Exhibit (a)(1)(i)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
LITTLE SWITZERLAND, INC.
AT
$2.40 NET PER SHARE
BY
TSAC CORP.
AN INDIRECT WHOLLY-OWNED SUBSIDIARY OF
TIFFANY & CO.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON FRIDAY, SEPTEMBER 13, 2002, UNLESS THE OFFER IS EXTENDED.
TSAC Corp., an indirect wholly-owned subsidiary of Tiffany & Co., is
offering to purchase at a price of $2.40 net per share in cash all outstanding
shares of common stock of Little Switzerland, Inc. (including all shares issued
upon exercise of options and warrants), on the terms and subject to the
conditions specified in this Offer to Purchase and related Letter of
Transmittal. Our offer is conditioned on, among other things, the tender of a
sufficient number of Little Switzerland shares so that, after the Little
Switzerland shares are purchased pursuant to the offer and taking into account
certain Little Switzerland shares to be purchased pursuant to a separate stock
purchase agreement described herein, we would own at least 90% of the
outstanding Little Switzerland common stock on a fully-diluted basis. We
currently own approximately 45% of the outstanding common stock of Little
Switzerland. This offer is also subject to certain other conditions described in
Section 11, "The Offer -- Certain Conditions of the Offer." This offer is not
conditioned on our obtaining any financing or the approval of Little
Switzerland's Board of Directors.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THIS TRANSACTION OR PASSED UPON THE
MERITS OR FAIRNESS OF THIS TRANSACTION OR PASSED UPON THE ADEQUACY OR ACCURACY
OF THE INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
IMPORTANT
Any Little Switzerland stockholder desiring to tender all or any portion of
such stockholder's Little Switzerland shares should, as applicable:
- Complete and sign the Letter of Transmittal in accordance with the
instructions in the Letter of Transmittal, including any required
signature guarantees, and mail or deliver to the Depositary (as defined
herein) the Letter of Transmittal with such stockholder's certificate(s)
for the tendered Little Switzerland shares and any other required
documents.
- Follow the procedure for book-entry transfer of Little Switzerland shares
set forth in Section 3, "The Offer -- Procedure for Tendering Shares."
- Request such stockholder's broker, dealer, commercial bank, trust company
or other nominee to tender shares for such stockholder. A stockholder
whose Little Switzerland shares are registered in the name of a broker,
dealer, commercial bank, trust company or other nominee must ask such
broker, dealer, commercial bank, trust company or other nominee to tender
Little Switzerland shares as the registered stockholder.
A stockholder who desires to tender Little Switzerland shares and whose
certificates for such shares are not immediately available, or who cannot comply
with the procedure for book-entry transfer on a
timely basis, may tender such Little Switzerland shares by following the
procedure for guaranteed delivery set forth in Section 3, "The
Offer -- Procedure for Tendering Shares."
Questions and requests for assistance may be directed to Morrow & Co., the
Information Agent for this offer, or the Dealer Manager for this offer, at their
respective addresses and telephone numbers set forth on the back cover of this
Offer to Purchase. Requests for additional copies of this Offer to Purchase and
the Letter of Transmittal may be directed to the Information Agent or to the
broker, dealer, commercial bank or trust company holding your shares.
---------------------
THE DATE OF THIS OFFER TO PURCHASE IS AUGUST 15, 2002.
The Dealer Manager for this tender offer is:
LEHMAN BROTHERS INC.
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TABLE OF CONTENTS
<Table>
<Caption>
SECTION PAGE
------- ----
SUMMARY TERM SHEET.......................................... 1
QUESTIONS AND ANSWERS ABOUT THE TENDER OFFER................ 3
INTRODUCTION................................................ 7
SPECIAL FACTORS............................................. 9
Background of the Offer................................... 9
Reasons for and Purpose of the Offer and the Merger;
Tiffany & Co.'s Plans for Little Switzerland........... 11
Purchaser's and Tiffany's Position Regarding the Fairness
of the Offer and the Merger............................ 12
Report of Lehman Brothers to Selected Members of
Management of Tiffany.................................. 13
Little Switzerland Financial Projections.................. 15
Certain Additional Little Switzerland Information......... 16
Tiffany Ownership and Operating Relationships with Little
Switzerland............................................ 17
Certain Related Party Transactions........................ 17
Conduct of Little Switzerland's Business if the Offer is
Not Completed.......................................... 19
THE OFFER................................................... 20
1. Terms of the Offer................................... 20
2. Acceptance for Payment and Payment for Shares........ 21
3. Procedure for Tendering Shares....................... 22
4. Rights of Withdrawal................................. 25
5. Certain Federal Income Tax Consequences of the
Offer.................................................. 26
6. Price Range of Shares; Dividends..................... 27
7. Certain Information Concerning Little Switzerland.... 28
8. Certain Information Concerning Tiffany & Co.,
International and Purchaser............................ 31
9. Merger; Appraisal Rights; Rule 13e-3................. 32
10. Source and Amount of Funds........................... 33
11. Certain Conditions of the Offer...................... 34
12. Dividends and Distributions.......................... 36
13. Certain Legal Matters................................ 36
14. Certain Effects of the Offer......................... 37
15. Fees and Expenses.................................... 38
16. Miscellaneous........................................ 39
Schedule A Information Concerning the Directors and
Executive Officers of Tiffany, International and
Purchaser................................................. A-1
Schedule B Security Ownership of Certain Beneficial Owners
and Management............................................ B-1
Schedule C Section 262 of the Delaware General Corporate
Law....................................................... C-1
</Table>
i
SUMMARY TERM SHEET
This summary highlights important information from this Offer to Purchase
but is intended to be an overview only. We urge you to read carefully the
remainder of this Offer to Purchase and the related Letter of Transmittal. We
have included section references to direct you to a more complete description of
the topics contained in this summary.
- TSAC Corp., an indirect wholly-owned subsidiary of Tiffany & Co, is
offering to buy all of the outstanding shares of common stock of Little
Switzerland, including any shares issued upon exercise of options and
warrants. The tender price is $2.40 net per share in cash, without
interest. See "Introduction" and Section 1, "The Offer -- Terms of the
Offer."
- We currently own approximately 45% of the outstanding Little Switzerland
shares. See "Introduction."
- TSAC Corp. has entered into a stock purchase agreement with Seymour
Holtzman, his son Steven Holtzman and certain of their affiliates,
including Jewelcor Management, Inc., who collectively beneficially own
approximately 12% of the outstanding Little Switzerland shares, to
purchase all of the Little Switzerland shares beneficially owned by them,
subject to conditions identical to the conditions of the tender offer,
including the minimum tender condition described below. See "Special
Factors -- Background of the Offer." For convenience of reference, we
refer to Seymour Holtzman, Steven Holtzman, Jewelcor Management, Inc. and
their affiliates who have entered into the stock purchase agreement as
the "Holtzmans."
- This is a "going private" transaction. If the tender offer is successful
and we own at least 90% of the outstanding Little Switzerland shares,
including the Little Switzerland shares purchased from the Holtzmans, as
described above, we will cause TSAC Corp. to merge into Little
Switzerland (the "Merger") and, as a result:
-- Tiffany & Co. will own all of the equity interests in Little
Switzerland;
-- You will no longer have any interest in Little Switzerland's future
earnings or growth;
-- Little Switzerland will no longer be a public company;
-- There will be no trading market for Little Switzerland shares; and
-- Little Switzerland shares will no longer trade on the Over the Counter
Bulletin Board.
See Section 14, "The Offer -- Certain Effects of the Offer."
- We are not required to complete the tender offer, or purchase the shares
from the Holtzmans pursuant to the stock purchase agreement, unless a
sufficient number of Little Switzerland shares are tendered so that,
after we purchase shares pursuant to the tender offer and taking into
account the shares we will purchase pursuant to the stock purchase
agreement with the Holtzmans, we would own at least 90% of the
outstanding Little Switzerland common stock on a fully-diluted basis. We
have the right to waive or reduce the number of Little Switzerland shares
that are required to be tendered in the tender offer, subject to
compliance with the applicable sections of the Securities Exchange Act of
1934. In no event, however, will we purchase Little Switzerland shares in
the tender offer, or purchase the shares from the Holtzmans pursuant to
the stock purchase agreement, if less than a majority of the outstanding
Little Switzerland shares, excluding shares beneficially owned by us or
by the Holtzmans, are tendered in the tender offer. See "Introduction"
and Section 11, "The Offer -- Certain Conditions of the Offer."
- We have commenced the tender offer without obtaining the approval of
Little Switzerland's Board of Directors. The offer is not conditioned on
the approval of the Little Switzerland Board of Directors. See "Special
Factors -- Background of the Offer."
- The offer is not conditioned on Tiffany & Co. or any of its subsidiaries
obtaining any financing. See Section 10, "The Offer -- Source and Amount
of Funds."
1
- Any stockholders who do not tender their shares and who dissent from the
Merger may exercise appraisal rights in accordance with Delaware law. See
Section 9, "The Offer -- Merger; Appraisal Rights; Rule 13e-3."
- In the Merger, we will pay to those stockholders who do not tender their
shares and do not exercise their appraisal rights the same consideration
as we pay in the tender offer. See "Introduction" and Section 9, "The
Offer -- Merger; Appraisal Rights; Rule 13e-3."
- Stockholders who sell their shares in the tender offer will receive cash
for their shares sooner than stockholders who wait for the Merger to
occur or those who exercise their appraisal rights. Stockholders who sell
their shares in the offer will not be entitled to a judicial appraisal of
the fair value of their shares under Delaware law.
- You may tender your shares under the offer until 5:00 p.m., New York City
time, on Friday, September 13, 2002, which is the scheduled expiration
date of the offering period, unless we decide to extend the offering
period or provide a subsequent offering period. See Section 3, "The
Offer -- Procedure for Tendering Shares," for information about tendering
your shares.
2
QUESTIONS AND ANSWERS ABOUT THE TENDER OFFER
WHO IS OFFERING TO BUY MY LITTLE SWITZERLAND SHARES?
TSAC Corp., a Delaware corporation and an indirect wholly-owned subsidiary
of Tiffany & Co., is offering to buy your Little Switzerland shares as described
in this document. See Section 8, "The Offer -- Certain Information Concerning
Tiffany & Co., International and Purchaser," for further information about us.
WHAT ARE THE CLASSES AND AMOUNTS OF SECURITIES SOUGHT IN THE OFFER?
We are offering to buy all of the Little Switzerland shares that we do not
currently own, including shares issued upon exercise of options and warrants.
For information about the conditions to the offer, see Section 11, "The
Offer -- Certain Conditions of the Offer."
HOW MUCH IS TIFFANY & CO. OFFERING TO PAY AND WHAT IS THE FORM OF PAYMENT?
We are offering to pay $2.40 for each Little Switzerland share, net to you,
in cash. See "Introduction" and Section 1, "The Offer -- Terms of the Offer,"
for information about the terms of the offer.
WILL I HAVE TO PAY ANY FEES OR COMMISSIONS?
If you are the record owner of your shares and you tender your shares to us
in the offer, you will not have to pay brokerage fees or similar expenses. If
you own your shares through a broker or other nominee, and your broker or
nominee tenders your shares on your behalf, it may charge you a fee for doing
so. You should consult your broker or nominee to determine whether any charges
will apply. See "Introduction" and Section 3, "The Offer -- Procedure for
Tendering Shares."
HOW WILL U.S. TAXPAYERS BE TAXED FOR U.S. FEDERAL INCOME TAX PURPOSES?
If you are a U.S. taxpayer, your receipt of cash for Little Switzerland
shares in the offer will be a taxable transaction for U.S. federal income tax
purposes. You will generally recognize gain or loss in an amount equal to the
difference between the cash you receive in the offer and your adjusted tax basis
in the Little Switzerland shares you sell in the offer. That gain or loss will
be a capital gain or loss if the shares are a capital asset in your hands, and
will be long-term capital gain or loss if you have held the shares for more than
one year at the time the offer is completed. We urge you to consult your own tax
advisor as to the particular tax consequences of the offer to you. See Section
5, "The Offer -- Certain Federal Income Tax Consequences of the Offer."
DOES TIFFANY & CO. HAVE THE FINANCIAL RESOURCES TO MAKE PAYMENT?
Yes. We have the financial resources to pay for all the Little Switzerland
shares with our cash on hand. THE TENDER OFFER IS NOT CONDITIONED ON OUR
OBTAINING ANY FINANCING. See Section 10, "The Offer -- Source and Amount of
Funds."
WHAT ARE THE MOST SIGNIFICANT CONDITIONS TO THE OFFER?
The offer is conditioned on, among other things, satisfaction of these two
important conditions:
- the tender of a sufficient number of Little Switzerland shares so that,
after the purchase of the shares pursuant to the offer and the shares to
be acquired pursuant to the stock purchase agreement with the Holtzmans,
we would own at least 90% of the outstanding Little Switzerland common
stock on a fully-diluted basis (the "Minimum Condition"); and
- the tender of at least a majority of the outstanding Little Switzerland
shares, excluding shares beneficially owned by us or by the Holtzmans
(the "Majority of the Minority Condition").
3
See "Introduction and Section 11, "The Offer -- Certain Conditions of the
Offer," for a complete description of all the conditions to which the offer is
subject.
WHY IS TIFFANY & CO. MAKING THIS OFFER?
Tiffany already is the owner of approximately 45% of Little Switzerland's
outstanding shares of common stock. We have determined that maintaining a
significant minority interest in Little Switzerland is not a desirable long-term
strategy. Through our officers' participation on the Board of Directors of
Little Switzerland, we have come to understand that Little Switzerland requires
significant additional capital in order to grow and become profitable in the
future. We do not believe that Little Switzerland on its own could obtain
financing from the capital markets at this time. In addition, we feel that the
costs associated with the procedural and compliance requirements of a public
company are a strain on Little Switzerland's management resources. Making Little
Switzerland a wholly-owned subsidiary of Tiffany will reduce these complications
and costs and allow us an opportunity to provide Little Switzerland with the
additional capital it requires to fulfill its growth and business plans. See
"Special Factors -- Reasons for and Purpose of the Offer and the Merger; Tiffany
& Co.'s Plans for Little Switzerland" and "Special Factors -- Tiffany's
Ownership and Operating Relationships with Little Switzerland."
IS THIS OFFER SUPPORTED BY THE LITTLE SWITZERLAND BOARD OF DIRECTORS?
We commenced this offer without seeking or obtaining the prior approval of
the Little Switzerland Board of Directors. The completion of the offer is not
conditioned on the approval of the Little Switzerland Board of Directors.
Although the Board of Directors of Little Switzerland has not made any
recommendation, we believe that the tender offer price, which represents a
substantial premium over the market price for shares of Little Switzerland
common stock, is adequate. Federal securities laws require the Little
Switzerland Board of Directors to advise Little Switzerland stockholders of its
position on this offer within ten business days after the date of this document.
Mr. Seymour Holtzman and two officers of Tiffany constitute three of the five
directors on the Little Switzerland Board of Directors. These three directors
are likely to abstain with respect to any determination as to the position of
the Little Switzerland Board of Directors on this tender offer. See
"Introduction."
WHY IS TIFFANY & CO. NOT SEEKING APPROVAL OF ITS OFFER FROM LITTLE SWITZERLAND'S
INDEPENDENT DIRECTORS?
We want to begin to realize the benefits of ownership and improve the
capital and management resources of Little Switzerland as soon as possible. We
believe that making a tender offer directly to Little Switzerland's stockholders
will be significantly faster, and incur significantly less cost to us and to
Little Switzerland, than making a proposal for consideration by Little
Switzerland's independent directors and negotiating a merger agreement with
those directors. In this connection, we note that the purchase price for the
shares is the same price that we negotiated on an arms-length basis with the
Holtzmans. We believe that the Little Switzerland stockholders are capable of
evaluating the fairness of the offer. We also note that approximately 79% of the
Little Switzerland shares (assuming exercise of all outstanding options and
warrants) owned by stockholders other than the Holtzmans and us would need to be
tendered to satisfy the Minimum Condition. We believe that acceptance of the
offer by the holders of this very high percentage of Little Switzerland's common
stock would provide meaningful procedural protection that obviates the need for
Little Switzerland Board approval. Accordingly, we are not seeking to negotiate
our offer with Little Switzerland's Board of Directors. See "Special
Factors -- Background of the Offer -- Development of the Offer."
HOW LONG DO I HAVE TO DECIDE WHETHER TO TENDER MY SHARES IN THE INITIAL OFFERING
PERIOD?
You may tender your shares under the offer until 5:00 p.m., New York City
time, on Friday, September 13, 2002, which is the scheduled expiration date of
the offering period, unless we decide to extend the offering period or provide a
subsequent offering period. See Section 1, "The Offer -- Terms of the Offer" and
Section 3, "The Offer -- Procedure for Tendering Shares," for information about
tendering your shares.
4
CAN THE OFFER BE EXTENDED AND HOW WILL I BE NOTIFIED IF THE OFFER IS EXTENDED?
Yes, we may elect to extend the offer. We can do so by issuing a press
release no later than 9:00 a.m., New York City time, on the next business day
following the scheduled expiration date of the offer. The press release would
state the approximate number of shares tendered as of that time and would
announce the extended expiration date. See Section 1, "The Offer -- Terms of the
Offer," for information about extension of the offer.
WILL THERE BE A SUBSEQUENT OFFERING PERIOD?
Following our purchase of all shares tendered during the offering period,
we may elect to provide a subsequent offering period of at least three business
days, during which time stockholders whose shares have not been accepted for
payment may tender their shares and receive the offer consideration. Tenders
during any subsequent offering period may not be withdrawn for any reason. We
are not permitted under the federal securities laws to provide a subsequent
offering period of more than 20 business days. See Sections 1 and 4, "The
Offer -- Terms of the Offer," and "The Offer -- Rights of Withdrawal,"
respectively, for more information concerning any subsequent offering period.
HOW DO I TENDER MY SHARES?
If you hold the certificates for your shares, you should complete the
Letter of Transmittal, enclose all the documents required by it, including your
certificates, and send them to the Depositary at the address listed on the back
cover of this document. If your broker holds your shares for you in "street
name" you must instruct your broker to tender your shares on your behalf. In any
case, the Depositary must receive all required documents before the expiration
date of the offer, which is 5:00 p.m., New York City time, on Friday, September
13, 2002, unless extended. If you cannot comply with these procedures, you still
may be able to tender your shares by using the guaranteed delivery procedures
described in this document. See Section 3, "The Offer -- Procedure for Tendering
Shares," for more information on the procedures for tendering your shares.
UNTIL WHAT TIME CAN I WITHDRAW PREVIOUSLY TENDERED SHARES?
You (or your broker if your shares are held in "street name") may withdraw
the tender of your shares at any time before the expiration date of the offer.
However, Shares tendered during any subsequent offering period may not be
withdrawn for any reason. See Section 4, "The Offer -- Rights of Withdrawal,"
for more information.
HOW DO I WITHDRAW PREVIOUSLY TENDERED SHARES?
You (or your broker if your shares are held in "street name") must notify
the Depositary at the address and telephone number listed on the back cover of
this document. The notice must include the name of the stockholder that tendered
the shares, the number of shares to be withdrawn and the name in which the
tendered shares are registered. For complete information about the procedures
for withdrawing your previously tendered shares, see Section 4, "The
Offer -- Rights of Withdrawal."
IF TIFFANY & CO. CONSUMMATES THE TENDER OFFER, WHAT ARE ITS PLANS WITH RESPECT
TO THE SHARES THAT ARE NOT TENDERED IN THE OFFER?
If the tender offer is successful and we own at least 90% of the
outstanding Little Switzerland shares, including the shares acquired pursuant to
the stock purchase agreement with the Holtzmans, we will cause TSAC Corp. to
merge with and into Little Switzerland and pay to the Little Switzerland
stockholders who have not tendered their shares the same consideration we paid
for shares in the tender offer. After the Merger, Little Switzerland will be a
wholly-owned subsidiary of Tiffany. Little Switzerland stockholders who do not
tender their shares in the offer will have a right to dissent and demand an
appraisal of the fair value of their shares under Delaware law. If the Minimum
Condition is not satisfied, we do not intend to
5
acquire any Little Switzerland shares from the Holtzmans or from the public. See
Section 9, "The Offer -- Merger; Appraisal Rights; Rule 13e-3."
WHEN DOES TIFFANY & CO. EXPECT TO COMPLETE THE OFFER AND THE MERGER?
We hope to complete the offer on Friday, September 13, 2002, the initial
scheduled expiration date. We may extend the offer, however, if the conditions
to the offer have not been satisfied at the scheduled expiration date or if we
are required to extend the offer by the rules of the SEC. We expect to complete
the Merger shortly after completion of the offer. See Section 1, "The
Offer -- Terms of the Offer" and Section 9, "The Offer -- Merger; Appraisal
Rights; Rule 13e-3."
WILL I HAVE THE RIGHT TO HAVE MY LITTLE SWITZERLAND SHARES APPRAISED?
