Awards
Number of
Shares
Acquired on
Exercise
(#)
Value
Realized
on Exercise
($)
Number of
Shares
Acquired
on Vesting
(#)
309,248 (a)
10,268,658
213,975 (b)
12,058,339
118,863 (c)
99,501 (d)
—
5,279,595
4,910,951
—
8,564
18,916
19,064
17,407
—
Value
Realized
on Vesting
($)
985,846
2,527,121
2,250,435
2,087,329
—
Name
Alessandro Bogliolo
Mark J. Erceg
Philippe Galtie
Leigh M. Harlan
Daniella Vitale
(a) Weighted-average holding period for options exercised: 1.6 years
(b) Weighted-average holding period for options exercised: 3.1 years
(c) Weighted-average holding period for options exercised: 2.4 years
(d) Weighted-average holding period for options exercised: 3.4 years
PENSION BENEFITS
The NEOs do not participate in any defined benefit pension plans.
NONQUALIFIED DEFERRED COMPENSATION TABLE
Fiscal 2019
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Name
Executive
Contributions
in Last Fiscal
Year (a) ($)
Registrant
Contributions
in Last Fiscal
Year (b) ($)
Aggregate
Earnings/
(Losses)
in Last Fiscal
Year (c) ($)
Aggregate
Withdrawals/
Distributions
($)
Aggregate
Balance at
Last Fiscal
Year End
(d) ($)
Alessandro Bogliolo
—
137,218
Mark J. Erceg
Philippe Galtie
Leigh M. Harlan
Daniella Vitale
873,936
—
—
—
38,357
38,758
16,360
—
13,037
87,728
10,059
5,196
—
—
—
—
—
—
151,483
1,033,613
124,521
85,082
—
Note to Nonqualified Deferred Compensation Table
(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-63.
(b) The amounts shown in this column, which reflect Excess DCRB Contributions made in Fiscal 2019 for plan year
2018, are also included in the column headed "All Other Compensation" in the Summary Compensation Table at
PS-63. For more information concerning Excess DCRB Contributions, see "Defined Contribution Retirement
Benefit" at PS-57 and "Excess DCRB Feature of the Deferral Plan" below. Mr. Bogliolo, Mr. Erceg, Mr. Galtie and
Ms. Harlan are vested 20%, 40%, 60% and 100%, respectively, in the total Excess DCRB Contributions
credited to them.
TIFFANY & CO.
PS-78
(c) Amounts shown in this column are not reported as compensation in the Summary Compensation Table because
the Deferral Plan does not pay above-market or preferential earnings on compensation that is deferred.
(d) 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 or the Company but not
to the extent that such amounts represent earnings. See Note (c) above.
These are the key features of the Company's Deferral Plan:
Features of the Deferral Plan
• Participation is open to directors, executive officers and certain other employees.
• 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 DCRB Contribution 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 funded by a trust that is subject to the claims of Tiffany's creditors.
• The value in the participant's account depends on the return on investments in various mutual funds that may
be 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 the Board.
• Termination of services generally triggers a distribution of all account balances other than, in the case of
retirement or disability, retirement balances.
• Executive officers will not receive any distribution from the plan until six months following termination of
service.
Excess DCRB Feature of the Deferral Plan
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The Deferral Plan provides for an Excess DCRB Contribution with respect to certain eligible employees under the
DCRB feature of the 401K 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 401K 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, an Excess
DCRB Contribution will be credited to the employee's accounts under the Deferral Plan.
The Excess DCRB feature is intended to benefit those eligible employees who were hired on or after January 1,
2006, and for this reason were precluded from participation in the Company's defined benefit plans. All the NEOs
are eligible for benefits under the Excess DCRB feature of the Deferral Plan.
TIFFANY & CO.
PS-79
The Excess DCRB Contribution vests in accordance with the vesting schedule for DCRB Contributions under the
401K Plan, as follows:
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%
Other Retirement Benefits
Mr. Galtie receives contributions for the benefit of his accounts with certain French social security and pension
schemes. For details about the foregoing retirement benefit, see "Philippe Galtie Compensatory Arrangement" at
PS-74 and Notes h(ix)-(xi) to the Summary Compensation Table at PS-67.
POTENTIAL PAYMENTS ON TERMINATION OR CHANGE IN CONTROL
The following tables show benefits payable to the NEOs shown upon involuntary termination prior to a Change in
Control (as defined below), and upon involuntary termination following a Change in Control. In either case, the values
below assume the NEO shown was involuntarily terminated on January 31, 2020. An "involuntary termination" shown
in the table below does not include a termination for cause, but does include a resignation for good reason, except
where otherwise noted. As used in this section, "Change in Control" has the meaning described below under "Definition
of a Change in Control" at PS-83. The values shown in the second table below assume the Change in Control is not a
Terminating Transaction. See "Definition of a Change in Control" at PS-83 and "Vesting of Equity Grants" at PS-84.
Involuntary Terminations Absent a Change in Control
Early Vesting of Equity Awards ($) (c)
Cash Severance
Payment ($) (a)
Welfare Benefit
($)(b)
Early Vesting of
Stock Options
(d)
Early Vesting of
PSUs (e)
Early Vesting of
RSUs (f)
Total ($)
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Name
Alessandro
Bogliolo
Mark J. Erceg
Philippe Galtie
Leigh M.
Harlan
3,400,650
1,415,080
1,287,040
841,570
Daniella Vitale
1,369,079
41,723
41,723
35,406
35,669
41,723
—
—
—
—
—
—
—
—
—
—
—
3,442,373
278,762
209,875
1,735,565
1,532,321
113,247
990,486
281,174
1,691,976
TIFFANY & CO.
