Delaware
(State or other jurisdiction
of incorporation)
|
1-9494
(Commission
File Number)
|
13-3228013
(I.R.S. Employer Identification No.)
|
727 Fifth Avenue, New York, New York
(Address of principal executive offices)
|
10022
(Zip Code)
|
TIFFANY & CO. | |
BY: | /s/ Patrick B. Dorsey |
Patrick B. Dorsey | |
Senior Vice President, Secretary and | |
General Counsel |
·
|
Worldwide net sales rose 30% to $872.7 million. On a constant-exchange-rate basis excluding the effect of translating foreign-currency-denominated sales into U.S. dollars, worldwide net sales increased 24% and comparable store sales rose 22% (see “Non-GAAP Measures” schedule).
|
·
|
Net earnings increased 33% to $90.0 million, or $0.69 per diluted share, versus $67.7 million, or $0.53 per diluted share, in the prior year.
|
·
|
Earnings in the second quarter of 2011 were reduced by $0.16 per diluted share for nonrecurring expenses (see SG&A expenses below) related to the relocation of Tiffany’s New York headquarters staff. Earnings in the second quarter of 2010 were reduced by $0.02 per diluted share for similarly-related nonrecurring expenses. Excluding those nonrecurring items in both years, net earnings rose 58% in the quarter and were $0.86 per diluted share, versus $0.55 per diluted share in the prior year (see “Non-GAAP Measures” schedule).
|
·
|
Worldwide net sales rose 25% to $1.6 billion. On a constant-exchange-rate basis, worldwide net sales and comparable store sales rose 20% and 18%.
|
·
|
Net earnings rose 30% to $171.1 million, or $1.32 per diluted share, compared with $132.1 million, or $1.03 per diluted share.
|
·
|
Earnings in the first half of 2011 were reduced by $0.20 per diluted share for nonrecurring items. Excluding nonrecurring items in both years, net earnings rose 49% in the first half and were $1.52 per diluted share, versus $1.03 per diluted share in the prior year (see “Non-GAAP Measures” schedule).
|
·
|
In the Americas, sales rose 25% to $438.2 million in the second quarter and 22% to $812.9 million in the first half. On a constant-exchange-rate basis, total sales and comparable store sales in the quarter rose 24% and 23% and in the first half rose 21% and 20% (in the quarter and first half, sales in the New York flagship store increased 41% and 33%, benefiting from strong foreign tourist demand, and comparable branch store sales in the Americas increased 19% and 17%). Internet and catalog sales in the Americas increased 16% and 15%.
|
·
|
In Asia-Pacific, sales increased 55% to $173.2 million in the second quarter and 46% to $340.5 million in the first half. On a constant-exchange-rate basis, sales increased 45% and 38% and comparable store sales increased 41% and 33% due to growth in most countries with the largest increase in the greater China region.
|
·
|
In Japan, sales rose 21% to $142.5 million in the second quarter and 14% to $265.9 million in the first half. On a constant-exchange-rate basis, total sales increased 8% and 2% due to comparable store sales growth of 8% and 3%.
|
·
|
In Europe, sales increased 32% to $101.3 million in the second quarter and 28% to $187.0 million in the first half. On a constant-exchange-rate basis, sales increased 17% and 18% and comparable store sales rose 11% and 12% reflecting growth in most countries.
|
·
|
At July 31, 2011, the Company operated 236 stores (98 in the Americas, 55 in Japan, 52 in Asia-Pacific and 31 in Europe), versus 223 a year ago (91 in the Americas, 57 in Japan, 48 in Asia-Pacific and 27 in Europe).
|
·
|
Other sales increased 46% to $17.4 million in the second quarter and 14% to $27.5 million in the first half. In both periods, there were increased wholesale sales of finished products to independent distributors within emerging markets, partly offset in the first half by a decline in wholesale sales of rough diamonds.
|
·
|
Gross margin (gross profit as a percentage of net sales) was 59.0% in the second quarter and 58.7% in the first half, compared with 57.8% in both of the respective periods last year. The increases were due to sales leverage on fixed costs.
|
·
|
SG&A (selling, general and administrative) expenses rose 37% in the second quarter and 28% in the first half, which included nonrecurring costs of $34 million in the second quarter and $43 million in the first half, versus $4 million in both of the prior-year periods, related to the relocation of Tiffany’s New York headquarters staff (see “Non-GAAP Measures” schedule). Excluding the nonrecurring costs, SG&A expenses rose 26% in the quarter and 21% in the first half reflecting higher store occupancy, staffing, marketing and sales-related variable costs.
|
·
|
The effective income tax rate was 31.2% in the quarter versus 34.0% last year, with the decline primarily due to a reversal of a valuation allowance against certain deferred tax assets. The rate was 33.4% in the first half, versus 32.5% last year which had included a nonrecurring tax benefit of $0.02 per share primarily related to a change in the tax status of certain subsidiaries.
