-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, mkduh2OCT4kJbyrL7GpMpvy6TfTKSTRLsAOnxn1QoTAl3FUoKBNj1Fb216hr1NYv G1IwZxWc3Qlqmkuj/4Vruw== 0000950123-94-002016.txt : 19941212 0000950123-94-002016.hdr.sgml : 19941212 ACCESSION NUMBER: 0000950123-94-002016 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19941031 FILED AS OF DATE: 19941209 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: TIFFANY & CO CENTRAL INDEX KEY: 0000098246 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-JEWELRY STORES [5944] IRS NUMBER: 133228013 STATE OF INCORPORATION: DE FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09494 FILM NUMBER: 94564041 BUSINESS ADDRESS: STREET 1: 727 FIFTH AVE CITY: NEW YORK STATE: NY ZIP: 10022 BUSINESS PHONE: 2127558000 10-Q 1 TIFFANY & CO. -- FORM 10-Q FOR 3RD QUARTER 1 MANUALLY SIGNED ORIGINAL Page 1 of 16 Sequentially Numbered Pages Exhibit Index on Page 15 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ----------- FORM 10-Q ----------- (Mark One) X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES - --- EXCHANGE ACT OF 1934 FOR THE QUARTER ENDED OCTOBER 31, 1994. OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES - --- EXCHANGE ACT OF 1934 FOR THE TRANSITION FROM TO . -------- ------------- Commission file number: 1-9494 TIFFANY & CO. (Exact name of registrant as specified in its charter) DELAWARE 13-3228013 (State of incorporation) (I.R.S. Employer Identification No.) 727 FIFTH AVE. NEW YORK, NY 10022 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (212) 755-8000
Former name, former address and former fiscal year, if changed since last report . --------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X . No . ------- ------ APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date: Common Stock, $.01 par value, 15,681,414 shares outstanding at the close of business on OCTOBER 31, 1994. 2 TIFFANY & CO. AND SUBSIDIARIES INDEX TO FORM 10-Q FOR THE QUARTER ENDED OCTOBER 31, 1994
PAGE ---- PART I - FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets - October 31, 1994 (Unaudited) and January 31, 1994 3 Consolidated Statements of Income - for the three and nine months ended October 31, 1994 and 1993 (Unaudited) 4 Consolidated Statements of Stockholders' Equity - for the three and nine months ended October 31, 1994 (Unaudited) 5 Consolidated Statements of Cash Flows - for the nine months ended October 31, 1994 and 1993 (Unaudited) 6 Notes to Consolidated Financial Statements (Unaudited) 7-9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10-13 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 14 (a) Exhibits (b) Reports on Form 8-K
- 2 - 3 PART I. FINANCIAL INFORMATION ITEM I. FINANCIAL STATEMENTS TIFFANY & CO. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except per share amounts)
October 31, January 31, 1994 1994 -------------- ------------- (Unaudited) ASSETS Current assets; Cash and short-term investments $ 4,573 $ 4,994 Accounts receivable, less allowances of $4,666 and $4,170 61,230 67,330 Income taxes receivable 7,925 12,517 Inventories 305,699 262,282 Prepaid expenses 23,449 17,718 -------- -------- Total current assets 402,876 364,841 Property and equipment, net 101,306 97,365 Deferred income taxes 16,285 15,404 Other assets, net 30,742 26,799 -------- -------- $551,209 $504,409 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Short-term borrowings $ 82,184 $ 59,289 Accounts payable and accrued liabilities 89,989 79,980 Income taxes payable 0 6,359 Merchandise and other customer credits 7,397 6,947 -------- -------- Total current liabilities 179,570 152,575 Long-term trade payable 28,380 25,394 Reserve for product return 13,236 13,663 Long-term debt 101,500 101,500 Deferred income taxes 6,178 6,758 Postretirement benefit obligation 16,202 14,320 Other long-term liabilities 874 1,118 Commitments and contingencies Stockholders' equity: Common stock, $.01 par value; authorized 30,000 shares, issued 15,681 and 15,660 157 157 Additional paid-in capital 71,091 70,498 Retained earnings 132,836 126,082 Foreign currency translation adjustments 1,185 (7,656) -------- -------- Total stockholders' equity 205,269 189,081 -------- -------- $551,209 $504,409 ======== ========
See notes to consolidated financial statements -3- 4 TIFFANY & CO. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (in thousands, except per share amounts)
