-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LMoWp/UA68AqCA0b5DpYoDVxDObbS/1sgCD3PPp/Fvw8hNQMFT7p1KB/QQn/rCbL CCJ9rXafW4NSD5BVZxECmA== 0000098246-04-000055.txt : 20040225 0000098246-04-000055.hdr.sgml : 20040225 20040225151351 ACCESSION NUMBER: 0000098246-04-000055 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20040131 ITEM INFORMATION: FILED AS OF DATE: 20040225 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TIFFANY & CO CENTRAL INDEX KEY: 0000098246 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-JEWELRY STORES [5944] IRS NUMBER: 133228013 STATE OF INCORPORATION: DE FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-09494 FILM NUMBER: 04627438 BUSINESS ADDRESS: STREET 1: 727 FIFTH AVE CITY: NEW YORK STATE: NY ZIP: 10022 BUSINESS PHONE: 2122305317 MAIL ADDRESS: STREET 1: 727 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10022 8-K 1 form8k_022504.txt FORM 8-K CURRENT REPORT SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------------- FORM 8-K CURRENT REPORT ----------------------- Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): February 25, 2004 TIFFANY & CO. (Exact name of Registrant as specified in its charter) Delaware 1-9494 13-3228013 (State or other jurisdiction of (Commission File Number) (I.R.S. Employer incorporation) Identification Number) 727 Fifth Avenue, New York, New York 10022 (Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 755-8000 Item 12. Results of Operations and Financial Condition. On February 25, 2004, Tiffany & Co. issued a press release announcing its unaudited earnings and results of operations for the three months and year ended January 31, 2004. The Company is furnishing a copy of the press release hereto as Exhibit 99.1. The information in this Current Report is being furnished pursuant to Item 12 Results of Operations and Financial Condition. In accordance with General Instruction B.6 of Form 8-K, the information in this report shall not be deemed "filed" for the purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, or the Exchange Act, except as expressly stated by specific reference in such filing. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. TIFFANY & CO. BY:/s/ Patrick B. Dorsey ____________________________________ Patrick B. Dorsey Senior Vice President, Secretary and General Counsel Date: February 25, 2004 EXHIBIT INDEX Exhibit No. Description 99.1 Text of Press Release issued by Tiffany & Co., dated February 25, 2004. EX-99.1 3 ex_99-1.txt PRESS RELEASE Exhibit 99.1 TIFFANY & CO. NEWS RELEASE Fifth Avenue & 57th Street Contacts: New York, N.Y. 10022 --------- James N. Fernandez (212)230-5315 Mark L. Aaron (212)230-5301 TIFFANY REPORTS STRONG FOURTH QUARTER GROWTH: --------------------------------------------- FULL YEAR 2003 WORLDWIDE SALES REACH $2 BILLION; ------------------------------------------------ COMPANY PROVIDES ITS DETAILED 2004 OUTLOOK ------------------------------------------ New York, February 25, 2004 - Tiffany & Co. (NYSE-TIF) announced today that its worldwide net sales rose 18% to $731,588,000 in the fourth quarter ended January 31, 2004, led by substantial growth in the U.S. as well as gains in most international markets. On a constant-exchange-rate basis that excludes the effect of translating local-currency-denominated sales into U.S. dollars, worldwide net sales in the fourth quarter increased 14% and comparable store sales rose 10%. Net earnings in the fourth quarter rose 24% to $110,476,000, or 74 cents per diluted share, versus $89,287,000, or 60 cents per diluted share, in the prior year. The Company's most recent expectation called for earnings of 68 - 71 cents per diluted share. In the full year ended January 31, 2004, net sales rose 17% to $2,000,045,000, versus $1,706,602,000. On a constant-exchange-rate basis, net sales increased 14% and worldwide comparable store sales rose 8%. Full year net earnings increased 13% to $215,517,000, or $1.45 per diluted share, versus $189,894,000, or $1.28 per diluted share, a year ago. Net earnings in the year ended January 31, 2003 included a non-recurring tax benefit of five cents per diluted share (see "Other Financial Highlights"). Michael J. Kowalski, chairman and chief executive officer, said, "We are pleased and encouraged to be concluding 2003 on a healthy note in most areas of our business. Tiffany has maintained its long-term commitment to selective expansion and offering extraordinary products. The benefits are clearly apparent." 