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 increased 21% to $821.8 million. On a constant-exchange-rate basis excluding the effect of translating foreign-currency-denominated sales into U.S. dollars, worldwide net sales increased 17% and comparable store sales increased 16% (see “Non-GAAP Measures” schedule).
|
·
|
Net earnings rose 63% to $89.7 million, or $0.70 per diluted share, from $55.1 million, or $0.43 per diluted share, in the prior year.
|
·
|
Net earnings in the third quarter of 2010 had been reduced by $0.03 per diluted share for nonrecurring expenses (see SG&A expenses below). Excluding that nonrecurring item, net earnings in this third quarter were 52% above the prior year (see “Non-GAAP Measures” schedule).
|
·
|
Worldwide net sales increased 24% to $2.5 billion. On a constant-exchange-rate basis, worldwide net sales rose 19% and comparable store sales rose 18%.
|
·
|
Net earnings increased 39% to $260.8 million, or $2.02 per diluted share, compared with $187.2 million, or $1.46 per diluted share, in the prior year.
|
·
|
Net earnings in year-to-date 2011 were reduced by $0.20 per diluted share for nonrecurring items related to the recent headquarters relocation. Net earnings in year-to-date 2010 were reduced by $0.03 per diluted share for various non-recurring items. Excluding those items in both years, net earnings rose 50% in the year-to-date (see “Non-GAAP Measures” schedule).
|
·
|
In the Americas region, sales increased 17% to $387.7 million in the third quarter and 20% to $1.2 billion in the year-to-date. On a constant-exchange-rate basis, total sales and comparable store sales rose 17% and 15% in the third quarter and 20% and 18% in the year-to-date. In the quarter and year-to-date, sales in the New York flagship store increased 24% and 30%, due to strong sales to foreign tourists, while comparable branch store sales in the Americas rose 13% and 16%. Combined Internet and catalog sales in the Americas increased 11% in the quarter and 14% in the year-to-date.
|
·
|
In the Asia-Pacific region, sales increased 44% to $183.2 million in the third quarter and 45% to $523.7 million in the year-to-date. On a constant-exchange-rate basis, total sales and comparable store sales rose 40% and 36% in the quarter due to substantial increases in most countries led by growth in the greater China region, and increased 38% and 34% in the year-to-date.
|
·
|
In Japan, sales increased 12% to $146.4 million in the third quarter and 13% to $412.3 million in the year-to-date. On a constant-exchange-rate basis, total sales and comparable store sales rose 3% and 4% in the quarter and increased 2% and 3% in the year-to-date.
|
·
|
In Europe, sales rose 19% to $92.5 million in the third quarter and 25% to $279.5 million in the year-to-date. On a constant-exchange-rate basis, total sales and comparable store sales rose 15% and 6% in the third quarter due to sales growth in Continental Europe, and increased 17% and 10% in the year-to-date.
|
·
|
The Company has opened 18 stores (net) in the past 12 months. At October 31, 2011, the Company operated 243 stores (101 in the Americas, 55 in Japan, 55 in Asia-Pacific and 32 in Europe), versus 225 (93 in the Americas, 56 in Japan, 49 in Asia-Pacific and 27 in Europe) a year ago.
|
·
|
Other sales declined 19% to $11.9 million in the third quarter due to lower wholesale sales of finished products to independent distributors within emerging markets and a decline in wholesale sales of rough diamonds. Other sales increased 1% to $39.4 million in the year-to-date.
|
·
|
Gross margin (gross profit as a percentage of net sales) of 57.9% in the third quarter compared with 58.5% in the prior year, with the decline primarily due to a shift in sales mix toward higher-priced jewelry that achieves a lower gross margin. Year-to-date, gross margin rose to 58.4% from 58.0% last year.
|
·
|
SG&A (selling, general and administrative) expenses increased 10% in the third quarter, and increased 21% in the year-to-date. SG&A expenses in the year-to-date included nonrecurring costs of $43 million recorded in the first half of 2011 related to the recent relocation of Tiffany’s New York headquarters staff, while SG&A expenses in 2010 included $6.1 million in the third quarter and $10.5 million in the year-to-date for the relocation (see “Non-GAAP Measures” schedule). Excluding the nonrecurring costs, SG&A expenses rose 12% in the quarter primarily due to increases in store occupancy, staffing and sales-related variable costs, and rose 18% in the year-to-date.
|
·
|
The effective income tax rate was 33.9% in the third quarter versus 34.9% last year. Year-to-date, the effective income tax rate was 33.6% in 2011, compared with 33.2% in 2010 which had included a nonrecurring tax benefit (see “Non-GAAP Measures” schedule).
