-----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, Lmn6boK+iYaWMxMoxgMfHT7AKI6WeNtDL8iE208I8NULRNCReJJ6j5Va00U+opHM ZcAEM9iER0qSm8DtYMQHYg== 0000098246-09-000183.txt : 20091125 0000098246-09-000183.hdr.sgml : 20091125 20091125131427 ACCESSION NUMBER: 0000098246-09-000183 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20091125 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20091125 DATE AS OF CHANGE: 20091125 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: 091207491 BUSINESS ADDRESS: STREET 1: 727 FIFTH AVE CITY: NEW YORK STATE: NY ZIP: 10022 BUSINESS PHONE: 2122305321 MAIL ADDRESS: STREET 1: 727 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10022 8-K 1 form8k_112509.txt 8-K 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: November 25, 2009 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 November 25, 2009, Registrant issued a press release announcing its unaudited earnings and results of operations for the third quarter ended October 31, 2009. A copy of the November 25, 2009 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 November 25, 2009. 1 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/ James N. Fernandez __________________________________ James N. Fernandez Executive Vice President, Chief Financial Officer Date: November 25, 2009 2 EXHIBIT INDEX Exhibit No. Description 99.1 Text of Press Release issued by Tiffany & Co., dated November 25, 2009. EX-99 2 ex99_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 ITS THIRD QUARTER RESULTS; ------------------------------------------ SALES AND EARNINGS EXCEED EXPECTATIONS -------------------------------------- New York, N.Y., November 25, 2009 - Tiffany & Co. (NYSE: TIF) reported higher-than-expected net sales of $598 million and net earnings from continuing operations of $0.34 per diluted share in its third quarter that ended October 31, 2009. Management raised its sales and earnings outlook for the full year. Net sales of $598.2 million in the third quarter were 3% below the prior year. On a constant-exchange-rate basis, which excludes the effect of translating foreign-currency-denominated sales into U.S. dollars, worldwide net sales declined 5% and comparable store sales declined 6% (see attached "Non-GAAP Measures" schedule). In the nine months (year-to-date) ended October 31, 2009, net sales of $1.728 billion were 14% below the prior year. On a constant-exchange-rate basis, net sales and comparable store sales declined 13% and 15%. Michael J. Kowalski, chairman and chief executive officer, said, "We were pleased to see that the rate of sales declines in the U.S. lessened as the quarter progressed. At the same time, many countries in Asia-Pacific and Europe achieved considerably better-than-expected sales. These results, combined with ongoing expense restraint, contributed to earnings above our prior expectation." Net earnings from continuing operations in the third quarter were $43.3 million, or $0.34 per diluted share. This includes a $4.0 million charge related to a diamond sourcing agreement and a $5.6 million tax benefit which, together, were a benefit to net earnings from continuing operations of $0.01 per diluted share. Net earnings were $43.3 million, or $0.35 per diluted share. 1 In the prior year's third quarter, net earnings from continuing operations were $45.6 million, or $0.36 per diluted share. This included a $4.3 million pre-tax charge, or $0.03 per diluted share, related to a write-off (see Interest and Other expenses, net). Net earnings were $43.8 million, or $0.35 per diluted share. In the 2009 year-to-date, net earnings from continuing operations were $127.5 million, or $1.02 per diluted share. This included $11.2 million of tax benefits; non-recurring income of $4.4 million related to a loan recovery; and a $4.0 million charge related to a diamond sourcing agreement; these three items together were a benefit of $0.08 per diluted share. Net earnings were $124.5 million, or $1.00 per diluted share. In the first nine months of 2008, net earnings from continuing operations were $194.7 million, or $1.53 per diluted share, and net earnings were $188.9 million, or $1.49 per diluted share. This included the above-mentioned $4.3 million pre-tax charge related to a write-off. Financial results for the Iridesse subsidiary are classified as discontinued operations in the statement of earnings for the current and prior year periods. This change in classification began in the second quarter of 2009. Net sales by segment were as follows: - ------------------------------------- o In the Americas, sales of $303.5 million in the third quarter and $887.4 million in the year-to-date were 9% and 21% below prior year levels. Comparable U.S. store sales declined 10% in the third quarter (declined 5% in the month of October) and 25% in the year-to-date. Sales in the New York flagship store declined 8% and 27% while comparable U.S. branch store sales declined 11% and 24%. During the quarter, the Company opened stores in Roseville, CA and Seattle, WA. Combined Internet and catalog sales in the U.S. declined 9% and 11% in the quarter and year-to-date. o In the Asia-Pacific region, sales increased 10% to $225.8 million in the third quarter due to improved results in most countries. Sales of $639.2 million in the year-to-date were equal to last year. On a constant-exchange-rate basis, sales rose 2% in the third quarter and declined 3% in the year-to-date, and comparable store sales declined 3% and 6%. During the quarter, the Company opened a boutique in Seoul, Korea. 