1 Sales performance in Tiffany's four channels of distribution was as follows: - ---------------------------------------------------------------------------- o U.S. Retail sales, which represented 47% of 2003 net sales, rose 20% to $359,418,000 in the fourth quarter and 16% to $948,891,000 in the full year. Comparable store sales rose 17% in the fourth quarter (up 22% in Tiffany's New York flagship store and 15% in branch stores) and 12% in the year (up 10% in the flagship store and 12% in branch stores). Comparable store sales growth in the quarter and year resulted from increases in the average amount spent per transaction. In 2003, the Company opened new stores in Coral Gables, Walnut Creek and Palm Desert and converted a wholesale-trade location in Guam to a company-operated TIFFANY & CO. store. The Company now operates 51 TIFFANY & CO. stores in the U.S. o International Retail sales, representing 39% of 2003 net sales, rose 18% to $273,534,000 in the fourth quarter and 14% to $781,572,000 in the year. On a constant-exchange-rate basis, total International Retail sales rose 7% in the quarter and 6% in the year; on that basis by region, comparable retail store sales declined 7% in the quarter and 3% in the year in Japan (total retail sales declined 2% and rose 1% in Japan), increased 19% and 13% in other Asia-Pacific markets and rose 13% and 12% in Europe. Comparable store sales growth was also strong in Canada, Mexico and Brazil. In 2003, the Company had net additions of two retail locations in Japan and one each in Hong Kong, Korea, Mexico and Brazil. At year-end, the Company operated 90 TIFFANY & CO. stores in international markets. o Direct Marketing sales, accounting for 10% of 2003 net sales, increased 11% in the fourth quarter to $76,860,000 and 10% to $197,397,000 for the full year. Combined e-commerce and catalog sales rose 25% in the quarter and 23% in the year primarily due to increased numbers of orders. Business sales declined 15% in the quarter and 9% in the year as a result of the Company's previously-announced decision to discontinue selling employee service award programs and to leave that market by the end of 2003. o Specialty Retail sales increased 8% to $21,776,000 in the fourth quarter due to sales growth in LITTLE SWITZERLAND stores. Full year sales of $72,185,000 are not fully comparable to $24,124,000 in the prior year due to the Company's acquisition of Little Switzerland, Inc. in October 2002 and the opening of two TEMPLE ST. CLAIR stores in 2003. 2 Other Financial Highlights: - --------------------------- o Gross margin (gross profit as a percentage of net sales) was 59.5% in the fourth quarter and 57.9% in the full year, compared with 59.7% and 59.3% in the prior-year periods. The declines in both periods reflected, to varying degrees, changes in sales mix toward higher-priced, lower-margin diamond jewelry; the opening of an additional distribution center in the third quarter of 2003; costs related to the development of a rough-diamond sourcing and processing organization; LIFO charges of $2,852,000 in the quarter and $10,452,000 in the year, compared with charges of $665,000 and $1,165,000 in the prior-year periods, primarily due to higher precious metal costs; and the consolidation of Little Switzerland's sales in the full-year period. o Selling, general and administrative expenses ("SG&A") rose 18% in the fourth quarter and 16% in the full year. As a percentage of net sales, SG&A was 35.0% in the fourth quarter and 40.1% in the full year, versus 35.2% and 40.6% in the prior-year periods. The improvements were due to favorable leverage of fixed costs against increased sales. o The Company's effective tax rate was 37.5% in the fourth quarter and 37.1% in the full year, compared with 38.9% and 36.6% in the prior-year periods. The 2003 tax rates benefited from a favorable reserve adjustment related to the elimination of certain tax exposures. The annual 2002 tax rate was affected by the Company recognizing, in the third quarter of 2002, a non-recurring cumulative effect of prior periods' tax benefits provided by the Extraterritorial Income Exclusion Act of 2000. o The Company ended the year in a strong financial position. Net-debt leverage of 13% at January 31, 2004 compared with 14% a year ago. The Company's capital expenditures were approximately $275 million in 2003 compared with $220 million in 2002. o Net inventories at January 31, 2004 were 19% higher than the previous year-end. The majority of the increase was due to higher raw material and work-in-process inventories as a result of management's decision to expand internal manufacturing operations and rough-diamond sourcing. In addition, approximately one-quarter of the increase resulted from the translation effect of a weaker U.S. dollar. 