|
·
|
At July 31, 2011, cash and cash equivalents and short-term investments totaled $565.2 million versus $614.7 million last year. Total short-term and long-term debt represented 29% of stockholders’ equity compared with 40% a year ago.
|
·
|
Net inventories at July 31, 2011 were 18% above the prior year. The increase was planned to support sales growth, store openings, product introductions and expanded assortments, and higher product and raw material acquisition costs. Almost one-fourth of the increase resulted from the effect of translating stronger foreign currencies into U.S. dollars.
|
·
|
The Company repurchased approximately 330,000 shares of its Common Stock in the second quarter at a total cost of $24.5 million, or an average cost of $74.29 per share. In the first half, the Company spent $52.5 million to repurchase approximately 783,000 shares at an average cost of $67.00 per share. At July 31st, approximately $340 million remained available for future repurchases under the currently authorized plan. That plan expires in January 2013.
|
a)
|
A high-teens percentage increase in worldwide net sales (in U.S. dollars).
|
b)
|
Sales assumptions by region (in U.S. dollars) include a high-teens percentage increase in the Americas, at least a 30% increase in Asia-Pacific, at least a 20% increase in Europe, and a high-single-digit percentage increase in Japan. Other sales are expected to increase approximately 25%.
|
c)
|
Opening 17 Company-operated stores including six in the Americas, three in Europe and eight in Asia-Pacific, and a net reduction of one location in Japan.
|
d)
|
Operating margin increasing more than one full point due to an improved SG&A expenses (excluding nonrecurring items) to sales ratio and a higher gross margin.
|
e)
|
Interest and other expenses, net of approximately $45 million.
|
f)
|
An effective income tax rate of approximately 34%.
|
g)
|
A net earnings increase of 25% - 28% to $3.65 - $3.75 per diluted share (not including nonrecurring expenses), compared with a previous forecast of $3.45 - $3.55 per diluted share (not including nonrecurring expenses). Nonrecurring expenses are related to the relocation of Tiffany’s New York headquarters staff and have reduced net earnings in 2011 by $0.20 per share.
|
h)
|
An increase in net inventories of more than 15%.
|
i)
|
Capital expenditures of approximately $250 million.
|
Second Quarter 2011 vs. 2010
|
First Half 2011 vs. 2010
|
|||||
GAAP
Reported
|
Translation
Effect
|
Constant-
Exchange-Rate
Basis
|
GAAP
Reported
|
Translation
Effect
|
Constant-
Exchange-Rate
Basis
|
|
Net Sales:
|
||||||
Worldwide
|
30%
|
6%
|
24%
|
25%
|
5%
|
20%
|
Americas
|
25%
|
1%
|
24%
|
22%
|
1%
|
21%
|
Asia-Pacific
|
55%
|
10%
|
45%
|
46%
|
8%
|
38%
|
Japan
|
21%
|
13%
|
8%
|
14%
|
12%
|
2%
|
Europe
|
32%
|
15%
|
17%
|
28%
|
10%
|
18%
|
Comparable Store Sales: | ||||||
Worldwide
|
28%
|
6%
|
22%
|
24%
|
6%
|
18%
|
Americas
|
24%
|
1%
|
23%
|
21%
|
1%
|
20%
|
Asia-Pacific
|
51%
|
10%
|
41%
|
41%
|
8%
|
33%
|
Japan
|
22%
|
14%
|
8%
|
15%
|
12%
|
3%
|
Europe
|
25%
|
14%
|
11%
|
23%
|
11%
|
12%
|
Three Months Ended
July 31, 2011
|
Three Months Ended
July 31, 2010
|
|||
(in thousands, except per share amounts)
|
$
(after tax)
|
Diluted
EPS
|
$
(after tax)
|
Diluted
EPS
|
Net earnings, as reported
|
$ 90,043
|
$ 0.69
|
$ 67,675
|
$ 0.53
|
Headquarters relocation a
|
20,991
|
0.16
|
2,392
|
0.02
|
Net earnings, as adjusted
|
$ 111,034
|
$ 0.86
|
$ 70,067
|
$ 0.55
|
a
|
On a pre-tax basis includes charges of $0 and $289,000 within cost of sales and $34,497,000 and $3,656,000 within SG&A for the three months ended July 31, 2011 and 2010 associated with Tiffany’s consolidation of its New York headquarters staff within one location.
|
Six Months Ended
July 31, 2011
|
Six Months Ended
July 31, 2010
|
|||
(in thousands, except per share amounts)
|
$
(after tax)
|
Diluted
EPS
|
$
(after tax)
|
Diluted
EPS
|
Net earnings, as reported
|
$ 171,106
|
$ 1.32
|
$ 132,100
|
$ 1.03
|
Headquarters relocation a
|
25,994
|
0.20
|
2,987
|
0.02
|
Tax benefit, net b
|
–
|
–
|
(3,096)
|
(0.02)
|
Net earnings, as adjusted
|
$ 197,100
|
$ 1.52
|
$ 131,991
|
$ 1.03
|
a
|
On a pre-tax basis includes charges of $213,000 and $361,000 within cost of sales and $42,506,000 and $4,444,000 within SG&A for the six months ended July 31, 2011 and 2010 associated with Tiffany’s consolidation of its New York headquarters staff within one location.