PS-80
Involuntary Terminations Following a Change in Control
Early Vesting of Equity Awards ($) (c)(i)
Cash Severance
Payment ($) (g)
Welfare Benefit
($)(h)
Early Vesting of
Stock Options (j)
Early Vesting of
PSUs (k)
Early Vesting of
RSUs (l)
Total ($)
Name
Alessandro
Bogliolo
Mark J. Erceg
7,450,650
3,200,080
Philippe Galtie
2,967,040
Leigh M.
Harlan
1,962,820
Daniella Vitale
3,259,079
48,331
48,331
39,882
48,331
48,331
6,533,159
10,970,556
3,682,870
28,685,566
1,990,452
4,329,550
1,115,046
10,683,459
1,849,717
2,980,504
1,031,820
8,868,963
403,953
1,757,552
959,583
5,132,239
—
—
1,124,696
4,432,106
(a)
(b)
(c)
(d)
(e)
(f)
Notes to Potential Payments on Termination or Change in Control Tables
For Mr. Bogliolo, the amount shown represents 24 months of base salary (payable in a lump sum) and
payment of the unpaid portion of his Fiscal 2019 annual incentive award. For the remaining NEOs, the
amount shown represents the aggregate cost of continuing their salary for a period determined by the
Executive Severance Plan (18 months for Mr. Erceg, Mr. Galtie and Ms. Vitale, and 15 months for Ms.
Harlan), plus the unpaid portion of their Fiscal 2019 annual incentive awards.
The amounts shown in this column represent the cost of (i) 12 months of outplacement services and (ii)
continued health care coverage determined on the basis of the Company's "COBRA" rates for post-
employment continuation coverage for a period of 18 months for Mr. Bogliolo, Mr. Erceg, Mr. Galtie and
Ms. Vitale, and 15 months for Ms. Harlan. Such COBRA rates are available to all participating employees
who terminate from employment and were determined on the basis of coverage elections made by the
executive officer.
The value of early vesting of equity awards was determined using $134.02, the closing price of the
Company's stock on January 31, 2020.
In the event of involuntary termination on the assumed termination date, Mr. Bogliolo would be entitled to
continued vesting of outstanding stock options scheduled to vest within 24 months of termination, with
the exercise period for such options to expire one year from the vesting date (a total of 98,416 stock
options). No value has been assigned in this column to stock options subject to continued vesting, or to
adjustments in the exercise period for vested options.
The remaining NEOs would be entitled to early vesting of stock options scheduled to vest within 12
months of termination, with the exercise period for such stock options to expire one year from termination.
No value is shown in this column as all such stock options were accelerated to vest in December 2019.
See "2019 Retention and Tax Mitigation Actions" at PS-40.
In the event of involuntary termination on the assumed termination date, Mr. Bogliolo would be entitled to
continued pro rata vesting of all outstanding PSUs (resulting in continued vesting of 71,157 PSUs,
following such prorating). The remaining NEOs would be entitled to continued pro rata vesting of PSUs for
which the performance period would end within 12 months of the assumed termination date. Accordingly,
this column assumes continued pro rata vesting of outstanding PSUs granted in (if applicable) January
2017 and 2018 (resulting in continued vesting, following such prorating, of 31,303 PSUs for Mr. Erceg,
18,354 PSUs for Mr. Galtie and 12,707 PSUs for Ms. Harlan). In each case, no value has been assigned
to PSUs subject to such continued vesting.
In the event of involuntary termination on the assumed termination date, Mr. Bogliolo would be entitled to
continued vesting of RSUs scheduled to vest within 24 months of termination (13,740 RSUs), and Ms.
Harlan would be entitled to continued vesting of the outstanding portion of RSUs granted to her in March
2017 (1,968 RSUs). No value has been assigned to RSUs subject to such continued vesting. For the
TIFFANY & CO.
PS-81
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remaining NEOs, the outstanding portion of RSUs scheduled to vest within 12 months of termination
would vest on termination. Accordingly, the amounts shown represent the value of early vesting of one-
fourth of the RSUs granted in January 2020 to Mr. Erceg, Mr. Galtie, Ms. Harlan and Ms. Vitale.
(g)
(h)
(i)
(j)
(k)
Cash severance payments shown in this column represent the sum of (i) the unpaid portion of the NEO's
short-term incentive award for Fiscal 2019, and (ii) two times the sum of such short-term incentive award
at target and the NEO's Fiscal 2019 base salary.
The amounts shown in this column represent two years of health care coverage determined on the basis of
the COBRA rates described above.
The values shown in these columns assume that the Change in Control is not a Terminating Transaction.
See "Definition of a Change in Control" at PS-83. For an explanation of the effect of a Terminating
Transaction, see "Vesting of Equity Grants" at PS-84.
The amounts shown in this column reflect the vesting of all outstanding stock options upon the Change in
Control.
The amounts shown in this column reflect the vesting of a portion of the 2017, 2018 and 2019 PSUs
upon the Change in Control, calculated as described below under "Vesting of Equity Grants" at PS-84; but
they do not include the 2020 PSUs, as the assumed Change in Control would have occurred prior to the
start of the performance period applicable to such PSUs.
(l)
The amounts shown in this column represent the vesting of all outstanding RSUs upon the Change in
Control.
Explanation of Potential Payments on Termination Prior to a Change in Control
Alessandro Bogliolo Offer Letter
The offer letter provided to Mr. Bogliolo provides for the benefits shown below in the event of involuntary termination
prior to October 2, 2020, absent a Change in Control.
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Alessandro Bogliolo Offer Letter - Severance Benefits
Salary
Lump sum payment equal to 24 months of then-current base salary.
Annual Incentive
Prorated portion of the annual incentive for the year in which termination occurs, calculated based
on actual performance, and paid at the same time that such awards are paid to active executive
officers.