3 o The Company did not repurchase any shares of its Common Stock in the fourth quarter. For the full year, the Company repurchased 200,000 shares of its Common Stock at a total cost of $4,610,000, or an average cost of $23.05 per share. Under its stock repurchase plan, which was recently extended and increased by the Board of Directors until November 2006, there remains approximately $116.5 million available for future repurchases. Outlook: - -------- Mr. Kowalski said, "Tiffany's institutional presence built over 167 years, its standards of excellence and its financial strength position the company well for continued success. The strength of our sales in the U.S. and many international markets is gratifying. However, while our engagement jewelry sales in Japan are increasing, we are addressing the challenge of declining silver jewelry sales by introducing new products which we believe will contribute to gradually improved results. Overall, we maintain a positive outlook and our expectations for 2004 call for 11%-13% growth in net sales and 12%-15% growth in net earnings." Specific underlying assumptions include: o An 11%-13% increase in net sales with comparable store sales increases of a high-single-digit percentage in the U.S. and low-single-digits in Japan, as well as healthy growth in most other international markets. From a seasonal and comparative perspective, U.S. comparable store sales growth is expected to be greater in the first half, while growth in Japan is expected to improve as the year progresses. The Company expects to continue to increase worldwide retail square footage of TIFFANY & CO. stores by at least 5% in 2004, including new stores already announced in North Palm Beach, Florida, Edina, Minnesota and London, England; additional locations will be announced when plans are finalized. o A slight increase in gross margin for the year, including a decline in the first half resulting from costs, not yet annualized, from the new distribution center. o A low-double-digit percentage increase in SG&A for the full year (with the rate of growth slightly higher in the first half), which would result, for the full year, in an improved ratio of SG&A as a percentage of net sales. o A mid-teens percentage increase in operating earnings. 4 o Other expenses of approximately $12-13 million. o A mid-teens percentage increase in earnings before income taxes. o An effective tax rate of approximately 38.5%. o A 12%-15% increase in net earnings, with increases in all quarters that reflect an accelerating rate of growth as the year progresses. Based on an assumption of a modest increase in average shares outstanding, this would result in earnings per diluted share in a range of $1.60 - $1.65. o Capital expenditures equal to approximately 7% of net sales. o Net inventories increasing at a somewhat higher rate than net sales growth as a result of strategic merchandising investments in addition to ongoing store expansion and product introductions. Mr. Kowalski concluded, "We have great opportunities to maintain our pace of growth in the TIFFANY & CO. brand, as well as to expand into new retail concepts under other brands, which we will develop with our established infrastructure and management expertise. Tiffany's competitive strengths will help us to further penetrate the vast markets we can potentially serve and create additional and lasting shareholder value." The Company will host a conference call today at 8:30 a.m. (EST) to review these results and its outlook. Interested parties may listen to a broadcast on the Internet at www.tiffany.com (click on "About Tiffany," "Shareholder Information," "Conference Call") and at www.streetevents.com. Tiffany & Co. is the internationally renowned jeweler and specialty retailer. Sales are made primarily through company-operated TIFFANY & CO. stores and boutiques in the Americas, Asia-Pacific and Europe. Direct Marketing includes Tiffany's Business Sales division, Internet and catalog sales. Specialty Retail primarily includes the retail sales made in LITTLE SWITZERLAND stores and also includes consolidated results from other ventures now operated or to be operated under non-TIFFANY & CO. trademarks or trade names. Additional information can be found on Tiffany's Web site, www.tiffany.com, and on its shareholder information line 800-TIF-0110. 