Tiffany Reports Fourth Quarter And Full Year Results

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 sales made outside the U.S. 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 year:

				Fourth Quarter 2011 vs. 2010						Full Year 2011 vs. 2010
				GAAPReported		TranslationEffect		Constant-Exchange-RateBasis		GAAPReported		TranslationEffect		Constant-Exchange-RateBasis
Net Sales:
Worldwide				8%		1%		7%		18%		3%		15%
Americas				5%		—		5%		15%		1%		14%
Asia-Pacific				19%		1%		18%		36%		5%		31%
Japan				12%		7%		5%		13%		10%		3%
Europe				3%		—		3%		17%		5%		12%
Comparable Store Sales:
Worldwide				6%		1%		5%		16%		3%		13%
Americas				3%		—		3%		13%		—		13%
Asia-Pacific				14%		1%		13%		31%		4%		27%
Japan				12%		8%		4%		13%		9%		4%
Europe				(3)%		(1)%		(2)%		10%		4%		6%

Net Earnings

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 year-to-date results on a more comparable basis to the corresponding period in the prior year, thereby providing investors with an additional perspective to analyze the results of operations of the Company at January 31, 2012. 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 January 31, 2012						Three Months Ended January 31, 2011
( in thousands, except per share amounts)				$ (after tax)			Diluted EPS			$ (after tax)			Diluted EPS
Net earnings, as reported				$	178,395		$	1.39		$	181,224		$	1.41
Headquarters relocation a					–			–			3,887			0.03
Net earnings, as adjusted				$	178,395		$	1.39		$	185,111		$	1.44

a

On a pre-tax basis includes charges of $323,000 within cost of sales and $6,086,000 within SG&A expenses for the three months ended January 31, 2011 associated with Tiffany’s plan to consolidate its New York headquarters staff within one location.

				Year Ended January 31, 2012						Year Ended January 31, 2011
( in thousands, except per share amounts)				$ (after tax)			Diluted EPS			$ (after tax)				Diluted EPS
Net earnings, as reported				$	439,190		$	3.40		$	368,403			$	2.87
Headquarters relocation a					25,994			0.20			10,768				0.08
Tax benefit, net b					–			–			(3,096	)			(0.02	)
Net earnings, as adjusted				$	465,184		$	3.60		$	376,075			$	2.93

a		On a pre-tax basis includes charges of $213,000 and $1,010,000 within cost of sales and $42,506,000 and $16,625,000 within SG&A for the years ended January 31, 2012 and 2011 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 January 31,						Years Ended January 31,
					2012			2011			2012			2011
Net sales				$	1,187,440		$	1,101,215		$	3,642,937		$	3,085,290
Cost of sales					470,525			430,238			1,491,783			1,263,012
Gross profit					716,915			670,977			2,151,154			1,822,278
Selling, general and administrative expenses					431,172			392,797			1,442,728			1,227,497
Earnings from operations					285,743			278,180			708,426			594,781
Interest and other expenses, net					13,316			11,091			43,475			47,347
Earnings from operations before income taxes					272,427			267,089			664,951			547,434
Provision for income taxes					94,032			85,865			225,761			179,031
Net earnings				$	178,395		$	181,224		$	439,190		$	368,403
Net earnings per share:
Basic				$	1.41		$	1.43		$	3.45		$	2.91
Diluted				$	1.39		$	1.41		$	3.40		$	2.87
Weighted-average number of common shares:
Basic					126,747			126,628			127,397			126,600
Diluted					128,344			128,793			129,083			128,406

TIFFANY & CO. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands)
					January 31,			January 31,
					2012			2011
ASSETS
Current assets:
Cash and cash equivalents and short-term investments				$	442,190		$	740,871
Accounts receivable, net					184,085			185,969
Inventories, net					2,073,212			1,625,302
Deferred income taxes					83,124			41,826
Prepaid expenses and other current assets					107,064			90,577
Total current assets					2,889,675			2,684,545
Property, plant and equipment, net					767,174			665,588
Other assets, net					502,143			385,536
				$	4,158,992		$	3,735,669
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings				$	112,973		$	38,891
Current portion of long-term debt					60,822			60,855
Accounts payable and accrued liabilities					328,962			258,611
Income taxes payable					60,977			55,691
Merchandise and other customer credits					62,943			65,865
Total current liabilities					626,677			479,913
Long-term debt					538,352			588,494
Pension/postretirement benefit obligations					338,564			217,435
Other long-term liabilities					186,802			147,372
Deferred gains on sale-leasebacks					119,692			124,980
Stockholders' equity					2,348,905			2,177,475
				$	4,158,992		$	3,735,669

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