Welfare Benefits
Reimbursement of the cost of continued health care coverage for up to 18 months.
Equity Awards
Continued vesting of stock options and RSUs that would have vested within 24 months of
termination, with vested options remaining exercisable for 12 months following the vesting date.
Earned
Compensation
Conditions
Continued vesting of all outstanding PSUs, with vested PSUs to be paid out at the same time that
PSUs granted to active executive officers are settled, and the number to vest to be determined
based on actual performance and prorated to reflect employment during the performance period.
Payment of any earned but unpaid annual incentive award for any fiscal year completed prior to the
termination date.
The above benefits are conditioned upon (i) a release of claims in favor of the Company, its
affiliates and their employees, and (iii) compliance with restrictive covenants providing for non-
competition, non-solicitation and no hire obligations for two years following termination, as well as
ongoing confidentiality and cooperation obligations.
In accordance with the above, the cash severance amount shown for Mr. Bogliolo in the table on PS-80 represents 24
months of base salary (paid as a lump sum) and payment of the unpaid portion of his 2019 annual incentive award. In
addition, although Mr. Bogliolo is entitled under his offer letter to continued vesting of certain equity awards as
described above, no value has been assigned in the first table on PS-80 to awards subject to such continued vesting.
TIFFANY & CO.
PS-82
Executive Severance Plan
The Executive Severance Plan provides the following benefits in the event of involuntary termination prior to a Change
in Control:
Executive Severance Plan
Salary
Annual Incentive
Welfare Benefits
Base salary continuation in accordance with normal payroll practices, determined as follows:
(i) CEO - 24 months, (ii) EVP - 18 months or (iii) SVP - 15 months.
Payment of the executive's annual incentive for the year in which termination takes place, with
the amount to be paid calculated as follows, and paid at the same time that such awards are
paid to active executive officers:
- Prorated for employment during the performance period
- Individual portion based on target
- Corporate portion based on actual performance
Payment of the cost of continued health care coverage from termination until the earliest of (i)
the last day salary continuation benefits are paid, (ii) the date that is 18 months from
termination and (iii) the date the executive becomes eligible for coverage from a subsequent
employer.
If termination occurs after July 31, payment of the premium on any Company-purchased life
insurance policy for the year in which termination occurs.
Outplacement benefits for 12 months.
Equity Awards
RSUs and stock options scheduled to vest within 12 months of termination vest at or shortly
after termination, with the exercise period for vested options to expire one year following
termination.
PSUs for which the performance period will end within 12 months of termination continue to
vest, with the number to vest to be determined based on actual performance and prorated to
reflect employment during the performance period.
Earned Compensation
Payment of any earned but unpaid base salary and vacation pay, and earned but unpaid annual
incentive award for any fiscal year completed prior to the termination date.
Conditions
The above benefits are conditioned upon: (i) a release of claims in favor of the Company, its
affiliates and their employees, and (ii) compliance with restrictive covenants providing for non-
competition, non-solicitation and no-hire obligations for the period during which salary
continuation benefits are paid, as well as ongoing confidentiality and cooperation obligations.
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In the event that an executive is entitled to cash severance benefits under an employment agreement or offer letter, the
cash severance benefits described above will only be provided to the extent they exceed such cash severance benefits.
Likewise, the equity benefits described will only be provided to the extent they do not duplicate benefits provided in an
employment agreement, offer letter or applicable equity grant terms.
Equity Benefits
For a summary of the effects of involuntary termination prior to a Change in Control on equity awards under the
Executive Severance Plan and the applicable grant terms, see "Equity Incentive Plan Awards–Effect of Termination of
Employment on Awards" at PS-71. The terms applicable to PSUs reserve the right of the Committee, under certain
circumstances, to permit vesting of such units in the event of an involuntary termination without cause (but not
resignation for good reason) absent a Change in Control. The amounts reported assume no units were vested in this
manner.
Explanation of Potential Payments on Termination Following a Change in Control
Definition of a Change in Control
For purposes of the Executive Severance Plan, unvested equity awards made to the NEOs, and the retention
agreements, the term "Change in Control" means that one of the following events has occurred:
• A person or group of persons acting in concert (a "person" being an individual or organization) is or becomes the
beneficial owner of Company stock representing 35% or more of the combined voting power of the Company's
then-outstanding stock (subject to certain exceptions such as in the case of a trustee of a Company employee
benefit plan);
TIFFANY & CO.
PS-83
• A majority of the Board is, for any reason, not made up of individuals who are currently on the Board or who are
incumbent directors. Incumbent directors are defined for purposes of the retention agreements and certain
unvested equity awards as directors approved by a majority of the current directors or directors who were
themselves approved by a majority of the current directors. The terms of other unvested equity awards use the
same definition, but with the proviso that incumbent directors do not include a director who joined the board
after having been designated to do so pursuant to an agreement between the Company and another person to
effect a transaction that would otherwise constitute a Change in Control;
• As a result of a corporate transaction such as a merger, the shareholders of the Company immediately prior to
such transaction do not own more than 50% of the combined voting power of the surviving entity; or
• 50% or more of the consolidated assets of the Company and its subsidiaries are sold, liquidated or distributed,
unless the shareholders of the Company continue to own those assets in the same proportion as their ownership
of Company stock prior to the sale, liquidation or distribution (in the case of the retention agreements and
certain unvested equity awards); or all or substantially all assets of the Company or Tiffany are sold or disposed
of to an unrelated party (in the case of other unvested equity awards).
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.
Cash Severance - Retention Agreements
The retention agreements entered into by the Company and Tiffany with each of the executive officers provide for the
severance benefits shown below in the event of involuntary termination within two years of the date of the Change in
Control.