5 The Company anticipates reporting its first quarter results on May 13, 2004 and conducting a conference call at 8:30 a.m. (EST) that day, to be broadcast at www.tiffany.com and www.streetevents.com. To receive future notifications for conference calls and/or news release alerts, interested parties may register at www.tiffany.com (click on "About Tiffany," "Shareholder Information," "Calendar of Events" and "News by E-Mail"). This press release contains certain "forward-looking" statements concerning expectations for sales, store openings, margins, earnings, inventories and capital expenditures. Actual results might differ materially from those projected in the forward-looking statements. Information concerning factors that could cause actual results to differ materially are set forth in Tiffany's 2002 Annual Report and in Form 10-K, 10-Q and 8-K Reports filed with the Securities and Exchange Commission. The Company undertakes no obligation to update or revise any forward-looking statements to reflect subsequent events or circumstances. # # # 6 TIFFANY & CO. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited, in thousands, except per share amounts)
Three months ended January 31, Years ended January 31, ----------------------------------- -------------------------------------- 2004 2003 2004 2003 ------------- ------------- --------------- --------------- Net sales $ 731,588 $ 619,013 $ 2,000,045 $ 1,706,602 Cost of sales 296,543 249,600 842,663 695,154 ------------- ------------- --------------- --------------- Gross profit 435,045 369,413 1,157,382 1,011,448 Selling, general and administrative expenses 256,163 217,773 801,863 692,251 ------------- ------------- --------------- --------------- Earnings from operations 178,882 151,640 355,519 319,197 Other expenses, net 2,138 5,508 12,834 19,560 ------------- ------------- --------------- --------------- Earnings before income taxes 176,744 146,132 342,685 299,637 Provision for income taxes 66,268 56,845 127,168 109,743 ------------- ------------- --------------- --------------- Net earnings $ 110,476 $ 89,287 $ 215,517 $ 189,894 ============= ============= =============== =============== Net earnings per share: Basic $ 0.75 $ 0.62 $ 1.48 $ 1.31 ============= ============= =============== =============== Diluted $ 0.74 $ 0.60 $ 1.45 $ 1.28 ============= ============= =============== =============== Weighted-average number of common shares: Basic 146,682 144,962 145,730 145,328 Diluted 149,795 147,804 148,472 148,591
7 TIFFANY & CO. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited, in thousands)
January 31, January 31, 2004 2003 ----------------- ------------------ ASSETS Current assets: Cash and cash equivalents $ 276,115 $ 156,197 Accounts receivable, net 131,990 113,061 Inventories, net 871,251 732,088 Deferred income taxes 45,043 44,380 Prepaid expenses and other current assets 23,683 24,662 -------------- -------------- Total current assets 1,348,082 1,070,388 Property, plant and equipment, net 885,092 677,630 Deferred income taxes - 6,595 Other assets, net 157,914 168,973 ------------- -------------- $ 2,391,088 $ 1,923,586 ============= ============== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Short-term borrowings $ 41,948 $ 52,552 Current portion of long-term debt 51,920 - Accounts payable and accrued liabilities 209,842 163,338 Income taxes payable 45,922 41,297 Merchandise and other customer credits 45,527 42,720 ------------- -------------- Total current liabilities 395,159 299,907 Long-term debt 392,991 297,107 Postretirement/employment benefit obligations 36,746 33,117 Deferred income taxes 22,397 - Other long-term liabilities 75,595 85,406 Stockholders' equity 1,468,200 1,208,049 ------------- -------------- $ 2,391,088 $ 1,923,586 ============= ==============
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