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Tiffany’s Second Quarter Sales And Earnings In Line With Company Expectations

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:

       
Second Quarter 2012 vs. 2011     First Half 2012 vs. 2011
               
Constant- Constant-
GAAP Translation Exchange-Rate GAAP Translation Exchange-Rate
Reported     Effect     Basis     Reported     Effect     Basis

Net Sales:

Worldwide 2 % (1)% 3 % 4 % (1)% 5 %
Americas (1)% (1)% 1 % (1)% 2 %
Asia-Pacific 1 % (2)% 3 % 8 % (1)% 9 %
Japan 11 % 1 % 10 % 13 % 2 % 11 %
Europe (1)% (9)% 8 % 1 % (7)% 8 %

Comparable Store Sales:

Worldwide (3)% (2)% (1)% (1)% 1 %
Americas (5)% (5)% (3)% (3)%
Asia-Pacific (7)% (2)% (5)% 2 % 2 %
Japan 12 % 2 % 10 % 13 % 2 % 11 %
Europe (7)% (9)% 2 % (6)% (7)% 1 %
 

Net Earnings

The accompanying press release presents net earnings and highlights prior year nonrecurring items in the text. Management believes excluding such items presents the Company’s second quarter and first half 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 July 31, 2012. The following table reconciles GAAP net earnings and net earnings per diluted share (“EPS”) to non-GAAP net earnings and net earnings per diluted share, as adjusted:

       
Three Months Ended

July 31, 2012

    Three Months Ended

July 31, 2011

 

$     Diluted $     Diluted

(in thousands, except per share amounts)

    (after tax)     EPS     (after tax)     EPS
Net earnings, as reported $ 91,801 $ 0.72 $ 90,043 $ 0.69
Headquarters relocation a               20,991       0.16
Net earnings, as adjusted $ 91,801     $ 0.72     $ 111,034     $ 0.86

a

 

On a pre-tax basis includes charges of $34,497,000 within selling, general and administrative expenses for the three months ended July 31, 2011 associated with Tiffany’s consolidation of its New York headquarters staff within one location.

       
Six Months Ended

July 31, 2012

    Six Months Ended

July 31, 2011

 

$     Diluted $     Diluted

(in thousands, except per share amounts)

    (after tax)     EPS     (after tax)     EPS
Net earnings, as reported $ 173,335 $ 1.36 $ 171,106 $ 1.32
Headquarters relocation a               25,994       0.20
Net earnings, as adjusted $ 173,335     $ 1.36     $ 197,100     $ 1.52

a

 

On a pre-tax basis includes charges of $213,000 within cost of sales and $42,506,000 within selling, general and administrative expenses for the six months ended July 31, 2011 associated with Tiffany’s consolidation of its New York headquarters staff within one location.

 
       
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,

2012 2011 2012 2011
Net sales $ 886,569 $ 872,712 $ 1,705,739 $ 1,633,730
 
Cost of sales 387,407 358,015 737,559 675,340
 
Gross profit 499,162 514,697 968,180 958,390
 
Selling, general and administrative expenses 344,582 374,157 678,615 681,884
 
Earnings from operations 154,580 140,540 289,565 276,506
 
Interest and other expenses, net 14,250 9,619 24,804 19,766
 
Earnings from operations before income taxes 140,330 130,921 264,761 256,740
 
Provision for income taxes 48,529 40,878 91,426 85,634
 
Net earnings $ 91,801 $ 90,043 $ 173,335 $ 171,106
 
 
Net earnings per share:
 
Basic $ 0.72 $ 0.70 $ 1.37 $ 1.34
Diluted $ 0.72 $ 0.69 $ 1.36 $ 1.32
 
 
Weighted-average number of common shares:
 
Basic 126,631 128,030 126,677 127,816
Diluted 127,663 129,794 127,920 129,587
 
     
TIFFANY & CO. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands)
     
 
July 31, January 31, July 31,
  2012   2012   2011

ASSETS

 
Current assets:
Cash and cash equivalents and short-term investments $ 367,437 $ 442,190 $ 565,191
Accounts receivable, net 171,463 184,085 182,001
Inventories, net 2,230,474 2,073,212 1,836,874
Deferred income taxes 105,212 83,124 67,964
Prepaid expenses and other current assets 130,128 107,064 115,474
 
Total current assets 3,004,714 2,889,675 2,767,504
 
Property, plant and equipment, net 777,387 767,174 738,172
Other assets, net 542,645 502,143 425,212
 
$ 4,324,746 $ 4,158,992 $ 3,930,888
 

LIABILITIES AND STOCKHOLDERS' EQUITY

 
Current liabilities:
Short-term borrowings $ 155,137 $ 112,973 $ 97,272
Current portion of long-term debt 0 60,822 61,728
Accounts payable and accrued liabilities 259,608 328,962 274,301
Income taxes payable 26,901 60,977 20,687
Merchandise and other customer credits 63,112 62,943 66,764
 
Total current liabilities 504,758 626,677 520,752
 
Long-term debt 784,409 538,352 534,673
Pension/postretirement benefit obligations 316,319 338,564 205,298
Other long-term liabilities 198,176 186,802 193,256
Deferred gains on sale-leasebacks 112,285 119,692 125,173
Stockholders' equity 2,408,799 2,348,905 2,351,736
 
$ 4,324,746 $ 4,158,992 $ 3,930,888




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