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Tiffany Reports Its Second Quarter Results

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:
       
Second Quarter 2013 vs. 2012     First Half 2013 vs. 2012

GAAPReported
   

TranslationEffect
   

Constant-Exchange-RateBasis
   

GAAPReported
   

TranslationEffect
   

Constant-Exchange-RateBasis

Net Sales:
               
Worldwide 4 % (4)% 8 % 7 % (3)% 10 %
Americas 2 % 2 % 4 % 4 %
Asia-Pacific 20 % 20 % 17 % 17 %
Japan (14)% (21)% 7 % (7)% (21)% 14 %
Europe 11 % 1 % 10 % 9 % 9 %

Comparable Store Sales:
Worldwide 1 % (4)% 5 % 3 % (4)% 7 %
Americas 1 % 1 %
Asia-Pacific 13 % 13 % 11 % 11 %
Japan (13)% (21)% 8 % (6)% (20)% 14 %
Europe 8 % 1 % 7 % 6 % 6 %
 

Net Earnings

The accompanying press release presents net earnings and highlights expenses tied to specific cost reduction initiatives in the text. Management believes excluding such specific items presents the Company’s quarter-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 July 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:
       
 

Six Months EndedJuly 31, 2013
( in thousands, except per share amounts)        

$(after tax)
       

DilutedEPS
       
Net earnings, as reported $ 190,358 $ 1.48
 
Cost reduction initiatives a   5,785           0.05
 
Net earnings, as adjusted $ 196,143         $ 1.53
 
 

a
  On a pre-tax basis, includes charges of $9,379,000 within SG&A for the first half of 2013 associated with severance related to staffing reductions and subleasing of certain office space for which only a portion of the Company’s future rent obligations will be recovered.
 
 
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,
2013 2012 2013 2012
Net sales $ 925,884 $ 886,569 $ 1,821,368 $ 1,705,739
 
Cost of sales 393,755 387,407 786,015 737,559
 
Gross profit 532,129 499,162 1,035,353 968,180
 
Selling, general and administrative expenses 355,243 344,582 717,309 678,615
 
Earnings from operations 176,886 154,580 318,044 289,565
 
Interest and other expenses, net 14,694 14,250 27,406 24,804
 
Earnings from operations before income taxes 162,192 140,330 290,638 264,761
 
Provision for income taxes 55,411 48,529 100,280 91,426
 
Net earnings $ 106,781 $ 91,801 $ 190,358 $ 173,335
 
 
Net earnings per share:
 
Basic $ 0.84 $ 0.72 $ 1.49 $ 1.37
Diluted $ 0.83 $ 0.72 $ 1.48 $ 1.36
 
 
Weighted-average number of common shares:
 
Basic 127,826 126,631 127,572 126,677
Diluted 128,771 127,663 128,606 127,920
 
 
     
 
TIFFANY & CO. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands)
                 
 
 
 
July 31, January 31, July 31,
  2013   2013   2012

ASSETS
 
Current assets:
Cash and cash equivalents $ 489,664 $ 504,838 $ 366,080
Accounts receivable, net 161,746 173,998 171,463
Inventories, net 2,328,510 2,234,334 2,230,474
Deferred income taxes 77,948 79,508 105,212
Prepaid expenses and other current assets 182,049 158,911 131,485
 
Total current assets 3,239,917 3,151,589 3,004,714
 
Property, plant and equipment, net 814,593 818,838 777,387
Other assets, net 677,208 660,423 542,645
 
$ 4,731,718 $ 4,630,850 $ 4,324,746
 

LIABILITIES AND STOCKHOLDERS' EQUITY
 
Current liabilities:
Short-term borrowings $ 207,412 $ 194,034 $ 155,137
Accounts payable and accrued liabilities 276,810 295,424 259,608
Income taxes payable 36,731 30,487 26,901
Merchandise and other customer credits 67,921 66,647 63,112
 
Total current liabilities 588,874 586,592 504,758
 
Long-term debt 756,807 765,238 784,409
Pension/postretirement benefit obligations 342,361 361,246 316,319
Other long-term liabilities 221,692 209,732 198,176
Deferred gains on sale-leasebacks 86,688 96,724 112,285
Stockholders' equity 2,735,296 2,611,318 2,408,799
 
$ 4,731,718 $ 4,630,850 $ 4,324,746
 
 

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