If you tender your Little Switzerland shares in the offer, you will not be
entitled to exercise statutory appraisal rights under Delaware law. If you do
not tender your shares in the offer and the Merger occurs, you will have a
statutory right to demand payment of the judicially appraised fair value of your
Little Switzerland shares plus a fair rate of interest, if any, from the date of
the Merger. The appraised value may be more than, less than or the same as the
cash consideration we pay in the offer and the Merger. See Section 9, "The
Offer -- Merger; Appraisal Rights; Rule 13e-3."
IF I DECIDE NOT TO TENDER, HOW WILL THE OFFER AFFECT MY SHARES?
If you do not tender in the offer and the Merger occurs, you will receive
the same consideration as paid in the tender offer, subject to your right to
dissent and demand an appraisal of the fair value of your shares under Delaware
law. If you exercise your appraisal rights, you will not receive the Merger
consideration unless you waive or effectively lose your appraisal rights.
If you do not tender in the offer and the Merger does not occur, and we
purchase shares in the offer, our purchase of shares will reduce the number of
shares that might otherwise trade publicly and will reduce the number of holders
of shares. These events could adversely affect the liquidity and trading price
of the remaining shares held by the public. The shares may no longer be quoted
on the Over the Counter Bulletin Board. Little Switzerland may no longer be
required to make filings with the SEC or comply with the SEC's rules relating to
publicly held companies. See Section 14, "The Offer -- Certain Effects of the
Offer," for complete information about the effect of the offer on your shares.
WHAT IS THE MARKET VALUE OF MY SHARES AS OF A RECENT DATE?
On, Monday, August 12, 2002, the last full trading day prior to the public
announcement of our intention to commence the offer, the reported closing price
of the Little Switzerland shares on the Over the Counter Bulletin Board was
$1.39 per share. You should obtain a recent market quotation before deciding
whether to tender your shares. See Section 6, "The Offer -- Price Range of
Shares; Dividends," for recent high and low sales prices for the shares.
WHO CAN I TALK TO IF I HAVE QUESTIONS ABOUT THE TENDER OFFER?
If you have questions or you need assistance you should contact the
Information Agent, Morrow & Co., Inc., at (800) 607-0088 or the Dealer Manager,
Lehman Brothers Inc., collect at (212) 526-3444 or (212) 526-2566. See the back
cover page of this offer to purchase for more information.
6
To the Holders of Common Stock of
Little Switzerland:
INTRODUCTION
TSAC Corp. ("Purchaser"), an indirect wholly-owned subsidiary of Tiffany &
Co. ("Tiffany"), is offering to purchase all of the outstanding shares of common
stock, par value $0.01 per share (the "Shares"), of Little Switzerland, Inc.
("Little Switzerland") at a purchase price of $2.40 per Share, net to the seller
in cash, without interest, on the terms and subject to the conditions set forth
in this Offer to Purchase and in the related Letter of Transmittal (which
together constitute the "Offer"). The per Share Offer price represents a 73%
premium to the closing price of Little Switzerland common stock on August 12,
2002, the last full trading day before the public announcement of Tiffany's
intention to commence the Offer.
If you are a record owner of Shares, you will not be required to pay
brokerage fees or commissions or, except as described in Instruction 6 of the
Letter of Transmittal, stock transfer taxes on the transfer and sale of Shares
in the Offer. Stockholders who hold their Shares through bankers or brokers
should check with such institutions as to whether they charge any service fee.
If you do not complete and sign the Substitute Form W-9 that is included in the
Letter of Transmittal, however, you may be subject to a required backup
withholding of U.S. federal income tax at a rate of 30% of the gross proceeds
payable to you. We will pay all charges and expenses of Mellon Investor Services
LLC, as Depositary (the "Depositary"), Morrow & Co., Inc., as Information Agent
(the "Information Agent"), and Lehman Brothers Inc., as Dealer Manager (the
"Dealer Manager"), incurred in connection with the Offer.
OUR OFFER IS CONDITIONED, AMONG OTHER THINGS, ON:
- THE TENDER OF A SUFFICIENT NUMBER OF SHARES SO THAT, AFTER THE PURCHASE
OF THE SHARES PURSUANT TO THE OFFER AND THE PURCHASE OF THE SHARES TO BE
ACQUIRED PURSUANT TO THE STOCK PURCHASE AGREEMENT WITH THE HOLTZMANS, WE
WOULD OWN AT LEAST 90% OF THE OUTSTANDING SHARES ON A FULLY-DILUTED BASIS
(THE "MINIMUM CONDITION"); AND
- THE TENDER OF AT LEAST A MAJORITY OF THE OUTSTANDING SHARES, EXCLUDING
SHARES BENEFICIALLY OWNED BY US OR BY THE HOLTZMANS (THE "MAJORITY OF THE
MINORITY CONDITION").
WE RESERVE THE RIGHT TO WAIVE OR REDUCE THE MINIMUM CONDITION AND TO ELECT
TO PURCHASE A SMALLER NUMBER OF SHARES, SUBJECT TO COMPLIANCE WITH THE
APPLICABLE SECTIONS OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE
"EXCHANGE ACT"). WE HAVE NO CURRENT EXPECTATION THAT WE WOULD SEEK TO EXERCISE
THIS RIGHT. IN NO EVENT, HOWEVER, WILL WE PURCHASE SHARES IN THE OFFER UNLESS
THE MAJORITY OF THE MINORITY CONDITION IS SATISFIED. OUR OFFER IS ALSO SUBJECT
TO OTHER TERMS AND CONDITIONS. SEE SECTION 1, "THE OFFER -- TERMS OF THE OFFER,"
AND SECTION 11, "THE OFFER -- CERTAIN CONDITIONS OF THE OFFER."
The purpose of the Offer is to acquire as many outstanding Shares as
possible as a first step in acquiring all of the equity of Little Switzerland.
If the Offer is successful and we own at least 90% of the outstanding Shares,
including the Shares purchased from the Holtzmans, we will cause Purchaser to
merge with Little Switzerland through a short-form merger (the "Merger"). In the
Merger, each outstanding Share that we do not own (other than Shares held by
Little Switzerland stockholders who dissent from the Merger and perfect their
appraisal rights under the Delaware General Corporation Law (the "DGCL")) will
be converted into the right to receive the same consideration that we paid in
the Offer, without interest. See Section 9, "The Offer -- Merger; Appraisal
Rights; Rule 13e-3." Under the DGCL, if we own at least 90% of the outstanding
Shares, we can consummate the Merger without a vote of or prior notice to the
remaining stockholders or Board of Directors of Little Switzerland. See Section
9, "The Offer -- Merger; Appraisal Rights; Rule 13e-3." As a result of the Offer
and the Merger, Little Switzerland would become a wholly-owned subsidiary of
Tiffany and the Shares would no longer trade publicly.
7
We have not asked the Little Switzerland Board of Directors to approve the
Offer or the Merger. The Little Switzerland Board must file with the Securities
and Exchange Commission (the "SEC"), and provide to the Little Switzerland
stockholders, a "Solicitation/Recommendation Statement on Schedule 14D-9" within
ten business days from the date of this document. We encourage you to review
carefully the Schedule 14D-9 when it becomes available.
As of the date hereof, Tiffany, through its wholly-owned subsidiary Tiffany
& Co. International ("International"), owns 7,410,000 Shares, representing
approximately 45% of the outstanding Shares and approximately 45% of the voting
power of Little Switzerland.
According to information received from Little Switzerland, there are
approximately 16,721,972 Shares outstanding and approximately 1,581,240 Shares
subject to issuance of options and warrants outstanding as of August 14, 2002.
Based on the foregoing, we believe that there would be approximately 18,303,212
Shares outstanding on a fully-diluted basis (treating as outstanding all Shares
issuable upon the exercise of all outstanding options and warrants). Because
Tiffany beneficially owns 7,410,000 Shares and the Holtzmans beneficially own
approximately 1,970,000 Shares (including 233,000 Shares subject to exercise of
outstanding options), we believe that at least approximately 7,100,000 Shares of
the approximately 8,900,000 fully-diluted Shares held by the public must be
tendered to satisfy the Minimum Condition. We believe that at least
approximately 3,800,000 Shares must be tendered by the public to satisfy the
Majority of the Minority Condition.
This Offer to Purchase and the documents incorporated by reference in this
Offer to Purchase contain certain forward-looking statements. These statements
appear throughout this Offer to Purchase and include statements regarding our
intent, belief or current expectations of, including statements concerning our
plans with respect to, the Offer and the Merger. Such forward-looking statements
are not guarantees of future performance or events and involve risks and
uncertainties. Actual results may differ materially from those described in such
forward-looking statements as a result of various factors. Factors that might
affect the accuracy of such forward-looking statements include, among other
things:
- general economic, capital market and business conditions;
- terrorist attacks on the United States or international targets;
- changes in government regulation;
- the risks and uncertainties described in Little Switzerland's and
Tiffany's filings with the SEC under the Exchange Act;
- changes in tax law requirements, including tax rate changes, new tax laws
and revised tax law interpretations;
- competitive factors in the industries in which Little Switzerland and
Tiffany operate; and
- the ability to execute fully our business strategy after taking Little
Switzerland private.
The information contained in this Offer to Purchase concerning Little
Switzerland was obtained from publicly available sources. We do not take any
responsibility for the accuracy of such information.
THE OFFER IS CONDITIONED UPON THE SATISFACTION OR WAIVER OF THE CONDITIONS
DESCRIBED IN SECTION 11, "THE OFFER -- CERTAIN CONDITIONS OF THE OFFER." THE
OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON FRIDAY, SEPTEMBER 13,
2002, UNLESS WE EXTEND IT.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH YOU SHOULD READ CAREFULLY BEFORE YOU MAKE ANY
DECISION WITH RESPECT TO THE OFFER.
8
SPECIAL FACTORS
BACKGROUND OF THE OFFER
TIFFANY'S INVESTMENT IN LITTLE SWITZERLAND
Tiffany is an international jewelry and specialty retailer. On May 1, 2001,
Tiffany, through its wholly-owned subsidiary, Tiffany & Co. International
("International"), purchased 7,410,000 Shares pursuant to a stock purchase
agreement between International and Little Switzerland.
At the time of this investment, Tiffany had been informed by Little
Switzerland that Little Switzerland had been seeking, without success, a merger
partner or a strategic investor. Little Switzerland noted that it was
experiencing significant liquidity concerns and that certain key suppliers were
unwilling to extend credit for the purchase of inventory. To address these
liquidity concerns, Tiffany agreed to purchase, directly from Little
Switzerland, 7,410,000 Shares for $9,262,500 ($1.25 per Share) and to make
available a $2.5 million line of credit.
Tiffany was willing to make the investment in 2001 because it believed that
Little Switzerland had a valuable position and established reputation within its
markets -- assets that, if properly developed with capital resources and
management skills, could lead to growth and profitability and a favorable return
on investment. Secondarily, Tiffany believed that Little Switzerland's stores
would make an attractive retail outlet for TIFFANY & CO. brand jewelry in the
Caribbean region.
In connection with this investment, Little Switzerland, Tiffany and the
Holtzmans entered into a stockholder agreement, and Tiffany and the Holtzmans
entered into an investor agreement. These agreements in essence provided that
the Board of Directors of Little Switzerland would consist of five persons, two
of whom would be nominees of Tiffany and one of whom would be a nominee of the
Holtzmans. The stockholder agreement also provided Tiffany and the Holtzmans
with certain rights to maintain their percentage ownership in Little
Switzerland, to participate in any sale of Shares by the other and with rights
to cause Little Switzerland to register their Shares with the SEC in connection
with any proposed public sale. These agreements will terminate upon the closing
of the purchase of Shares pursuant to the Offer and the stock purchase agreement
with the Holtzmans.
DEVELOPMENT OF THE OFFER
Since the time of International's acquisition of Little Switzerland's
common stock, Tiffany, through the participation of its officers on Little
Switzerland's Board of Directors, has gained greater insight into the challenges
facing Little Switzerland. In particular, Little Switzerland's need for
additional capital and improvements in infrastructure has led Tiffany to
consider this tender offer as further described under "Special
Factors -- Reasons for and Purpose of the Offer and the Merger; Tiffany's Plans
for Little Switzerland."
On November 15, 2001, Tiffany management discussed with the Board of
Directors of Tiffany Little Switzerland's need for an additional capital
infusion and the difficulty Little Switzerland was facing in raising this
additional capital due in part to Tiffany's significant minority interest in
Little Switzerland, which made third party investments unlikely, and the
geographic location of Little Switzerland, which made collateralized debt
financing impracticable. The Board of Directors of Tiffany determined that it
would not be prudent to advance further funds to Little Switzerland, or to
guarantee additional debt financing, while remaining a significant but minority
stockholder.
In May 2002, Seymour Holtzman expressed to certain members of Tiffany
management a willingness to sell his interest in Little Switzerland to Tiffany.
Tiffany management then engaged Lehman Brothers Inc. ("Lehman Brothers") to
advise Tiffany with respect to its investment in Little Switzerland and its
potential acquisition of the Holtzmans' Shares as well as the remaining Shares
held by the public. On June 5, 2002, Lehman Brothers presented to selected
members of Tiffany management certain materials prepared to assist Tiffany
management in consideration of the potential acquisition of Little Switzerland.
See "Special Factors -- Reasons for and Purpose of the Offer and the Merger;
Tiffany & Co.'s Plans for
9
Little Switzerland" for details regarding Tiffany's reasons for the Offer and
the Merger. During the month of June 2002, Lehman Brothers and Seymour Holtzman
discussed a possible sale of the Holtzmans' Shares to Tiffany. Lehman Brothers
initially indicated that Tiffany would be willing to pay $2.40 per Share.
Tiffany management decided that it would be unwilling to acquire the
Holtzmans' Shares without making a similar offer to all holders of Little
Switzerland common stock, and that it would be undesirable to acquire any
additional Shares unless Tiffany could be reasonably assured of being able to
acquire all of the outstanding Shares. Upon the advice of its outside legal
counsel, Gibson, Dunn and Crutcher LLP ("Gibson Dunn"), Tiffany determined that
to ensure that the Offer process would be fair, Purchaser would not purchase the
Holtzmans' Shares unless a substantial majority of the public were willing to
sell their Shares on the same terms, and would not close the Offer and the
subsequent Merger unless a majority of the Shares not held by International or
the Holtzmans were tendered in the Offer.
Tiffany determined to make the Offer directly to the shareholders of Little
Switzerland without approaching the management or the Board of Directors of
Little Switzerland in order to avoid the costs to both Tiffany and Little
Switzerland that would arise in connection with responding, on a substantive and
procedural basis, to a proposal from Tiffany to acquire all of the outstanding
Shares. Tiffany recognized that three of the five members of the Little
Switzerland Board of Directors -- two representatives of Tiffany and Seymour
Holtzman -- were interested parties in any such transaction and therefore would
refrain from any participation at the Little Switzerland Board level in
considering a proposal from Tiffany.
In late June 2002, the parties reached a tentative agreement, subject to
Tiffany Board approval and the execution and delivery of definitive agreements,
for Tiffany to purchase the Holtzmans' Shares at $2.50 per Share. On June 18,
2002, Gibson Dunn provided a draft stock purchase agreement to Seymour Holtzman.
The draft stock purchase agreement provided that at the closing of the Offer,
International would purchase each of the 1,969,692 Shares beneficially owned by
the Holtzmans, including Shares issuable upon exercise of outstanding options to
the extent such Shares are issued before the closing of the Offer, and that all
options held by the Holtzmans that were not exercised by the closing of the
Offer would be tendered to Little Switzerland for cancellation. The draft stock
purchase agreement contemplated that the price to be paid per Share to the
Holtzmans would be identical to the price per Share paid to holders who tender
their Shares pursuant to the Offer. The closing of the purchase of the
Holtzmans' Shares under the draft stock purchase agreement would be subject to
the same conditions of the Offer, including the Minimum Condition.
On June 20, 2002, Tiffany's Board of Directors signed a unanimous written
consent to approve the Stock Purchase Agreement with the Holtzmans, the Offer
and the Merger and to authorize Tiffany management to enter into the stock
purchase agreement, announce the Offer and take all other necessary actions in
order to consummate the closing of the stock purchase agreement with Mr.
Holtzman and his affiliates, the Offer and the Merger.
Over the following several weeks, as stock market conditions deteriorated
and no definitive agreements were executed, Tiffany reduced its offer price to
$2.40 per Share. Following further discussions between Seymour Holtzman and
Lehman Brothers, the parties agreed to a price of $2.40 per Share, subject to
adjustment so that the Holtzmans would receive the same price as the public
stockholders in the Offer. Tiffany and the Holtzmans executed and delivered the
definitive stock purchase agreement on August 12, 2002.
After the close of business on August 12, 2002, Tiffany issued a press
release announcing its intention to commence the tender offer on or soon after
August 15, 2002.
At a meeting of the Board of Directors of Little Switzerland held on August
13, 2002, the Board of Directors, including the nominees of Tiffany & Co., were
informed that management of Little Switzerland had received, on August 12, 2002,
a letter, dated August 6, 2002, from an individual named Edward Shapiro
inquiring whether Little Switzerland would be interested in a cash offer for all
outstanding Shares. The letter indicated that, if Little Switzerland were
interested in such an offer, it should so indicate to
10
Mr. Shapiro, who in turn would identify his "investor group." Although no offer
was made in the letter, nor was there any indication of the price that the
"investor group" would offer for the outstanding Shares or of the timing or
conditions of any offer, the Board of Directors established an Independent
Committee of the Board to initiate discussions with Mr. Shapiro to determine
whether his inquiry may lead to a bona fide offer. Tiffany & Co. was unaware of
the existence of this letter prior August 13, 2002, and its nominees informed
the other members of the Little Switzerland Board of Directors that Tiffany &
Co. would have no interest in selling its Shares to the "investor group."
On August 15, 2002, the Offer was commenced.
REASONS FOR AND PURPOSE OF THE OFFER AND THE MERGER; TIFFANY & CO.'S PLANS FOR
LITTLE SWITZERLAND
We have determined that maintaining a significant minority interest in
Little Switzerland is not a desirable long-term strategy. Through our officers'
participation on the Board of Directors of Little Switzerland, we have come to
understand that Little Switzerland requires significant additional capital in
order to increase sales and achieve profitability in the future. We do not
believe that Little Switzerland on its own could obtain financing from the
capital markets at this time. Moreover, we believe that it would not be prudent
to advance further funds to Little Switzerland, or to guarantee additional debt
financing as a minority stockholder because we would derive only a portion of
the benefits contributed.
In addition, conflicts of interests between Tiffany and Little Switzerland
have arisen in connection with our subordination of indebtedness owed by Little
Switzerland to Tiffany to debt owed by Little Switzerland to other creditors.
Although we are not able to consolidate our financial statements with Little
Switzerland, suppliers and lenders to Little Switzerland expect Tiffany to
subordinate its position to theirs. For example, Little Switzerland's new
lending institution required that Tiffany subordinate its line of credit to the
new lender's position as a condition to extending credit to Little Switzerland.
In addition, we feel that the costs associated with the procedural and
compliance requirements of a public company are a strain on Little Switzerland's
management resources. Making Little Switzerland a wholly-owned subsidiary of
Tiffany will reduce these complications and costs and allow Little Switzerland
management an opportunity to focus its attention on operations and a return to
profitability.
Upon the successful completion of the Offer and the Merger, we would be
willing to make further contributions of capital and management expertise in
order to effect changes and improvements that we believe are necessary for
Little Switzerland to increase sales and achieve profitability. Among the
changes and improvements we foresee making are: increased capital infusions for
store openings, inventory and renovations; improved information systems,
warehouse management, store planning and financial controls; introduction of a
comprehensive planning discipline; and provision of improved accounting and
administrative services. See "Special Factors -- Tiffany Ownership and Operating
Relationships with Little Switzerland."
The purpose of the Offer is for Tiffany to acquire for cash as many
outstanding Shares as possible. In conjunction with the purchase of the
Holtzmans' Shares, the Offer is a first step in acquiring the entire equity
interests in Little Switzerland not owned by Tiffany and its subsidiaries. The
Merger is intended to eliminate any remaining minority interest.
If the Offer is successful and we obtain at least 90% of the fully-diluted
Shares including the Shares purchased pursuant to the stock purchase agreement
with the Holtzmans, we will effect the Merger. As a result of the Offer and the
Merger, Little Switzerland would become a wholly-owned subsidiary of Tiffany and
the Shares would no longer trade publicly.
If, after the Offer is completed but prior to consummation of the Merger,
the aggregate ownership by Tiffany and its subsidiaries of the outstanding
Shares should fall below 90% due to the exercise of outstanding options to
acquire Shares or for any other reason, Purchaser may decide to acquire
additional Shares in the open market or in privately negotiated transactions to
the extent required for such ownership to equal or exceed 90%. Any such
purchases would be made at market prices or privately negotiated prices at the
time of purchase, which may be higher or lower than or the same as the Offer
price.
11
Following completion of the Offer and the Merger, we will cause the Shares
to be delisted from the Over the Counter Bulletin Board and Little Switzerland
will be a privately held corporation. Accordingly, current stockholders who are
not affiliated with us will not have the opportunity to participate in the
earnings and growth of Little Switzerland and will not have any right to vote on
corporate matters. Similarly, after completion of the Merger, former
stockholders will not face the risk of losses resulting from Little
Switzerland's operations or from any decline in the value of Little Switzerland.