For the For the Three Months Ended Nine Months Ended October 31, October 31, -------------------------- -------------------------- 1994 1993 1994 1993 ---- ---- ---- ---- Net sales $160,091 $134,750 $443,555 $358,464 Product return for Japan realignment 0 0 0 (115,000) -------- -------- -------- -------- 160,091 134,750 443,555 243,464 Cost of goods sold 75,674 62,918 213,017 180,404 Cost related to product return for Japan realignment 0 0 0 (57,500) -------- -------- -------- -------- Gross profit 84,417 71,832 230,538 120,560 Selling, general and administrative expenses 72,176 63,392 202,436 163,184 Provision for uncollectible accounts 414 524 1,143 1,430 -------- -------- -------- -------- Income/(loss) from operations 11,827 7,916 26,959 (44,054) Other expenses, net 3,533 2,201 9,305 5,611 -------- -------- -------- -------- Income/(loss) before income taxes 8,294 5,715 17,654 (49,665) Provision/(benefit) for income taxes 3,574 2,460 7,608 (21,407) -------- -------- -------- -------- Net income/(loss) $ 4,720 $ 3,255 $ 10,046 $(28,258) ======== ======== ======== ======== Net income/(loss) per share: Primary $ 0.30 $ 0.21 $ 0.63 $ (1.79) ======== ======== ========= ======== Fully diluted $ 0.30 $ 0.21 $ 0.63 $ (1.79) ======== ======== ========= ======== Weighted average number of common shares: Primary 15,962 15,797 15,876 15,775 Fully diluted 16,884 16,701 16,873 16,689
See notes to consolidated financial statements - 4 - 5 TIFFANY & CO. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) (in thousands)
Foreign Total Common Stock Additional Currency Stockholders' ------------------- Paid-In Retained Translation Equity Shares Amount Capital Earnings Adjustments ------------ ------ ------ ---------- -------- ----------- BALANCES, January 31, 1994 $189,081 15,660 $157 $70,498 $126,082 $(7,656) Exercise of stock options 70 3 - 70 - - Tax benefit from exercise of stock options 4 - - 4 - - Cash dividends on common stock (1,096) - - - (1,096) - Foreign currency translation adjustments 2,698 - - - - 2,698 Net income 1,876 - - - 1,876 - ------- ------- ---- ------- -------- ------- BALANCES, April 30, 1994 192,633 15,663 157 70,572 126,862 (4,958) ------- ------- ---- ------- -------- ------- Exercise of stock options 320 16 - 320 - - Tax benefit from exercise of stock options 112 - - 112 - - Cash dividends on common stock (1,098) - - - (1,098) - Foreign currency translation adjustments 1,892 - - - - 1,892 Net income 3,450 - - - 3,450 - ------- ------- ---- ------- -------- ------- BALANCES, July 31, 1994 197,309 15,679 157 71,004 129,214 (3,066) -------- ------- ---- ------- -------- ------- Exercise of stock options 71 2 - 71 - - Tax benefit from exercise of stock options 16 - - 16 - - Cash dividends on common stock (1,098) - - - (1,098) - Foreign currency translation adjustments 4,251 - - - - 4,251 Net income 4,720 - - - 4,720 - -------- ------- ---- ------- -------- ------- BALANCES, October 31, 1994 $205,269 15,681 $157 $71,091 $132,836 $ 1,185 ======== ======= ==== ======= ======== =======
See notes to consolidated financial statements - 5 - 6 TIFFANY & CO. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands)
For the Nine Months Ended October 31, --------------------------------- 1994 1993* ---- ---- Cash Flows From Operating Activities: Net income/(loss) $ 10,046 $(28,258) Adjustments to reconcile net income/(loss) to net cash provided by operating activities: Depreciation and amortization 12,067 9,833 Provision for uncollectible accounts 1,143 1,430 Provision for product returns 0 57,500 Reduction in reserve for product returns (427) (34,735) Provision for inventories 1,867 782 Deferred income taxes (1,365) (13,415) Income taxes receivable 4,592 (17,488) Loss on sale of fixed assets 0 271 Postretirement benefit provision 1,882 1,425 (Increase)/decrease in assets and increase/ (decrease) in liabilities Accounts receivable 7,634 (9,753) Inventories (28,556) (12,775) Prepaid expenses (4,857) (2,199) Other assets (5,124) (1,333) Accounts payable and accrued liabilities 8,944 30,357 Income taxes payable (6,961) (3,135) Merchandise and other customer credits 450 316 Other long-term liabilities (496) (1,278) --------- -------- Net cash provided by/(used)in operating activities 839 (22,455) --------- -------- Cash Flows From Investing Activities: Capital expenditures (12,581) (14,410) Other (133) - --------- -------- Net cash used in investing activities (12,714) (14,410) --------- -------- Cash Flows