Retention Agreements
Salary
Two times annual base salary.
Annual Incentive Two times the executive's target annual incentive for the year in which termination
occurs.
Welfare Benefits Two years of benefits continuation under Tiffany's health and welfare plans.
Earned
Compensation
Payment of (i) any earned but unpaid base salary, vacation pay and bonus or annual
incentive award for any completed fiscal year that remains unpaid, and (ii) a pro rata
portion of the executive's target annual incentive for the year in which termination
occurs.
Vesting of Equity Grants
Stock Option Grants
Outstanding stock options will vest in full and become exercisable in the event of a Change in Control that is a
Terminating Transaction. For all other Change in Control events, early vesting will occur in full but only if the executive
is involuntarily terminated from employment following the Change in Control.
Performance-Based Restricted Stock Unit Grants
All outstanding PSUs will vest upon a Terminating Transaction, other than PSUs for which the performance period has
not yet commenced.
For all other Change in Control events, PSUs convert to time-vesting restricted stock units as follows:
•
•
If a Change in Control occurs before the start of the three-year performance period, no conversion or vesting
will occur.
If a Change in Control occurs in the first or second fiscal year of the three-year performance period, then 55%
of the PSUs awarded shall convert to time-vesting restricted stock units.
TIFFANY & CO.
PS-84
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If a Change in Control occurs in the last fiscal year of the three-year performance period, the percentage of
PSUs 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 will be prorated for the cumulative
two-year period (66.67%).
The resulting time-vesting restricted stock units will vest on the earlier of (i) the original maturity date in the notice of
grant (which, for all outstanding PSU grants, is three business days following the public announcement of the
Company's audited, consolidated financial results for the last fiscal year in the performance period), or (ii) if the
executive is involuntarily terminated, on such termination date.
An assumed Change of Control that is not a Terminating Transaction that occurs on January 31, 2020, would occur in
the third year of the performance period of the 2017 PSUs. Actual results for the first and second years of the
performance period, compared to prorated performance goals, would result in 40% of the total number of such PSUs
converting to time-vesting restricted stock units. The assumed Change in Control would occur in the first two years of
the performance period of the 2018 and 2019 PSUs, resulting in 55% of each of those grants converting to time-
vesting restricted stock units. For the 2020 PSUs, the three-year performance period began on February 1, 2020;
because the Change in Control is assumed to have taken place before that date, no portion of the 2020 PSUs are
reflected as vested as a result of the assumed Change in Control.
Time-Vesting Restricted Stock Unit Grants
Outstanding RSUs will vest in full and convert to shares in the event of a Terminating Transaction. For all other Change
in Control events, RSUs will vest in full if the executive is involuntarily terminated following the Change in Control
event.
LVMH Merger Agreement
The Merger will constitute a Terminating Transaction. For a description of the treatment of outstanding equity awards
under the Merger Agreement, see "LVMH Merger Agreement" at PS-40.
If any of the NEOs had died or become disabled on January 31, 2020, unvested stock options, PSUs and RSUs would
have vested at the values shown below.
Other Terminations
Name
Early Vesting of Stock
Options ($)
Alessandro Bogliolo
Mark J. Erceg
Philippe Galtie
Leigh M. Harlan
Daniella Vitale
6,533,159
1,990,452
1,849,717
403,953
—
Early Vesting of PSUs
($)
4,863,618
Early Vesting of RSUs
($)
3,682,870
3,885,434
2,226,425
1,577,311
—
1,115,046
1,031,820
959,583
1,124,696
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CEO PAY RATIO
The SEC has adopted a rule under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 that
requires the disclosure of the ratio of (i) the median annual total compensation for all employees of the Company and
its subsidiaries other than the CEO, to (ii) the annual total compensation of the CEO.
Under the SEC’s rule, the Company may identify its median employee once every three years as long as there have
been no meaningful changes to its employee population or its employee compensation arrangements during such
period that the Company believes would result in a significant modification to its pay ratio. The Company believes it
TIFFANY & CO.
PS-85
has not had any such changes in Fiscal 2019 that would have impacted the pay ratio. Accordingly, the same
median employee used for Fiscal 2018 has been used for Fiscal 2019.
For Fiscal 2018, to determine the median annual total compensation for all employees other than the CEO, a
median employee was identified from the population of all employees of the Company and its subsidiaries worldwide
as of January 31, 2019 (including all seasonal and part-time employees, as well as all full-time employees), using
annual cash compensation as of December 31, 2018. For these purposes, annual cash compensation was calculated
using base salary, cash bonuses and all other elements of cash compensation, such as overtime pay and
commissions. Equity awards, the value of retirement benefits and other elements of non-cash compensation were not
included.
The median employee's total compensation for Fiscal 2019 was determined in the same manner that total
compensation was determined for the CEO in the Summary Compensation Table that appears on PS-63.
On this basis, the median annual compensation for Fiscal 2019 for all employees, excluding the CEO, was $35,743,
and the CEO's annual compensation was $13,500,457. Accordingly, the ratio of the two amounts is 378 to 1. The
Company's pay ratio may not be comparable to the pay ratios of other companies, which may adopt different
methodologies, rely on different estimates or assumptions or, unlike the Company, make adjustments in calculating
their pay ratios.
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TIFFANY & CO.
