-----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, NYBy5BORSRHPr+shz6/ytoPDusl40LSILIK6C0EFC0ypx9wdP4OrXL7nY1JaujRE 7Ad17FDBGl6h3BZrHUzOCA== 0000098246-10-000058.txt : 20100322 0000098246-10-000058.hdr.sgml : 20100322 20100322141339 ACCESSION NUMBER: 0000098246-10-000058 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20100322 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20100322 DATE AS OF CHANGE: 20100322 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: 10696296 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_032210.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: March 22, 2010 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 March 22, 2010, Registrant issued a press release announcing its unaudited earnings and results of operations for the fourth quarter ended January 31, 2010. A copy of the March 22, 2010 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 March 22, 2010. 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/ Patrick B. Dorsey ------------------------------------------ Patrick B. Dorsey Senior Vice President, General Counsel and Secretary Date: March 22, 2010 2 EXHIBIT INDEX Exhibit No. Description 99.1 Press Release dated March 22, 2010 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 FOURTH QUARTER AND YEAR RESULTS; ------------------------------------------------ PROVIDES FINANCIAL OUTLOOK FOR 2010 ----------------------------------- New York, N.Y., March 22, 2010 - Tiffany & Co. (NYSE: TIF) reported today that worldwide sales rose 17% in its fourth quarter ended January 31, 2010. This increase reflected broad-based growth in the Americas, Asia-Pacific and European regions. Net earnings from continuing operations were $1.09 per diluted share in the quarter. Full year sales declined 5% to $2.7 billion and net earnings from continuing operations increased 15% to $2.12 per diluted share (earnings in both years included nonrecurring charges - see attached "Non-GAAP Measures" schedule). Management also introduced its financial objectives for 2010, which are enumerated in this news release. In the three months (fourth quarter) ended January 31, 2010: - ------------------------------------------------------------ o Net sales increased 17% to $981.4 million, compared with $837.6 million in last year's fourth quarter. On a constant-exchange-rate basis, which excludes the effect of translating foreign-currency-denominated sales into U.S. dollars, worldwide net sales rose 13% and comparable store sales rose 8% (see attached "Non-GAAP Measures" schedule). o Net earnings from continuing operations were $138.2 million, or $1.09 per diluted share, versus $37.4 million, or $0.30 per diluted share, in last year's fourth quarter. In last year's fourth quarter, the Company recorded nonrecurring items which, in total, reduced net earnings from continuing operations by $0.56 per diluted share. Net earnings were $140.4 million, or $1.10 per diluted share, versus $31.1 million, or $0.25 per diluted share, in last year's fourth quarter. 1 In the full year (fiscal 2009) ended January 31, 2010: - ------------------------------------------------------ o Net sales were $2.71 billion, or 5% below $2.85 billion in the prior year. On a constant-exchange-rate basis, worldwide net sales and comparable store sales declined 5% and 8%. o Net earnings from continuing operations were $265.7 million, or $2.12 per diluted share, compared with $232.2 million, or $1.84 per diluted share, in the prior year. In fiscal 2009, the Company recorded various nonrecurring items that benefited net earnings from continuing operations by $0.08 per diluted share. In fiscal 2008, the Company recorded nonrecurring items that reduced net earnings from continuing operations by $0.55 per diluted share. Net earnings were $264.8 million, or $2.11 per diluted share, versus $220.0 million, or $1.74 per diluted share, in 2008. Financial results for the Iridesse subsidiary are classified as discontinued operations for the current and prior-year periods. This change in classification began in the second quarter of 2009. Michael J. Kowalski, chairman and chief executive officer, said, "We were very pleased with the sales results in the fourth quarter which reflected growth in most countries, product categories and price points. Notwithstanding the global economic challenges over the past year, the