Exhibit 99.1
TIFFANY & CO.
NEWS RELEASE
Fifth Avenue & 57th Street Contacts:
New York, N.Y. 10022 ---------
James N. Fernandez
(212)230-5315
Mark L. Aaron
(212)230-5301
TIFFANY REPORTS FOURTH QUARTER AND YEAR RESULTS;
------------------------------------------------
PROVIDES FINANCIAL OUTLOOK FOR 2010
-----------------------------------
New York, N.Y., March 22, 2010 - Tiffany & Co. (NYSE: TIF) reported today that
worldwide sales rose 17% in its fourth quarter ended January 31, 2010. This
increase reflected broad-based growth in the Americas, Asia-Pacific and European
regions. Net earnings from continuing operations were $1.09 per diluted share in
the quarter. Full year sales declined 5% to $2.7 billion and net earnings from
continuing operations increased 15% to $2.12 per diluted share (earnings in both
years included nonrecurring charges - see attached "Non-GAAP Measures"
schedule). Management also introduced its financial objectives for 2010, which
are enumerated in this news release.
In the three months (fourth quarter) ended January 31, 2010:
- ------------------------------------------------------------
o Net sales increased 17% to $981.4 million, compared with $837.6
million in last year's fourth quarter. On a constant-exchange-rate
basis, which excludes the effect of translating
foreign-currency-denominated sales into U.S. dollars, worldwide net
sales rose 13% and comparable store sales rose 8% (see attached
"Non-GAAP Measures" schedule).
o Net earnings from continuing operations were $138.2 million, or $1.09
per diluted share, versus $37.4 million, or $0.30 per diluted share,
in last year's fourth quarter. In last year's fourth quarter, the
Company recorded nonrecurring items which, in total, reduced net
earnings from continuing operations by $0.56 per diluted share. Net
earnings were $140.4 million, or $1.10 per diluted share, versus $31.1
million, or $0.25 per diluted share, in last year's fourth quarter.
1
In the full year (fiscal 2009) ended January 31, 2010:
- ------------------------------------------------------
o Net sales were $2.71 billion, or 5% below $2.85 billion in the prior
year. On a constant-exchange-rate basis, worldwide net sales and
comparable store sales declined 5% and 8%.
o Net earnings from continuing operations were $265.7 million, or $2.12
per diluted share, compared with $232.2 million, or $1.84 per diluted
share, in the prior year. In fiscal 2009, the Company recorded various
nonrecurring items that benefited net earnings from continuing
operations by $0.08 per diluted share. In fiscal 2008, the Company
recorded nonrecurring items that reduced net earnings from continuing
operations by $0.55 per diluted share. Net earnings were $264.8
million, or $2.11 per diluted share, versus $220.0 million, or $1.74
per diluted share, in 2008.
Financial results for the Iridesse subsidiary are classified as discontinued
operations for the current and prior-year periods. This change in classification
began in the second quarter of 2009.
Michael J. Kowalski, chairman and chief executive officer, said, "We were very
pleased with the sales results in the fourth quarter which reflected growth in
most countries, product categories and price points. Notwithstanding the global
economic challenges over the past year, the decisive measures we took to control
spending were successful and, combined with the considerable and growing
international awareness of the TIFFANY & CO. brand, helped us to generate strong
earnings and free cash flow."
Net sales by segment were as follows:
- -------------------------------------
o In the Americas, sales increased 14% to $523.5 million in the fourth
quarter. Sales of $1.41 billion in the fiscal year were 11% below the
prior year. Comparable U.S. store sales rose 11% in the fourth quarter
and declined 15% in the fiscal year. Sales in the New York flagship
store and comparable U.S. branch stores increased 22% and 8% in the
fourth quarter, and declined 15% and 15% in the fiscal year. During
the quarter, the Company opened a store in Las Vegas, NV. Combined
Internet and catalog sales in the U.S. increased 16% in the quarter
and declined 1% in the year.
2
o In the Asia-Pacific region, sales rose 14% to $318.0 million in the
fourth quarter due to strong growth in all countries except Japan.
