1. Annual Report Jessica Howarth ACG 2021-080

2. Executive Summary Tiffany & Co. experienced a modest growth in sales and earnings during 2002. Tiffany & Co. experienced a modest growth in sales and earnings during 2002. http://www.shareholder.com/tiffany/annual.cfm http://www.shareholder.com/tiffany/annual.cfm

3. Part A. Introduction CEO: Michael J. Kowalski CEO: Michael J. Kowalski Home Office: 727 5 th Ave, NYC Home Office: 727 5 th Ave, NYC Recent end of Fiscal Year: January 31, 2002 Recent end of Fiscal Year: January 31, 2002 Products: fine jewelry (80% of fiscal 2002 sales), timepieces, sterling silverware, china, crystal, stationary, fragrances Products: fine jewelry (80% of fiscal 2002 sales), timepieces, sterling silverware, china, crystal, stationary, fragrances Areas of Business: US 59%, Japan 26%, other Asia-Pacific 6%, Europe 5%, other 4% (percentages based on net sales for 2002) Areas of Business: US 59%, Japan 26%, other Asia-Pacific 6%, Europe 5%, other 4% (percentages based on net sales for 2002)

4. Part A. Audit Report Independent Auditors: Independent Auditors: PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP The independent auditors for Tiffany & Co. state that all financial information has been presented fairly and is in conformity with generally accepted accounting principles in the US. The independent auditors for Tiffany & Co. state that all financial information has been presented fairly and is in conformity with generally accepted accounting principles in the US.

5. Part A. Stock Market Information Most recent price of stock: $39.64 Most recent price of stock: $39.64 12 month trading range: $19.40-$41.00 12 month trading range: $19.40-$41.00 Dividend per Share: $.16 Dividend per Share: $.16 Date of Information: January 31, 2002 Date of Information: January 31, 2002 In my opinion, it would be best for stockholders to sell their stock because at $39.64 per share, the stock is only $.36 away from its 12 month high. The value of the stock is more likely to decrease than increase any substantial amount. In my opinion, it would be best for stockholders to sell their stock because at $39.64 per share, the stock is only $.36 away from its 12 month high. The value of the stock is more likely to decrease than increase any substantial amount.

6. Part B. Industry Situation and Company Plans The Company Profile lists four key growth strategies : The Company Profile lists four key growth strategies : 1) expand channels of distribution in important markets around the world 2) compliment existing products with active product development programs 3) enhance customer awareness of product design, quality, and value offered by Tiffany’s through its marketing programs 4) provide customer service that ensures a superior shopping experience  The Letter to the Stockholders states that the future of Tiffany’s continues to base its confidence in its “proven, disciplined approach to long-term development.” During 2002, Tiffany & Co. strengthened its infrastructure and building capacity that will enable it to support future growth.

7. Part C. Income Statement Tiffany & Co. uses a Multi-step Income Statement Tiffany & Co. uses a Multi-step Income Statement 2003 2002 2003 2002 Gross Margin $1,011,448 $943,447 Gross Margin $1,011,448 $943,447 Operating Income 319,197 309,894 Operating Income 319,197 309,894 Net Income 189,894 173,587 Net Income 189,894 173,587 Gross Margin, Operating Income, and Net Income all increased from 2002 to 2003.

8. Part C. Balance Sheet Assets = Liabilities + Stockholders Equity 2003 $1,923,586 = 715,537 + 1,208,049 2002 $1,631,074 = 594,129 + 1,036,945

9. Part C. Statement of Cash Flows Both cash flow from operations and net income have increased since the previous year. Both cash flow from operations and net income have increased since the previous year. The company is growing by expanding its store locations. In 2002, Tiffany & Co. opened and renovated many new stores in the US and in international markets. The company is growing by expanding its store locations. In 2002, Tiffany & Co. opened and renovated many new stores in the US and in international markets. The company’s primary source of financing is through proceeds from issuance of long-term debt. The company’s primary source of financing is through proceeds from issuance of long-term debt. Overall, cash has decreased over the past two years since capital expenditures have exceeded 10% of net sales the last couple of years to fund major products that should increase net sales later. Overall, cash has decreased over the past two years since capital expenditures have exceeded 10% of net sales the last couple of years to fund major products that should increase net sales later.

10. Part D. Accounting Policies Financial Statements are prepared in accordance to the Generally Accepted Accounting Principles. Financial Statements are prepared in accordance to the Generally Accepted Accounting Principles. The equity method of accounting is used for investments in which company has a significant influence. The equity method of accounting is used for investments in which company has a significant influence. Cash and cash equivalents are stated at cost plus accrued interest. Cash and cash equivalents are stated at cost plus accrued interest. Inventories are valued at the lower of cost or market. Domestic and foreign branch inventory is valued using LIFO, while inventory held by foreign subsidiaries are valued using FIFO. Inventories are valued at the lower of cost or market. Domestic and foreign branch inventory is valued using LIFO, while inventory held by foreign subsidiaries are valued using FIFO. Plant, Property, and Equipment is stated at cost less Accumulated Depreciation, which is calculated using the straight-line method. Plant, Property, and Equipment is stated at cost less Accumulated Depreciation, which is calculated using the straight-line method.

11. Part E. Financial Analysis Liquidity Ratios 2003 2002 Working Capital $770,481 $638,709 Current Ratio 3.57 times 3.03 times Receivables Turnover 15.09 times 16.31 times Avg. Days Sales Uncollected 24.24 d d d days 22.38 days Inventory Turnover.95 times1.08 times Avg. Days Inventory on Hand 384.4 days 336.7 days

12. Part E. Financial Analysis Profitability Ratios 2002 2001 2002 2001 Profit Margin 11.1% 10.8% Asset Turnover.96 times 1.01 times Return on Assets.11 times.11 times Return on Equity.17 times.09 times

13. Part E. Financial Analysis Solvency Ratios Debt to Equity Debt to Equity 2003 2002 2003 2002.25 times.30 times.25 times.30 times

14. Part E. Financial Analysis Market Strength Ratios 2002 2001 2002 2001 Price/earnings per share 30.97 times 23.22 times Dividend Yield.4%.6%