Except as otherwise described in this Offer to Purchase, Tiffany has no
current plans or proposals or negotiations which relate to or would result in:
(i) an extraordinary corporate transaction, such as a merger (other than the
Merger), reorganization or liquidation involving Little Switzerland; (ii) any
purchase, sale or transfer of a material amount of assets of Little Switzerland;
(iii) any material change in Little Switzerland's present dividend rate or
policy; (iv) any change in the management of Little Switzerland (other than
Tiffany's intention to appoint a board of directors comprised solely of members
of Little Switzerland's and Tiffany's management after the Merger) or any change
in any material term of the employment contract of any executive officer; or (v)
any other material change in Little Switzerland's corporate structure or
business. We expressly reserve the right to change our business plans with
respect to Little Switzerland based on future developments.
PURCHASER'S AND TIFFANY'S POSITION REGARDING THE FAIRNESS OF THE OFFER AND THE
MERGER
We believe the Offer and the Merger are both financially and procedurally
fair to Little Switzerland's stockholders who are not affiliated with Purchaser,
Tiffany or the Holtzmans. We base our belief on our observations of the
following factors, each of which, in our judgment, supports our views as to the
fairness of the Offer and the Merger.
- The $2.40 per Share cash consideration payable in the Offer represents an
approximately 73% premium to the closing price on August 12, 2002, the
last trading day prior to public announcement of the Offer, and
represents a 92% premium to the $1.25 per Share paid by Tiffany in May
2001 in connection with its initial investment in Little Switzerland.
- The Offer is conditioned on the tender of at least a majority of the
Shares not owned by Tiffany or the Holtzmans -- the Majority of the
Minority Condition. Satisfaction of this condition will require that at
least approximately 3,800,000 Shares of the approximately 7,600,000
outstanding Shares not owned by Tiffany or the Holtzmans (more than 50%
of such Shares) are tendered. The Majority of the Minority Condition is
designed to provide a true opportunity to the public to determine if the
Offer is fair.
- The Offer is conditioned on the tender of a sufficient number of Shares
so that, after the Shares are purchased pursuant to the Offer and the
stock purchase agreement with the Holtzmans, we would own at least 90% of
the outstanding Little Switzerland common stock on a fully-diluted
basis -- the Minimum Condition. Satisfaction of this condition will
require that at least approximately 7,100,000 of the Shares not owned by
us or the Holtzmans are tendered. The Minimum Condition is designed to
provide meaningful procedural protection for Little Switzerland
stockholders.
- The Offer and the Merger provide the Little Switzerland stockholders
substantially greater opportunity to sell their holdings in Little
Switzerland at a premium than has been available in the public market,
where historically low volumes of trading have greatly limited liquidity.
- Tiffany's ownership of approximately 45% of the currently outstanding
Shares may have limited the financing alternatives available to Little
Switzerland.
- We believe that the Little Switzerland stockholders are capable of
evaluating the Offer.
- Little Switzerland stockholders who elect not to tender their Shares in
the Offer will receive the same consideration in the Merger that we pay
in the Offer, subject to their right to dissent from the Merger and
demand an appraisal of the fair value of their Shares under the DGCL.
This provision
12
is designed to eliminate any concern on the part of Little Switzerland
stockholders that they should tender into the Offer or risk being treated
less fairly.
- The fact that, prior to our initial investment in Little Switzerland,
Little Switzerland attempted unsuccessfully to find a merger partner or a
strategic investor.
- The fact that the Holtzmans, who have a representative on the Board of
Directors of Little Switzerland, have agreed to sell their Shares to
Tiffany on the same terms and conditions as the Offer.
- The materials prepared by Lehman Brothers and discussed with selected
management of Tiffany on June 5, 2002 regarding the potential purchase by
Tiffany of the publicly held Shares, including the relatively low
historical trading prices and volumes of Little Switzerland common stock
over various periods between May 23, 1997 and May 24, 2002 and the fact
that the Offer price represents a significant premium to the book value
of the equity of Little Switzerland. See "Special Factors -- Report of
Lehman Brothers to the Board of Directors of Tiffany."
We believe that each of the foregoing observations is relevant to all
Little Switzerland stockholders who are not affiliated with us.
We determined that the following factor was not a relevant indicator of the
value of the Shares:
- liquidation value, which we do not believe to be relevant because
substantial value results from continuing Little Switzerland as a going
concern and liquidation would destroy that value.
The foregoing discussion of the information and factors considered by us is
not intended to be exhaustive but includes all material factors we considered.
In view of the variety of factors considered in connection with our evaluation
of the Offer and the Merger, we did not find it practicable to, and did not,
quantify or otherwise assign relative weights to the specific factors considered
in reaching our determination and recommendation.
REPORT OF LEHMAN BROTHERS TO SELECTED MEMBERS OF MANAGEMENT OF TIFFANY
As financial advisor to Tiffany in connection with the tender offer, Lehman
Brothers was not requested to, and did not, render any appraisal or opinion in
connection with the tender offer. However, Lehman Brothers did prepare materials
that were presented to selected members of management of Tiffany on June 5,
2002. This presentation was made in order to assist the management of Tiffany in
their negotiations regarding the potential acquisition of Little Switzerland,
and Lehman Brothers did not make any findings, recommendations or conclusions in
the presentation. Among other things, this presentation provided various
methodologies to analyze the potential purchase of Little Switzerland. These
analyses, which are described below, do not purport to be the most appropriate
and relevant methods of analysis for these particular circumstances. Any
estimates contained in these analyses were not necessarily indicative of actual
values or predictive of future results of values, which may be significantly
more or less favorable than as set forth in the analyses. Estimates of values of
companies do not purport to be appraisals or necessarily to reflect the prices
at which companies may actually be sold. Because these estimates are inherently
subject to uncertainty, none of Tiffany, Little Switzerland, selected members of
Tiffany's management team, our board of directors, Lehman Brothers or any other
person assumes responsibility if future results or actual values differ
materially from the estimates.
Lehman Brothers' advisory services were provided for the assistance of
Tiffany in connection with its negotiations regarding the potential acquisition
of Little Switzerland. This presentation is not intended to be and does not
constitute a recommendation to any public stockholder of Little Switzerland as
to how such stockholder should vote with respect to the merger. THESE
PRESENTATIONS SHOULD NOT BE DEEMED TO CONSTITUTE AN OPINION THAT THE $2.40 PRICE
PER SHARE CONSIDERATION TO BE OFFERED TO THE LITTLE SWITZERLAND STOCKHOLDERS
(OTHER THAN TIFFANY AND ITS AFFILIATES) IS FAIR, FROM A FINANCIAL POINT OF VIEW
OR OTHERWISE, TO SUCH STOCKHOLDERS, TO TIFFANY, OR TO ANY OTHER PERSON.
13
In preparing its presentation materials, Lehman Brothers reviewed and
analyzed, among other things:
- publicly available information concerning Little Switzerland and various
companies that Lehman Brothers deemed comparable to Little Switzerland
(which included Zale, Whitehall Jewelers, Friedman's, Finlay Enterprises,
Mayor's Jewelers and Reeds Jewelers, collectively the "Peer Group") that
Lehman Brothers believed to be relevant to its analysis, including each
of the periodic reports and proxy statements filed by Little Switzerland
and the Peer Group since January 1, 2000, including the audited and
unaudited financial statements included in such reports and statements;
and
- a trading history of the stocks of Little Switzerland and the Peer Group
from May 23, 1997 to May 24, 2002.
In the materials prepared by Lehman Brothers and presented to selected
members of Tiffany's management on June 5, 2002, the following methodologies
were included: stock price performance analysis, trading history analysis,
comparable company analysis and comparable transaction analysis, as described
below. The presentation materials also included a business and financial
overview of Little Switzerland, a review of Little Switzerland's defensive
profile and an overview of Little Switzerland's ownership and Board of
Directors.
Stock Price Performance Analysis and Trading History. Using publicly
available information, Lehman Brothers compiled data to form four graphs of
stock price performance and historical trading data for Little Switzerland and
its Peer Group. Graph one depicts stock price performance for Little Switzerland
and the Peer Group, also called the Lehman Brothers Small-Cap Luxury Retail
Composite, for the period May 23, 1997 to May 24, 2002; Little Switzerland
decreased 69% and the Peer Group increased approximately 80% during the period.
Graph two depicts stock price performance for Little Switzerland for the period
May 23, 1997 to May 24, 2002; Little Switzerland's highest trading value during
the five year period was $8.00 on April 30, 1998 and lowest trading value was
$0.22 on October 21, 1999. Graph three depicts the one year historical trading
volume analysis; the highest quantity of stock (39% of the volume traded in the
past year) was traded when the stock was in the $1.76-$1.93 range, and the
lowest quantity of stock (2% of total volume) was traded when the stock was in
the $2.12-$2.29 range. Graph four depicts the five year historical trading
volume analysis; the highest quantity of stock (37% of total volume traded in
the past 5 years) was traded when the stock was in the $0.22-$1.33 range, and
the lowest quantity of stock (2% of total volume) was traded when the stock was
in the $4.67-$5.77 range.
Comparable Company Analysis. Using publicly available information, Lehman
Brothers compared the public stock market trading multiples for Little
Switzerland with those of the Peer Group. Lehman Brothers captured certain data,
including trading price as of May 24, 2002, market capitalization, enterprise
value, and revenue, earnings before interest, taxes, depreciation and
amortization ("EBITDA"), earnings before interest and taxes ("EBIT") and
earnings as reported for the Last Twelve Months ("LTM"). Enterprise value means
market capitalization plus total debt, less any cash or cash equivalents. Lehman
Brothers then calculated the total debt/total capital ratio and the total
debt/EBITDA ratio, in addition to enterprise value as a multiple of LTM revenue,
LTM EBITDA and LTM EBIT and market price as a multiple of the LTM net income and
book value. It was determined by Lehman Brothers that the Peer Group total
debt/total capital ratio median was 33.8% as compared to 28.4% for Little
Switzerland. Lehman Brothers also determined that the Peer Group median ratio of
enterprise to LTM revenue multiple was 0.54x as compared to Little Switzerland's
ratio of 0.66x. Finally, Lehman Brothers observed that the Peer Group median
ratio of market capitalization to book value multiple was 0.91x as compared to
Little Switzerland's ratio of 1.63x.
Comparable Transaction Analysis. Using publicly available information,
Lehman Brothers compared the transaction multiples for a number of acquisitions
of notable luxury and jewelry companies over the past 5 years. The approximate
size of these transactions range from $11 million to $266 million of enterprise
value. It was determined by Lehman Brothers that the median ratio of transaction
value to LTM revenue, LTM EBITDA and LTM EBIT was respectively 0.62x, 4.9x and
6.4x.
14
Defense Profile Analysis. Using publicly available information, Lehman
Brothers provided a summary of recent changes to Little Switzerland's
anti-takeover provisions. Lehman Brothers also provided a summary of Little
Switzerland's defense profile.
Ownership and Board of Director Analysis. Using publicly available
information, Lehman Brothers also analyzed Little Switzerland's ownership and
board of directors structure. The analysis concludes that two of Little
Switzerland's stockholders, Seymour Holtzman and Donald Sturm, control over 15%
of the diluted Shares. Lehman Brothers also noted that Tiffany holds two out of
five seats on the Board of Directors.
Lehman Brothers is an internationally recognized investment banking firm
and, as part of its investment banking activities, is regularly engaged in the
evaluation of businesses and their securities in connection with mergers and
acquisitions, negotiated underwritings, competitive bids, secondary
distributions of listed and unlisted securities, private placements and
valuations for corporate and other purposes. Tiffany selected Lehman Brothers
because of its expertise, reputation and familiarity with Tiffany and Little
Switzerland and because its investment banking professionals have substantial
expertise in transactions similar to the Offer.
The engagement of Lehman Brothers in connection with the proposed merger
was formalized by an engagement letter dated June 13, 2002 between Tiffany and
Lehman Brothers pursuant to which Tiffany has agreed to pay Lehman Brothers a
cash fee of $600,000, a portion of which is contingent upon consummation of the
Offer. In addition, Tiffany has agreed to reimburse Lehman Brothers for
reasonable expenses incurred by Lehman Brothers and to indemnify Lehman Brothers
and certain related persons for certain liabilities that may arise out of its
engagement.
Lehman Brothers has performed various investment banking services for
Tiffany in the past two years relating to both acquisition advisory and
financing transactions, including acting as agent for Tiffany in connection with
the private placement of $100 million of senior notes in July 2002, and has
received customary fees for its services. A Managing Director of Lehman Brothers
is a member of the Tiffany Board of Directors. In the ordinary course of Lehman
Brothers' business, Lehman Brothers may actively trade in the equity and debt
securities of Tiffany or Little Switzerland for its own account and for the
accounts of its customers and, accordingly, may at any time hold a long or short
position in such securities.
LITTLE SWITZERLAND FINANCIAL PROJECTIONS
Projections Prepared by Little Switzerland. We understand that Little
Switzerland does not, as a matter of course, make public forecasts or
projections as to future sales, earnings or other income statement data, cash
flows or balance sheet and financial position information. However, as part of
Little Switzerland's ongoing financial planning process, Little Switzerland
prepares financial projections, which are not publicly available, of Little
Switzerland's results of operations which are provided to the Board of Directors
of Little Switzerland, in the ordinary course of business every other month (the
"Little Switzerland Projections"). Two of the five directors of Little
Switzerland are Tiffany representatives. In their capacities as directors of
Little Switzerland, these two individuals receive the Little Switzerland
Projections. Seymour Holtzman also received these projections in his capacity as
a director of Little Switzerland.
15
The following is a summary of the financial projections for the fiscal
years ending May 2002 and May 2003 provided by Little Switzerland to Tiffany in
August 2002.
<Table>
<Caption>
FISCAL YEAR ENDING MAY 2003
------------------------------------------------------------------------
FISCAL YEAR LEAST
ENDING UNFAVORABLE LESS FAVORABLE FAVORABLE
MAY 2002 BEST CASE EXPECTED CASE CASE CASE CASE
----------- ----------- ------------- ----------- -------------- -----------
Sales................ $59,625,000 $71,414,000 $69,900,000 $67,124,000 $64,031,000 $61,599,000
Gross Profit......... 26,771,000 33,515,000 32,133,000 30,543,000 28,871,000 27,525,000
Margin............... 44.9% 46.4% 46.0% 45.5% 45.1% 44.7%
Sales, General and
Administration..... 30,588,000 32,372,000 31,923,000 31,406,000 30,827,000 30,381,000
Net Income (Loss) 52
Weeks.............. (4,537,000) 42,000 (891,000) (1,964,000) (3,057,000) (3,957,000)
Week 53 Profit....... -- 225,000 225,000 225,000 225,000 225,000
Net Income........... (4,537,000) 267,000 (666,000) (1,739,000) (2,832,000) (3,732,000)
</Table>
Cautionary Statement Concerning Little Switzerland Projections. The Little
Switzerland Projections have been included in the Offer to Purchase for the
limited purpose of giving stockholders access to financial projections that were
prepared by Little Switzerland management and obtained by the two Tiffany
representatives on the Little Switzerland Board of Directors in their capacities
as directors of Little Switzerland. Such information was prepared by Little
Switzerland management for internal use and not with a view to publication.
The Little Switzerland Projections were based on assumptions concerning
Little Switzerland's capital expenditures, business prospects and other revenue
and operating assumptions, including increasing consumer confidence levels,
positive attitudes towards flying and cruise taking and fair weather in the
Caribbean. These assumptions were not disclosed in writing, but were reported
orally by Little Switzerland management in their presentation to the Little
Switzerland Board of Directors. Tiffany believes these projections generally are
aggressive and are unlikely to be achieved. Tiffany accordingly has discounted
them in its consideration of the Offer.
Projected information of this type is considered a forward looking
statement based on estimates and assumptions that are inherently subject to
significant economic and competitive uncertainties and contingencies, including
those risks described in Little Switzerland's filings with the SEC under the
Exchange Act. These uncertainties and contingencies are difficult to predict and
many are beyond the ability of any company to control. Accordingly, there can be
no assurance that the projected results would be realized or that actual results
would not be significantly higher or lower than those set forth above. In
addition, the Little Switzerland Projections were not prepared with a view to
public disclosure or compliance with the published guidelines of the SEC or the
guidelines established by the American Institute of Certified Public Accountants
regarding projections and forecasts. Neither Tiffany, Purchaser, International
nor Little Switzerland's independent accountants were involved in the
development or have audited, examined, compiled, reviewed or applied any agreed
upon procedures to this information and, accordingly, are not associated with
and assume no responsibility for the accuracy of this information. We make no
representation as to the accuracy or validity of the foregoing projections.
CERTAIN ADDITIONAL LITTLE SWITZERLAND INFORMATION
Little Switzerland is required by the federal securities laws to provide
Little Switzerland stockholders with a "Solicitation/Recommendation Statement on
Schedule 14D-9" within ten business days from the date hereof. This Schedule
14D-9 will contain important information and may include certain material
non-public information that Little Switzerland believes is necessary for
stockholders to make a decision with respect to the Offer. We urge all Little
Switzerland stockholders to carefully review this document when it becomes
available.
16
TIFFANY OWNERSHIP AND OPERATING RELATIONSHIPS WITH LITTLE SWITZERLAND
Little Switzerland and certain of its directors and executive officers have
engaged in certain transactions and are parties to certain arrangements with
Tiffany and International and certain of their affiliates, directors and
executive officers. Information regarding these transactions, including the
amounts involved, is set forth below and in notes 7 and 11 to the consolidated
financial statements included in Little Switzerland's Annual Report on Form 10-K
for the fiscal year ended May 26, 2001 filed with the SEC on September 10, 2001.
The description provided in this Offer for Purchase regarding these transactions
is qualified by reference to Little Switzerland's Form 10-K. See Section 7, "The
Offer -- Certain Information Concerning Little Switzerland -- Available
Information."
CERTAIN RELATED PARTY TRANSACTIONS
OPERATING AGREEMENTS
In August 2001, Little Switzerland and Tiffany agreed in principle to
create a Tiffany boutique in Little Switzerland's store located in Barbados.
Pursuant to this agreement, Little Switzerland sells Tiffany's products,
together with other prestigious brands. In addition, Little Switzerland
purchased approximately $344,500 of merchandise from Tiffany during the nine
month period ended February 23, 2002. These arrangements are terminable by
either party at will at any time.
AGREEMENTS RELATING TO TIFFANY'S INITIAL INVESTMENT IN LITTLE SWITZERLAND
On May 1, 2001, Tiffany, through its wholly-owned subsidiary,
International, made an equity investment in Little Switzerland by purchasing
7,410,000 newly-issued unregistered Shares at $1.25 per Share for an aggregate
cost of approximately $9.3 million. In connection with Tiffany's equity
investment in Little Switzerland, Tiffany entered into several related loan
agreements to provide Little Switzerland with a line of credit of up to $2.5
million through April 30, 2006 (the "Tiffany Loan"). As of February 23, 2002,
Little Switzerland had utilized $2.5 million of this facility. Little
Switzerland used the proceeds from the Tiffany equity investment and the Tiffany
Loan to pay off existing bank debt and for its working capital needs. Pursuant
to a stockholder agreement entered into at the time of the Tiffany equity
investment, Little Switzerland, International and the Holtzmans agreed that two
out of the five directors on the Little Switzerland Board of Directors would be
designated by Tiffany and one by the Holtzmans. The parties also agreed that
Seymour Holtzman would serve as the Chairman of the Board of Directors of Little
Switzerland through the February 15, 2002 annual meeting of Little Switzerland
stockholders and until his successor is duly elected. At the February annual
meeting, the Little Switzerland Bylaws were amended to eliminate the position of
Chairman of the Board of Directors.
Each of the stock purchase agreement, the loan agreements, the stockholders
agreement and certain other agreements is described in greater detail below.
Stock Purchase Agreement. On May 1, 2001, International and Little
Switzerland entered into a stock purchase agreement under which International
purchased 7,410,000 Shares. The stock purchase agreement also provided
International with subscription rights allowing International to purchase
additional Shares in order to maintain its relative share ownership in Little
Switzerland. If the subscription right arises because of the issuance of
securities to employees, officers, directors, contractors, advisors or
consultants of Little Switzerland pursuant to incentive agreements or incentive
plans approved by the Board of Directors and the stockholders of Little
Switzerland, Shares purchased pursuant to the subscription right will be sold to
International at market value. If the subscription right arises because of the
issuance of securities other than as described in the foregoing sentence, the
common stock purchased pursuant to the subscription right will be sold to
International at the price at which the securities which gave rise to the
subscription right were sold.