Sales increased 4% to $957.2 million in the year. On a
constant-exchange-rate basis, sales rose 7% in the fourth quarter and
were unchanged in the year; comparable store sales increased 3% and
declined 3% in those periods. During the quarter, the Company opened
stores in Shenzhen, China and Melbourne, Australia.
o In Europe, sales increased 29% to $122.9 million in the fourth quarter
and 10% to $311.8 million in the year due to strong growth in most
countries. On a constant-exchange-rate basis, sales rose 18% in the
fourth quarter and 16% in the year; comparable store sales increased
14% and 9%. During the quarter, the Company opened a store in
Amsterdam, the Netherlands and a second location in London's Heathrow
Airport.
o The Company operated 220 TIFFANY & CO. stores and boutiques at January
31, 2010 (91 in the Americas, 102 in Asia-Pacific and 27 in Europe),
versus 206 locations a year ago (86 in the Americas, 96 in
Asia-Pacific and 24 in Europe).
o Other sales were $17.1 million in the fourth quarter versus $3.7
million in the prior year, and in the full year were $29.9 million
versus $55.6 million in the prior year. The changes in both periods
were affected by the levels of wholesale sales of rough diamonds.
Other financial highlights were:
- --------------------------------
o Gross margin (gross profit as a percentage of net sales) declined to
58.7% in the fourth quarter (versus 59.4% in the prior year) due to
increased wholesale sales of rough diamonds that generate minimal, if
any, profit. Gross margin declined to 56.5% in the year (versus 57.8%
last year) primarily due to higher product costs.
o Selling, general and administrative (SG&A) expenses increased 7% in
the fourth quarter, primarily due to management incentive compensation
expense related to improved financial performance. Such compensation
was curtailed last year. SG&A expenses declined 6% in the year, due to
substantial savings realized from reductions in staffing and marketing
costs.
3
o Interest and other expenses, net in the fourth quarter and year were
above the prior year primarily due to increased interest expense
related to issuances of long-term debt over the past year.
o Effective income tax rates were 34.2% in the fourth quarter (versus
40.2%) and 31.9% in the fiscal year (versus 36.5%). The full year
reduction was due to the recording of favorable reserve adjustments at
the conclusion of certain tax audits and at the expiration of
statutory periods; these adjustments benefited net earnings from
continuing operations by $0.09 per diluted share in the year.
o Accounts receivable at January 31, 2010 were 3% below the prior
year-end.
o Net inventories declined 11% in the fiscal year to $1.43 billion at
January 31, 2010 due to a reduction in finished goods inventories,
consistent with management's objective, as well as the effect from
higher-than-planned sales in the fourth quarter.
o Capital expenditures were $75 million in the year, compared with $154
million in the prior year. The lower spending resulted from fewer
store openings in 2009 and other cost containment initiatives.
o Balance sheet liquidity at January 31, 2010 included: cash and cash
equivalents of $786 million (versus $160 million a year ago), and
total short-term borrowings and long-term debt of $754 million (versus
$709 million a year ago).
Mr. Kowalski added, "In 2010, we will remain focused on meaningful opportunities
to expand our global store base, realize market share gains in a changing
competitive environment and enhance profitability. We believe that Tiffany has
the ability to deliver healthy sales and earnings growth and, in fact, have
begun the year with worldwide sales growth exceeding our first quarter plan
which calls for a high-teens percentage increase. Tiffany has the necessary
components for ongoing success -- compelling products, organizational and
financial strength, an efficient infrastructure and a premium brand that is
increasingly recognized for lasting value."
4
2010 Outlook:
- -------------
Management's outlook for fiscal 2010 is based on the following assumptions which
may or may not prove valid:
a) A worldwide sales increase of approximately 11%.
b) By region, sales are expected to increase by a low-double-digit
percentage in the Americas, a high-single-digit percentage in
Asia-Pacific (including a low-single-digit percentage decline in Japan
and at least 20% growth elsewhere), and a mid-teens percentage in
Europe. Other sales are expected to decline 5%;
c) The opening of 17 new Company-operated stores (six in the Americas,
eight in Asia-Pacific and three in Europe);
d) An increase in the operating margin primarily due to a higher gross
margin as well as a modestly improved ratio of SG&A expenses to sales;
e) Other expenses, net of approximately $50 million;
f) An effective income tax rate of approximately 35%;
g) Net earnings from continuing operations of $2.45 - $2.50 per diluted
share;
h) Capital expenditures of approximately $200 million; and
i) A high-single-digit percentage increase in net inventories.