2 o In Europe, sales increased 12% to $65.0 million in the third quarter and sales of $188.9 million in the year-to-date were equal to the prior year. On a constant-exchange-rate basis, sales rose 16% in the third quarter and 15% in the year-to-date, and comparable store sales increased 9% and 6% due to growth in most countries. During the quarter, the Company opened a boutique in Manchester, England. o The Company operated 215 TIFFANY & CO. stores and boutiques at October 31, 2009 (90 in the Americas, 100 in Asia-Pacific and 25 in Europe), versus 204 locations a year ago (85 in the Americas, 96 in Asia-Pacific and 23 in Europe). o Other sales declined 81% to $3.9 million in the third quarter and 75% to $12.8 million in the year-to-date. A reduction in the Company's purchases of rough diamonds in response to soft consumer demand for polished diamonds has led to reduced wholesale sales of rough diamonds. The Company sells rough diamonds that do not meet its requirements. Other financial highlights were: - -------------------------------- o Gross margin (gross profit as a percentage of net sales) was 54.8% in the third quarter and 55.2% in the year-to-date, compared with 56.3% and 57.1% in the prior year. The declines were primarily due to higher product costs. o Selling, general and administrative (SG&A) expenses declined 2% in the third quarter (after a reported decline of 7% in last year's third quarter due to the Company's reduction in then anticipated management incentive compensation) and declined 11% in the year-to-date. Substantial savings were realized from reduced staffing and marketing costs in both periods, as well as lower variable costs in the year-to-date. o Interest and other expenses, net in the third quarter were below the prior year. The prior year included a $4.3 million write-off of an interest rate swap that the Company had entered into with Lehman Brothers Special Financing Inc., as well as foreign currency transaction losses. Interest and other expenses, net in the year-to-date were above the prior year primarily due to increased interest expense related to issuances of long-term debt over the past year. 3 o Effective income tax rates of 22.0% in the third quarter and 29.2% in the year-to-date compared with 32.1% and 35.8% in the prior year. Effective income tax rates in 2009 were affected by the recording of favorable reserve adjustments at the conclusion of certain tax audits and expiration of statutory periods; these adjustments benefited net earnings from continuing operations per diluted share by $0.04 in the quarter and $0.09 in the year-to-date. o Accounts receivable at October 31, 2009 were 8% below the prior year as a result of lower sales. o Net inventories at October 31, 2009 were 6% below the prior year and have declined 4% since the beginning of the fiscal year. This reduction is consistent with management's objective, which is to reduce inventories by a single-digit percentage in the full year. o Capital expenditures in the nine-month period were $46.9 million, compared with $108.5 million in the prior year. The lower spending reflected fewer store openings and other cost containment, and the Company expects capital expenditures of approximately $85 million for the full year. o Balance sheet liquidity at October 31, 2009 included: cash and cash equivalents of $374.9 million, versus $160.4 million a year ago, and total short-term borrowings and long-term debt of $753.0 million, versus $821.3 million a year ago. Mr. Kowalski added, "We believe that Tiffany has performed remarkably well despite the dramatic downturn in consumer spending. We have continued to invest in the business and have not compromised any of our brand principles. At the same time, we have taken the steps necessary to ensure healthy levels of profitability and liquidity. Looking forward, we remain confident in the long-term growth potential of Tiffany, driven by new store, market and product opportunities, the ability to realize market share gains in a changed competitive environment, and the growing appeal of our core brand values of genuine luxury and lasting value in a more discerning consumer environment." 