Stockholder Agreement. On May 1, 2001, International, Little Switzerland
and one of the Holtzman entities, Jewelcor Management, Inc., entered into a
stockholder agreement. Pursuant to this agreement, the parties agreed to fix the
number of seats on the Board of Directors of Little Switzerland at five, two of
17
which are to be designated by International. One of the five Board seats will be
filled by a person designated by the Holtzmans. One of the remaining two seats
will be occupied by Little Switzerland's Chief Executive Officer and the other
will be filled by a person who is not an officer or employee of Little
Switzerland and is independent of any person who owns beneficially more than 5%
of Little Switzerland common stock. Both of the remaining two seats must be
reasonably acceptable to International and the Holtzmans. The stockholder
agreement also provided that Mr. Seymour Holtzman would be Chairman of the Board
of Directors through the February 15, 2002 annual meeting of Little Switzerland
stockholders and until his successor is duly elected; that International will
designate the Chairman of the Audit Committee of the Board of Directors; and
that no material changes will be made to the business model of Little
Switzerland without the unanimous approval of all directors.
The stockholder agreement also provided that if any stockholder party to
the stockholder agreement enters into an agreement to sell some or all of its
Little Switzerland common stock, each of the other stockholders party to the
stockholder agreement has the right to include a proportional amount of their
own Little Switzerland common stock in such sale. The stockholder agreement
further provided that if any stockholder party thereto receives a bona fide
offer from a third party, other than an affiliate of that stockholder or an
underwriter in connection with a public offering, to purchase some or all of its
Little Switzerland common stock, the stockholder receiving such an offer must
first offer such Shares to the other stockholders party to the stockholder
agreement on the same terms and conditions.
All rights of a stockholder party to the stockholder agreement terminate at
the point in which any stockholder fails to own 50% of the number of Shares
owned by that stockholder at the time such stockholder became a party to the
stockholder agreement.
Registration Rights Agreement. On May 1, 2001, International and Little
Switzerland entered into a registration rights agreement to provide registration
rights for all of the stock purchased by International pursuant to the stock
purchase agreement.
Loan Agreements. On May 1, 2001, Tiffany entered into loan agreements with
three Little Switzerland entities. Under the loan agreements, the Little
Switzerland entities may borrow up to a total of $2.5 million at an interest
rate of 3% per year above LIBOR. Interest is payable semi-annually with
principal and unpaid interest due on or before April 30, 2006. The loan
agreements are collateralized by a subordinated interest in Little Switzerland's
U.S. and U.S. Virgin Islands based inventory and receivables, as well as a
subordinated pledge of two-thirds of the stock of Little Switzerland's foreign
subsidiaries. Any funds provided under the loan agreements are subordinated to
certain of Little Switzerland's credit facilities pursuant to a subordination
agreement among the parties to the loan agreements and Little Switzerland's
primary lender.
Security, Pledge And Guaranty Agreements. On May 1, 2001, Tiffany entered
into Security, Pledge and Guaranty Agreements with the three Little Switzerland
entities serving as guarantors for all obligations and amounts outstanding under
the loan agreements. In return for receiving money under the loan agreements,
the Borrowers and Little Switzerland agreed to secure the indebtedness by
granting a subordinated security interest in and lien on Little Switzerland's
U.S. and U.S. Virgin Islands based inventory, including all receivables and
two-thirds of the stock of Little Switzerland's foreign subsidiaries. Upon the
occurrence of a default, subject to the subordination of its rights to Little
Switzerland's primary lender, Tiffany will have the right to receive all cash
payments paid in respect of the pledged stock and apply those payments against
the obligations owed. Tiffany also may have all of the pledged stock registered
in its name or in the name of its nominee and may thereafter exercise all
voting, corporate and other rights pertaining to such pledged stock and all
rights of conversion, exchange, subscription and any other rights, privileges or
options pertaining to such pledged stock.
SUBORDINATION TO NEW CREDIT AGREEMENT
Little Switzerland's primary source of liquidity is the senior
collateralized revolving and term loan credit facility with Congress Financial
Corporation, which allows Little Switzerland to borrow up to $12 million through
March 21, 2005. As a condition to entering into this credit facility, Congress
Financial
18
required Tiffany to enter into an Intercreditor and Subordination Agreement,
pursuant to which Tiffany agreed to subordinate its existing indebtedness from
Little Switzerland to any indebtedness that Little Switzerland might owe to
Congress Financial.
CONDUCT OF LITTLE SWITZERLAND'S BUSINESS IF THE OFFER IS NOT COMPLETED
If the Offer is not completed because the Majority of the Minority
Condition is not satisfied, or the Minimum Condition or any other condition is
not satisfied or waived, Tiffany and Purchaser expect that Little Switzerland's
current management will continue to operate the business of Little Switzerland
substantially as currently operated. In that event, Tiffany will re-evaluate the
role of Little Switzerland within the overall strategy being pursued by Tiffany.
In particular, Tiffany may consider:
- disposing of its interest in Little Switzerland either in the public
market or in private transactions;
- purchasing the Shares owned by the Holtzmans;
- engaging in open market or privately negotiated purchases of Shares to
increase its ownership of the Shares to at least 90% of the then
outstanding Shares and then effecting a short-form merger;
- proposing that Purchaser and Little Switzerland enter into a merger
agreement, which would require the approval of the Little Switzerland
Board (which probably would refer the matter to a committee of
independent directors) and the vote of Shares in favor of the merger
(which vote in favor of the Merger would require approval by a majority
of holders of the Shares);
- discontinuing the selling relationship between Little Switzerland and
Tiffany; or
- keeping outstanding the public minority interest in Little Switzerland.
If Tiffany and Purchaser were to pursue any of these alternatives, it might
take considerably longer for the public stockholders of Little Switzerland to
receive any consideration for their Shares (other than through sales in the open
market) than if they had tendered their Shares in the Offer. This could delay
further capital infusions into Little Switzerland. Any such transaction may
result in proceeds per Share to the public stockholders of Little Switzerland
that are more or less than or the same as the Offer price.
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THE OFFER
1. TERMS OF THE OFFER
Upon the terms and subject to the conditions set forth in the Offer
(including the terms and conditions set forth in Section 11, "The
Offer -- Certain Conditions of the Offer," and if the Offer is extended or
amended, the terms and conditions of such extension or amendment (the "Offer
Conditions")), Purchaser will accept for payment, and pay for, Shares validly
tendered on or prior to the Expiration Date (as defined herein) and not
withdrawn as permitted by Section 4, "The Offer -- Rights of Withdrawal." The
term "Expiration Date" means 5:00 p.m., New York City time, on September 13,
2002, unless Purchaser shall have extended the period for which the Offer is
open, in which event the term "Expiration Date" shall mean the latest time and
date on which the Offer, as so extended by Purchaser, shall expire. The period
until 5:00 p.m., New York City time, on September 13, 2002, as such period may
be extended is referred to as the "Offering Period."
Subject to the applicable rules and regulations of the SEC, Purchaser
expressly reserves the right, in its sole discretion, at any time or from time
to time, to extend the Offering Period by giving oral or written notice of such
extension to the Depositary. During any such extension of the Offering Period,
all Shares previously tendered and not withdrawn will remain subject to the
Offer, subject to the right of a tendering stockholder to withdraw such
stockholder's Shares. See Section 4, "The Offer -- Rights of Withdrawal."
Subject to the applicable regulations of the SEC, Purchaser also expressly
reserves the right, in its sole discretion, at any time or from time to time
prior to the Expiration Date:
- to delay acceptance for payment of or (regardless of whether such Shares
were theretofore accepted for payment) payment for, any tendered Shares,
or to terminate or amend the Offer as to any Shares not then paid for, on
the occurrence of any of the events specified in Section 11, "The
Offer -- Certain Conditions of the Offer;" and
- to waive any condition and to set forth or change any other term and
condition of the Offer except as otherwise specified in Section 11, "The
Offer -- Certain Conditions of the Offer;"
in each case, by giving oral or written notice of such delay, termination or
amendment to the Depositary and by making a public announcement thereof. If
Purchaser accepts any Shares for payment pursuant to the terms of the Offer, it
will accept for payment all Shares validly tendered during the Offering Period
and not withdrawn, and, on the terms and subject to the conditions of the Offer,
including but not limited to the Offer Conditions, it will promptly pay for all
Shares so accepted for payment and will immediately accept for payment and
promptly pay for all Shares as they are tendered in any Subsequent Offering
Period (as defined herein). Purchaser confirms that its reservation of the right
to delay payment for Shares that it has accepted for payment is limited by Rule
14e-1(c) under the Exchange Act, which requires that a tender offeror pay the
consideration offered or return the tendered securities promptly after the
termination or withdrawal of a tender offer.
Any extension, delay, termination or amendment of the Offer will be
followed as promptly as practicable by public announcement thereof. Any such
announcement in the case of an extension will be issued no later than 9:00 a.m.,
New York City time, on the next business day after the previously scheduled
Expiration Date. Subject to applicable law (including Rules 14d-4(d), 14d-6(c)
and 14e-1 under the Exchange Act, which requires that any material change in the
information published, sent or given to stockholders in connection with the
Offer be promptly disseminated to stockholders in a manner reasonably designed
to inform stockholders of such change) and without limiting the manner in which
Purchaser may choose to make any public announcement, Purchaser shall have no
obligation to publish, advertise or otherwise communicate any such public
announcement other than by issuing a press release or other announcement.
If, during the Offering Period, Purchaser, in its sole discretion, shall
decrease the percentage of Shares being sought or increase or decrease the
consideration offered to holders of Shares, such increase or decrease shall be
applicable to all holders whose Shares are accepted for payment pursuant to the
Offer.
20
If, at the time notice of any increase or decrease is first published, sent or
given to holders of Shares, the Offer is scheduled to expire at any time earlier
than the tenth business day from and including the date that such notice is
first so published, sent or given, the Offer will be extended until the
expiration of such ten business day period. Purchaser confirms that if it makes
a material change in the terms of the Offer or the information concerning the
Offer, or if it waives a material condition of the Offer, Purchaser will extend
the Offer to the extent required by Rules 14d-4(d), 14d-6(c) and 14e-1 under the
Exchange Act. The minimum period during which the Offer must remain open
following material changes in the terms of the Offer or information concerning
the Offer, other than a change in price or change in percentage of securities
sought, will depend upon the relevant facts and circumstances then existing,
including the relative materiality of the changed terms or information. In a
public release, the SEC has stated its views that an offer must remain open for
a minimum period of time following a material change in the terms of the Offer
and that waiver of a material condition is a material change in the terms of the
Offer. The release states that an offer should remain open for a minimum of five
business days from the date a material change is first published or sent or
given to security holders and that, if material changes are made with respect to
information that approaches the significance of price and percentage of Shares
sought, a minimum of ten business days may be required to allow for adequate
dissemination to stockholders and investor response. For purposes of the Offer,
a "business day" means any day other than a Saturday, Sunday or federal holiday
and consists of the time period from 12:01 a.m. through 12:00 midnight, New York
City time.
Purchaser may elect, in its sole discretion, to provide a subsequent
offering period of three to 20 business days (the "Subsequent Offering Period").
A Subsequent Offering Period, if one is provided, is not an extension of the
Offering Period. A Subsequent Offering Period would be an additional period of
time, following the expiration of the Offering Period, in which stockholders may
tender Shares not tendered during the Offering Period. If Purchaser decides to
provide for a Subsequent Offering Period, Purchaser will make an announcement to
that effect by issuing a press release no later than 9:00 a.m., New York City
time, on the next business day after the previously scheduled Expiration Date.
All Offer Conditions must be satisfied or waived prior to the commencement of
any Subsequent Offering Period. If Purchaser elects to provide a Subsequent
Offering Period, it expressly reserves the right, in its sole discretion, at any
time or from time to time, to extend the Subsequent Offering Period (not beyond
a total of 20 business days) by giving oral or written notice of such extension
to the Depositary. During a Subsequent Offering Period, tendering stockholders
will not have withdrawal rights. See Section 4, "The Offer -- Rights of
Withdrawal."
Tiffany has exercised its right as a stockholder of Little Switzerland to
request Little Switzerland's stockholder list and security position listings for
the purpose of disseminating the Offer to stockholders. Tiffany expects Little
Switzerland to provide Purchaser with Little Switzerland's stockholder list and
security position listings for the purpose of disseminating the Offer to holders
of Shares. Tiffany also may request from the Information Agent Little
Switzerland's stockholder list and security position listings for the purpose of
disseminating the Offer to stockholders. This Offer to Purchase and the related
Letter of Transmittal will be mailed to record holders of Shares and will be
furnished to brokers, banks and similar persons whose names, or the names of
whose nominees, appear on the stockholder list or, if applicable, who are listed
as participants in a clearing agency's security position listing for subsequent
transmittal to beneficial owners of Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES
Upon the terms and subject to the Offer Conditions (including if the Offer
is extended or amended, the terms and conditions of any such extension or
amendment), Purchaser will accept for payment, and will pay for, Shares validly
tendered and not withdrawn as promptly as practicable after the expiration of
the Offering Period. If there is a Subsequent Offering Period, all Shares
tendered during the Offering Period will be immediately accepted for payment and
promptly paid for following the expiration thereof and Shares tendered during a
Subsequent Offering Period will be immediately accepted for payment and paid for
as they are tendered. Subject to applicable rules of the SEC, Purchaser
expressly reserves the
21
right to delay acceptance for payment of or payment for Shares in order to
comply, in whole or in part, with any applicable law. See Section 11, "The
Offer -- Certain Conditions of the Offer." In all cases, payment for Shares
tendered and accepted for payment pursuant to the Offer will be made only after
timely receipt by the Depositary of:
- certificates evidencing such Shares (or a confirmation of a book-entry
transfer of such Shares (a "Book-Entry Confirmation") into the
Depositary's account at The Depository Trust Company (the "Book-Entry
Transfer Facility"));
- a properly completed and duly executed Letter of Transmittal, with any
required signature guarantees or, in the case of a book-entry transfer,
an Agent's Message (as defined herein) in lieu of the Letter of
Transmittal; and
- any other required documents.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment Shares validly tendered and not withdrawn as, if and when Purchaser
gives oral or written notice to the Depositary of its acceptance for payment of
such Shares pursuant to the Offer. Payment for Shares accepted for payment
pursuant to the Offer will be made by deposit of the purchase price therefor
with the Depositary, which will act as agent for the tendering stockholders for
the purpose of receiving payments from Purchaser and transmitting such payments
to the tendering stockholders. UNDER NO CIRCUMSTANCES WILL INTEREST ON THE
PURCHASE PRICE FOR TENDERED SHARES BE PAID, REGARDLESS OF ANY DELAY IN MAKING
SUCH PAYMENT.
If any tendered Shares are not accepted for payment pursuant to the terms
and conditions of the Offer for any reason, or if certificates are submitted for
more Shares than are tendered, certificates for such unpurchased Shares will be
returned, without expense to the tendering stockholder (or, in the case of
Shares tendered by book-entry transfer of such Shares into the Depositary's
account at the Book-Entry Transfer Facility pursuant to the procedures set forth
in Section 3, "The Offer -- Procedure for Tendering Shares," such Shares will be
credited to an account maintained with the Book-Entry Transfer Facility), as
soon as practicable following expiration or termination of the Offer.
Purchaser reserves the right to transfer or assign in whole or in part from
time to time to one or more of its affiliates the right to purchase all or any
portion of the Shares tendered pursuant to the Offer, but any such transfer or
assignment will not relieve Purchaser of its obligations under the Offer and
will in no way prejudice the rights of tendering stockholders to receive payment
for Shares validly tendered and accepted for payment pursuant to the Offer.
3. PROCEDURE FOR TENDERING SHARES
Valid Tender. To tender Shares pursuant to the Offer,
- a properly completed and duly executed Letter of Transmittal in
accordance with the instructions of the Letter of Transmittal, with any
required signature guarantees, certificates for Shares to be tendered and
any other documents required by the Letter of Transmittal, must be
received by the Depositary prior to the Expiration Date at one of its
addresses set forth on the back cover of this Offer to Purchase;
- the Shares must be delivered pursuant to the procedures for book-entry
transfer described below (and the Book-Entry Confirmation of such
delivery received by the Depositary, including an Agent's Message (as
defined herein) if the tendering stockholder has not delivered a Letter
of Transmittal) prior to the Expiration Date; or
- the tendering stockholder must comply with the guaranteed delivery
procedures set forth below.
The term "Agent's Message" means a message transmitted electronically by
the Book-Entry Transfer Facility to, and received by, the Depositary and forming
a part of a Book-Entry Confirmation, which states that the Book-Entry Transfer
Facility has received an express acknowledgment from the participant in the
Book-Entry Transfer Facility tendering the Shares which are the subject of such
Book-Entry Confirmation,
22
that such participant has received and agrees to be bound by the terms of the
Letter of Transmittal and that Purchaser may enforce such agreement against the
participant.
Book-Entry Delivery. The Depositary will establish accounts with respect
to the Shares at the Book-Entry Transfer Facility for purposes of the Offer
within two business days after the date of this Offer to Purchase. Any financial
institution that is a participant in the Book-Entry Transfer Facility's systems
may make book-entry transfer of Shares by causing the Book-Entry Transfer
Facility to transfer such Shares into the Depositary's account in accordance
with the Book-Entry Transfer Facility's procedures for such transfer. Although
delivery of Shares may be effected through book-entry transfer, either the
Letter of Transmittal, properly completed and duly executed, together with any
required signature guarantees, or an Agent's Message in lieu of the Letter of
Transmittal, and any other required documents, must be transmitted to and
received by the Depositary at one of its addresses set forth on the back cover
of this Offer to Purchase by the Expiration Date, or the tendering stockholder
must comply with the guaranteed delivery procedures described below. DELIVERY OF
DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH SUCH BOOK-ENTRY
TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
Signature Guarantees. Except as otherwise provided below, all signatures
on a Letter of Transmittal must be guaranteed by a financial institution
(including most commercial banks, savings and loan associations and brokerage
houses) that is a participant in the Security Transfer Agents Medallion Program,
the New York Stock Exchange Medallion Signature Guarantee Program or the Stock
Exchange Medallion Program or by any other "Eligible Guarantor Institution," as
such term is defined in Rule 17Ad-15 under the Exchange Act (each, an "Eligible
Institution"). Signatures on a Letter of Transmittal need not be guaranteed (i)
if the Letter of Transmittal is signed by the registered holders (which term,
for purposes of this section, includes any participant in the Book-Entry
Transfer Facility's systems whose name appears on a security position listing as
the owner of the Shares) of Shares tendered therewith and such registered holder
has not completed the box entitled "Special Payment Instructions" or the box
entitled "Special Delivery Instructions" on the Letter of Transmittal or (ii) if
such Shares are tendered for the account of an Eligible Institution. See
Instructions 1 and 5 of the Letter of Transmittal. If the certificates for
Shares are registered in the name of a person other than the signer of the
Letter of Transmittal, or if payment is to be made, or certificates for Shares
not tendered or not accepted for payment are to be returned, to a person other
than the registered holder of the certificates surrendered, then the tendered
certificates must be endorsed or accompanied by appropriate stock powers, in
either case signed exactly as the name or names of the registered holders or
owners appear on the certificates, with the signatures on the certificates or
stock powers guaranteed as described above. If the Letter of Transmittal or
stock powers are signed or any certificate is endorsed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or others
acting in a fiduciary or representative capacity, such persons should so
indicate when signing and, unless waived by Purchaser, proper evidence
satisfactory to Purchaser of their authority to so act must be submitted. See
Instructions 1 and 5 of the Letter of Transmittal.
Guaranteed Delivery. A stockholder who desires to tender Shares pursuant
to the Offer and whose certificates for Shares are not immediately available, or
who cannot comply with the procedure for book-entry transfer on a timely basis,
or who cannot deliver all required documents to the Depositary prior to the
Expiration Date, may tender such Shares by following all of the procedures set
forth below:
- such tender is made by or through an Eligible Institution;
- a properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form provided by Purchaser, is received by the
Depositary, as provided below, prior to the Expiration Date; and
- the certificates for all tendered Shares, in proper form for transfer (or
a Book-Entry Confirmation with respect to all such Shares), together with
a properly completed and duly executed Letter of Transmittal, with any
required signature guarantees (or, in the case of a book-entry transfer,
an Agent's Message in lieu of the Letter of Transmittal), and any other
required documents, are received by the Depositary within three trading
days after the date of execution of such Notice of
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Guaranteed Delivery. A "trading day" is any day on which the New York
Stock Exchange is open for business.
The Notice of Guaranteed Delivery may be delivered by hand or mail to the
Depositary or transmitted by telegram or facsimile transmission to the
Depositary and must include a guarantee by an Eligible Institution in the form
set forth in such Notice of Guaranteed Delivery.
THE METHOD OF DELIVERY OF THE SHARES, THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER
FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. SHARES WILL
BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN
THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS
BY MAIL, IT IS RECOMMENDED THAT THE STOCKHOLDER USE PROPERLY INSURED REGISTERED
MAIL WITH RETURN RECEIPT REQUESTED. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ENSURE TIMELY DELIVERY.