From Financing Activities: Increase in short-term borrowings 14,153 38,619 Proceeds from exercise of stock options 461 411 Tax benefit from exercise of stock options 132 336 Cash dividends on common stock (3,292) (3,286) --------- -------- Net cash provided by financing activities 11,454 36,080 --------- -------- Net decrease in cash and short-term investments (421) (785) Cash and short-term investments at beginning of year 4,994 6,672 --------- -------- Cash and short-term investments at end of nine months $ 4,573 $ 5,887 ========= ======== Supplemental Disclosure Of Cash Flow Information: Cash paid during the nine months for: Interest $ 10,555 $ 6,153 ========= ======== Income taxes $ 12,871 $ 4,343 ========= ========
* Reclassified for comparative purposes See notes to consolidated financial statements - 6 - 7 TIFFANY & CO. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. CONSOLIDATED FINANCIAL STATEMENTS The accompanying consolidated financial statements include the accounts of Tiffany & Co. and all majority-owned domestic and foreign subsidiaries (the "Company"). All material intercompany balances and transactions have been eliminated. The statements are without audit and, in the opinion of management, include all adjustments (which include only normal recurring adjustments except for the adjustment necessary as a result of the LIFO method of inventory valuation, which is based on assumptions as to inflation rates and projected fiscal year-end inventory levels) necessary to present fairly the Company's financial position as of October 31, 1994 and the results of operations and cash flows for the interim periods presented. The audited financial statements for January 31, 1994 are presented without accompanying footnotes which are included in the Company's Form 10-K filing. Since the Company's business is seasonal, with a higher proportion of sales and income generated in the last quarter of the fiscal year, the results of operations for the nine months ended October 31, 1994 and 1993 are not necessarily indicative of the results of the entire fiscal year. 2. INVENTORIES Inventories at October 31, 1994 and January 31, 1994 are summarized as follows:
October 31, January 31, 1994 1994 ----------- ----------- (in thousands) Finished goods $257,278 $219,010 Raw materials 43,338 40,210 Work in process 7,594 5,097 -------- -------- 308,210 264,317 Less: Reserves (2,511) (2,035) -------- -------- $305,699 $262,282 ======== ========
- 7 - 8 At October 31, and January 31, 1994, $215,727,000 and $177,379,000, respectively, of inventories were valued using the LIFO method. The excess of such inventories valued at replacement cost over the value based upon the LIFO method was approximately $9,770,000 and $8,470,000 at October 31, 1994 and January 31, 1994, respectively. The LIFO valuation method had no effect on net income for the three month periods ended October 31, 1994 and 1993, respectively. The LIFO valuation method had the effect of decreasing net income/(loss) by $0.05 and $0.06 per share for the nine month periods ended October 31, 1994 and 1993, respectively. 3. POSTEMPLOYMENT BENEFITS Effective February 1, 1994, the Company adopted Statement of Financial Accounting Standards No. 112, "Accounting for Postemployment Benefits" ("SFAS No. 112"), which requires the accrual of the cost of postemployment benefits rather than expensing the costs when incurred. These benefits include salary continuation, severance benefits, disability benefits and continuation of health care benefits and life insurance coverage for former employees after employment but before retirement. The adoption of this standard did not have a material impact on the Company's reported results of operation or financial condition. 4. FOREIGN CURRENCY HEDGING PROGRAM During the first quarter of 1994, the Company initiated a foreign currency hedging program intended to reduce the Company's risk on foreign-currency-denominated transactions. In connection with this program, the Company will from time to time enter into forward exchange contracts and foreign-currency-purchased put options which are designated as hedges of commitments to purchase merchandise and settle liabilities in foreign currencies. The market value gains and losses on these foreign exchange contracts are initially deferred and then recognized when the related transactions are settled. At October 31, 1994, the Company had