4 2009 Outlook: - ------------- Management's outlook for the fourth quarter (based on assumptions that may or may not prove valid) is for a mid-single-digit percentage increase in worldwide sales. Total sales growth in November-to-date is tracking favorably to management's expectation, but results in December are most relevant to the Company's ability to achieve its outlook for the fourth quarter. For the full year, management now expects: (i) a worldwide sales decline of approximately 8%, including: (a) a low-teens percentage decline in the Americas, (b) the Asia-Pacific region equal to the prior year, (c) a low-single-digit percentage increase in Europe, and (d) a 60% decline in Other sales; (ii) a decline in the operating margin (when the prior year is adjusted to exclude one-time items) due to both a lower gross margin and the anticipated sales de-leverage effect on fixed costs, partly offset by savings tied to staff reductions and other cost-related initiatives; (iii) interest and other expenses, net of approximately $48 million; (iv) an effective income tax rate of approximately 31%; and (v) net earnings from continuing operations of $1.88 - $1.98 per diluted share (versus previous guidance of $1.65 - $1.75 per diluted share). Today's Conference Call - ----------------------- The Company will host a conference call today at 8:30 a.m. (Eastern Time) to review these actual results and its outlook. Investors may listen at http://investor.tiffany.com ("Events and Presentations"). Next Scheduled Announcement - --------------------------- The Company expects to report its sales results for the November-December holiday period on Tuesday, January 12, 2010 before the stock market opens. There will not be a conference call. To receive notifications of news releases, please register at http://investor.tiffany.com ("E-Mail Alerts"). Tiffany & Co. operates jewelry 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. 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, operating margin, earnings, inventories 5 and capital expenditures. 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 2008 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. # # # 6 TIFFANY & CO. AND SUBSIDIARIES (Unaudited) NON-GAAP MEASURES - ----------------- Net Sales - --------- The Company's reported sales reflect either a translation-related benefit from strengthening foreign currencies or a detriment from a strengthening U.S. dollar. The Company reports information in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"). Internally, management monitors its sales performance 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 basis provides a more representative assessment of the sales performance 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 table reconciles sales percentage increases (decreases) from the GAAP to the non-GAAP basis versus the previous year:
Third Quarter 2009 vs. 2008 Year-to-date 2009 vs. 2008 -------------------------------------------- -------------------------------------------- Constant- Constant- GAAP Translation Exchange- GAAP Translation Exchange- Reported Effect Rate Basis Reported Effect Rate Basis -------------------------------------------- -------------------------------------------- Net Sales: - ---------- Worldwide (3)% 2 % (5)% (14)% (1)% (13)% Americas (9)% (1)% (8)% (21)% (1)% (20)% U.S. (9)% - (9)% (23)% - (23)% Asia-Pacific 10 % 8 % 2 % - 3 % (3)% Japan 3 % 13 % (10)% (3)% 9 % (12)% Other Asia-Pacific 20 % 2 % 18 % 5 % (7)% 12 % Europe 12 % (4)% 16 % - (15)% 15 % Comparable Store Sales: - ----------------------- Worldwide (3)% 3 % (6)% (15)% - (15)% Americas (10)% - (10)% (24)% (1)% (23)% U.S. (10)% - (10)% (25)% - (25)% Asia-Pacific 5 % 8 % (3)% (3)% 3 % (6)% Japan - 13 % (13)% (3)% 9 % (12)% Other Asia-Pacific 10 % 1 % 9 % (3)% (6)% 3 % Europe 6 % (3)% 9 % (8)% (14)% 6 %
7 Net Earnings from Continuing Operations - --------------------------------------- The accompanying press release presents net earnings from continuing operations and highlights current-year and prior-year one-time items in the text. Management believes excluding such items presents the Company's third quarter and nine months results on a more comparable basis to the corresponding periods in the prior year, thereby providing investors with an additional perspective to analyze the results of operations of the Company at October 31, 2009. The following table reconciles GAAP net earnings from continuing operations and net earnings from continuing operations per diluted share ("EPS") to the non-GAAP net earnings from continuing operations and net earnings from continuing operations per diluted share, as adjusted:
Three Months Ended Three Months Ended October 31, 2009 October 31, 2008 --------------------------------------------------------------------------------- $ Diluted $ Diluted (in thousands, except per share amounts) (after tax) EPS (after tax) EPS - --------------------------------------------------------------------------------------------------------------------------- Net earnings from continuing $ 43,309 $ 0.34 $ 45,556 $ 0.36 operations, as reported Diamond sourcing agreement a 3,440 0.03 - - Tax benefit b (5,558) (0.04) - - Write-off of interest rate swap c - - 2,727 0.03 --------------------------------------------------------------------------------- Net earnings from continuing operations as adjusted $ 41,191 $ 0.33 $ 48,283 $ 0.39 =================================================================================
a On a pre-tax basis includes a $4,000,000 charge within SG&A for the three months ended October 31, 2009. b Includes $5,558,000 of tax benefits within the provision for income taxes for the three months ended October 31, 2009. c On a pre-tax basis includes a $4,300,000 charge within interest and other expenses, net for the three months ended October 31, 2008.