Other Requirements. Notwithstanding any provision hereof, payment for
Shares accepted for payment pursuant to the Offer will in all cases be made only
after timely receipt by the Depositary of (i) certificates evidencing such
Shares or a timely Book-Entry Confirmation with respect to such Shares into the
Depositary's account at the Book-Entry Transfer Facility, (ii) a Letter of
Transmittal, properly completed and duly executed, with any required signature
guarantees (or, in the case of a book-entry transfer, an Agent's Message in lieu
of the Letter of Transmittal) and (iii) any other documents required by the
Letter of Transmittal. Accordingly, tendering stockholders may be paid at
different times depending upon when certificates for Shares or Book-Entry
Confirmations with respect to Shares are actually received by the Depositary.
UNDER NO CIRCUMSTANCES WILL INTEREST ON THE PURCHASE PRICE OF THE TENDERED
SHARES BE PAID BY PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY
DELAY IN MAKING SUCH PAYMENT.
Tender Constitutes An Agreement. The valid tender of Shares pursuant to
one of the procedures described above will constitute a binding agreement
between the tendering stockholder and Purchaser upon the terms and subject to
the conditions of the Offer.
Appointment Of Proxies. By executing a Letter of Transmittal as set forth
above, the tendering stockholder irrevocably appoints designees of Purchaser as
such stockholder's attorneys-in-fact and proxies, each with full power of
substitution, to the full extent of such stockholder's rights with respect to
the Shares tendered by such stockholder and accepted for payment by Purchaser
(and with respect to any and all other Shares or other securities issued or
issuable in respect of such Shares on or after the date of this Offer to
Purchase). All such powers of attorney and proxies will be considered coupled
with an interest in the tendered Shares. Such appointment is effective when, and
only to the extent that, Purchaser deposits the payment for such Shares with the
Depositary. Upon the effectiveness of such appointment, all prior powers of
attorney, proxies and consents given by such stockholder will be revoked, and no
subsequent powers of attorney, proxies and consents may be given (and, if given,
will not be deemed effective). Purchaser's designees will be empowered, with
respect to the Shares for which the appointment is effective, to exercise all
voting and other rights of such stockholder as they, in their sole discretion,
may deem proper at any annual, special or adjourned meeting of the stockholders
of Little Switzerland, by written consent in lieu of any such meeting or
otherwise. Purchaser reserves the right to require that, in order for Shares to
be deemed validly tendered, immediately upon Purchaser's payment for such
Shares, Purchaser must be able to exercise full voting rights with respect to
such Shares.
Determination Of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of any tender of Shares
will be determined by Purchaser in its sole discretion, which determination will
be final and binding. Purchaser reserves the absolute right to reject any and
all tenders determined by it not to be in proper form or the acceptance for
payment of or payment for which may, in the opinion of Purchaser's counsel, be
unlawful. Purchaser also reserves the absolute right to waive any defect or
irregularity in the tender of any Shares of any particular stockholder whether
or not similar defects or irregularities are waived in the case of other
stockholders. No tender of Shares will be deemed to have been validly made until
all defects and irregularities relating thereto have been cured or waived to the
satisfaction of Purchaser. None of Purchaser, the Depositary, the Information
Agent, the Dealer Manager or any other person will be under any duty to give
notification of any defects or irregularities in
24
tenders or incur any liability for failure to give any such notification.
Purchaser's interpretation of the terms and conditions of the Offer (including
the Letter of Transmittal and Instructions thereto) will be final and binding.
Backup Withholding. In order to avoid "backup withholding" of U.S. federal
income tax on payments of cash pursuant to the Offer, a stockholder surrendering
Shares in the Offer must, unless an exemption applies, provide the Depositary
with his correct social security or other taxpayer identification number ("TIN")
on a Substitute Form W-9 and certify under penalties of perjury that such TIN is
correct and that he is not subject to backup withholding. If you do not provide
your correct TIN or fail to provide the certifications described above, the
Internal Revenue Service (the "IRS") may impose a penalty and payment of cash to
you pursuant to the Offer may be subject to backup withholding of U.S. federal
income tax at a rate of 30%. Backup withholding is not an additional tax.
Rather, the tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in an overpayment
of taxes, a refund may be obtained by filing a tax return with the IRS. All
stockholders who are U.S. persons surrendering Shares pursuant to the Offer
should complete and sign the main signature form and the Substitute Form W-9
included as part of the Letter of Transmittal to provide the information and
certification necessary to avoid backup withholding (unless an applicable
exemption exists and is proved in a manner satisfactory to Purchaser and the
Depositary). Certain stockholders (including, among others, all corporations and
certain foreign individuals and entities) are not subject to backup withholding.
Non-corporate foreign stockholders should complete and sign the main signature
form and a statement, signed under penalties of perjury, attesting to that
stockholder's exempt status (such forms may be obtained from the Depositary), in
order to avoid backup withholding. See Instruction 8 to the Letter of
Transmittal.
4. RIGHTS OF WITHDRAWAL
Tenders of Shares made pursuant to the Offer are irrevocable, except that
Shares tendered pursuant to the Offer may be withdrawn at any time prior to the
expiration of the Offering Period and, unless theretofore accepted for payment
by Purchaser pursuant to the Offer, also may be withdrawn at any time after
October 11, 2002. There will be no withdrawal rights during any Subsequent
Offering Period for Shares tendered during the Subsequent Offering Period.
For a withdrawal to be effective, a written, telegraphic, telex or
facsimile transmission notice of withdrawal must be timely received by the
Depositary at one of its addresses set forth on the back cover of this Offer to
Purchase. Any such notice of withdrawal must specify the name of the person
having tendered the Shares to be withdrawn, the number or amount of Shares to be
withdrawn and the names in which the certificate(s) evidencing the Shares to be
withdrawn are registered, if different from that of the person who tendered such
Shares. The signature(s) on the notice of withdrawal must be guaranteed by an
Eligible Institution, unless such Shares have been tendered for the account of
any Eligible Institution. If Shares have been tendered pursuant to the
procedures for book-entry tender as set forth in Section 3, "The
Offer -- Procedure for Tendering Shares," any notice of withdrawal must specify
the name and number of the account at the Book-Entry Transfer Facility to be
credited with the withdrawn Shares. If certificates for Shares to be withdrawn
have been delivered or otherwise identified to the Depositary, the name of the
registered holder and the serial numbers of the particular certificates
evidencing the Shares to be withdrawn also must be furnished to the Depositary
as aforesaid prior to the physical release of such certificates. All questions
as to the form and validity (including time of receipt) of any notice of
withdrawal will be determined by Purchaser, in its sole discretion, which
determination shall be final and binding. None of Tiffany, Purchaser, the
Depositary, the Information Agent, the Dealer Manager or any other person will
be under any duty to give notification of any defects or irregularities in any
notice of withdrawal or incur any liability for failure to give such
notification.
Withdrawals of tender for Shares may not be rescinded, and any Shares
properly withdrawn will be deemed not to have been validly tendered for purposes
of the Offer. Withdrawn Shares may be retendered by following one of the
procedures described in Section 3, "The Offer -- Procedure for Tendering
Shares," at any time prior to the Expiration Date or during a Subsequent
Offering Period if one is provided.
25
If Purchaser extends the Offer, is delayed in its acceptance for payment of
Shares, or is unable to accept for payment Shares pursuant to the Offer, for any
reason, then, without prejudice to Purchaser's rights under this Offer, the
Depositary, on behalf of Purchaser, nevertheless may retain tendered Shares, and
such Shares may not be withdrawn except to the extent that tendering
stockholders are entitled to withdrawal rights as set forth in this Section 4.
Any such delay will be accompanied by an extension of the Offer to the extent
required by law.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE OFFER
The following is a summary of certain United States federal income tax
consequences of the Offer and the Merger to holders whose Shares are purchased
pursuant to the Offer or whose Shares are converted into the right to receive
cash in the Merger. The summary is based on the provisions of the Internal
Revenue Code of 1986, as amended (the "Code"), applicable current and proposed
United States Treasury Regulations issued thereunder, judicial authority and
administrative rulings and practice, all of which are subject to change,
possibly with retroactive effect, at any time. The following statements and
conclusions, therefore, could be altered or modified.
The discussion does not consider holders of Shares:
- in whose hands Shares are not capital assets,
- who hold Shares as part of a hedge, "straddle," constructive sale or
conversion or other risk reduction arrangement,
- who received Shares upon conversion of securities or exercise of warrants
or other rights to acquire Shares or pursuant to the exercise of employee
stock options or otherwise as compensation or who hold restricted shares
received as compensation or
- who are in special tax situations (such as insurance companies,
tax-exempt organizations, financial institutions, United States
expatriates or non-U.S. persons).
Furthermore, the discussion does not consider the tax treatment of holders
who exercise appraisal rights in the Merger, nor does it cover any aspect of
state, local or foreign taxation or estate and gift taxation.
The United States federal income tax consequences set forth below are
included for general informational purposes only and are based upon current law.
The following summary does not purport to consider all aspects of United States
federal income taxation that might be relevant to stockholders of Little
Switzerland. Because individual circumstances may differ, each holder of Shares
should consult his own tax advisor to determine the applicability of the rules
discussed below to him and the particular tax effects of the Offer and the
Merger, including the application and effect of state, local and other tax laws.
The receipt of cash for Shares pursuant to the Offer or the Merger will be
a taxable transaction for United States federal income tax purposes and also may
be a taxable transaction under applicable state, local, foreign and other income
tax laws. In general, for United States federal income tax purposes, a holder of
Shares will recognize gain or loss equal to the difference between the holder's
adjusted tax basis in the Shares sold pursuant to the Offer or converted to cash
in the Merger and the amount of cash received therefor. Gain or loss must be
determined separately for each block of Shares (i.e., Shares acquired at the
same cost in a single transaction) sold pursuant to the Offer or converted to
cash in the Merger. If the Shares exchanged constitute capital assets in the
hands of the stockholder, gain or loss will be capital gain or loss. In general,
capital gains recognized by an individual will be subject to a maximum United
States federal income tax rate of 20% if the Shares were held for more than one
year on the date of sale (or, if applicable, the date of the Merger), and if
held for one year or less they will be subject to tax at ordinary income tax
rates. Certain limitations may apply on the use of capital losses.
Payments in connection with the Offer or the Merger may be subject to
"backup withholding" of U.S. federal income tax at a 30% rate. Backup
withholding generally applies if a holder (a) fails to furnish his TIN, (b)
furnishes an incorrect TIN, (c) fails properly to include a reportable interest
or dividend
26
payment on its United States federal income tax return or (d) under certain
circumstances, fails to provide a certified statement, signed under penalties of
perjury, that the TIN provided is his correct number and that he is not subject
to backup withholding. Backup withholding is not an additional tax but merely an
advance payment, which may be refunded to the extent it results in an
overpayment of tax. Certain persons generally are entitled to exemption from
backup withholding, including corporations, financial institutions and certain
foreign stockholders if such foreign stockholders submit a statement, signed
under penalties of perjury, attesting to their exempt status. Certain penalties
apply for failure to furnish correct information and for failure to include
reportable payments in income. Each stockholder should consult his own tax
advisor as to its qualification for exemption from backup withholding and the
procedure for obtaining such exemption.
All stockholders who are United States persons surrendering Shares pursuant
to the Offer should complete and sign the main signature form and the Substitute
Form W-9 included as part of the Letter of Transmittal to provide the
information and certification necessary to avoid backup withholding (unless an
applicable exemption exists and is proved in a manner satisfactory to Offeror
and the Depositary). Non-corporate foreign stockholders should complete and sign
the main signature form and a statement, signed under penalties of perjury,
attesting to that stockholder's exempt status (such forms can be obtained from
the Depositary), in order to avoid backup withholding.
THE INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND MAY NOT BE APPLICABLE TO STOCKHOLDERS IN SPECIAL SITUATIONS
SUCH AS STOCKHOLDERS WHO RECEIVED THEIR SHARES UPON THE EXERCISE OF EMPLOYEE
STOCK OPTIONS OR OTHERWISE AS COMPENSATION AND STOCKHOLDERS WHO ARE NOT UNITED
STATES PERSONS. STOCKHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT
TO THE SPECIFIC TAX CONSEQUENCES TO THEM OF THE OFFER AND THE MERGER, INCLUDING
THE APPLICATION AND EFFECT OF FEDERAL, STATE, LOCAL, FOREIGN OR OTHER TAX LAWS.
6. PRICE RANGE OF SHARES; DIVIDENDS
The Shares are listed and principally traded on the Over the Counter
Bulletin Board under the symbol "LSVI". The following table sets forth, for the
calendar quarters indicated, the high and low sales prices for the Shares on the
Over the Counter Bulletin Board based upon public sources:
<Table>
<Caption>
SALES PRICE
-------------
CALENDAR YEAR HIGH LOW
- ------------- ----- -----
2000:
First Quarter............................................. $1.19 $0.50
Second Quarter............................................ 1.50 0.22
Third Quarter............................................. 1.13 0.35
Fourth Quarter............................................ 0.91 0.50
2001:
First Quarter............................................. 1.56 0.68
Second Quarter............................................ 1.96 0.88
Third Quarter............................................. 2.55 1.02
Fourth Quarter............................................ 2.10 1.21
2002:
First Quarter............................................. 2.12 1.77
Second Quarter............................................ 1.95 1.65
Third Quarter through August 12, 2002..................... 1.77 1.25
</Table>
On August 12, 2002, the last full trading day prior to announcement of the
Offer, the reported closing price of the Shares on the Over the Counter Bulletin
Board was $1.39 per Share. On August 14, 2002, the last full trading day prior
to commencement of the Offer, the reported closing price of the Shares on the
27
Over the Counter Bulletin Board was $2.35 per Share. STOCKHOLDERS ARE URGED TO
OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES.
To date, Little Switzerland has not declared or paid cash dividends on the
Shares. According to Little Switzerland's most recent Form 10-Q, filed with the
SEC on April 9, 2002, it is highly unlikely Little Switzerland will pay
dividends on the Shares in the near future.
7. CERTAIN INFORMATION CONCERNING LITTLE SWITZERLAND
Except for information contained in "Special Factors -- Certain Additional
Little Switzerland Information," "Special Factors -- Tiffany Ownership and
Operating Relationships with Little Switzerland," "Special Factors -- Certain
Related Party Transactions" and "Special Factors -- Little Switzerland Financial
Projections," the information concerning Little Switzerland contained in this
Offer to Purchase has been taken from or based upon publicly available documents
and records on file with the SEC and other public sources and is qualified in
its entirety by reference thereto. Although Tiffany, International, Purchaser,
the Dealer Manager and the Information Agent have no knowledge that would
indicate that any statements contained herein based on such documents and
records are untrue, Tiffany, International, Purchaser, the Dealer Manager and
the Information Agent cannot take responsibility for the accuracy or
completeness of the information contained in such documents and records, or for
any failure by Little Switzerland to disclose events which may have occurred or
may affect the significance or accuracy of any such information but which are
unknown to Tiffany, International, Purchaser, the Dealer Manager or the
Information Agent.
General. Little Switzerland is a Delaware corporation with its principal
corporate offices located at 161-B Crown Bay, St. Thomas, U.S. Virgin Islands
00802. Its telephone number is (340) 776-2010. Little Switzerland has described
its business as follows:
Little Switzerland, Inc. is a specialty retailer of luxury items operating
18 distinctively-designed retail stores on five Caribbean islands (duty-free)
and Alaska. Little Switzerland markets a wide selection of high-quality products
including jewelry, watches, crystal, china, gifts and accessories. Little
Switzerland is the exclusive retailer of certain brand-name products on some
islands and in some areas of Alaska. Little Switzerland's customers are
primarily tourists from the United States. Little Switzerland was incorporated
in the state of Delaware on May 23, 1991. Little Switzerland Wholesale, Inc. and
Little Switzerland Holding, Inc. are wholly-owned subsidiaries of Little
Switzerland. As of May 26, 2001, there were ten subsidiaries of Little
Switzerland Holding, Inc. incorporated in various jurisdictions, of which six
subsidiaries are currently operating retail outlets. Little Switzerland
Wholesale, Inc. purchases and resells products to all of Little Switzerland's
stores.
Intent To Tender; Recommendation; Little Switzerland Opinion. As of the
date hereof:
- Purchaser, International and Tiffany do not know whether or not any
executive officer, director or affiliate of Little Switzerland intends to
tender Shares in the Offer (other than Mr. Seymour Holtzman, who is a
director on the Little Switzerland Board of Directors and who is
obligated to sell his Shares pursuant to the terms of the stock purchase
agreement entered into with International in connection with the Offer)
and the nominees of Tiffany who are members of the Board of Directors of
Little Switzerland, who intend to tender their Shares in the Offer;
- none of Little Switzerland, its executive officers, directors or
affiliates have made any public recommendation with respect to the Offer;
and
- Little Switzerland has not made public any appraisal, report or opinion
on the fairness of this transaction.
Available Information. Little Switzerland is subject to the information
and reporting requirements of the Exchange Act and in accordance therewith is
obligated to file reports and other information with the SEC relating to its
business, financial condition and other matters. Information, as of particular
dates, concerning Little Switzerland's directors and officers, their
remuneration, stock options granted to them,
28
the principal holders of Little Switzerland's securities, any material interests
of such persons in transactions with Little Switzerland and other matters is
required to be disclosed in proxy statements distributed to Little Switzerland's
stockholders and filed with the SEC. Such reports, proxy statements and other
information should be available for inspection at the public reference room at
the SEC's offices at 450 Fifth Street, N.W., Washington, D.C. 20549. Copies may
be obtained, by mail, upon payment of the SEC's customary charges, by writing to
its principal office at 450 Fifth Street, N.W., Judiciary Plaza, Washington,
D.C. 20549 and can be obtained electronically on the SEC's website at
http://www.sec.gov.
29
FINANCIAL INFORMATION
LITTLE SWITZERLAND
SELECTED CONSOLIDATED FINANCIAL INFORMATION
The following table sets forth summary historical consolidated financial
data for Little Switzerland as of and for the nine months ended February 23,
2002 and February 24, 2001 and as of and for each of the years ended May 26,
2001 and May 27, 2000.
This data and the comparative per share data set forth below are extracted
from, and should be read in conjunction with, the audited consolidated financial
statements and other financial information contained in Little Switzerland's
Annual Report on Form 10-K for the year ended May 26, 2001 and the unaudited
consolidated interim financial information contained in Little Switzerland's
Quarterly Reports on Form 10-Q for the quarterly periods ended February 23, 2002
and February 24, 2001, including the notes thereto. More comprehensive financial
information is included in such reports (including management's discussion and
analysis of financial condition and results of operations) and other documents
filed by Little Switzerland with the SEC, and the following summary is qualified
in its entirety by reference to such reports and other documents and all of the
financial information and notes contained therein. Copies of such reports and
other documents may be examined at or obtained from the SEC in the manner set
forth above. These documents are incorporated by reference in this Offer to
Purchase. See "-- Available Information."
<Table>
<Caption>
NINE MONTHS ENDED FOR THE YEARS ENDED
----------------------------- ---------------------------
FEB. 23, 2002 FEB. 24, 2001 MAY 26, 2001 MAY 27, 2000
------------- ------------- ------------ ------------
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS)
Income Statement Data:
Net Sales.................................. $43,667 $40,501 $56,276 $ 55,026
Cost of Sales.............................. 24,202 23,651 31,700 35,689
Selling, General and Administrative
Expenses................................ 22,703 22,276 32,452 32,657
Net Earnings (loss)........................ (3,778) (4,998) (7,600) (15,456)
Balance Sheet Data:
Current Assets............................. $35,609 $35,410 $38,021 $ 30,240
Total Assets............................... 42,573 43,651 45,333 42,479
Current Liabilities........................ 17,353 26,480 16,906 20,924
Total Liabilities.......................... 22,902 26,682 22,044 21,126
Total Stockholders' Equity................. 19,671 16,969 23,289 19,734
Other Data:
Cash Dividends Declared Per Common Share..... $ 0 $ 0 $ 0 $ 0
Average Shares of Common Stock Outstanding... 16,508 8,665 9,269 8,629
</Table>
Little Switzerland historically has not reported a ratio of earnings to
fixed charges or book value per Share.
30
COMPARATIVE PER SHARE DATA
The following table sets forth certain historical per Share data for Little
Switzerland. Basic and diluted earnings per common share is presented for the
nine months ended February 23, 2002 and February 24, 2001 and for each of the
years ended May 26, 2001 and May 27, 2000.
<Table>
<Caption>
NINE MONTHS ENDED FOR THE YEARS ENDED
------------------------------------- ---------------------------
FEBRUARY 23, 2002 FEBRUARY 24, 2001 MAY 26, 2001 MAY 27, 2000
----------------- ----------------- ------------ ------------
Basic and diluted net income (loss)
per share.......................... $(0.23) $(0.58) $(0.82) $(1.79)
</Table>
8. CERTAIN INFORMATION CONCERNING TIFFANY & CO., INTERNATIONAL AND PURCHASER
General. Purchaser is a Delaware corporation that currently does not own
any Shares. Purchaser is an indirect wholly-owned subsidiary of Tiffany, formed
to purchase the Shares in the Offer. The principal executive offices of
Purchaser are located at Tiffany & Co., 727 Fifth Avenue, New York, New York
10022. Its telephone number is (212) 755-8000.
International, the parent company of Purchaser, is incorporated under the
laws of the State of Delaware and has its principal executive offices at 727
Fifth Avenue, New York, New York 10022. Its telephone number is (212) 755-8000.
