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TheStreet Open House

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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