PS-86
DIRECTOR COMPENSATION TABLE
Fiscal 2019
Fees
Earned or
Paid in
Cash
($) (a)
115,000
71,250
159,583
23,750
71,250
95,000
110,000
110,000
23,750
47,500
95,000
Stock
Awards
($) (b) (c)
Option Awards
($) (b) (c)
78,101
78,101
80,104
80,104
195,984
153,525
—
—
78,101
78,101
78,101
78,101
195,253
170,801
78,101
80,104
80,104
80,104
80,104
80,104
80,104
80,104
Name
Rose Marie Bravo
Hafize Gaye Erkan
Roger N. Farah
Lawrence K. Fish (f)
Jane Hertzmark
Hudis
Abby F. Kohnstamm
James E. Lillie
William A. Shutzer
Robert S. Singer
Francesco Trapani (g)
Annie Young-Scrivner
Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings ($) (d)
All Other
Compensation
($) (e)
Total
($)
42,195
25,075
N/A
N/A
N/A
N/A
N/A
N/A
19,547
N/A
N/A
N/A
—
—
10,385
—
—
—
—
—
40,320
—
340,475
229,455
509,092
34,135
229,455
253,205
268,205
287,752
299,107
338,725
253,205
Notes to Director Compensation Table
(a) Includes amounts deferred under the Deferral Plan, but does not include retainer amounts that the director
elected to have paid in the form of RSUs under the Director Compensation Deferral Plan. See "Discussion of
Director Compensation Table" at PS-88.
(b) Supplemental Table: Outstanding Director Option and Restricted Stock Unit Awards at Fiscal Year End:
Name
Rose Marie Bravo
Hafize Gaye Erkan
Roger N. Farah
Lawrence K. Fish
Jane Hertzmark Hudis
Abby F. Kohnstamm
James E. Lillie
William A. Shutzer
Robert S. Singer
Francesco Trapani
Annie Young-Scrivner
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Aggregate Number of Option
Awards Outstanding at
Fiscal Year End (number of
underlying shares)
Aggregate Number of Restricted
Stock Units Unvested at
Fiscal Year End (number of
underlying shares)
38,233
4,951
24,633
20,524
4,951
34,373
15,026
38,233
31,896
15,026
8,277
856
856
2,148
—
856
856
856
856
2,140
—
856
The aggregate number of unvested RSUs reported above does not include RSUs that have vested but have not
yet been delivered, pursuant to a prior election of the director to defer delivery.
TIFFANY & CO.
PS-87
(c) Amounts shown represent the grant date fair value of RSUs and stock options granted in Fiscal 2019. In valuing
option awards, the Company made certain assumptions. For a discussion of those assumptions, please refer to
"Note N. Stock Compensation Plans," in Notes to Consolidated Financial Statements, under "Item 8. Financial
Statements and Supplementary Data" in the Company's Annual Report on Form 10-K.
(d) The actuarial valuation shown takes into account the current age of the director and is based on the following
assumptions: Pri–2012 Non-disabled Annuitant Tables for males and females with White Collar Adjustments
projected from 2012 using Scale MP-2019; discount rate of 3%; and assumed retirement age of 65. (If the
director is over age 65, the director is assumed to retire on January 31, 2020.) 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.
(e) The amount reported for Ms. Bravo reflects a $20,000 cash contribution towards a table at a charitable event
and merchandise grants provided to a charitable organization of $5,075. The amount reported for Mr. Fish
reflects a $10,000 cash contribution and merchandise grants of $385 to the Fish Family Foundation to
support the Champion of Change Japan Award. The amount reported for Mr. Trapani reflects merchandise
grants provided to a charitable event of $40,320. In addition, merchandise grants of less than $10,000 were
provided to a charitable organization of which Mr. Shutzer is a trustee. See "Contributions to Director-
Affiliated Charities" at PS-34.
(f) Mr. Fish did not stand for re-election at the 2019 Annual Meeting. The amounts reported above are retainer
fees for the final quarter of the director compensation year that began on June 1, 2018.
(g) Mr. Trapani resigned from the Board effective November 26, 2019 in order to pursue other opportunities. The
amounts shown in the first column are cash retainer fees with respect to his service for the final two quarters
of the compensation year beginning on June 1, 2018, which were paid in Fiscal 2019. Mr. Trapani elected to
have all of his retainer fees for the compensation year beginning on July 1, 2019, paid in the form of RSUs,
all of which were forfeited upon his resignation.
Discussion of Director Compensation Table
The objectives of non-management director compensation are to attract and retain qualified individuals, provide
compensation that is commensurate with the expected time commitment to the Board, and further align the interests
of non-management directors with those of the Company’s shareholders.
The Nominating/Corporate Governance Committee of the Board reviews compensation for non-management directors
annually. This review includes a comparison of the Company's director compensation program to the director
compensation programs provided by peer companies, and is conducted with the assistance of an independent
compensation consultant. Grants of compensation to non-management directors are typically approved immediately
before the annual shareholder meeting, and are subject to the director being elected for the coming year.
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TIFFANY & CO.
PS-88
In June 2019, after reviewing competitive compensation data and with the input of its independent compensation
consultant, the Nominating/Corporate Governance Committee of the Board recommended, and the Board approved,
the compensation amounts shown below for the compensation year beginning on July 1, 2019. Based on the
competitive compensation data reviewed, the compensation amounts provided by the Company approximate the peer
median.
Board Fees
Annual Cash Retainer
$95,000
Stock Options
10-year option vested immediately; options have a strike price equal to fair market
value on date of grant.
targeted at approximately $80,000
Restricted Stock Units
Scheduled to become payable after one year of service, on retirement, or on a selected
date following the one-year anniversary of the grant date, at the prior election of the
director.
targeted at approximately $80,000
Committee Fees (payable in cash)
Audit Committee Chair
Compensation Committee Chair
Corporate Social Responsibility Committee Chair
Finance Committee Chair
Nominating/Corporate Governance Committee Chair
Additional Retainer for Non-Executive Chairman
(divided equally among cash, stock options and RSUs)
$25,000
$20,000
$15,000
$15,000
$15,000
$220,000
Directors are also reimbursed for expenses they incur in attending Board and committee meetings, including
expenses for travel, food and lodging. The chart above summarizes the compensation provided to non-management
directors. Directors who are employees of the Company or its subsidiaries do not receive separate compensation for
their service as a director.