International owns 7,410,000 Shares of Little Switzerland, as shown in Schedule
B to this Offer. International is a holding company for Tiffany's international
retail operations.
Tiffany, the parent company of International, is incorporated under the
laws of the State of Delaware and has its principal executive offices at 727
Fifth Avenue, New York, New York 10022. Its telephone number is (212) 755-8000.
Tiffany, through its wholly-owned subsidiary, International, beneficially owns
7,410,000 Shares of Little Switzerland, as shown in Schedule B to this Offer.
Tiffany's principal product categories are fine jewelry, timepieces,
sterling silver goods, china, crystal, stationery, writing instruments,
fragrances and personal accessories. Tiffany offers an extensive selection of
Tiffany brand jewelry at a wide range of prices. In fiscal years 1999, 2000 and
2001, approximately 75%, 78% and 79%, respectively, of Tiffany's net sales were
attributable to jewelry.
None of Purchaser, Tiffany or International have made arrangements in
connection with the Offer to provide holders of Shares access to their corporate
files or to obtain counsel or appraisal services at their expense. For
discussion of appraisal rights, see Section 9, "The Offer -- Merger; Appraisal
Rights; Rule 13e-3."
The name, citizenship, business address, business telephone number, current
principal occupation (including the name, principle business and address of the
organization in which such occupation is conducted), and material positions held
during the past five years, of each of the directors and executive officers of
Tiffany, International and Purchaser are set forth in Schedule A to this Offer
to Purchase.
Except as set forth under "Special Factors" or on Schedule B hereto,
neither Purchaser, International nor Tiffany, nor, to the best of their
knowledge, any of the persons listed in Schedule A hereto nor any associate or
majority-owned subsidiary of Purchaser, International or Tiffany, has
effectuated any transactions in Shares in the past 60 days. In addition,
Schedule B hereto sets forth any acquisitions of Little Switzerland's securities
by Purchaser, Tiffany and International during the past two years.
Except as set forth under "Special Factors" or Schedule B hereto, there
have been no negotiations, transactions or material contacts during the past two
years between Purchaser, Tiffany or International, or, to the best of their
knowledge, any of the persons listed in Schedule A hereto, on the one hand, and
Little Switzerland or its affiliates, on the other hand, concerning a merger,
consolidation or acquisition, a tender offer or other acquisition of any class
of Little Switzerland's securities, an election of Little Switzerland's
directors, or a sale or other transfer of a material amount of assets of Little
Switzerland nor to the best knowledge of Tiffany, International and Purchaser
have there been any negotiations or material contacts between (i) any affiliates
of Little Switzerland or (ii) Little Switzerland or any of its affiliates and
any person not affiliated with Little Switzerland who would have a direct
interest in such matters. Except as
31
described under "Special Factors", neither Tiffany, International nor Purchaser,
nor, to the best of their knowledge, any of the persons listed in Schedule A
hereto, has since the date hereof had any transaction with Little Switzerland or
any of its executive officers, directors or affiliates that would require
disclosure under the rules and regulations of the SEC applicable to the Offer.
None of Purchaser, Tiffany or International has been convicted in a
criminal proceeding during the past five years (excluding traffic violations or
similar misdemeanors), nor has any of Purchaser, Tiffany or International been a
party to any judicial or administrative proceeding during the past five years
that resulted in a judgment, decree or final order enjoining the person from
future violations of, or prohibiting activities subject to, federal or state
securities laws or a finding of any violation of federal or state securities
laws.
Fairness. The Board of Directors of each of Tiffany, International and
Purchaser unanimously agreed to effect the Offer and the Merger.
Intent To Tender. As of the date hereof, Purchaser, Tiffany and
International do not know whether or not any of their executive officers or
directors, any person controlling either of them or any executive officer or
director of any corporation ultimately in charge of Purchaser, International or
Tiffany intends to tender Shares in the Offer, other than the nominees of
Tiffany who are members of the Board of Directors of Little Switzerland, who
intend to tender their Shares in the Offer.
Available Information. Additional information concerning Tiffany is set
forth in Tiffany's Annual Report on Form 10-K for the year ended January 31,
2002, and its quarterly report for the fiscal quarter ended April 30, 2002,
filed with the SEC on April 10, 2002 and June 10, 2002, respectively, which may
be obtained from the SEC in the manner set forth with respect to information
concerning Little Switzerland in Section 7, "The Offer -- Certain Information
Concerning Little Switzerland."
Forward-Looking Disclaimer. Statements Purchaser, International and
Tiffany may publish, including those in this Offer to Purchase, that are not
strictly historical are "forward-looking" statements. Although Purchaser,
International and Tiffany believe the expectations reflected in such
forward-looking statements are based on reasonable assumptions, they can give no
assurance that their expectations will be realized. Forward-looking statements
involve known and unknown risks which may cause Purchaser's, International's or
Tiffany's actual results and corporate developments to differ materially from
those expected. Factors that could cause results and developments to differ
materially from Purchaser's, International's or Tiffany's expectations include
federal and state regulatory developments, technology developments and capital
expenditures, competition within each business segment, cyclicality of the
markets for the products of a major segment, litigation, the effects of
acquisitions and divestitures, the ability of Tiffany to effect all of its
strategic initiatives as contemplated and other risks described from time to
time in Tiffany's SEC reports including quarterly reports on Form 10-Q, annual
reports on Form 10-K and reports on Form 8-K.
9. MERGER; APPRAISAL RIGHTS; RULE 13E-3
Merger. If the Offer is successful and Purchaser acquires Shares which,
together with Shares beneficially owned by Tiffany and its affiliates and Shares
acquired by Purchaser pursuant to the stock purchase agreement with the
Holtzmans, constitute at least 90% of the outstanding Shares, Tiffany currently
intends to transfer (and cause International to transfer) the Shares owned by
Tiffany and International to Purchaser to permit Purchaser to consummate a
"short-form" merger pursuant to Section 253 of the DGCL. Section 253 of the DGCL
provides that if Purchaser owns at least 90% of the outstanding Shares,
Purchaser may merge into Little Switzerland by executing, acknowledging and
filing, in accordance with Section 103 of the DGCL, a certificate of such
ownership and merger setting forth a copy of the resolution of Purchaser's Board
of Directors to so merge (including a statement of the terms and conditions of
the merger and the consideration to be paid by Purchaser upon surrender of
Shares not owned by Purchaser) and the date of its adoption. Under Section 253
of the DGCL, such a merger of Little Switzerland with Purchaser would not
require the approval or any other action on the part of the Board of Directors
or the stockholders of Little Switzerland. Purchaser intends to effect the
Merger
32
without a meeting of holders of Shares. The Merger is currently expected to
occur as soon as possible after completion of the Offer.
If, after the Offer is completed but prior to consummation of the Merger,
the aggregate beneficial ownership by Tiffany and its subsidiaries, including
Purchaser, of the outstanding Shares should fall below 90% due to the exercise
of outstanding options to acquire Shares or for any other reason, Purchaser may
decide to acquire additional Shares on the open market or in privately
negotiated transactions to the extent required for such ownership to equal or
exceed 90%. Any such purchases would be made at market prices or privately
negotiated prices at the time of purchase, which may be higher or lower than or
the same as the Offer price.
THIS OFFER DOES NOT CONSTITUTE A SOLICITATION OF PROXIES OR CONSENTS. ANY
SUCH SOLICITATION WHICH TIFFANY, INTERNATIONAL OR PURCHASER MIGHT MAKE WILL BE
MADE PURSUANT TO SEPARATE PROXY OR CONSENT SOLICITATION MATERIALS COMPLYING WITH
THE REQUIREMENTS OF SECTION 14(a) OF THE EXCHANGE ACT.
Appraisal Rights. Holders of Shares do not have appraisal rights in
connection with the Offer. However, if the Merger is consummated, each holder of
Shares who has neither voted in favor of the Merger nor consented thereto in
writing and who properly demands an appraisal of such holder's Shares under
Section 262 of the DGCL will be entitled, in lieu of receiving the Merger
consideration, to an appraisal by the Delaware Court of Chancery of the fair
value of such holder's Shares, exclusive of any element of value arising from
the accomplishment or expectation of the Merger, together with a fair rate of
interest, if any, to be paid from the date of the Merger. In determining such
fair value, the Court may consider all relevant factors. The value so determined
could be more or less than the consideration to be paid in the Offer and the
Merger. Any judicial determination of the fair value could be based upon
considerations other than or in addition to the market value of the Shares,
including, among other things, asset values and earning capacity.
Since holders of Shares do not have appraisal rights in connection with the
Offer, no demand for appraisal under Section 262 should be made at this time.
Not later than ten days following the effective date of the Merger, the
surviving corporation in the Merger will notify the record holders of Shares as
of the effective date of the Merger of the consummation of the Merger and of the
availability of and procedure for demanding appraisal rights.
If any holder of Shares who demands appraisal under Section 262 of the DGCL
fails to perfect, or effectively withdraws or loses his right to appraisal as
provided in the DGCL, such holder's Shares will be converted into the right to
receive the cash consideration offered in the Merger. A stockholder may withdraw
his demand for appraisal by delivery to Purchaser of a written withdrawal of his
demand for appraisal.
The foregoing discussion is not a complete statement of law pertaining to
appraisal rights under the DGCL and is qualified in its entirety by the full
text of Section 262 of the DGCL which is attached as Schedule C to this Offer to
Purchase.
FAILURE TO FOLLOW THE STEPS REQUIRED BY SECTION 262 OF THE DGCL FOR
PERFECTING APPRAISAL RIGHTS MAY RESULT IN THE LOSS OF SUCH RIGHTS.
Rule 13e-3. Because Tiffany may be deemed to be an affiliate of Little
Switzerland, the transactions contemplated herein constitute a "going private"
transaction under Rule 13e-3 under the Exchange Act. Rule 13e-3 requires, among
other things, that certain information relating to the fairness of the Offer and
the Merger and the consideration offered to minority stockholders be filed with
the SEC and disclosed to minority stockholders prior to consummation of the
Merger. Purchaser, International and Tiffany have provided such information in
this Offer to Purchase.
10. SOURCE AND AMOUNT OF FUNDS
Tiffany estimates that the total amount of funds required to purchase all
of the outstanding Shares in the Offer, other than those already owned by
Tiffany, but including the Shares to be acquired pursuant to
33
the stock purchase agreement with the Holtzmans, and to pay related fees and
expenses will be approximately $27.1 million. Tiffany will assure that Purchaser
will obtain these funds from cash on hand and working capital. The Offer is not
conditioned upon Tiffany & Co. or any of its subsidiaries obtaining any
financing.
11. CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer, Purchaser shall not be
required to accept for payment or pay for any Shares, may postpone the
acceptance for payment of or pay for tendered Shares, and may, in its sole
discretion, terminate or amend the Offer as to any Shares not then paid for if
(i) at the expiration of the Offering Period, the Minimum Condition has not been
satisfied, (ii) at the expiration of the Offering Period, the Majority of the
Minority Condition has not been satisfied or (iii) if on or after the date of
the stock purchase agreement entered into by and between the Purchaser and the
Holtzmans, and at or prior to the time of the expiration of the Offer:
(a) any necessary approval, permit, authorization or consent of any
Governmental Authority (as defined below) shall not have been obtained; or
(b) any consent from a third party shall not have been obtained, if
the failure to obtain that consent would reasonably be expected to have a
material adverse effect on the financial condition, results of operations,
business or prospects (a "Material Adverse Effect") of Little Switzerland;
or
(c) there shall be any action taken, or any statute, rule, regulation,
legislation, interpretation, judgment, order or injunction enacted,
enforced, promulgated, amended, issued or deemed applicable to the Offer,
by any Governmental Authority, that would reasonably be expected to,
directly or indirectly:
(i) make illegal or otherwise prohibit consummation of the Offer;
(ii) prohibit or materially limit the ownership or operation by
Tiffany, International or Purchaser of all or any material portion of
the business or assets of Little Switzerland or compel Tiffany,
International or Purchaser to dispose of or hold separately all or any
material portion of the business or assets of either Tiffany,
International or Purchaser or of Little Switzerland, or seek to impose
any material limitation on the ability of Tiffany, International or
Purchaser to conduct its business or own such assets, in any such case
which would reasonably be expected to have a Material Adverse Effect on
Tiffany, International, Purchaser or Little Switzerland, as the case may
be;
(iii) impose material limitations on the ability of Tiffany,
International or Purchaser to effectively acquire, hold or exercise full
rights of ownership of the Shares, including the right to vote any
Shares acquired by Tiffany, International or Purchaser pursuant to the
stock purchase agreement with the Holtzmans or the Offer on all matters
properly presented to Little Switzerland's shareholders;
(iv) require divestiture by Tiffany, International or Purchaser of
any Shares; or
(v) result in a Material Adverse Effect on Little Switzerland;
(d) there shall be instituted or pending any action or proceeding by
any Governmental Authority that would reasonably be expected to result in,
any of the consequences referred to in paragraph (c) above or by any third
party for which there is a substantial likelihood of resulting in any of
the consequences referred to in paragraph (c) above;
(e) there shall have occurred an event, change, occurrence or
development of a state of facts or circumstances having, or which would
reasonably be expected to have, a Material Adverse Effect on Little
Switzerland;
(f) it shall have been publicly disclosed or Purchaser shall have
otherwise learned that a tender or exchange offer for 10% or more of the
outstanding shares of Little Switzerland common stock shall
34
have been commenced or publicly proposed to be made by another Person (as
defined below), including Little Switzerland or its affiliates;
(g) (i) the Board of Directors of Little Switzerland or any committee
thereof shall have disapproved or recommended against the Offer or approved
or recommended any acquisition or proposal for the acquisition of Little
Switzerland common stock other than the Offer; (ii) any Person or group
shall have entered into a definitive agreement or an agreement in principle
with Little Switzerland with respect to a proposal for the acquisition of
Little Switzerland common stock other than the Offer, or (iii) the Board of
Directors of Little Switzerland or any committee thereof shall have
resolved to do any of the foregoing; or
(h) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on the New York Stock Exchange,
Inc. or The Nasdaq National Market for a period in excess of 24 hours
(excluding suspensions or limitations resulting solely from physical damage
or interference with such exchanges not related to market conditions), (ii)
the declaration of a banking moratorium or any suspension of payments,
whether or not mandatory, in respect of banks in the United States, (iii)
the commencement of a war, declared or undeclared, or other international
or national calamity directly or indirectly involving the United States,
(iv) any limitation, whether or not mandatory, by any Governmental
Authority that would reasonably be expected to have a Material Adverse
Effect on either Tiffany or Purchaser and on the extension of credit by
banks or other financial institutions, (v) from the date the Offer is
initiated through the Expiration Date, a decline of at least 15% in the Dow
Jones Industrial Average or the Standard & Poor's 500 Index for any one
week period, or (vi) in the case of any of the foregoing, existing at the
date the Offer is initiated, a material acceleration or worsening thereof.
The foregoing conditions are for the sole benefit of Purchaser,
International and Tiffany and may be asserted by Purchaser, International or
Tiffany regardless of the circumstances, including any action or inaction by
Purchaser, International or Tiffany, giving rise to any such conditions or may
be waived by Purchaser, International or Tiffany, in whole or in part, at any
time and from time to time, in the sole and absolute discretion of Tiffany,
International or Purchaser. The determination as to whether any condition has
occurred shall be in the sole and reasonable judgment of Purchaser,
International and Tiffany and will be final and binding on all parties. The
failure by Purchaser, International or Tiffany at any time to exercise any of
the foregoing rights shall not waive any such right and each such right shall be
an ongoing right that may be asserted at any time and from time to time.
In no event, will Tiffany, International and Purchaser purchase Shares in
the Offer unless the Majority of the Minority Condition has been satisfied. The
Majority of the Minority Condition will not be waived.
As used herein, the term "Applicable Law" means any domestic or foreign
law, rule or regulation, order, writ, judgment, injunction, decree,
determination or award.
As used herein, the term "Governmental Authority" means any nation or
government or multinational body, any state, agency, commission or other
political subdivision thereof or any entity (including a court) exercising
executive, legislative, judicial or administration functions of or pertaining to
government.
As used herein, the term "Person" means an individual, corporation, limited
liability company, partnership, joint venture, association, trust,
unincorporated organization or other entity.
Tiffany will make, or cause to be made, a public announcement of a material
change in, or waiver of, such conditions, and the Offer, in certain
circumstances, may be extended in connection with any such change or waiver. All
Offer Conditions must be satisfied or waived prior to the commencement of any
Subsequent Offering Period.
35
12. DIVIDENDS AND DISTRIBUTIONS
If, on or after the date hereof, Little Switzerland should (i) split,
combine or otherwise change the Shares or its capitalization, (ii) acquire
currently outstanding Shares or otherwise cause a reduction in the number of
outstanding Shares or (iii) issue or sell additional Shares, shares of any other
class of capital stock, other voting securities or any securities convertible
into, or rights, warrants or options, to acquire any of the foregoing, other
than Shares issued pursuant to the exercise of stock options outstanding as of
the date hereof, Purchaser, in its sole discretion and subject to the provisions
of Section 11, "The Offer -- Certain Conditions of the Offer," may make such
adjustments as it deems appropriate in the Offer price and other terms of the
Offer, including the number or type of securities offered to be purchased.
If, on or after the date hereof, Little Switzerland should declare or pay
any cash dividend on the Shares or other distribution on the Shares, or issue
with respect to the Shares any additional Shares, shares of any other class of
capital stock, other voting securities or any securities convertible into, or
rights, warrants or options, conditional or otherwise, to acquire, any of the
foregoing, payable or distributable to stockholders of record on a date prior to
the transfer of the Shares purchased pursuant to the Offer to Purchaser or its
nominee or transferee on Little Switzerland's stock transfer records:
- subject to the provisions of Section 11, "The Offer -- Certain Conditions
of the Offer," the Purchaser, in its sole discretion, may reduce the
Offer price and other terms of the Offer by the amount of any such cash
dividend or cash distribution and
- the whole of any such noncash dividend, distribution or issuance to be
received by the tendering stockholders (a) will be received and held by
the tendering stockholders for the account of Purchaser and will be
required to be promptly remitted and transferred by each tendering
stockholder to the Depositary for the account of Purchaser, accompanied
by appropriate documentation of transfer, or (b) at the direction of
Purchaser, will be exercised for the benefit of Purchaser, in which case
the proceeds of such exercise will promptly be remitted to Purchaser.
Pending such remittance and subject to applicable law, Purchaser will be
entitled to all rights and privileges as owner of any such noncash
dividend, distribution, issuance or proceeds and may withhold the entire
Offer price or deduct from the Offer price the amount or value thereof,
as determined by Purchaser in its sole discretion.
13. CERTAIN LEGAL MATTERS
General. Except as otherwise disclosed herein, based upon an examination
of publicly available filings with respect to Little Switzerland, Purchaser,
International and Tiffany are not aware of any licenses or other regulatory
permits that appear to be material to the business of Little Switzerland and
that might be adversely affected by the acquisition of Shares by Purchaser
pursuant to the Offer or of any approval or other action by any governmental,
administrative or regulatory agency or authority that would be required for the
acquisition or ownership of Shares by Purchaser pursuant to the Offer. Should
any such approval or other action be required, Purchaser currently contemplates
that such approval or action would be sought or taken. Purchaser does not intend
to delay the purchase of Shares tendered pursuant to the Offer pending the
outcome of any action or the receipt of any such approval. There can be no
assurance that any such approval or action, if needed, would be obtained without
substantial conditions, or that adverse consequences would not result to Little
Switzerland's or Purchaser's business or that certain parts of Little
Switzerland's or Purchaser's business might not have to be disposed of in the
event that such approvals were not obtained or such other actions were not
taken. Any of these developments could cause Purchaser to elect to terminate the
Offer without the purchase of the Shares thereunder. Purchaser's obligation
under the Offer to accept for payment and pay for Shares is subject to certain
conditions. See Section 11, "The Offer -- Certain Conditions of the Offer."
Antitrust Compliance. Under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (the "HSR Act"), certain acquisition transactions may
not be consummated unless certain information has been furnished to the
Antitrust Division of the Department of Justice and the Federal Trade Commission
and certain waiting period requirements have been satisfied. The purchase of
Shares
36
pursuant to the Offer is not subject to such requirements and the Offer is not a
reportable transaction under the HSR Act.
Section 203 Of The DGCL. In general, Section 203 of the DGCL is an
anti-takeover statute that prevents an "Interested Stockholder" (defined
generally as a person with 15% or more of a corporation's outstanding voting
stock) of a Delaware corporation from engaging in a "Business Combination"
(defined as a variety of transactions, including mergers) with such corporation
for three years following the date such person became an Interested Stockholder
unless certain conditions, such as approval from the board of directors or
owning at least 85% of the voting stock of the corporation prior to the Business
Combination, are met. Since the original purchase of Shares by Tiffany in the
May 1, 2001 transaction was approved by the Board of Directors of Little
Switzerland, Tiffany, International and Purchaser believe that the Section 203
restrictions do not apply to the Offer or the proposed Merger. For a description
of the May 1, 2001 transaction, see "Special Factors--Certain Related Party
Transactions."
