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Tiffany Reports Third Quarter Results

Stocks in this article: TIF

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 net 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:

      Third Quarter 2013 vs. 2012       Year-to-date 2013 vs. 2012
            Constant-                   Constant-
GAAP Translation Exchange-Rate GAAP Translation Exchange-Rate
Reported       Effect       Basis       Reported       Effect       Basis

Net Sales:

Worldwide 7 % (4)% 11 % 7 % (4)% 11 %
Americas 4 % (1)% 5 % 4 % 4 %
Asia-Pacific 27 % (2)% 29 % 20 % (1)% 21 %
Japan (13)% (22)% 9 % (8)% (20)% 12 %
Europe 7 % 3 % 4 % 8 % 1 % 7 %
Other 14 % 14 % 56 % 56 %

Comparable Store Sales:

Worldwide 3 % (4)% 7 % 3 % (4)% 7 %
Americas 1 % 1 % 1 % 1 %
Asia-Pacific 20 % (2)% 22 % 14 % (1)% 15 %
Japan (16)% (21)% 5 % (9)% (20)% 11 %
Europe 4 % 2 % 2 % 6 % 1 % 5 %
Other * 1% 1 % 1% 1 %
 
* Represents sales in five TIFFANY & CO. stores in the United Arab Emirates, which were converted from independently-operated to Company-operated in July 2012, and became comparable in the third quarter of 2013.
 

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 items presents the Company’s 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 October 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:

              Nine Months Ended

October 31, 2013

( in thousands, except per share amounts)               $

(after tax)

          Diluted

EPS

Net earnings, as reported $       284,968           $       2.21
Cost reduction initiatives a         5,785                   0.05
Net earnings, as adjusted $       290,753           $       2.26
a   On a pre-tax basis, includes charges of $9,379,000 within SG&A for the nine months ended October 31, 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 October 31,

Nine Months Ended October 31,
2013 2012 2013 2012
Net sales $ 911,478 $ 852,741 $ 2,732,846 $ 2,558,480
 
Cost of sales 391,997 388,452 1,178,012 1,126,011
 
Gross profit 519,481 464,289 1,554,834 1,432,469
 
Selling, general and administrative expenses 365,863 346,994 1,083,172 1,025,609
 
Earnings from operations 153,618 117,295 471,662 406,860
 
Interest and other expenses, net 13,922 14,783 41,328 39,587
 
Earnings from operations before income taxes 139,696 102,512 430,334 367,273
 
Provision for income taxes 45,086 39,333 145,366 130,759
 
Net earnings $ 94,610 $ 63,179 $ 284,968 $ 236,514
 
 
Net earnings per share:
 
Basic $ 0.74 $ 0.50 $ 2.23 $ 1.87
Diluted $ 0.73 $ 0.49 $ 2.21 $ 1.85
 
 
Weighted-average number of common shares:
 
Basic 128,004 126,737 127,716 126,697
Diluted 128,974 127,902 128,729 127,914
 
                 
TIFFANY & CO. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands)
 
 
 
October 31, January 31, October 31,
  2013   2013   2012

ASSETS

 
Current assets:
Cash and cash equivalents $ 521,200 $ 504,838 $ 344,512
Accounts receivable, net 165,862 173,998 160,604
Inventories, net 2,418,710 2,234,334 2,289,571
Deferred income taxes 78,020 79,508 106,744
Prepaid expenses and other current assets 178,710 158,911 181,375
 
Total current assets 3,362,502 3,151,589 3,082,806
 
Property, plant and equipment, net 836,062 818,838 800,225
Other assets, net 680,937 660,423 566,964
 
$ 4,879,501 $ 4,630,850 $ 4,449,995
 

LIABILITIES AND STOCKHOLDERS' EQUITY

 
Current liabilities:
Short-term borrowings $ 252,016 $ 194,034 $ 196,279
Accounts payable and accrued liabilities 309,798 295,424 284,189
Income taxes payable 16,190 30,487 17,958
Merchandise and other customer credits 66,110 66,647 65,996
 
Total current liabilities 644,114 586,592 564,422
 
Long-term debt 755,724 765,238 781,637
Pension/postretirement benefit obligations 348,561 361,246 322,033
Other long-term liabilities 223,684 209,732 205,720
Deferred gains on sale-leasebacks 85,464 96,724 108,962
Stockholders' equity 2,821,954 2,611,318 2,467,221
 
$ 4,879,501 $ 4,630,850 $ 4,449,995
 




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