decisive measures we took to control spending were successful and, combined with the considerable and growing international awareness of the TIFFANY & CO. brand, helped us to generate strong earnings and free cash flow." Net sales by segment were as follows: - ------------------------------------- o In the Americas, sales increased 14% to $523.5 million in the fourth quarter. Sales of $1.41 billion in the fiscal year were 11% below the prior year. Comparable U.S. store sales rose 11% in the fourth quarter and declined 15% in the fiscal year. Sales in the New York flagship store and comparable U.S. branch stores increased 22% and 8% in the fourth quarter, and declined 15% and 15% in the fiscal year. During the quarter, the Company opened a store in Las Vegas, NV. Combined Internet and catalog sales in the U.S. increased 16% in the quarter and declined 1% in the year. 2 o In the Asia-Pacific region, sales rose 14% to $318.0 million in the fourth quarter due to strong growth in all countries except Japan. Sales increased 4% to $957.2 million in the year. On a constant-exchange-rate basis, sales rose 7% in the fourth quarter and were unchanged in the year; comparable store sales increased 3% and declined 3% in those periods. During the quarter, the Company opened stores in Shenzhen, China and Melbourne, Australia. o In Europe, sales increased 29% to $122.9 million in the fourth quarter and 10% to $311.8 million in the year due to strong growth in most countries. On a constant-exchange-rate basis, sales rose 18% in the fourth quarter and 16% in the year; comparable store sales increased 14% and 9%. During the quarter, the Company opened a store in Amsterdam, the Netherlands and a second location in London's Heathrow Airport. o The Company operated 220 TIFFANY & CO. stores and boutiques at January 31, 2010 (91 in the Americas, 102 in Asia-Pacific and 27 in Europe), versus 206 locations a year ago (86 in the Americas, 96 in Asia-Pacific and 24 in Europe). o Other sales were $17.1 million in the fourth quarter versus $3.7 million in the prior year, and in the full year were $29.9 million versus $55.6 million in the prior year. The changes in both periods were affected by the levels of wholesale sales of rough diamonds. Other financial highlights were: - -------------------------------- o Gross margin (gross profit as a percentage of net sales) declined to 58.7% in the fourth quarter (versus 59.4% in the prior year) due to increased wholesale sales of rough diamonds that generate minimal, if any, profit. Gross margin declined to 56.5% in the year (versus 57.8% last year) primarily due to higher product costs. o Selling, general and administrative (SG&A) expenses increased 7% in the fourth quarter, primarily due to management incentive compensation expense related to improved financial performance. Such compensation was curtailed last year. SG&A expenses declined 6% in the year, due to substantial savings realized from reductions in staffing and marketing costs. 3 o Interest and other expenses, net in the fourth quarter and year were above the prior year primarily due to increased interest expense related to issuances of long-term debt over the past year. o Effective income tax rates were 34.2% in the fourth quarter (versus 40.2%) and 31.9% in the fiscal year (versus 36.5%). The full year reduction was due to the recording of favorable reserve adjustments at the conclusion of certain tax audits and at the expiration of statutory periods; these adjustments benefited net earnings from continuing operations by $0.09 per diluted share in the year. o Accounts receivable at January 31, 2010 were 3% below the prior year-end. o Net inventories declined 11% in the fiscal year to $1.43 billion at January 31, 2010 due to a reduction in finished goods inventories, consistent with management's objective, as well as the effect from higher-than-planned sales in the fourth quarter. o Capital expenditures were $75 million in the year, compared with $154 million in the prior year. The lower spending resulted from fewer store openings in 2009 and other cost containment initiatives. o Balance sheet liquidity at January 31, 2010 included: cash and cash equivalents of $786 million (versus $160 million a year ago), and total short-term borrowings and long-term debt of $754 million (versus $709 million a year ago). Mr. Kowalski added, "In 2010, we will remain focused on meaningful opportunities to expand our global store base, realize market share gains in a changing competitive environment and enhance profitability. We believe that Tiffany has the ability to deliver healthy sales and earnings growth and, in fact, have begun the year with worldwide sales growth exceeding our first quarter plan which calls for a high-teens percentage increase. Tiffany has the necessary components for ongoing success -- compelling products, organizational and financial strength, an efficient infrastructure and a premium brand that is increasingly recognized for lasting value." 