|
b
|
Includes $3,096,000 of tax benefits primarily related to a change in the tax status of certain subsidiaries associated with the acquisition in 2009 of additional equity interests in diamond sourcing and polishing operations.
|
TIFFANY & CO. AND SUBSIDIARIES
|
|||||||||
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
|
|||||||||
(Unaudited, in thousands, except per share amounts)
|
|||||||||
|
|||||||||
|
|
||||||||
Three Months Ended July 31,
|
Six Months Ended July 31,
|
||||||||
2011
|
2010
|
2011
|
2010
|
||||||
Net sales
|
$
|
872,712
|
$
|
668,760
|
$
|
1,633,730
|
$
|
1,302,346
|
|
Cost of sales
|
358,015
|
282,008
|
675,340
|
549,616
|
|||||
Gross profit
|
514,697
|
386,752
|
958,390
|
752,730
|
|||||
Selling, general and administrative expenses
|
374,157
|
273,146
|
681,884
|
533,707
|
|||||
Earnings from operations
|
140,540
|
113,606
|
276,506
|
219,023
|
|||||
Interest and other expenses, net
|
9,619
|
11,121
|
19,766
|
23,259
|
|||||
Earnings from operations before income taxes
|
130,921
|
102,485
|
256,740
|
195,764
|
|||||
Provision for income taxes
|
40,878
|
34,810
|
85,634
|
63,664
|
|||||
Net earnings
|
$
|
90,043
|
$
|
67,675
|
$
|
171,106
|
$
|
132,100
|
|
Net earnings per share:
|
|||||||||
Basic
|
$
|
0.70
|
$
|
0.53
|
$
|
1.34
|
$
|
1.04
|
|
Diluted
|
$
|
0.69
|
$
|
0.53
|
$
|
1.32
|
$
|
1.03
|
|
Weighted-average number of common shares:
|
|||||||||
|
|
||||||||
Basic
|
128,030
|
126,897
|
|
127,816
|
126,798
|
||||
Diluted
|
129,794
|
128,385
|
129,587
|
128,464
|
|||||
|
|||||||||
TIFFANY & CO. AND SUBSIDIARIES
|
|||||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|||||||||||
(Unaudited, in thousands)
|
|||||||||||
|
July 31,
|
|
January 31,
|
|
July 31,
|
||||||
2011
|
2011
|
2010
|
|||||||||
ASSETS
|
|||||||||||
Current assets:
|
|||||||||||
Cash and cash equivalents and short-term investments
|
$
|
565,191
|
$
|
740,871
|
$
|
614,674
|
|||||
Accounts receivable, net
|
182,001
|
185,969
|
156,708
|
||||||||
Inventories, net
|
1,836,874
|
1,625,302
|
1,553,117
|
||||||||
Deferred income taxes
|
67,964
|
41,826
|
16,114
|
||||||||
Prepaid expenses and other current assets
|
115,474
|
90,577
|
76,780
|
||||||||
Total current assets
|
2,767,504
|
2,684,545
|
2,417,393
|
||||||||
Property, plant and equipment, net
|
738,172
|
665,588
|
661,387
|
||||||||
Other assets, net
|
425,212
|
385,536
|
367,781
|
||||||||
$
|
3,930,888
|
$
|
3,735,669
|
$
|
3,446,561
|
||||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|||||||||||
Current liabilities:
|
|||||||||||
Short-term borrowings
|
$
|
97,272
|
$
|
38,891
|
$
|
44,221
|
|||||
Current portion of long-term debt
|
61,728
|
60,855
|
269,960
|
||||||||
Accounts payable and accrued liabilities
|
274,301
|
258,611
|
165,757
|
||||||||
Income taxes payable
|
20,687
|
55,691
|
16,198
|
||||||||
Merchandise and other customer credits
|
66,764
|
65,865
|
60,546
|
||||||||
Total current liabilities
|
520,752
|
479,913
|
556,682
|
||||||||
Long-term debt
|
534,673
|
588,494
|
467,855
|
||||||||
Pension/postretirement benefit obligations
|
205,298
|
217,435
|
189,978
|
||||||||
Other long-term liabilities
|
193,256
|
147,372
|
141,112
|
||||||||
Deferred gains on sale-leasebacks
|
125,173
|
124,980
|
124,932
|
||||||||
Stockholders' equity
|
2,351,736
|
2,177,475
|
1,966,002
|
||||||||
|
|
|
|||||||||
$
|
3,930,888
|
$
|
3,735,669
|
$
|
3,446,561
|
||||||