-----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, DUhKjXKJ/riKtrenmMjUwD3p6CDDEOVtMO+BEYFdAo8gpBil1a6d+o8ateC9eM/P cHbNSy3IphIk0vkvrhARDQ== 0000098246-06-000120.txt : 20060831 0000098246-06-000120.hdr.sgml : 20060831 20060831135907 ACCESSION NUMBER: 0000098246-06-000120 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20060731 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20060831 DATE AS OF CHANGE: 20060831 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: 061067887 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_083106.txt FORM 8_K 2Q EARNINGS RELEASE UNITED STATES 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: August 31, 2006 TIFFANY & CO. (Exact name of Registrant as specified in its charter) Delaware 1-9494 13-3228013 (State or other jurisdiction (Commission (I.R.S. Employer of incorporation) File Number) Identification No.) 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 Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 2.02. Results of Operations and Financial Condition. On August 31, 2006, Registrant issued a press release announcing its unaudited earnings and results of operations for the second quarter ended July 31, 2006. A copy of the August 31, 2006 press release is attached hereto as Exhibit 99.1 to this Form 8-K. The information in this Current Report on Form 8-K is being furnished pursuant to Item 2.02 Results of Operations and Financial Condition. In accordance with General Instruction B.2 of Form 8-K, the information in this report shall not be deemed "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), 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, as amended, or the Exchange Act, except as expressly stated by specific reference in such filing. Item 9.01. Financial Statements and Exhibits. (c) Exhibits 99.1 Press Release dated August 31, 2006. 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, General Counsel and Secretary Date: August 31, 2006 EXHIBIT INDEX Exhibit No. Description 99.1 Text of Press Release issued by Tiffany & Co., dated August 31, 2006 EX-99 2 ex99_1.txt EXHIBIT 99.1PRESS RELEASE 08-31-06 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 SECOND QUARTER RESULTS; --------------------------------------- COMPARABLE STORE SALES UP 5% IN U.S. AND 10% INTERNATIONALLY ------------------------------------------------------------ New York, N.Y., August 31, 2006 - Tiffany & Co. (NYSE: TIF) today reported results for its fiscal second quarter ended July 31, 2006. Net sales growth of 9% was driven by increases in U.S. and international comparable store sales. As expected, net earnings declined primarily due to a prior-year tax benefit. In the second quarter, net sales increased 9% to $574,940,000, compared with $526,701,000 in the prior year. On a constant-exchange-rate basis which excludes the effects of translating foreign-currency-denominated sales into U.S. dollars (see attached "Non-GAAP Measures" schedule), net sales increased 10% and worldwide comparable store sales rose 6%. Net earnings in the second quarter were $41,144,000, or $0.29 per diluted share, compared with $50,551,000, or $0.35 per diluted share. Earnings in the prior year included a tax benefit of $6,600,000, or $0.05 per diluted share, related to the repatriation provisions of the American Jobs Creation Act of 2004 ("AJCA"). Earnings before income taxes declined 4%. In the six-month period (first half) ended July 31, 2006, net sales of $1,114,181,000 were 7% higher than $1,036,602,000 a year ago. On a constant-exchange-rate basis, net sales increased 9% and worldwide comparable store sales rose 5%. First half net earnings of $84,286,000, or $0.59 per diluted share, compared with $90,609,000, or $0.62 per diluted share, in the prior year. Earnings in the prior year included AJCA tax benefits of $8,100,000, or $0.06 per diluted share. Earnings before income taxes increased 4%. Sales by channel of distribution were as follows: - ------------------------------------------------- o U.S. Retail sales increased 8% to $288,556,000 in the second quarter and 5% to $549,136,000 in the first half. Comparable store sales increased 5% in the quarter but declined in July (quarterly sales rose 5% in the New York flagship store and 4% in branch stores) and rose 2% in the first half (New York flagship store sales declined 1% and branch store sales rose 2%). Comparable store sales growth in 1 the quarter resulted from higher spending per transaction. The Company operated 60 TIFFANY & CO. stores in the U.S. at the end of the quarter. o International Retail sales increased 10% to $223,153,000 in the second quarter and 12% to $438,317,000 in the first half. On a constant-exchange-rate basis, sales rose 12% in the quarter and 16% in the first half due to 6% and 11% total retail sales growth in Japan and solid growth in most other countries; on that same basis, comparable international store sales increased 10% in the quarter and 13% in the first half, due to growth of: 2% in the quarter (but a decline in July) and 7% in the half in Japan; 27% and 24% in the Asia-Pacific region outside Japan; and 17% and 20% in Europe. The Company operated 97 TIFFANY & CO. international stores and boutiques at the end of the quarter. o Direct Marketing sales increased 18% to $35,742,000 in the second quarter and 11% to $65,699,000 in the first half. The increases in both periods were due to growth in the number of orders and in the average amount spent per order. o Other sales in the second quarter increased 4% to $27,489,000 and sales of $61,029,000 in the first half were equal to the