Today's Conference Call:
- ------------------------
The Company will host a conference call today at 8:30 a.m. (Eastern Time) to
review these actual results and its outlook. Investors may listen at
http://investor.tiffany.com ("Events and Presentations").
Next Scheduled Announcement:
- ----------------------------
The Company expects to report its first quarter 2010 financial results on May
27, 2010 with a conference call at 8:30 a.m. (Eastern Time). To receive
notifications of news releases, please register at http://investor.tiffany.com
("E-Mail Alerts").
Tiffany & Co. operates jewelry stores and manufactures products through its
subsidiary corporations. Its principal subsidiary is Tiffany and Company. The
Company operates TIFFANY & CO. retail stores and boutiques in the Americas,
Asia-Pacific and Europe and engages in direct selling through Internet, catalog
and business gift operations. For additional information, please visit
www.tiffany.com or call our shareholder information line at 800-TIF-0110.
5
This document contains certain "forward-looking" statements concerning the
Company's objectives and expectations with respect to sales, store openings,
gross margin, SG&A expenses, interest expense, effective income tax rate, net
earnings, inventories and capital expenditures. Actual results might differ
materially from those projected in the forward-looking statements. Information
concerning risk factors that could cause actual results to differ materially is
set forth in the Company's 2008 Annual Report on Form 10-K and in other reports
filed with the Securities and Exchange Commission. The Company undertakes no
obligation to update or revise any forward-looking statements to reflect
subsequent events or circumstances.
# # #
6
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 international sales 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 years:
Fourth Quarter 2009 vs. 2008 Year-to-date 2009 vs. 2008
-------------------------------------------- --------------------------------------------
Constant- Constant-
GAAP Translation Exchange- GAAP Translation Exchange-
Reported Effect Rate Basis Reported Effect Rate Basis
------------------------------------------- --------------------------------------------
Net Sales:
- ----------
Worldwide 17 % 4 % 13 % (5)% - (5)%
Americas 14 % 1 % 13 % (11)% - (11)%
U.S. 12 % - 12 % (12)% - (12)%
Asia-Pacific 14 % 7 % 7 % 4 % 4 % -
Japan (6)% 3 % (9)% (4)% 7 % (11)%
Other Asia-Pacific 51 % 13 % 38 % 18 % (1)% 19 %
Europe 29 % 11 % 18 % 10 % (6)% 16 %
Comparable Store Sales:
- -----------------------
Worldwide 11 % 3 % 8 % (7)% 1 % (8)%
Americas 11 % 1 % 10 % (14)% - (14)%
U.S. 11 % - 11 % (15)% - (15)%
Asia-Pacific 8 % 5 % 3 % 1 % 4 % (3)%
Japan (7)% 2 % (9)% (4)% 7 % (11)%
Other Asia-Pacific 36 % 12 % 24 % 8 % - 8 %
Europe 25 % 11 % 14 % 3 % (6)% 9 %
7
Net Earnings from Continuing Operations
- ---------------------------------------
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 full year results on a more comparable basis to the corresponding periods in
the prior year, thereby providing investors with an additional perspective to
analyze the results of operations of the Company at January 31, 2010. 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 Three Months Ended
January 31, 2010 January 31, 2009
---------------------------------------------------------------------------
$ Diluted $ Diluted
(in thousands, except per share amounts) (after tax) EPS (after tax) EPS
- ---------------------------------------------------------------------------------------------------------------------
Net earnings from continuing $ 138,207 $ 1.09 $ 37,413 $ 0.30
operations, as reported
Restructuring charges - - 59,006 0.47
Impairment of investments and - - 8,335 0.07
loans a, b
Diamond facility closing charge a - - 2,198 0.02
---------------------------------------------------------------------------
Net earnings from continuing $ 138,207 $ 1.09 $ 106,952 $ 0.86
operations, as adjusted
===========================================================================
a On a pre-tax basis includes a $14,444,000 charge within SG&A for the three months ended January 31, 2009.
b On a pre-tax basis includes $1,311,000 charge within interest and other expenses, net for the three months ended
January 31, 2009.