Nine Months Ended Nine Months Ended October 31, 2009 October 31, 2008 --------------------------------------------------------------------------------- $ Diluted $ Diluted (in thousands, except per share amounts) (after tax) EPS (after tax) EPS - --------------------------------------------------------------------------------------------------------------------------- Net earnings from continuing $ 127,469 $ 1.02 $ 194,742 $ 1.53 operations, as reported Diamond sourcing agreement a 3,440 0.03 - - Loan recovery a (2,676) (0.02) - - Tax benefit b (11,220) (0.09) - - Write-off of interest rate swap c - - 2,727 0.02 --------------------------------------------------------------------------------- Net earnings from continuing $ 117,013 $ 0.94 $ 197,469 $ 1.55 operations as adjusted =================================================================================
a On a pre-tax basis includes a charge of $4,000,000 tied to the termination of a diamond sourcing agreement and a benefit of $4,442,000 from a loan recovery, both within SG&A for the nine months ended October 31, 2009. b Includes $11,220,000 of tax benefits within the provision for income taxes for the nine months ended October 31, 2009. c On a pre-tax basis includes a $4,300,000 charge within interest and other expenses, net for the nine months ended October 31, 2008. 8 TIFFANY & CO. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited, in thousands, except per share amounts)
Three Months Ended October 31, Nine Months Ended October 31, ----------------------------------- --------------------------------- 2009 2008 2009 2008 ------------- ------------- ------------- ------------- Net sales $ 598,212 $ 616,152 $ 1,728,320 $ 2,011,266 Cost of sales 270,409 269,027 773,846 862,247 ------------- ------------- ------------- ------------- Gross profit 327,803 347,125 954,474 1,149,019 Selling, general and administrative expenses 260,986 265,622 738,589 826,501 ------------- ------------- ------------- ------------- Earnings from continuing operations 66,817 81,503 215,885 322,518 Interest and other expenses, net 11,326 14,449 35,898 19,294 ------------- ------------- ------------- ------------- Earnings from continuing operations before income taxes 55,491 67,054 179,987 303,224 Provision for income taxes 12,182 21,498 52,518 108,482 ------------- ------------- ------------- ------------- Net earnings from continuing operations 43,309 45,556 127,469 194,742 Net earnings (loss) from discontinued operations 30 (1,779) (3,013) (5,805) ------------- ------------- ------------- ------------- Net earnings $ 43,339 $ 43,777 $ 124,456 $ 188,937 ============= ============= ============= ============= Net earnings from continuing operations per share: Basic $ 0.35 $ 0.37 $ 1.03 $ 1.56 ============= ============= ============= ============= Diluted $ 0.34 $ 0.36 $ 1.02 $ 1.53 ============= ============= ============= ============= Net earnings per share: Basic $ 0.35 $ 0.35 $ 1.00 $ 1.51 ============= ============= ============= ============= Diluted $ 0.35 $ 0.35 $ 1.00 $ 1.49 ============= ============= ============= ============= Weighted-average number of common shares: Basic 124,202 123,399 124,095 125,190 Diluted 125,582 124,899 124,756 127,053
9 TIFFANY & CO. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited, in thousands)
October 31, January 31, October 31, 2009 2009 2008 ----------------- ----------------- ------------------ ASSETS - ------ Current assets: Cash and cash equivalents $ 374,871 $ 160,445 $ 160,376 Accounts receivable, net 150,895 164,447 164,269 Inventories, net 1,541,888 1,601,236 1,638,479 Deferred income taxes 12,521 13,640 33,069 Prepaid expenses and other current assets 126,400 108,966 70,375 ------------- ------------- -------------- Total current assets 2,206,575 2,048,734 2,066,568 Property, plant and equipment, net 694,063 741,048 738,287 Other assets, net 318,591 312,501 334,720 ------------- ------------- -------------- $ 3,219,229 $ 3,102,283 $ 3,139,575 ============= ============= ============== LIABILITIES AND STOCKHOLDERS' EQUITY - ------------------------------------ Current liabilities: Short-term borrowings $ 30,906 $ 242,966 $ 414,364 Current portion of long-term debt 163,890 40,426 100,682 Accounts payable and accrued liabilities 222,313 223,566 236,191 Income taxes payable 15,412 27,653 6,930 Merchandise and other customer credits 66,287 67,311 67,924 ------------- ------------- -------------- Total current liabilities 498,808 601,922 826,091 Long-term debt 558,207 425,412 306,226 Pension/postretirement benefit obligations 187,872 200,603 86,355 Other long-term liabilities 132,837 152,334 140,704 Deferred gains on sale-leasebacks 130,861 133,641 134,444 Stockholders' equity 1,710,644 1,588,371 1,645,755 ------------- ------------- -------------- $ 3,219,229 $ 3,102,283 $ 3,139,575 ============= ============= ==============
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