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Tiffany Reports Fourth Quarter And Full Year Results; Management Provides Its Financial Outlook For 2013

TIFFANY & CO. AND SUBSIDIARIES(Unaudited)

NON-GAAP MEASURES

The Company reports information in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). The Company’s management does not, nor does it suggest that investors should, consider 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.

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. 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 following table reconciles sales percentage increases (decreases) from the GAAP to the non-GAAP basis versus the previous year:

       
Fourth Quarter 2012 vs. 2011     Year-to-Date 2012 vs. 2011

GAAPReported

   

TranslationEffect

   

Constant-Exchange-Rate Basis

   

GAAPReported

   

TranslationEffect

   

Constant-Exchange-Rate Basis

Net Sales:

               
Worldwide

4%

(1)%

5%

4%

(1)%

5%

Americas

2%

2%

2%

2%

Asia-Pacific

13%

3%

10%

8%

8%

Japan (6)% (8)%

2%

4%

(2)%

6%

Europe

3%

3%

3%

(4)%

7%

Comparable Store Sales:

Worldwide (1)%

1%

Americas (2)% (2)% (2)% (2)%
Asia-Pacific

8%

2%

6%

3%

1%

2%

Japan

(6)%

(8)%

2%

4%

(3)%

7%

Europe

1%

1%

(2)% (4)%

2%

 

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 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, 2013. 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:

           

Year EndedJanuary 31, 2013

     

Year EndedJanuary 31, 2012

( in thousands, except per share amounts)

     

$(after tax)

     

DilutedEPS

     

$(after tax)

     

DilutedEPS

Net earnings, as reported $   416,157       $ 3.25 $   439,190       $ 3.40
Headquarters relocation a                       25,994         0.20
Net earnings, as adjusted $   416,157       $ 3.25       $   465,184       $ 3.60
 
a

On a pre-tax basis includes charges of $213,000 within cost of sales and $42,506,000 within SG&A for the year ended January 31, 2012 associated with Tiffany’s consolidation of its New York headquarters staff within one location.

 

Free Cash Flow

Internally, management monitors its cash flow on a non-GAAP basis as the ability to generate free cash flow demonstrates how much cash a company has available for discretionary and non-discretionary items after deduction of capital expenditures. The Company’s operations require regular capital expenditures for the opening, renovation and expansion of stores and distribution and manufacturing facilities as well as ongoing investments in information technology. Management believes this provides a more representative assessment of operating cash flows. The following table reconciles GAAP net cash provided by operating activities to non-GAAP free cash flows:

       
( in thousands)        

For the year endedJanuary 31, 2013

Net cash provided by operating activities $ 328,290
Capital expenditures   219,530
Free cash inflow $ 108,760
 
         
TIFFANY & CO. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited, in thousands, except per share amounts)
             
 
Three Months Ended January 31, Year Ended January 31,
2013 2012 2013 2012
Net sales $ 1,235,769 $ 1,187,440 $ 3,794,249 $ 3,642,937
 
Cost of sales 504,954 470,525 1,630,965 1,491,783
 
Gross profit 730,815 716,915 2,163,284 2,151,154
 
Selling, general and administrative expenses 440,458 431,172 1,466,067 1,442,728
 
Earnings from operations 290,357 285,743 697,217 708,426
 
Interest and other expenses, net 14,054 13,316 53,641 43,475
 
Earnings from operations before income taxes 276,303 272,427 643,576 664,951
 
Provision for income taxes 96,660 94,032 227,419 225,761
 
Net earnings $ 179,643 $ 178,395 $ 416,157 $ 439,190
 
 
Net earnings per share:
 
Basic $ 1.42 $ 1.41 $ 3.28 $ 3.45
Diluted $ 1.40 $ 1.39 $ 3.25 $ 3.40
 
 
Weighted-average number of common shares:
 
Basic 126,857 126,747 126,737 127,397
Diluted 127,992 128,344 127,934 129,083
 
 
TIFFANY & CO. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands)
     
 
January 31, January 31,
  2013   2012

ASSETS

 
Current assets:
Cash and cash equivalents $ 504,838 $ 433,954
Accounts receivable, net 173,998 184,085
Inventories, net 2,234,334 2,073,212
Deferred income taxes 79,508 83,124
Prepaid expenses and other current assets 158,911 115,300
 
Total current assets 3,151,589 2,889,675
 
Property, plant and equipment, net 818,838 767,174
Other assets, net 660,423 502,143
 
$ 4,630,850 $ 4,158,992
 

LIABILITIES AND STOCKHOLDERS' EQUITY

 
Current liabilities:
Short-term borrowings $ 194,034 $ 112,973
Current portion of long-term debt 0 60,822
Accounts payable and accrued liabilities 295,424 328,962
Income taxes payable 30,487 60,977
Merchandise and other customer credits 66,647 62,943
 
Total current liabilities 586,592 626,677
 
Long-term debt 765,238 538,352
Pension/postretirement benefit obligations 361,246 338,564
Other long-term liabilities 209,732 186,802
Deferred gains on sale-leasebacks 96,724 119,692
Stockholders' equity 2,611,318 2,348,905
 
$ 4,630,850 $ 4,158,992
 




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