prior year. LITTLE SWITZERLAND sales rose 10% and 3% in the respective periods. The Company continues to expand its IRIDESSE stores, which focus on pearl jewelry. Other financial highlights were as follows: - ------------------------------------------- o Gross profit as a percentage of net sales ("gross margin") was 55.1% in the second quarter versus 55.5% in the prior year due to increased product costs. Gross margin was 55.5% in the first half versus 54.7% a year ago due to a favorable shift in product sales mix, partly offset by increased product costs. The Company recorded LIFO inventory charges of $8,101,000 in the second quarter (versus $2,952,000 a year ago) and $9,467,000 in the first half (versus $4,169,000 in the prior year). o Selling, general and administrative ("SG&A") expenses rose 12% in the second quarter and 10% in the first half. As a percentage of net sales, SG&A expenses were 42.5% in the quarter (versus 41.4% a year ago) and 42.3% in the half (versus 41.1% in the prior year), with the increases largely reflecting higher store-related costs, as well as higher marketing-related costs in the first half. o Effective tax rates were 38.9% in the second quarter and 38.7% in the first half, compared with 28.0% and 31.5% in the prior year. The lower rates in the prior-year periods reflected the previously-mentioned AJCA tax benefits. o Net inventories at July 31, 2006 increased 16% from a year ago. This increase reflected inventories purchased or manufactured in anticipation of new store openings and expanded product assortments, higher precious metal costs and expanded internal manufacturing and diamond sourcing. 2 o The Company repurchased and retired 2,525,135 shares of its Common Stock in the second quarter at a total cost of $83,839,000, or an average cost of $33.20 per share. In the first half, the Company repurchased and retired 4,704,407 shares of its Common Stock at a total cost of $163,589,000, or an average cost of $34.77 per share. In a separate announcement today, the Company reported that its Board of Directors has extended the expiration date of its current repurchase program and authorized up to an additional $700 million for repurchases. Including this additional authorization, there is approximately $813 million available for future repurchases through December 2009. o At July 31, 2006, the Company's balance sheet included: cash and cash equivalents of $146,941,000 (versus $128,611,000 a year ago), short-term and long-term debt totaling $572,306,000 (versus $404,263,000 a year ago) and stockholders' equity of $1,760,551,000 (versus $1,693,975,000 a year ago). Total debt as a percentage of stockholders' equity was 33% at July 31, 2006 (versus 24% a year ago). Michael J. Kowalski, chairman and chief executive officer, said, "We anticipated these first half results due to above-average expense growth, but they do not reflect Tiffany's historical performance or earnings power. Our ongoing plans for store openings and new product introductions sustain our confidence in Tiffany's ability to achieve higher rates of growth over the long-term." He added, "Comparable store sales in August-to-date include a return to mid-single-digit growth in the U.S., double-digit growth in many international markets and a high-single-digit decline in Japan. For this third quarter, we are looking for a mid-single-digit increase in earnings before income taxes, and net earnings approximately equal to last year's 16 cents per diluted share which had benefited from a lower effective tax rate due to favorable reserve adjustments related to the expiration of certain statutory periods." "Our expectation for the full year calls for a low-double-digit increase in earnings before income taxes for 2006 and net earnings in a range of $1.77 - $1.82 per diluted share. This projection assumes: high-single-digit net sales growth, including mid-single-digit comparable store sales growth in the U.S. and low-single-digit growth in Japan along with greater increases in other international regions; gross margin approximately equal to the prior-year; and high-single-digit SG&A expense growth," Mr. Kowalski said. Today's Conference Call - ----------------------- The Company will host a conference call today at 8:30 a.m. (EST) to review these results and its outlook. Investors may listen to the call at www.tiffany.com (click on "About Tiffany," "Shareholder Information," "Conference Call") and www.streetevents.com. Next Scheduled Announcement - --------------------------- The Company anticipates reporting its third quarter results on November 29, 2006 with a conference call at 8:30 a.m. (EST) that day, to be broadcast at www.tiffany.com and 3 www.streetevents.com. To receive future notifications for conference calls and/or news release alerts, please register at www.tiffany.com (click on "About Tiffany," "Shareholder Information," "Calendar of Events" and "News by E-Mail"). Company Description - ------------------- Tiffany & Co. operates jewelry and specialty retail stores and manufactures products through its subsidiary corporations. Its principal subsidiary is Tiffany and Company. The Company operates TIFFANY & CO. retail stores and boutiques in the Americas, Asia-Pacific and Europe and engages in direct selling through Internet, catalog and business gift operations. Other operations include consolidated results from ventures operated under trademarks or tradenames other than TIFFANY & CO. For additional information, please visit www.tiffany.com or call our shareholder information line at 800-TIF-0110. This document contains