Under the Merger Agreement, annual equity awards to non-management directors may be granted prior to the
Effective Time solely in the form of RSUs. For a description of the treatment of outstanding RSU awards under the
Merger Agreement, see "LVMH Merger Agreement" at PS-40. Cash fees in respect of Fiscal 2020 will be paid in full
prior to the Effective Time, as permitted by the Merger Agreement.
In March 2020, the Board approved a one-time grant of RSUs to Mr. Farah with a target value of $1 million in
recognition of his leadership and the significant additional time commitment required in connection with the
negotiation of the Merger Agreement and the Company’s ongoing Merger-related transition work. The grant will be
awarded at the same time that the next annual grants are awarded to non-management directors in the ordinary
course, and will be subject to the same terms and conditions (including with respect to vesting) as such annual
grants.
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Under the Company's share ownership policy, non-management directors are expected to own shares of the
Company's common stock worth five times their annual retainer. Shares that may be acquired through the exercise of
stock options do not count towards meeting this threshold until the options are exercised and the shares delivered.
Likewise, in cases where a director has elected to defer delivery of vested RSU shares until a later date, the shares
do not count until delivery has taken place. Non-management directors who meet the share ownership threshold may
only dispose of shares in excess of the threshold. Absent financial hardship or a qualified domestic relations order,
non-management directors who do not yet meet the threshold may dispose of no more than 50% of net shares issued
due to the vesting or exercise of an equity award. As of January 31, 2020, all non-management directors met the
share ownership threshold, with the exception of three such directors who joined the Board in Fiscal 2018 or later.
Under the Retirement Plan for Non-Employee Directors, non-management directors first elected prior to January 1,
1999, who retire with five or more years of Board service, are entitled to receive an annual retirement benefit equal
to $38,000, payable at the later of age 65 or the retirement date. This benefit is payable quarterly and continues for
a period of time equal to the director's length of service on the Board, including periods served as an employee
TIFFANY & CO.
PS-89
director, or until death, if earlier. Ms. Bravo and Mr. Shutzer are the only current directors entitled to participate in
this plan.
The Deferral Plan permits directors to defer up to one hundred percent of their cash compensation and invest the
amounts they defer in accounts and funds established under the plan. However, the Company does not guarantee
any return on said investments. The following table provides data concerning director participation in this plan by the
current non-management directors:
Name
Roger N. Farah
William A. Shutzer
Director
Contribution
In Last
Fiscal Year
($) (a)
Registrant
Contribution
In Last
Fiscal Year
($)
159,583
—
—
—
Notes
Aggregate
Earnings/
(Losses)
In Last
Fiscal Year
($)
87,090
262,099
Aggregate
Withdrawals/
Distributions
($)
Aggregate
Balance
At Last
Fiscal Year End
($)
—
—
577,127
2,001,215
(a) Includes amounts that are also included in the amounts shown in the column headed "Fees Earned or Paid in
Cash" in the Director Compensation Table at PS-87.
The Director Compensation Deferral Plan ("Director Deferral Plan") permits non-management directors to elect that
all or a portion of their cash retainer fees (other than any fees subject to deferral under the Deferral Plan) be settled
by a grant of RSUs. The following directors elected to have all or a portion of their cash retainer fees for the director
compensation year beginning on July 1, 2019, paid in the form of RSUs: Mr. Trapani (100% of fees payable
beginning on July 1, 2019), Mr. Singer (100% of fees payable beginning on July 1, 2019) and Mr. Farah (100% of
fees payable beginning on January 1, 2020).
In June 2019, the Director Deferral Plan was amended to permit directors to elect to receive their aggregate equity
compensation split evenly between RSUs or stock options, or 100% in the form of RSUs. However, the Merger
Agreement permits annual director equity awards to be granted solely in the form of RSUs.
Additional Compensation from JANA Partners LLC
In addition to the compensation described above paid by the Company as compensation for his service as a director,
Mr. Trapani received additional compensation from JANA in connection with his appointment to the Board. Pursuant
to the nomination agreement entered into between JANA and Mr. Trapani in February 2017 (the "Nomination
Agreement"), in which Mr. Trapani agreed to serve as a nominee of a JANA affiliate for election or appointment to the
Board, Mr. Trapani received from JANA:
• $100,000 in cash paid by JANA within three business days of the date of the Nomination Agreement;
• $150,000 in cash paid by JANA within three business days of the appointment of Mr. Trapani to the Board
in 2017; and
• certain cash settled stock appreciation rights ("SARs") with respect to a total of 75,000 shares of Company
common stock as follows: (i) SARs with respect to 37,500 shares payable in 2020 (the "2020 SARs"); and
(ii) SARs with respect to 37,500 shares payable in 2022 (the "2022 SARs"). The amounts payable by JANA
with respect to the SARs will be based on the increase in value from the share price on the date of the
Nomination Agreement and the lesser of the share price and the 30 day volume weighted average price on
the third anniversary (in respect of the 2020 SARs) and fifth anniversary (in respect of the 2022 SARs) of
Mr. Trapani's appointment to the Board, as applicable.
The Nominating Agreement provides that the 2020 SARs are scheduled to vest immediately on the third anniversary
of Mr. Trapani's appointment to the Board and the 2022 SARs are scheduled to vest on the fifth anniversary of his
appointment to the Board; provided that all unvested SARs will vest immediately prior to the consummation of a
change in control. The 2020 SARs and 2022 SARS will be settled in cash within 10 business days of the applicable
vesting date.