4 2010 Outlook: - ------------- Management's outlook for fiscal 2010 is based on the following assumptions which may or may not prove valid: a) A worldwide sales increase of approximately 11%. b) By region, sales are expected to increase by a low-double-digit percentage in the Americas, a high-single-digit percentage in Asia-Pacific (including a low-single-digit percentage decline in Japan and at least 20% growth elsewhere), and a mid-teens percentage in Europe. Other sales are expected to decline 5%; c) The opening of 17 new Company-operated stores (six in the Americas, eight in Asia-Pacific and three in Europe); d) An increase in the operating margin primarily due to a higher gross margin as well as a modestly improved ratio of SG&A expenses to sales; e) Other expenses, net of approximately $50 million; f) An effective income tax rate of approximately 35%; g) Net earnings from continuing operations of $2.45 - $2.50 per diluted share; h) Capital expenditures of approximately $200 million; and i) A high-single-digit percentage increase in net inventories. 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 first quarter 2010 financial results on May 27, 2010 with a conference call at 8:30 a.m. (Eastern Time). 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. 5 This document contains certain "forward-looking" statements concerning the Company's objectives and expectations with respect to sales, store openings, gross margin, SG&A expenses, interest expense, effective income tax rate, net earnings, inventories 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 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 years:
Fourth 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 17 % 4 % 13 % (5)% - (5)% Americas 14 % 1 % 13 % (11)% - (11)% U.S. 12 % - 12 % (12)% - (12)% Asia-Pacific 14 % 7 % 7 % 4 % 4 % - Japan (6)% 3 % (9)% (4)% 7 % (11)% Other Asia-Pacific 51 % 13 % 38 % 18 % (1)% 19 % Europe 29 % 11 % 18 % 10 % (6)% 16 % Comparable Store Sales: - ----------------------- Worldwide 11 % 3 % 8 % (7)% 1 % (8)% Americas 11 % 1 % 10 % (14)% - (14)% U.S. 11 % - 11 % (15)% - (15)% Asia-Pacific 8 % 5 % 3 % 1 % 4 % (3)% Japan (7)% 2 % (9)% (4)% 7 % (11)% Other Asia-Pacific 36 % 12 % 24 % 8 % - 8 % Europe 25 % 11 % 14 % 3 % (6)% 9 %
7 Net Earnings from Continuing Operations - --------------------------------------- The accompanying press release presents net earnings from continuing operations and highlights current-year and prior-year nonrecurring items in the text. Management believes excluding such items presents the Company's fourth quarter and full year 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 January 31, 2010. 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 January 31, 2010 January 31, 2009 --------------------------------------------------------------------------- $ Diluted $ Diluted (in thousands, except per share amounts) (after tax) EPS (after tax) EPS - --------------------------------------------------------------------------------------------------------------------- Net earnings from continuing $ 138,207 $ 1.09 $ 37,413 $ 0.30 operations, as reported Restructuring charges - - 59,006 0.47 Impairment of investments and - - 8,335 0.07 loans a, b Diamond facility closing charge a - - 2,198 0.02 --------------------------------------------------------------------------- Net earnings from continuing $ 138,207 $ 1.09 $ 106,952 $ 0.86 operations, as adjusted =========================================================================== a On a pre-tax basis includes a $14,444,000 charge within SG&A for the three months ended January 31, 2009. b On a pre-tax basis includes $1,311,000 charge within interest and other expenses, net for the three months ended January 31, 2009.