|
·
|
Cash and cash equivalents and short-term investments totaled $297.4 million at October 31, 2011, versus $529.5 million last year. Total short-term and long-term debt totaled $708.8 million at October 31, 2011 versus $755.0 million a year ago, representing 31% of stockholders’ equity compared with 38% a year ago.
|
·
|
Net inventories at October 31, 2011 were 25% above the prior year. Combined raw material and work-in-process inventories rose 58%, partly reflecting higher product acquisition costs and expanded internal production, while finished goods inventories rose 8%. Overall, higher inventory levels supported sales growth, store openings, product introductions and expanded assortments.
|
·
|
The Company repurchased approximately 1.3 million shares of its Common Stock in the third quarter at a total cost of $86.3 million, or an average cost of $65.37 per share. Year-to-date, the Company has spent $138.8 million to repurchase approximately 2.1 million shares at an average cost of $65.97 per share. At October 31st, approximately $253 million was available for future repurchases under the currently authorized plan. That plan expires in January 2013.
|
a)
|
Worldwide net sales (in U.S. dollars) increasing by a high-teens percentage, which implies a low-teens percentage increase in the fourth quarter.
|
b)
|
Sales by region (in U.S. dollars): Americas sales increasing by a high-teens percentage, Asia-Pacific sales increasing at least 35%, Japan sales increasing at least 10% and Europe sales increasing at least 20%. Other sales are expected to decline modestly.
|
c)
|
Adding 14 (net) Company-operated stores including six in the Americas, three in Europe, six in Asia-Pacific and a net reduction of one store in Japan.
|
d)
|
Operating margin increasing more than one full point primarily due to an improved ratio of SG&A expenses (excluding nonrecurring items) to sales.
|
e)
|
Interest and other expenses, net of approximately $43 million.
|
f)
|
An effective income tax rate of approximately 34%.
|
g)
|
Net earnings increasing 26% - 30% to $3.70 - $3.80 per diluted share, compared with a prior forecast of $3.65 - $3.75 per diluted share (both forecasts do not include nonrecurring expenses related to the relocation of Tiffany’s New York headquarters staff which reduce net earnings in 2011 by $0.20 per diluted share). This implies net earnings in the fourth quarter in a range of $1.48 - $1.58 per diluted share, versus $1.44 per diluted share in the year-ago period (not including nonrecurring expenses).
|
h)
|
Net inventories increasing at least 15%.
|
i)
|
Capital expenditures of approximately $250 million.
|
Third Quarter 2011 vs. 2010
|
Year-to-Date 2011 vs. 2010
|
|||||
GAAP
Reported
|
Translation
Effect
|
Constant-
Exchange-Rate
Basis
|
GAAP
Reported
|
Translation
Effect
|
Constant-
Exchange-Rate
Basis
|
|
Net Sales: | ||||||
Worldwide
|
21%
|
4%
|
17%
|
24%
|
5%
|
19%
|
Americas
|
17%
|
—%
|
17%
|
20%
|
—%
|
20%
|
Asia-Pacific
|
44%
|
4%
|
40%
|
45%
|
7%
|
38%
|
Japan
|
12%
|
9%
|
3%
|
13%
|
11%
|
2%
|
Europe
|
19%
|
4%
|
15%
|
25%
|
8%
|
17%
|
Comparable Store Sales:
|
||||||
Worldwide
|
19%
|
3%
|
16%
|
22%
|
4%
|
18%
|
Americas
|
15%
|
—%
|
15%
|
19%
|
1%
|
18%
|
Asia-Pacific
|
40%
|
4%
|
36%
|
41%
|
7%
|
34%
|
Japan
|
13%
|
9%
|
4%
|
14%
|
11%
|
3%
|
Europe
|
10%
|
4%
|
6%
|
18%
|
8%
|
10%
|
Three Months Ended
October 31, 2011
|
Three Months Ended
October 31, 2010
|
|||
(in thousands, except per share amounts)
|
$
(after tax)
|
Diluted
EPS
|
$
(after tax)
|
Diluted
EPS
|
Net earnings, as reported
|
$ 89,689
|
$ 0.70
|
$ 55,079
|
$ 0.43
|
Headquarters relocation a
|
–
|
–
|
3,894
|
0.03
|
Net earnings, as adjusted
|
$ 89,689
|
$ 0.70
|
$ 58,973
|
$ 0.46
|
a
|
On a pre-tax basis includes charges of $326,000 within cost of sales and $6,095,000 within SG&A for the three months ended October 31, 2010 associated with Tiffany’s consolidation of its New York headquarters staff within one location.