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TIFFANY & CO.
PS-90
The payment obligations with respect to the 2020 SARs and 2022 SARs are subject to the terms of the Nomination
Agreement. The Company is not party to the Nomination Agreement nor is the Company responsible for any of the
payments thereunder.
EQUITY COMPENSATION PLAN INFORMATION
(As of Fiscal Year 2019)
Column A
Column B
Column C
Number of
securities to
be issued upon
exercise of
outstanding
options,
warrants and
rights
Weighted average
exercise price of
outstanding
options, warrants
and rights ($)
Number of
securities
remaining available
for future
issuance under
equity
compensation
plans
(excluding
securities
reflected in
column A)
1,062,117 a $
93.96
4,634,980 b
—
—
—
Plan category
Equity compensation plans approved by
security holders
Equity compensation plans not approved
by security holders
Total
1,062,117 a $
93.96
4,634,980 b
(a) Shares indicated are the aggregate of those issuable upon exercise of outstanding options awarded under the
Company's 2014 Employee Incentive Plan and the 2017 Directors Equity Plan (the "Directors Plan"). They do
not include 1,274,925 shares issuable with respect to stock units awarded under those plans. They also do
not include shares issuable under options or restricted stock units that were awarded and remain outstanding
under the Company's 2008 Directors Equity Plan, which total 179,505 and 12,614 shares, respectively. All
amounts shown take into account accrued dividend equivalent units where applicable.
(b) Shares indicated are the aggregate of those available for grant under the 2014 Employee Incentive Plan and
the Directors Plan.
Shareholder Proposals for Inclusion in the Proxy Statement for the 2021 Annual Meeting
OTHER MATTERS
If you wish to nominate a candidate for election as a director to be included in the Company's Proxy Statement for
our 2021 Annual Meeting, we must receive notice of such nomination no earlier than November 21, 2020 and no
later than December 21, 2020. If you wish to submit a proposal of other business to be included in the Company's
Proxy Statement for our 2021 Annual Meeting, we must receive such proposal no later than December 21, 2020.
Proposals should be sent to the Company at 200 Fifth Avenue, New York, New York 10010 to the attention of the
Corporate Secretary (Legal Department).
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Other Proposals
If you wish to nominate a candidate for election as a director at an annual meeting or propose other business for
consideration at an annual meeting, but do not intend for such nomination or proposal to be included in the
Company's Proxy Statement for the 2021 Annual Meeting, written notice complying with the requirements set forth
in our By-laws generally must be delivered to the Company at 200 Fifth Avenue, New York, New York 10010 to the
attention of the Corporate Secretary (Legal Department), not later than 90 days, and not earlier than 120 days, prior
to the first anniversary of the preceding year's annual meeting. Accordingly, a shareholder nomination or proposal
TIFFANY & CO.
PS-91
intended to be considered at the 2021 Annual Meeting, but not intended to be included in the Company's Proxy
Statement, must be received by the Company no earlier than February 1, 2021 and no later than March 3, 2021.
Except as required by applicable law, the Company will consider only proposals that are received by the Company
within the applicable time frames set forth above, and that meet the applicable requirements of the SEC and our By-
laws.
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" and selecting "Financials." 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.
Reminder to Vote
Please be sure to either complete, sign and mail the proxy card or voting instruction form, as applicable, in the
return envelope provided or call in your instructions or vote via the Internet as soon as you can so that your vote may
be recorded and counted.
BY ORDER OF THE BOARD OF DIRECTORS
Leigh M. Harlan
Secretary
New York, New York
April 20, 2020
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TIFFANY & CO.
PS-92
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"). Sales on a constant-exchange-rate basis are
calculated by taking the current year's sales in local currencies and translating them into U.S. dollars using the prior
year's foreign currency exchange rates. Management believes this constant-exchange-rate basis provides a useful
supplemental basis for the assessment of sales performance and of 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:
2019
GAAP
Reported
Translation
Effect
Constant-
Exchange-
Rate Basis
—%
(2)
2
1
(1)
(2)
(1)%
—
(3)
1
(3)
—
1%
(2)
5
—
2
(2)
Net Sales:
Worldwide
Americas
Asia-Pacific
Japan
Europe
Other
Operating Earnings and Net Earnings. Internally, management monitors and measures its earnings performance
excluding certain items listed below. Management believes excluding such items provides a useful supplemental
basis for the assessment of the Company's results relative to the corresponding period in the prior year. The following
tables reconcile certain GAAP amounts to non-GAAP amounts:
(in millions, except per share amounts)
GAAP
Charges related to
the proposed
Merger (a)
Non-GAAP
Year Ended January 31, 2020
Gross Profit
As a % of sales
Selling, general & administrative expenses
As a % of sales
Earnings from operations
As a % of sales
Provision for income taxes
Effective income tax rate
Net earnings
Diluted earnings per share*
$
2,761.9
$
1.0
$
2,762.9
62.4%
2,029.3
$
$
45.9%
732.6
16.6%
149.2
21.6%
541.1
4.45
0.1 %
(20.2)
(0.5)%
21.2
0.4 %
4.1
(0.1)
17.1
0.14
62.5%
2,009.1
45.4%
753.8
17.0%
153.3
21.5%
558.2
4.59
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(a) Costs recorded in 2019 related to the proposed Merger. See "Item 8. Financial Statements and Supplementary
Data - Note B. Entry into Merger Agreement" in the Company's Annual Report on Form 10-K, filed with the SEC on
March 20, 2020, for additional information.
TIFFANY & CO.