certain "forward-looking" statements concerning the Company's objectives and expectations with respect to sales, store openings, gross margins, expenses, earnings, earnings per share and assets. Actual results might differ materially from those projected in the forward-looking statements. Information concerning risk factors that could cause actual results to differ materially is set forth in the Company's 2005 Annual Report on Form 10-K and in other 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. # # # 4 TIFFANY & CO. AND SUBSIDIARIES (Unaudited) NON-GAAP MEASURES - ----------------- The Company reports information in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"). Internally, management monitors the sales performance of its international stores and boutiques on a non-GAAP basis that eliminates the positive or negative effects that result from translating international sales into U.S. dollars ("constant-exchange-rate basis"). Management believes this constant-exchange-rate measure is a more representative assessment of the sales performance of its international stores and boutiques and provides better comparability between reporting periods. The Company's management does not, nor does it suggest that investors should, consider such non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. The Company presents such non-GAAP financial measures in reporting its financial results to provide investors with an additional tool to evaluate the Company's operating results. The following tables reconcile sales percentage increases (decreases), versus the prior year, from the GAAP to the non-GAAP basis:
Second Quarter 2006 vs. 2005 First Half 2006 vs. 2005 -------------------------------------------- ------------------------------------------ Trans- Constant- Trans- Constant- GAAP lation Exchange- GAAP lation Exchange- Reported Effect Rate Basis Reported Effect Rate Basis -------------- ------------- --------------- -------------- ----------- --------------- Net Sales: - ---------- Worldwide 9% (1%) 10% 7% (2%) 9% U.S. Retail 8% - 8% 5% - 5% Internatinal Retail 10% (2%) 12% 12% (4%) 16% Japan Retail 1% (5%) 6% 3% (8%) 11% Other Asia- Pacific 23% 2% 21% 21% - 21% Europe 19% 3% 16% 18% (3%) 21% Comparable Store Sales: - ---------------------- Worldwide 6% - 6% 4% (1%) 5% U.S. Retail 5% - 5% 2% - 2% International Retail 8% (2%) 10% 8% (5%) 13% Japan Retail (3%) (5%) 2% (1%) (8%) 7% Other Asia- Pacific 28% 1% 27% 24% - 24% Europe 20% 3% 17% 17% (3%) 20%
5 TIFFANY & CO. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited, in thousands, except per share amounts)
Three Months Six Months Ended July 31, Ended July 31, ------------------------------------ ------------------------------------- 2006 2005 2006 2005 -------------- -------------- -------------- --------------- Net sales $ 574,940 $ 526,701 $ 1,114,181 $ 1,036,602 Cost of sales 257,962 234,617 496,077 469,697 -------------- -------------- -------------- --------------- Gross profit 316,978 292,084 618,104 566,905 Selling, general and administrative expenses 244,342 218,016 471,221 426,526 -------------- -------------- -------------- --------------- Earnings from operations 72,636 74,068 146,883 140,379 Other expenses, net 5,307 3,858 9,282 8,064 -------------- -------------- -------------- --------------- Earnings before income taxes 67,329 70,210 137,601 132,315 Provision for income taxes 26,185 19,659 53,315 41,706 -------------- -------------- -------------- --------------- Net earnings $ 41,144 $ 50,551 $ 84,286 $ 90,609 ============== ============== ============== =============== Net earnings per share: Basic $ 0.30 $ 0.35 $ 0.60 $ 0.63 ============== ============== ============== =============== Diluted $ 0.29 $ 0.35 $ 0.59 $ 0.62 ============== ============== ============== =============== Weighted-average number of common shares: Basic 139,170 142,989 140,556 143,618 Diluted 141,177 144,930 142,896 145,533
6 TIFFANY & CO. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited, in thousands)
July 31, January 31, July 31, 2006 2006 2005 ----------------- ----------------- ------------------ ASSETS - ------ Current assets: Cash and cash equivalents $ 146,941 $ 393,609 $ 128,611 Accounts receivable, net 143,446 142,294 126,000 Inventories, net 1,236,995 1,060,164 1,066,371 Deferred income taxes 80,404 69,576 72,084 Prepaid expenses and other current assets 62,410 33,200 51,991 ------------- ------------- -------------- Total current assets 1,670,196 1,698,843 1,445,057 Property, plant and equipment, net 904,479 866,004 916,374 Other assets, net 212,351 212,425 139,237 ------------- ------------- -------------- $ 2,787,026 $ 2,777,272 $ 2,500,668 ============= ============= ============== LIABILITIES AND STOCKHOLDERS' EQUITY - ------------------------------------ Current liabilities: Short-term borrowings $ 142,215 $ 38,942 $ 22,966 Current portion of long-term debt 6,272 6,186 - Accounts payable and accrued liabilities 199,301 202,646 178,322 Income taxes payable 31,467 60,364 20,510 Merchandise and other customer credits 57,577 56,472 51,491 ------------- ------------- -------------- Total current liabilities 436,832 364,610 273,289 Long-term debt 423,819 426,548 381,297 Postretirement/employment benefit obligations 42,876 41,982 40,778 Deferred income taxes 935 - 9,790 Other long-term liabilities 122,013 113,219 101,539 Stockholders' equity 1,760,551 1,830,913 1,693,975 ------------- ------------- -------------- $ 2,787,026 $ 2,777,272 $ 2,500,668 ============= ============= ==============
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