Tiffany Case

The company can negotiate for a lease to own arrangements for the new building with a builder/contractor.

The private investors really had no cohesiveness as a group making it difficult to negotiate a deal as a group. Although the negations potentially could be less formal, satisfying each individual investor could be a strain on the young company.

Computer equipment had been acquired by lease and by purchases; leases had four years to run

Therefore in this agreement the equipment is going to be partially financed by the lessor (Northwest) through a third-party financial institution (Lender) and act as a leveraged lease, wherein the lending company holds the title to the leased asset, while the lessor creates the agreement with the lessee (BNRR) and collects the payment for the use of the equipment. Therefore the lease in this case will be regarded as a financial decision for BNRR

Intel’s capital structure dilemma was that it was holding too much cash on hand. Eventually, there were three available strategies or alternatives that Intel could undertake in terms of cash disbursement policies. First, it could continue or expand its market-repurchase program. Secondly, Intel could declare dividends to its shareholders on existing stocks. The last strategy is to put together a package of two unique securities: 1) A distribution of a two-year put warrant to its existing shareholders. 2) A distribution of 10-year convertible subordinated debentures to new

Needspace entered a operating lease with WeHaveIt for 10-Year Lease term.Lease agreements have certain provisions depending on how the contract is written by the lessor to the lessee and what type of lease agreement. In this lease agreement we are focusing operating lease with provisions of NeedSpace and WeHaveIt, which has a 10 year lease term, no options to renew or negotiate renewal offered in the contract and the lessee incurs certain cost, repairs and maintenance. In regards to ASC 840 leases, according to 840-10-20 and 840-10-05-9A, 840-10-05-9B an operating lease is when the lessor the owner of the property gives the lessee the right to use property, plant or equipment for a limited amount of time. Meaning the lessee

James Gitanga was not sure about the unusual capital structure of the Company, avoiding the long-term debt. We believe that the long-term capital structure across the industry was pre-determined by the high capital expenditures and steady cash inflows. Thus, issuing long-term debt was more preferable. Besides, by issuing debt they would enjoy the tax shield since interest on long-term debt is tax-deductible.

The final option was raising capital in debt markets. Because of its current leverage KTM would only receive short term financing from banks and the management was thus rather considering the bond market opportunity.

2. New bank credit facility, 600 million cash on hand to take advantage of opportunities that may arise

The stock market has increased from 1.896 in ’86 to 4.789 in ’95 thus creating an incentive for DLJ to offer an IPO. Strategy involved being the IPO allowed employees to exchange their compensation plans for shares and options in DLJ thus giving them an incentive to stay with the company. There were also many advantages and disadvantages related to DLJ going public. Advantages included DLJ increasing liquidity and allowing founders to harvest their wealth, permitting founders to diversify, facilitated raising new corporate cash, established value for the firm, and increasing the potential markets. Disadvantages included the cost of reporting, new disclosure requirements, self-dealings, a possibility of inactive markets reducing price, the firm losing some of its control, and a higher degree of investor relations had to be maintained.

As shown in the ratios chart, working capital has increased by $13M. Maturities of short-term investments and cash flow from operations are projected to be sufficient to sustain the company’s overall financing needs, including capital expenditures. The following corporate strategic plan identifies a project that needs financial backing.

As part of the arrangement Mitsukoshi would still receive 27% of net retail sales in compensation for providing boutique facilities, sales staff, collection of receivables, and security for store inventory. This will give Tiffany access to Mitsukoshi’s established sales networks although Tiffany & Co. would take over marketing responsibilities in Japan from Mitsukoshi. Mitsukoshi sold Tiffany & Co. merchandise at substantial premium that Tiffany management believe from which a retail price reduction of 20%-25% will likely result in a substantial increase in unit volume of jewellery sales. Due the significant number of Tiffany Boutiques operating in Japan, future openings there were expected to occur at a minimal rate

Secondly, the floating of the company shares will also aid in valuation and likely increase the share value of the company. This will in essence, provide Jeremy with a good exit value and a return on his investment.

Currently, Tiffany’s competitors’ aggressiveness in the industry is taking a toll on Tiffany’s stock price. From a high of $41.38 per share in January 2003, Tiffany’s stock price went down to $23.06 per share as of March 2003. The decline was due to many factors such as competition, economic recession, and SAR epidemic. Working capital and the corresponding current ratio were $612,978,000 and 2.8:1 at January 31, 2003, compared to $667,647,000 and 3.0:1 on January 31, 2002. Tiffany suffered a loss in 2001 due to economic conditions, especially post- September 11 results.

If Innobus finds a new market their sales will increase and improve their financial position.