State Takeover Laws. A number of states have adopted laws and regulations
applicable to offers to acquire securities of corporations that are incorporated
in those states or that have substantial assets, stockholders, principal
executive offices or principal places of business in those states. In Edgar v.
Mite Corporation, the Supreme Court of the United States held in 1982 that the
Illinois Business Takeover Statute, which made the takeover of certain
corporations more difficult, imposed a substantial burden on interstate commerce
and was therefore unconstitutional. In 1987, however, in CTS Corporation v.
Dynamics Corporation of America, the Supreme Court held that as a matter of
corporate law, and in particular, those laws concerning corporate governance, a
state may constitutionally disqualify an acquiror of "Control Shares" (ones
representing ownership in excess of certain voting power thresholds, e.g., 20%,
33% or 50%) of a corporation incorporated in its state and meeting certain other
jurisdictional requirements from exercising voting power with respect to those
shares without the approval of a majority of the disinterested stockholders.
Subsequently, in TLX Acquisition Corp. v. Telex Corp., a federal district court
in Oklahoma ruled that the Oklahoma statutes were unconstitutional insofar as
they apply to corporations incorporated outside Oklahoma, because they would
subject those corporations to inconsistent regulations. Similarly, in Tyson
Foods, Inc. v. McReynolds, a federal district court in Tennessee ruled that four
Tennessee takeover statutes were unconstitutional as applied to corporations
incorporated outside Tennessee. This decision was affirmed by the United State
Court of Appeals for the Sixth Circuit. In December 1988, a federal district
court in Florida held, in Grand Metropolitan PLC v. Butterworth, that the
provisions of the Florida Affiliated Transactions Act and Florida Control Share
Acquisition Act were unconstitutional as applied to corporations incorporated
outside of Florida.
Little Switzerland conducts business in Alaska and Florida, each of which
has enacted takeover laws, and outside the United States. Although Tiffany,
International and Purchaser believe that both Alaska's and Florida's takeover
laws do not apply to the Offer or the Merger, none of Tiffany, International or
Purchaser has determined whether any other state's takeover laws and regulations
will by their terms apply to the Offer or the Merger. Except as set forth above,
neither Tiffany, International nor Purchaser has recently attempted to comply
with any state takeover statute or regulation. Purchaser reserves the right to
challenge the applicability or validity of any state law purportedly applicable
to the Offer or the Merger. Nothing in this Offer to Purchase or any action
taken in connection with the Offer or the Merger is intended as a waiver of such
right. If it is asserted that any state takeover statute is applicable to the
Offer or the Merger and if an appropriate court does not determine that it is
inapplicable or invalid as applied to the Offer or the Merger, Purchaser might
be required to file certain information with, or to receive approvals from, the
relevant state authorities, and Purchaser might be unable to accept for payment
or pay for Shares tendered pursuant to the Offer, or be delayed in consummating
the Offer or the Merger. In such case, Purchaser may not be obliged to accept
for payment or pay for any Shares tendered pursuant to the Offer. See Section
11, "The Offer -- Certain Conditions of the Offer."
14. CERTAIN EFFECTS OF THE OFFER
Participation In Future Growth. If you tender your Shares in the Offer,
you will not have the opportunity to participate in the future earnings, profits
and growth of Little Switzerland and will not have
37
the right to vote on corporate matters relating to Little Switzerland. If the
Offer and the Merger are completed, Tiffany, as the ultimate parent company of
Little Switzerland, will indirectly own a 100% interest in the net book value
and net earnings of Little Switzerland and will benefit from any future increase
in the value of Little Switzerland. Similarly, Tiffany will bear the risk of any
decrease in the value of Little Switzerland, and you will not face the risk of a
decline in the value of Little Switzerland. Upon the completion of the Merger,
Tiffany's beneficial interest in Little Switzerland's net book value and net
loss would increase from approximately 45% to 100% and Little Switzerland would
no longer be a public company.
Market For Shares. The purchase of Shares by Purchaser pursuant to the
Offer will reduce the number of Shares that might otherwise trade publicly and
may reduce the number of holders of Shares, which could adversely affect the
liquidity and market value of the remaining Shares held by the public. Neither
Tiffany, International nor Purchaser can predict whether the reduction in the
number of Shares that might otherwise trade publicly would have an adverse or
beneficial effect on the market price for, or marketability of, the Shares or
whether such reduction would cause future market prices to be greater or less
than the price to be paid in the Offer.
Stock Quotation. The Shares are quoted on the Over the Counter Bulletin
Board. According to published guidelines of the Over the Counter Bulletin Board,
the Shares might no longer be eligible for quotation on the Over the Counter
Bulletin Board if, among other things, Little Switzerland no longer files
reports pursuant to Section 13 or Section 15(d) of the Exchange Act. If the
Shares were to cease to be quoted on the Over the Counter Bulletin Board, the
market for the Shares would be adversely affected.
Margin Regulations. The Shares are not presently "margin securities" under
the regulations of the Board of Governors of the Federal Reserve Board.
Exchange Act Registration. The Shares are currently registered under the
Exchange Act. The purchase of Shares pursuant to the Offer may result in the
Shares becoming eligible for deregistration under the Exchange Act. Registration
of the Shares may be terminated upon application by Little Switzerland to the
SEC if the Shares are not listed on a national securities exchange and there are
fewer than 300 holders of record of the Shares. Termination of registration of
the Shares under the Exchange Act would substantially reduce the information
required to be furnished by Little Switzerland to its stockholders and to the
SEC and would make certain provisions of the Exchange Act no longer applicable
to Little Switzerland, such as the short-swing profit recovery provisions of
Section 16(b) of the Exchange Act, the requirement of furnishing a proxy
statement pursuant to Section 14(a) of the Exchange Act in connection with
stockholders' meetings and the related requirement of furnishing an annual
report to stockholders, and the requirements of Rule 13e-3 under the Exchange
Act with respect to "going private" transactions. Furthermore, the ability of
"affiliates" of Little Switzerland and persons holding "restricted securities"
of Little Switzerland to dispose of such securities pursuant to Rule 144
promulgated under the Securities Act of 1933, as amended, may be impaired or
eliminated. If registration of the Shares under the Exchange Act were
terminated, the Shares would no longer be eligible for inclusion on the Over the
Counter Bulletin Board.
15. FEES AND EXPENSES
Except as set forth below, Purchaser will not pay any fees or commissions
to any broker, dealer or other person for soliciting tenders of Shares pursuant
to the Offer.
Tiffany has retained Lehman Brothers as financial advisor and Dealer
Manager in connection with the Offer. Tiffany has agreed to pay Lehman Brothers
a transaction fee of $600,000, a portion of which is contingent upon successful
completion of the Offer. Tiffany has also agreed to reimburse Lehman Brothers
for reasonable expenses incurred by Lehman Brothers and to indemnify Lehman
Brothers and certain related persons for certain liabilities that may arise out
of its engagement.
Tiffany has also retained Morrow & Co., Inc. to act as the Information
Agent in connection with the Offer. The Information Agent may contact holders of
Shares by mail, telephone, telex, telegraph and
38
personal interviews and may request brokers, dealers and other nominee
stockholders to forward materials relating to the Offer to beneficial owners of
Shares. The Information Agent will receive reasonable and customary compensation
for such services, plus reimbursement of out-of-pocket expenses, and Purchaser
will indemnify the Information Agent against certain liabilities and expenses in
connection with the Offer, including liabilities under the federal securities
laws.
Purchaser has retained Mellon Investor Services LLC to act as the
Depositary in connection with the Offer. Purchaser will pay the Depositary
reasonable and customary compensation for its services in connection with the
Offer, plus reimbursement for out-of-pocket expenses, and will indemnify the
Depositary against certain liabilities and expenses in connection therewith,
including liabilities under the federal securities laws. Brokers, dealers,
commercial banks and trust companies will be reimbursed by Purchaser for
customary mailing and handling expenses incurred by them in forwarding material
to their customers.
In addition, Little Switzerland will incur its own fees and expenses in
connection with the Offer.
The following is an estimate of the fees and expenses to be incurred by
Purchaser:
<Table>
Filing Fees................................................. $ 2,400
Financial Advisor's Fees and Expenses....................... 620,000
Accounting Fees and Expenses................................ 7,500
Depositary Fees............................................. 37,000
Information Agent Fees...................................... 10,000
Legal, Printing and Miscellaneous Fees and Expenses......... 313,100
--------
Total.................................................. $990,000
========
</Table>
16. MISCELLANEOUS
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the laws of such
jurisdiction. Purchaser may, however, in its sole discretion, take such action
as it may deem necessary to make the Offer in any such jurisdiction and extend
the Offer to holders of Shares in such jurisdiction.
Neither Purchaser nor Tiffany is aware of any jurisdiction in which the
making of the Offer or the acceptance of Shares in connection therewith would
not be in compliance with the laws of such jurisdiction.
Purchaser, International and Tiffany have filed with the SEC a Tender Offer
Statement on Schedule TO pursuant to Rule 14d-3 of the General Rules and
Regulations under the Exchange Act, furnishing certain additional information
with respect to the Offer, and may file amendments thereto. Such Statement
includes within it the information required by the SEC's Statement on Schedule
13E-3 relating to "going private" transactions. Such Statement and any
amendments thereto, including exhibits, may be examined and copies may be
obtained from the principal office of the SEC in Washington, D.C. in the manner
set forth in Section 7, "The Offer -- Certain Information Concerning Little
Switzerland."
39
No person has been authorized to give any information or make any
representation on behalf of Purchaser, International or Tiffany not contained in
this Offer to Purchase or in the Letter of Transmittal and, if given or made,
such information or representation must not be relied upon as having been
authorized.
TSAC CORP.
TIFFANY & CO.
TIFFANY & CO. INTERNATIONAL
August 15, 2002
40
SCHEDULE A
INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE
OFFICERS OF TIFFANY, INTERNATIONAL AND PURCHASER
The following persons are the executive officers and/or directors of
Tiffany, International and Purchaser as of the date of this Offer to Purchase.
To the best knowledge of Tiffany, International and Purchaser, none of these
persons has been convicted in a criminal proceeding during the past five years
(excluding traffic violations or similar misdemeanors), nor has any of these
persons been a party to any judicial or administrative proceeding during the
past five years that resulted in a judgment, decree or final order enjoining the
person from future violations of, or prohibiting activities subject to, federal
or state securities laws or a finding of any violation of federal or state
securities laws. The following tables set forth the name, business address,
present principal occupation, principal business and address of any corporation
or other organization in which the employment or occupation is conducted, and
material occupations, positions, offices or employment held within the past five
years of each director and executive officer of Tiffany, International and
Purchaser. Unless otherwise specified, each person listed below is a citizen of
the United States and has his or her principal business address at Tiffany &
Co., 600 Madison Avenue, New York, New York 10022 (telephone number (212)
755-8000).
TIFFANY & CO.
EXECUTIVE OFFICERS
<Table>
<Caption>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT AND FIVE-YEAR
NAME OFFICE(S) EMPLOYMENT HISTORY
- ---- --------- -------------------------------
William R. Chaney Director and Chairman of the Mr. Chaney, Chairman of Tiffany
Board -- Tiffany & Co.; since August 1984, joined
Chairman -- Tiffany and Tiffany in January 1980 as a
Company. member of its Board. From
August 1984 through January 31,
1999, he also served as Chief
Executive Officer of Tiffany.
Prior to 1984 he served as an
executive officer of Avon
Products Inc. Mr. Chaney also
serves on the board of
directors of The Bank of New
York, the Atlantic Mutual
Companies and Provident
Holdings, Inc. The Bank of New
York is Tiffany's principal
banking relationship, serving
as Administrative Agent and a
lender under Tiffany's
revolving credit facility and
as trustee of the Tiffany
Pension Plan.
Michael J. Kowalski Director, President and Chief Mr. Kowalski was appointed
Executive Officer -- Tiffany & President of Tiffany on January
Co.; Director, President and 18, 1996 and served as Chief
Chief Executive Operating Officer from January
Officer -- Tiffany and 1997 until his appointment as
Company; Director and Vice Chief Executive Officer on
President -- Judel Products February 1, 1999, succeeding
Corp.; Chairman -- Tiffany & William R. Chaney. He has
Co. Watch Center A.G.; served on Tiffany's Board
Director and
President -- Tiffany & Co.
</Table>
A-1
<Table>
<Caption>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT AND FIVE-YEAR
NAME OFFICE(S) EMPLOYMENT HISTORY
- ---- --------- -------------------------------
International; Director, of Directors since January
Chairman and Vice 1995. He previously served as
President -- Tiffany & Co. Executive Vice President of
Japan, Inc.; Director -- Tiffany from March 19, 1992,
Tiffany & Co. K.K.; with overall responsibility in
Director -- Tiffco Korea, the following areas:
Ltd.; Director -- Uptown merchandising, marketing,
Alliance (M) Sdn. Bhd.; advertising, public relations
Director -- Tiffany & Co. Pte. and product design. He has held
Ltd.; Director and a variety of merchandising
President -- The Tiffany & Co. management positions since
Foundation. joining Tiffany in 1983 as
Director of Financial Planning.
James E. Quinn Director and Vice Chairman -- Mr. Quinn joined Tiffany in
Tiffany & Co.; Director and July 1986 as Vice President of
Vice Chairman -- Tiffany and branch sales for Tiffany's
Company; Director -- Tiffany & corporate sales operations and
Co. International; Director has since had various
and President -- Tiffany & Co. responsibilities for sales
Mexico, S.A. de C.V.; management and operations. He
Director -- Tiffany & Co. was promoted to Executive Vice
Japan Inc.; President on March 19, 1992 and
Director -- Tiffany & Co. New assumed responsibility for
York Limited; Director -- retail and corporate sales for
Tiffany & Co. Italia S.p.A.; the Americas in 1994. In
Director -- Tiffany & Co. January 1995 he became a member
K.K.; Director -- Tiffany & of Tiffany's Board of Directors
Co. A.G.; Director -- Tiffany and in January 1998 he was
& Co. (UK); Director -- Sindat appointed Vice Chairman. He has
Limited. responsibility for worldwide
sales. Mr. Quinn is a member of
the board of directors of BNY
Hamilton Funds, Inc. and Mutual
of America Capital Management.
Mr. Quinn also serves on the
board of directors of Little
Switzerland.
Beth O. Canavan Executive Vice President -- Ms. Canavan joined Tiffany in
Tiffany & Co.; Executive Vice May 1987 as Director of New
President -- Tiffany and Store Development. She later
Company. held the positions of Vice
President, Retail Sales
Development in 1990, Vice
President and General Manager
of the New York Store in 1992
and Eastern Regional Vice
President in 1994. In 1997, she
assumed the position of Senior
Vice President for U.S. Retail
and in January 2000 she was
promoted to Executive Vice
President responsible for
retail sales activities in the
U.S. and Canada, retail store
expansion
</Table>
A-2
<Table>
<Caption>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT AND FIVE-YEAR
NAME OFFICE(S) EMPLOYMENT HISTORY
- ---- --------- -------------------------------
and customer service. In May
2001, Ms. Canavan also assumed
responsibility for direct sales
and business sales activities
in the U.S. and Canada.
James N. Fernandez Executive Vice President and Mr. Fernandez joined Tiffany in
Chief Financial Officer -- October 1983 and has held
Tiffany & Co.; Director, Vice various positions in financial
President and Chief Financial planning and management prior
Officer -- Tiffany & Co. ICT, to his appointment as Senior
Inc.; Director, Vice President Vice President -- Chief
and Chief Financial Officer -- Financial Officer in April
Tiffany & Co. International; 1989. In January 1998, he was
General Officer -- Tiffany & promoted to Executive Vice
Co. Watch Center A.G.; President -- Chief Financial
Director, Vice President and Officer, at which time his
Chief Financial responsibilities were expanded
Officer -- Tiffany & Co. Japan to include distribution in
Inc.; Director, Executive Vice addition to his
President and Chief Financial responsibilities for the
Officer -- Tiffany and accounting, treasury, investor
Company; Director, Vice relations, information
President and Chief Financial technology, financial planning
Officer -- Judel Products and internal audit functions.
Corp.; Statutory Mr. Fernandez serves on the
Auditor -- Tiffco Korea, Ltd.; board of directors of Aber
Statutory Auditor -- Uptown Diamond Corporation, a
Alliance (M) Sdn. Bhd.; publicly-traded company in
Director and Vice President -- which Tiffany holds a 14.7%
Tiffany & Co. Mexico, S.A. de equity interest. Aber is a 40%
C.V.; Director and Chief participant of the Diavik
Financial Officer -- Tiffany & Diamonds Project in Northwest
Co. (UK); Director -- Tiffany Canada.
(NJ) Inc.; Director and
Executive Vice
President -- The Tiffany & Co.
Foundation.
Victoria Berger-Gross Senior Vice President, Human Dr. Berger-Gross joined Tiffany
Resources -- Tiffany & Co.; in February 2001 as Senior Vice
Senior Vice President -- Human Resources.
President -- Tiffany and Prior to joining Tiffany, she
Company. served as Senior Vice President
& Director of Human Resources
at Lehman Brothers from May
2000, Senior Director -- Human
Resources at Bertelsmann A.G.'s
BMG Entertainment from March
1998 and Vice President --
Organizational Effectiveness at
Personnel Decisions
International from January
1990.
Patrick B. Dorsey Senior Vice President, General Mr. Dorsey joined Tiffany in
Counsel and Secretary -- July 1985 as General Counsel
Tiffany & Co.; Director, Vice and Secretary. Mr. Dorsey also
serves
</Table>
A-3
<Table>
<Caption>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT AND FIVE-YEAR
NAME OFFICE(S) EMPLOYMENT HISTORY
- ---- --------- -------------------------------
President and Secretary -- on the board of directors of
Tiffany & Co. ICT, Inc.; Little Switzerland.
Director, Vice President and
Secretary -- Tiffany & Co.
International; General
Officer -- Tiffany & Co. Watch
Center A.G.; Director, Vice
President and
Secretary -- Tiffany & Co.
Japan Inc.; Director, Senior
Vice President, Secretary and
General Counsel -- Tiffany and
Company; Director, Vice
President and
Secretary -- Judel Products
Corp.; Director -- Tiffco
Korea, Ltd.;
Director -- Uptown Alliance
(M) Sdn. Bhd.; Director, Vice
President and Secretary --
Tiffany & Co. Mexico, S.A. de
C.V.; Director -- Tiffany &
Co. (UK); Director and
Secretary -- Tiffany (NJ)
Inc.; Director and
Secretary -- The Tiffany & Co.
Foundation;
Director -- Tiffany & Co. NY
Limited; Director -- Tiffany &
Co. of New York Limited;
Director -- Tiffany & Co. Pte.
Ltd.; Director -- Tiffany &
Co. Pte. Ltd. (Malaysia).
Linda A. Hanson Senior Vice President, Ms. Hanson joined Tiffany in
Merchandising -- Tiffany & April 1990 as a management
Co.; Senior Vice associate. She assumed her
President -- Tiffany and current responsibilities in
Company. July 1997.
Fernanda M. Kellogg Senior Vice President, Public Ms. Kellogg joined Tiffany in
Relations -- Tiffany & Co.; October 1984 as Director of
Senior Vice Retail Marketing. She assumed
President -- Tiffany and her current responsibilities in
Company; Director and Vice January 1990.
President -- The Tiffany & Co.
Foundation.
Caroline D. Naggiar Senior Vice President, Ms. Naggiar joined Tiffany in
Marketing -- Tiffany & Co.; June 1997 as Vice President --
Senior Vice Marketing Communications. She
President -- Tiffany and assumed her current
Company. responsibilities in February
1998. Prior to joining Tiffany,
she served as Vice President --
Management Representative of
McCann-Erickson Advertising
from January 1993, where she
</Table>
A-4
<Table>
<Caption>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT AND FIVE-YEAR
NAME OFFICE(S) EMPLOYMENT HISTORY
- ---- --------- -------------------------------
was responsible for the Tiffany
account.
John S. Petterson Senior Vice President, Mr. Petterson joined Tiffany in
Operations -- Tiffany & Co. 1988 as a management associate.
He was promoted to Senior Vice
President -- Corporate Sales in
May 1995 and in February 2000
his responsibilities were
expanded to include Direct Mail
and the E-Commerce business. In
May 2001, Mr. Petterson assumed
the new role of Senior Vice
President -- Operations, with
responsibility for worldwide
distribution, customer service
and security activities.
</Table>
TIFFANY & CO.
DIRECTORS
<Table>
<Caption>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT AND FIVE-YEAR
NAME OFFICE(S) EMPLOYMENT HISTORY
- ---- --------- -------------------------------
William R. Chaney Director, Chairman of the Mr. Chaney, 69, is the Chairman
Board and Member of the of the Board of Directors.