|
Nine Months Ended
October 31, 2011
|
Nine Months Ended
October 31, 2010
|
|||
(in thousands, except per share amounts)
|
$
(after tax)
|
Diluted
EPS
|
$
(after tax)
|
Diluted
EPS
|
Net earnings, as reported
|
$ 260,795
|
$ 2.02
|
$ 187,179
|
$ 1.46
|
Headquarters relocation a
|
25,994
|
0.20
|
6,881
|
0.05
|
Tax benefit, net b
|
–
|
–
|
(3,096)
|
(0.02)
|
Net earnings, as adjusted
|
$ 286,789
|
$ 2.22
|
$ 190,964
|
$ 1.49
|
a
|
On a pre-tax basis includes charges of $213,000 and $687,000 within cost of sales and $42,506,000 and $10,539,000 within SG&A for the nine months ended October 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 October 31,
|
Nine Months Ended October 31,
|
|||||||||
2011
|
2010
|
2011
|
2010
|
|||||||
Net sales
|
$
|
821,767
|
$
|
681,729
|
$
|
2,455,497
|
$
|
1,984,075
|
||
Cost of sales
|
345,918
|
283,158
|
1,021,258
|
832,774
|
||||||
Gross profit
|
475,849
|
398,571
|
1,434,239
|
1,151,301
|
||||||
Selling, general and administrative expenses
|
329,672
|
300,993
|
1,011,556
|
834,700
|
||||||
Earnings from operations
|
146,177
|
97,578
|
422,683
|
316,601
|
||||||
Interest and other expenses, net
|
10,393
|
12,997
|
30,159
|
36,256
|
||||||
Earnings from operations before income taxes
|
135,784
|
84,581
|
392,524
|
280,345
|
||||||
Provision for income taxes
|
46,095
|
29,502
|
131,729
|
93,166
|
||||||
Net earnings
|
$
|
89,689
|
$
|
55,079
|
$
|
260,795
|
$
|
187,179
|
||
Net earnings per share:
|
||||||||||
Basic
|
$
|
0.71
|
$
|
0.44
|
$
|
2.04
|
$
|
1.48
|
||
Diluted
|
$
|
0.70
|
$
|
0.43
|
$
|
2.02
|
$
|
1.46
|
||
Weighted-average number of common shares:
|
||||||||||
|
|
|||||||||
Basic
|
127,210
|
126,176
|
127,614
|
126,591
|
|
|||||
Diluted
|
128,812
|
127,905
|
129,329
|
128,277
|
||||||
|
||||||||||
8
|
TIFFANY & CO. AND SUBSIDIARIES
|
||||||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS
|
||||||||||||
(Unaudited, in thousands)
|
||||||||||||
|
October 31,
|
|
January 31,
|
|
October 31,
|
|||||||
2011
|
2011
|
2010
|
||||||||||
ASSETS
|
||||||||||||
Current assets:
|
||||||||||||
Cash and cash equivalents and short-term investments
|
$
|
297,364
|
$
|
740,871
|
$
|
529,496
|
||||||
Accounts receivable, net
|
170,181
|
185,969
|
179,428
|
|||||||||
Inventories, net
|
2,065,466
|
1,625,302
|
1,654,552
|
|||||||||
Deferred income taxes
|
93,790
|
41,826
|
24,618
|
|||||||||
Prepaid expenses and other current assets
|
117,706
|
90,577
|
86,937
|
|||||||||
Total current assets
|
2,744,507
|
2,684,545
|
2,475,031
|
|||||||||
Property, plant and equipment, net
|
752,151
|
665,588
|
668,179
|
|||||||||
Other assets, net
|
401,626
|
385,536
|
371,577
|
|||||||||
$
|
3,898,284
|
$
|
3,735,669
|
$
|
3,514,787
|
|||||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||||||
Current liabilities:
|
||||||||||||
Short-term borrowings
|
$
|
107,830
|
$
|
38,891
|
$
|
60,286
|
||||||
Current portion of long-term debt
|
61,247
|
60,855
|
101,675
|
|||||||||
Accounts payable and accrued liabilities
|
287,012
|
258,611
|
216,293
|
|||||||||
Income taxes payable
|
1,459
|
55,691
|
2,275
|
|||||||||
Merchandise and other customer credits
|
64,360
|
65,865
|
65,107
|
|||||||||
Total current liabilities
|
521,908
|
479,913
|
445,636
|
|||||||||
Long-term debt
|
539,703
|
588,494
|
593,028
|
|||||||||
Pension/postretirement benefit obligations
|
212,268
|
217,435
|
195,896
|
|||||||||
Other long-term liabilities
|
187,635
|
147,372
|
152,744
|
|||||||||
Deferred gains on sale-leasebacks
|
124,047
|
124,980
|
128,927
|
|
||||||||
Stockholders' equity
|
2,312,723
|
2,177,475
|
1,998,556
|
|||||||||
|
|
|
||||||||||
$
|
3,898,284
|
$
|
3,735,669
|
$
|
3,514,787
|
|||||||
|
||||||||||||
|
||||||||||||
9
|
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