Full Year Ended Full Year Ended January 31, 2010 January 31, 2009 --------------------------------------------------------------------------- $ Diluted $ Diluted (in thousands, except per share amounts) (after tax) EPS (after tax) EPS - --------------------------------------------------------------------------------------------------------------------- Net earnings from continuing $ 265,676 $ 2.12 $ 232,155 $ 1.84 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) - - Restructuring charges - - 59,006 0.46 Impairment of investments and - - 8,335 0.07 loans a, c Diamond facility closing charge a - - 2,198 0.02 -------------------------------------------------------------------------- Net earnings from continuing $ 255,220 $ 2.04 $ 301,694 $ 2.39 operations, as adjusted ========================================================================== a On a pre-tax basis includes a benefit of $442,000 and a charge of $14,444,000 within SG&A for the years ended January 31, 2010 and 2009. b Includes $11,220,000 of tax benefits within the provision for income taxes for the year ended January 31, 2010. c On a pre-tax basis includes a $1,311,000 charge within interest and other expenses, net for the year ended January 31, 2009.
8 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, ------------------------------------ --------------------------------- 2010 2009 2010 2009 ------------- ------------- ------------- ------------- Net sales $ 981,384 $ 837,593 $ 2,709,704 $ 2,848,859 Cost of sales 405,639 340,170 1,179,485 1,202,417 ------------- ------------- ------------- ------------- Gross profit 575,745 497,423 1,530,219 1,646,442 Selling, general and administrative expenses 351,138 327,443 1,089,727 1,153,944 Restructuring charge - 97,839 - 97,839 ------------- ------------- ------------- ------------- Earnings from continuing operations 224,607 72,141 440,492 394,659 Interest and other expenses, net 14,620 9,606 50,518 28,900 ------------- ------------- ------------- ------------- Earnings from continuing operations before income taxes 209,987 62,535 389,974 365,759 Provision for income taxes 71,780 25,122 124,298 133,604 ------------- ------------- ------------- ------------- Net earnings from continuing operations 138,207 37,413 265,676 232,155 Net earnings (loss) from discontinued operations 2,160 (6,328) (853) (12,133) ------------- ------------- ------------- ------------- Net earnings $ 140,367 $ 31,085 $ 264,823 $ 220,022 ============= ============= ============= ============= Net earnings from continuing operations per share: Basic $ 1.10 $ 0.30 $ 2.14 $ 1.86 ============= ============= ============= ============= Diluted $ 1.09 $ 0.30 $ 2.12 $ 1.84 ============= ============= ============= ============= Net earnings per share: Basic $ 1.12 $ 0.25 $ 2.13 $ 1.76 ============= ============= ============= ============= Diluted $ 1.10 $ 0.25 $ 2.11 $ 1.74 ============= ============= ============= ============= Weighted-average number of common shares: Basic 125,097 123,363 124,345 124,734 Diluted 127,265 123,793 125,383 126,410
9 TIFFANY & CO. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited, in thousands)
January 31, January 31, 2010 2009 ----------------- ----------------- ASSETS - ------ Current assets: Cash and cash equivalents $ 785,702 $ 160,445 Accounts receivable, net 158,706 164,447 Inventories, net 1,427,855 1,601,236 Deferred income taxes 6,651 13,640 Prepaid expenses and other current assets 66,752 108,966 ------------- ------------- Total current assets 2,445,666 2,048,734 Property, plant and equipment, net 685,101 741,048 Other assets, net 357,593 312,501 ------------- ------------- $ 3,488,360 $ 3,102,283 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY - ------------------------------------ Current liabilities: Short-term borrowings $ 27,642 $ 242,966 Current portion of long-term debt 206,815 40,426 Accounts payable and accrued liabilities 231,913 223,566 Income taxes payable 67,513 27,653 Merchandise and other customer credits 66,390 67,311 ------------- ------------- Total current liabilities 600,273 601,922 Long-term debt 519,592 425,412 Pension/postretirement benefit obligations 219,276 200,603 Other long-term liabilities 137,331 152,334 Deferred gains on sale-leasebacks 128,649 133,641 Stockholders' equity 1,883,239 1,588,371 ------------- ------------- $ 3,488,360 $ 3,102,283 ============= =============
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