Dividend Committee. Please refer to "Tiffany &
Co. -- Executive Officers" for
additional information
regarding Mr. Chaney's
employment history.
Rose Marie Bravo Director and Member of the Ms. Bravo, 51, is Worldwide
Burberrys Limited Compensation Committee, Stock Chief Executive of Burberry
Office of the Chief Option Committee and Limited and is a member of its
Executive 18-22 Haymarket Nominating Committee. Board of Directors. Ms. Bravo
London SW1Y 4DQ previously served as President
of Saks Fifth Avenue from 1992
to 1997. Ms. Bravo became a
director of Tiffany in October
1997 when she was selected by
the Board of Directors to fill
a newly created directorship.
Samuel L. Hayes III Director and Member of the Professor Hayes, 67, has been
Cumnock Hall 300, Audit Committee, Compensation the Jacob H. Schiff Professor
Harvard Business School Committee, Stock Option of Investment Banking at the
Boston, MA 02163 Committee and Nominating Harvard Business School since
Committee. 1975. In 1998, he accepted
emeritus status. He was elected
a director of Tiffany in 1984.
He also serves on the boards of
the Eaton Vance Group of Funds
and Telect, Inc.
</Table>
A-5
<Table>
<Caption>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT AND FIVE-YEAR
NAME OFFICE(S) EMPLOYMENT HISTORY
- ---- --------- -------------------------------
Abby F. Kohnstamm Director and Member of the Ms. Kohnstamm, 48, is the
IBM Corporation Compensation Committee, Stock Senior Vice President,
New Orchard Road, MD 335 Option Committee and Marketing of IBM Corporation.
Armonk, NY 10504 Nominating Committee. In this capacity, she has
overall responsibility for
marketing at IBM. She is also a
member of IBM's Executive
Committee. Prior to joining IBM
in June 1993, Ms. Kohnstamm
held a number of senior
marketing positions at American
Express. Ms. Kohnstamm also
serves on the Board of Trustees
of Tufts University, the Board
of Overseers at New York
University's Stern School of
Business and the Association of
National Advertisers board. She
became a director of Tiffany in
July 2001, when she was
selected by the Board of
Directors to replace a retiring
director. IBM Corporation and
its affiliated companies
provide data-processing and
communication hardware,
software and services to
Tiffany and purchase business
gifts from Tiffany. Tiffany
uses IBM products for many
important data-processing
functions.
Michael J. Kowalski Director and Member of the Mr. Kowalski, 50, is President
Dividend Committee. and Chief Executive Officer of
Tiffany. Please refer to
"Tiffany & Co. -- Executive
Officers" for additional
information regarding Mr.
Kowalski's employment history.
Charles K. Marquis Director and Member of the Mr. Marquis, 59, is a Senior
Audit Committee, Compensation Advisor to Investcorp
Committee, Stock Option International, Inc. From 1974
Committee and Nominating through 1998, he was a partner
Committee. in the law firm of Gibson, Dunn
& Crutcher LLP. He was elected
a director of Tiffany & Co. in
1984. Mr. Marquis also serves
on the Boards of Directors of
CSK Auto Corporation, Jostens,
Inc. and Werner Holding Co.
James E. Quinn Director and Member of the Mr. Quinn, 50, is Vice Chairman
Dividend Committee. of Tiffany, responsible for
sales
</Table>
A-6
<Table>
<Caption>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT AND FIVE-YEAR
NAME OFFICE(S) EMPLOYMENT HISTORY
- ---- --------- -------------------------------
throughout the world. He became
a director of Tiffany in
January 1995. Please refer to
"Tiffany & Co. -- Executive
Officers" for additional
information regarding Mr.
Quinn's employment history.
William A. Shutzer Director and Member of the Mr. Shutzer, 55, is a Managing
Lehman Brothers Inc. Audit Committee, Compensation Director of Lehman Brothers. He
399 Park Avenue Committee and Nominating previously served as a Partner
New York, NY 10022 Committee. in Thomas Weisel Partners LLC,
a merchant banking firm, from
1999 through 2000, as Executive
Vice President of ING Baring
Furman Selz LLC from 1998
through 1999, President of
Furman Selz Inc. from 1995
through 1997 and as a Managing
Director of Lehman Brothers and
its predecessors from 1978
through 1994. He was elected a
director of Tiffany in 1984.
Mr. Shutzer is also a member of
the Boards of Directors of INT
Media Group, Inc., Blount
International, Inc., Practice
Works, Inc., and RSI Holding
Corp. Lehman Brothers has
provided investment banking
services to Tiffany in the past
and continues to provide
financial advise to Tiffany.
</Table>
TIFFANY AND CO. INTERNATIONAL
DIRECTORS AND OFFICERS
<Table>
<Caption>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT AND FIVE-YEAR
NAME OFFICE(S) EMPLOYMENT HISTORY
- ---- --------- -------------------------------
Patrick B. Dorsey Director, Vice President and Mr. Dorsey became a director of
Secretary. International in January 1988.
Please refer to "Tiffany &
Co. -- Executive Officers" for
additional information
regarding Mr. Dorsey's
employment history.
James N. Fernandez Director, Vice President and Mr. Fernandez joined
Chief Financial Officer. International in July 1989.
Please refer to "Tiffany &
Co. -- Executive Officers" for
additional information
regarding Mr. Fernandez's
employment history.
</Table>
A-7
<Table>
<Caption>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT AND FIVE-YEAR
NAME OFFICE(S) EMPLOYMENT HISTORY
- ---- --------- -------------------------------
Michael J. Kowalski Director and President. Mr. Kowalski joined
International in May 1995.
Please refer to "Tiffany &
Co. -- Executive Officers" for
additional information
regarding Mr. Kowalski's
employment history.
James E. Quinn Director and Vice President. Mr. Quinn joined International
in May 1995. Please refer to
"Tiffany & Co. -- Executive
Officers" for additional
information regarding Mr.
Quinn's employment history.
Warren S. Feld Controller -- Tiffany & Co.; Mr. Feld joined International
Tiffany & Co. Vice President and in August 1997.
Finance Division Controller -- Tiffany and
15 Sylvan Way Company; Controller -- Tiffany
Parsippany, NJ 07054 & Co. ICT., Inc.;
Controller -- Tiffany & Co.
International; Controller --
Tiffany & Co. Japan, Inc.;
Controller -- Judel Products
Corp.; Controller -- Tiffany &
Co. Mexico, S.A. de C.V.;
President -- Tiffany (NJ) Inc.
Michael W. Connolly Treasurer. Mr. Connolly joined
Tiffany & Co. International in August 1997.
Finance Division
15 Sylvan Way
Parsippany, NJ 07054
</Table>
TSAC CORP.
DIRECTORS AND OFFICERS
<Table>
<Caption>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT AND FIVE-YEAR
NAME OFFICE(S) EMPLOYMENT HISTORY
- ---- --------- -------------------------------
Patrick B. Dorsey Director and Secretary and Mr. Dorsey became a director
Treasurer. and Secretary and Treasurer of
TSAC in June 2002. Please refer
to "Tiffany & Co. -- Executive
Officers" for additional
information regarding Mr.
Dorsey's employment history.
James N. Fernandez Director and Vice President. Mr. Fernandez became a director
and Vice President of TSAC in
June 2002. Please refer to
"Tiffany & Co. -- Executive
Officers" for additional
information regarding
</Table>
A-8
<Table>
<Caption>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT AND FIVE-YEAR
NAME OFFICE(S) EMPLOYMENT HISTORY
- ---- --------- -------------------------------
Mr. Fernandez's employment
history.
Michael J. Kowalski Director and Vice President. Mr. Kowalski became a director
and Vice President of TSAC in
June 2002. Please refer to
"Tiffany & Co. -- Executive
Officers" for additional
information regarding Mr.
Kowalski's employment history.
James E. Quinn Director and President. Mr. Quinn became a director and
President of TSAC in June 2002.
Please refer to "Tiffany &
Co. -- Executive Officers" for
additional information
regarding Mr. Quinn's
employment history.
</Table>
A-9
SCHEDULE B
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the current ownership of Shares by
Purchaser, International and Tiffany (including their respective directors and
executive officers).
<Table>
<Caption>
AMOUNT AND
NATURE OF PERCENTAGE OF
FILING PERSON(S) BENEFICIAL OWNER STOCK(1)
- ---------------- ------------------- -------------
Tiffany & Co. .............................................. 7,410,000(2) 44.3%
Tiffany & Co. International................................. 7,410,000 44.3%
TSAC Corp. ................................................. 0 0
James E. Quinn.............................................. 10,000(3) *
Patrick B. Dorsey........................................... 10,000(3) *
</Table>
- ---------------
* Less than 1%
(1) Based upon the latest information provided by Little Switzerland, that, as
of August 14, 2002, there were 16,721,972 Shares of Little Switzerland
common stock outstanding. Based also upon, and in accordance with,
information provided in Tiffany & Co.'s and International's most recent
Schedule 13D, dated as of May 10, 2001.
(2) Share ownership is based on Tiffany & Co.'s 100% ownership of Tiffany & Co.
International.
(3) Includes Shares which the named directors had the right to acquire through
the exercise of stock options within 60 days of August 14, 2002.
Transactions In Shares During The Past Sixty Days. Neither Purchaser nor
Tiffany & Co. has any knowledge of Share transactions effectuated in the past
sixty days by Tiffany & Co., International or Purchaser, any of their executive
officers or directors, any other Tiffany & Co. subsidiaries or affiliates, or
Little Switzerland or any pension, profit sharing or similar plan of Little
Switzerland or its affiliates.
Prior Share Purchases By Tiffany And Purchaser. In the past two years,
Tiffany and Purchaser have not acquired any securities of Little Switzerland,
except for Tiffany's May, 2001 equity investment in Little Switzerland in which
International purchased 7,410,000 newly issued unregistered Shares, which
represented approximately 45% of Little Switzerland's outstanding Shares, at an
aggregate cost of approximately $9.3 million. The purchase price per Share was
$1.25.
B-1
SCHEDULE C
EXCERPTS FROM THE GENERAL CORPORATION LAW OF THE
STATE OF DELAWARE RELATING TO THE RIGHTS OF
DISSENTING STOCKHOLDERS PURSUANT TO SECTION 262
262 APPRAISAL RIGHTS. -- (a) Any stockholder of a corporation of this State
who holds shares of stock on the date of the making of a demand pursuant to
subsection (d) of this section with respect to such shares, who continuously
holds such shares through the effective date of the merger or consolidation, who
has otherwise complied with subsection (d) of this section and who has neither
voted in favor of the merger or consolidation nor consented thereto in writing
pursuant to Section 228 of this title shall be entitled to an appraisal by the
Court of Chancery of the fair value of the stockholder's shares of stock under
the circumstances described in subsections (b) and (c) of this section. As used
in this section, the word "stockholder" means a holder of record of stock in a
stock corporation and also a member of record of a nonstock corporation; the
words "stock" and "share" mean and include what is ordinarily meant by those
words and also membership or membership interest of a member of a nonstock
corporation; and the words "depository receipt" mean a receipt or other
instrument issued by a depository representing an interest in one or more
shares, or fractions thereof, solely of stock of a corporation, which stock is
deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to Section 251 (other than a merger effected pursuant to
Section 251(g) of this title), Section 252, Section 254, Section 257, Section
258, Section 263 or Section 264 of this title:
(1) Provided, however, that no appraisal rights under this section
shall be available for the shares of any class or series of stock, which
stock, or depository receipts in respect thereof, at the record date fixed
to determine the stockholders entitled to receive notice of and to vote at
the meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or (ii) held
of record by more than 2,000 holders; and further provided that no
appraisal rights shall be available for any shares of stock of the
constituent corporation surviving a merger if the merger did not require
for its approval the vote of the stockholders of the surviving corporation
as provided in subsection (f) of Section 251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series
of stock of a constituent corporation if the holders thereof are required
by the terms of an agreement of merger or consolidation pursuant to
Sections 251, 252, 254, 257, 258, 263 and 264 of this title to accept for
such stock anything except:
a. Shares of stock of the corporation surviving or resulting from
such merger or consolidation, or depository receipts in respect thereof;
b. Shares of stock of any other corporation, or depository
receipts in respect thereof, which shares of stock (or depository
receipts in respect thereof) or depository receipts at the effective
date of the merger or consolidation will be either listed on a national
securities exchange or designated as a national market system security
on an interdealer quotation system by the National Association of
Securities Dealers, Inc. or held of record by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or
d. Any combination of the shares of stock, depository receipts and
cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a., b. and c. of this
paragraph.
C-1
(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under Section 253 of this title is not owned by
the parent corporation immediately prior to the merger, appraisal rights
shall be available for the shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets of
the corporation. If the certificate of incorporation contains such a provision,
the procedures of this section, including those set forth in subsections (d) and
(e) of this section, shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights
are provided under this section is to be submitted for approval at a
meeting of stockholders, the corporation, not less than 20 days prior to
the meeting, shall notify each of its stockholders who was such on the
record date for such meeting with respect to shares for which appraisal
rights are available pursuant to subsection (b) or (c) hereof that
appraisal rights are available for any or all of the shares of the
constituent corporations, and shall include in such notice a copy of this
section. Each stockholder electing to demand the appraisal of such
stockholder's shares shall deliver to the corporation, before the taking of
the vote on the merger or consolidation, a written demand for appraisal of
such stockholder's shares. Such demand will be sufficient if it reasonably
informs the corporation of the identity of the stockholder and that the
stockholder intends thereby to demand the appraisal of such stockholder's
shares. A proxy or vote against the merger or consolidation shall not
constitute such a demand. A stockholder electing to take such action must
do so by a separate written demand as herein provided. Within 10 days after
the effective date of such merger or consolidation, the surviving or
resulting corporation shall notify each stockholder of each constituent
corporation who has complied with this subsection and has not voted in
favor of or consented to the merger or consolidation of the date that the
merger or consolidation has become effective; or
(2) If the merger or consolidation was approved pursuant to section
228 or section 253 of this title, then, either a constituent corporation
before the effective date of the merger or consolidation, or the surviving
or resulting corporation within 10 days thereafter shall notify each of the
holders of any class or series of stock of such constituent corporation who
are entitled to appraisal rights of the approval of the merger or
consolidation and that appraisal rights are available for any or all shares
of such class or series of stock of such constituent corporation, and shall
include in such notice a copy of this section. Such notice may, and, if
given on or after the effective date of the merger or consolidation, shall,
also notify such stockholders of the effective date of the merger or
consolidation. Any stockholder entitled to appraisal rights may, within 20
days after the date of mailing of such notice, demand in writing from the
surviving or resulting corporation the appraisal of such holder's shares.
Such demand will be sufficient if it reasonably informs the corporation of
the identity of the stockholder and that the stockholder intends thereby to
demand the appraisal of such holder's shares. If such notice did not notify
stockholders of the effective date of the merger or consolidation, either
(i) each such constituent corporation shall send a second notice before the
effective date of the merger or consolidation notifying each of the holders
of any class or series of stock of such constituent corporation that are
entitled to appraisal rights of the effective date of the merger or
consolidation or (ii) the surviving or resulting corporation shall send
such a second notice to all such holders on or within 10 days after such
effective date; provided, however, that if such second notice is sent more
than 20 days following the sending of the first notice, such second notice
need only be sent to each stockholder who is entitled to appraisal rights
and who has demanded appraisal of such holder's shares in accordance with
this subsection. An affidavit of the secretary or assistant secretary or of
the transfer agent of the corporation that is required to give either
notice that such notice has been given shall, in the absence of fraud, be
prima facie evidence of the facts stated therein. For purposes of
determining the stockholders entitled to receive either notice, each
constituent corporation may fix, in advance, a record date that shall be
not more than 10 days prior to the date the notice is given,
C-2
provided, that if the notice is given on or after the effective date of the
merger or consolidation, the record date shall be such effective date. If
no record date is fixed and the notice is given prior to the effective
date, the record date shall be the close of business on the day next
preceding the day on which the notice is given.
(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any stockholder who has
complied with subsections (a) and (d) hereof and who is otherwise entitled to
appraisal rights, may file a petition in the Court of Chancery demanding a
determination of the value of the stock of all such stockholders.
Notwithstanding the foregoing, at any time within 60 days after the effective
date of the merger or consolidation, any stockholder shall have the right to
withdraw such stockholder's demand for appraisal and to accept the terms offered
upon the merger or consolidation. Within 120 days after the effective date of
the merger or consolidation, any stockholder who has complied with the
requirements of subsections (a) and (d) hereof, upon written request, shall be
entitled to receive from the corporation surviving the merger or resulting from
the consolidation a statement setting forth the aggregate number of shares not
voted in favor of the merger or consolidation and with respect to which demands
for appraisal have been received and the aggregate number of holders of such
shares. Such written statement shall be mailed to the stockholder within 10 days
after such stockholder's written request for such a statement is received by the
surviving or resulting corporation or within 10 days after expiration of the
period for delivery of demands for appraisal under subsection (d) hereof,
whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a
copy thereof shall be made upon the surviving or resulting corporation, which
shall within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the addresses
therein stated. Such notice shall also be given by 1 or more publications at
least 1 week before the day of the hearing, in a newspaper of general
circulation published in the City of Wilmington, Delaware or such publication as
the Court deems advisable. The forms of the notices by mail and by publication
shall be approved by the Court, and the costs thereof shall be borne by the
surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled to
appraisal rights. The Court may require the stockholders who have demanded an
appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as to
such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any element
of value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such fair value, the
Court shall take into account all relevant factors. In determining the fair rate
of interest, the Court may consider all relevant factors, including the rate of
interest which the surviving or resulting corporation would have had to pay to
borrow money during the pendency of the proceeding. Upon application by the
surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion, permit discovery
or other pretrial proceedings and may proceed to trial upon the appraisal prior
to the final determination of the stockholder entitled to an appraisal. Any
stockholder whose name appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section and who has submitted
such stockholder's certificates of stock to the Register in Chancery, if such is
required, may
C-3
participate fully in all proceedings until it is finally determined that such
stockholder is not entitled to appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such stockholder, in the case of
holders of uncertificated stock forthwith, and the case of holders of shares
represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded appraisal rights as provided in subsection (d) of
this section shall be entitled to vote such stock for any purpose or to receive
payment of dividends or other distributions on the stock (except dividends or
other distributions payable to stockholders of record at a date which is prior
to the effective date of the merger or consolidation); provided, however, that
if no petition for an appraisal shall be filed within the time provided in
subsection (e) of this section, or if such stockholder shall deliver to the
surviving or resulting corporation a written withdrawal of such stockholder's
demand for an appraisal and an acceptance of the merger or consolidation, either
within 60 days after the effective date of the merger or consolidation as
provided in subsection (e) of this section or thereafter with the written
approval of the corporation, then the right of such stockholder to an appraisal
shall cease. Notwithstanding the foregoing, no appraisal proceeding in the Court
of Chancery shall be dismissed as to any stockholder without the approval of the
Court, and such approval may be conditioned upon such terms as the Court deems
just.
(l) The shares of the surviving or resulting corporation to which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized and
unissued shares of the surviving or resulting corporation.
C-4
The Letter of Transmittal, certificates for the Shares and any other
required documents should be sent by each stockholder of Little Switzerland or
his or her broker, dealer, commercial bank, trust company or other nominee to
the Depositary as follows:
THE DEPOSITARY FOR THE OFFER IS:
MELLON INVESTOR SERVICES LLC
<Table>
<Caption>
BY MAIL: BY OVERNIGHT DELIVERY: BY HAND:
-------- ---------------------- --------
Mellon Investor Services LLC Mellon Investor Services LLC Mellon Investor Services LLC
Reorganization Department Reorganization Department Reorganization Department
PO Box 3301 85 Challenger Road 120 Broadway, 13th floor
South Hackensack, NJ 07606 Mail Stop -- Reorg New York, NY 10271
Ridgefield Park, NJ 07660
</Table>
FOR NOTICE OF GUARANTEED DELIVERY
BY FACSIMILE TRANSMISSION:
(201) 296-4293
TO CONFIRM FACSIMILE TRANSMISSION ONLY:
(201) 296-4860
FOR TELEPHONE ASSISTANCE:
(800) 777-3674
Questions or requests for assistance may be directed to the Information
Agent or the Dealer Manager at the addresses and telephone numbers listed below.
You may obtain additional copies of this Offer to Purchase, the Letter of
Transmittal and other Offer materials from the Information Agent as set forth
below, and they will be furnished promptly at the Purchaser's expense. You may
also contact your broker, dealer, commercial bank or trust company or other
nominee for assistance concerning the Offer.
The Information Agent for the Offer is:
MORROW & CO., INC.
445 Park Avenue, Fifth Floor
New York, New York 10022
E-mail: LSVI.info@morrowco.com
Banks and Brokerage Firms, Please Call: (800) 654-2468
STOCKHOLDERS, PLEASE CALL: (800) 607-0088
All Others Call Collect: (212) 754-8000
The Dealer Manager for the Offer is:
LEHMAN BROTHERS
745 Seventh Avenue
New York, New York 10019
Call Collect: (212) 526-3444 or (212) 526-2566