PS-93
Free Cash Flow. Internally, management monitors its cash flow on a non-GAAP basis. Free cash flow is calculated by
deducting capital expenditures from net cash provided by operating activities. The ability to generate free cash flow
demonstrates how much cash the Company has available for discretionary and non-discretionary purposes 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 useful supplemental basis for assessing the Company's
operating cash flows. The following table reconciles GAAP net cash provided by operating activities to non-GAAP free
cash flow:
(in millions)
2019
2018
Net cash provided by operating activities a
$
670.9 $
531.8 $
Less: Capital expenditures (a)
Free cash flow
(320.6)
(282.1)
$
350.3 $
249.7 $
2017
932.2
(239.3)
692.9
(a) See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity
and Capital Resources" in the Company's Annual Report on Form 10-K, filed with the SEC on March 20, 2020, for
further information on the Company's cash flows.
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CORPORATE INFORMATION
ALESSANDRO BOGLIOLO
Chief Executive Officer,
Tiffany & Co.
(2017) 5 and 6
ROSE MARIE BRAVO, CBE
Chief Executive Officer (Retired),
Burberry Limited
(1997) 2* and 3
HAFIZE GAYE ERKAN
President,
First Republic Bank
(2019) 1
ROGER N. FARAH
Chairman of the Board,
Tiffany & Co.
Former Co-Chief Executive Officer,
Tory Burch LLC
(2017) 2, 3* and 5
JANE HERTZMARK HUDIS
Group President,
The Estée Lauder Companies Inc.
(2019)
BOARD OF DIRECTORS OF TIFFANY & CO.
ABBY F. KOHNSTAMM
Executive Vice President and Chief Marketing Officer (Retired),
Pitney Bowes Inc.
(2001) 2, 3 and 5
JAMES E. LILLIE
Former Chief Executive Officer,
Jarden Corporation
(2017) 1, 4 and 5*
WILLIAM A. SHUTZER
Senior Advisor,
Evercore Partners
(1984) 4*
ROBERT S. SINGER
Former Chief Executive Officer,
Barilla Holding SpA
(2012) 1* and 4
ANNIE YOUNG-SCRIVNER
Chief Executive Officer
Godiva Chocolatier
(2018) 2, 4 and 5
(Year joined Board)
Member of (* indicates Committee Chair):
(1) Audit Committee
(2) Compensation Committee and Stock Option Subcommittee
(3) Nominating/Corporate Governance Committee
(4) Finance Committee
(5) Corporate Social Responsibility Committee
(6) Dividend Committee
EXECUTIVE OFFICERS OF TIFFANY & CO.
ALESSANDRO BOGLIOLO
Chief Executive Officer
MARK J. ERCEG
ANDREA C. DAVEY
Senior Vice President–Global Marketing
LEIGH M. HARLAN
Executive Vice President–Chief Financial Officer
Senior Vice President–Secretary and General Counsel
PHILIPPE GALTIE
Executive Vice President–Global Sales
ANDREW W. HART
Senior Vice President–Diamond and Jewelry Supply
DANIELLA VITALE
GRETCHEN KOBACK-PURSEL
Executive Vice President–Chief Brand Officer
Senior Vice President–Chief Human Resources Officer
TIFFANY & CO.
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SHAREHOLDER INFORMATION
Company Headquarters
Tiffany & Co.
200 Fifth Avenue, New York, New York 10010
212-755-8000
Stock Exchange Listing
New York Stock Exchange, symbol TIF
Annual Meeting of Shareholders
Monday, June 1, 2020, 2:30 p.m.
200 Fifth Avenue, New York, New York
Website
For Tiffany’s financial results, other information and reports filed with the Securities and Exchange Commission,
please visit our website at https://investor.tiffany.com.
Investor and Financial Media Contact
Investors, securities analysts and the financial media should contact Jason Wong, Vice President – Treasurer and
Investor Relations, by calling 973-254-7612 or by e-mailing jason.wong@tiffany.com.
Transfer Agent and Registrar
Please direct your communications regarding individual stock records, address changes or dividend payments to:
Computershare, PO Box 505000, Louisville, KY 40233-5000 (by regular mail) or
462 South 4th Street, Suite 1600, Louisville, KY 40202 (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
To request a catalog, please call 800-526-0649.
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.
TIFFANY & CO.
C-2
Stock Price and Dividend Information
Stock price at end of fiscal year
$ 134.02 $ 88.73 $ 106.65 $ 78.72 $ 63.84
2019
2018
2017
2016
2015
Price Ranges of Tiffany & Co. Common Stock
2019
Close
High
Low
2018
Close
High
Low
Cash Dividends
Per Share
2019
2018
$ 108.87 $ 86.03 $ 107.82 $ 107.21 $ 92.77 $ 102.83
$ 0.55 $ 0.50
109.75
86.38
93.92
141.64
100.27
137.56
130.40
78.60
124.51
138.41
103.49
111.30
134.39
122.11
134.02
117.93
73.04
88.73
0.58
0.58
0.58
0.55
0.55
0.55
Quarter
First
Second
Third
Fourth
On March 16, 2020, the closing price of Tiffany & Co. Common Stock was $115.68 and there were 13,106 holders
of record of the Company's Common Stock.
Certifications
Alessandro Bogliolo and Mark J. Erceg 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, 2020.
As required by the New York Stock Exchange ("NYSE"), on July 3, 2019, Alessandro Bogliolo submitted his annual
certification to the NYSE that stated that he was not aware of any violations by the Company of the NYSE corporate
governance listing standards.
Trademarks
THE NAMES TIFFANY, TIFFANY & CO., T&CO., THE COLOR AND WORD MARK TIFFANY BLUE, THE TIFFANY
BLUE BOX AND OTHERS ARE TRADEMARKS OF TIFFANY (NJ) LLC AND TIFFANY AND COMPANY.
© 2020 TIFFANY & CO.
TIFFANY & CO.
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