Full Year Ended Full Year Ended
January 31, 2010 January 31, 2009
---------------------------------------------------------------------------
$ Diluted $ Diluted
(in thousands, except per share amounts) (after tax) EPS (after tax) EPS
- ---------------------------------------------------------------------------------------------------------------------
Net earnings from continuing $ 265,676 $ 2.12 $ 232,155 $ 1.84
operations, as reported
Diamond sourcing agreement a 3,440 0.03 - -
Loan recovery a (2,676) (0.02) - -
Tax benefit b (11,220) (0.09) - -
Restructuring charges - - 59,006 0.46
Impairment of investments and - - 8,335 0.07
loans a, c
Diamond facility closing charge a - - 2,198 0.02
--------------------------------------------------------------------------
Net earnings from continuing $ 255,220 $ 2.04 $ 301,694 $ 2.39
operations, as adjusted
==========================================================================
a On a pre-tax basis includes a benefit of $442,000 and a charge of $14,444,000 within SG&A for the years ended January 31, 2010
and 2009.
b Includes $11,220,000 of tax benefits within the provision for income taxes for the year ended January 31, 2010.
c On a pre-tax basis includes a $1,311,000 charge within interest and other expenses, net for the year ended January 31,
2009.
8
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,
------------------------------------ ---------------------------------
2010 2009 2010 2009
------------- ------------- ------------- -------------
Net sales $ 981,384 $ 837,593 $ 2,709,704 $ 2,848,859
Cost of sales 405,639 340,170 1,179,485 1,202,417
------------- ------------- ------------- -------------
Gross profit 575,745 497,423 1,530,219 1,646,442
Selling, general and administrative expenses 351,138 327,443 1,089,727 1,153,944
Restructuring charge - 97,839 - 97,839
------------- ------------- ------------- -------------
Earnings from continuing operations 224,607 72,141 440,492 394,659
Interest and other expenses, net 14,620 9,606 50,518 28,900
------------- ------------- ------------- -------------
Earnings from continuing operations before income taxes 209,987 62,535 389,974 365,759
Provision for income taxes 71,780 25,122 124,298 133,604
------------- ------------- ------------- -------------
Net earnings from continuing operations 138,207 37,413 265,676 232,155
Net earnings (loss) from discontinued operations 2,160 (6,328) (853) (12,133)
------------- ------------- ------------- -------------
Net earnings $ 140,367 $ 31,085 $ 264,823 $ 220,022
============= ============= ============= =============
Net earnings from continuing operations per share:
Basic $ 1.10 $ 0.30 $ 2.14 $ 1.86
============= ============= ============= =============
Diluted $ 1.09 $ 0.30 $ 2.12 $ 1.84
============= ============= ============= =============
Net earnings per share:
Basic $ 1.12 $ 0.25 $ 2.13 $ 1.76
============= ============= ============= =============
Diluted $ 1.10 $ 0.25 $ 2.11 $ 1.74
============= ============= ============= =============
Weighted-average number of common shares:
Basic 125,097 123,363 124,345 124,734
Diluted 127,265 123,793 125,383 126,410
9
TIFFANY & CO. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands)
January 31, January 31,
2010 2009
----------------- -----------------
ASSETS
- ------
Current assets:
Cash and cash equivalents $ 785,702 $ 160,445
Accounts receivable, net 158,706 164,447
Inventories, net 1,427,855 1,601,236
Deferred income taxes 6,651 13,640
Prepaid expenses and other current assets 66,752 108,966
------------- -------------
Total current assets 2,445,666 2,048,734
Property, plant and equipment, net 685,101 741,048
Other assets, net 357,593 312,501
------------- -------------
$ 3,488,360 $ 3,102,283
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Short-term borrowings $ 27,642 $ 242,966
Current portion of long-term debt 206,815 40,426
Accounts payable and accrued liabilities 231,913 223,566
Income taxes payable 67,513 27,653
Merchandise and other customer credits 66,390 67,311
------------- -------------
Total current liabilities 600,273 601,922
Long-term debt 519,592 425,412
Pension/postretirement benefit obligations 219,276 200,603
Other long-term liabilities 137,331 152,334
Deferred gains on sale-leasebacks 128,649 133,641
Stockholders' equity 1,883,239 1,588,371
------------- -------------
$ 3,488,360 $ 3,102,283
============= =============
10