outstanding forward exchange contracts, maturing on November 25, 1994, to sell yen 694,396,000 at predetermined contract exchange rates. At October 31, 1994, the Company had outstanding purchased put options maturing at various dates through October 25, 1995, giving it the right, but not the obligation, to sell yen 5,148,000,000 at the predetermined contract exchange rates. If current market conditions continue under which the market yen exchange rates at maturity are below the contract rates, the Company will allow the options to expire. The Company's pre-tax expense related to its hedging program was $271,000 for the three month period ended October 31, 1994 and $637,000 for the nine month period ended October 31, 1994. 5. EARNINGS PER SHARE Primary earnings per common share data have been computed by dividing net income by the weighted average number of shares outstanding during the period, including dilutive stock options. Fully diluted earnings per common share has been computed by dividing net income, after giving effect to the elimination of interest expense and bond amortization fees, net of income tax effect, applicable to the convertible subordinated debentures, by the weighted average number of shares outstanding including dilutive stock options and shares assumed issued on conversion of the subordinated debentures using the "if converted" method. - 8 - 9 6. SUBSEQUENT EVENT On November 17, 1994, Tiffany's Board of Directors declared a regular quarterly dividend of $0.07 per common share. This dividend will be paid on January 10, 1995 to stockholders of record on December 20, 1994. - 9 - 10 PART I. FINANCIAL INFORMATION Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS The Company operates three channels of distribution: U.S. Retail includes retail sales in Company-operated stores in the U.S. and wholesale sales to independent retailers in North America; Direct Marketing includes corporate (business-to-business) and catalog sales; and International Retail includes retail sales through Company-operated stores and boutiques, corporate sales, and wholesale sales to independent retailers and distributors, primarily in Asia-Pacific, Europe, Canada and the Middle East. Sales by channel of distribution were as follows:
Three months ended Nine months ended October 31, October 31, ------------------ ------------------ (in thousands) 1994 1993 1994 1993 - -------------- -------- -------- -------- -------- U.S. Retail $ 72,256 $ 62,584 $197,273 $171,766 Direct Marketing 20,796 20,260 60,284 57,454 International Retail 67,039 51,906 185,998 129,244 -------- -------- -------- -------- Net sales $160,091 $134,750 $443,555 $358,464 ======== ======== ======== ========
In comparison to comparable periods in 1993, net sales in the three months ended October 31, 1994 (third quarter) increased 19%; in the nine months ended October 31, 1994 sales increased 24%. U.S. Retail sales increased 15% in both the third quarter and nine-month periods. Comparable sales in stores open more than one year rose 12% in both periods. Sales increased in the New York store and in branch stores. Higher sales were generated by increased transactions, primarily to local-market customers. Direct Marketing sales increased 3% in the third quarter and 5% in the nine-month period due to higher catalog sales. International Retail sales increased 29% in the third quarter and 44% in the nine-month period. International Retail sales in the nine-month period are not comparable to 1993 due to the realignment of the Company's Japan business in July 1993 (see below). When measured in yen, sales in Company-operated boutiques that were open in Japan more than one year increased 22% in the third quarter and 2% in the nine-month period (the 1993 sales base for comparison purposes includes retail sales made in boutiques which were operated by Mitsukoshi Ltd. in the first half of 1993). Management believes the recent improvement in Japan primarily resulted from the Company's merchandising, marketing and publicity initiatives, as well as from favorable consumer response to recent price reductions. The Company achieved sales growth in Asia-Pacific markets other than Japan. In Europe, comparable retail store sales, when measured in local currencies, increased 26% in the third quarter and 2% in the nine-month period. In July 1993, the Company effected a realignment of its business in Japan by assuming merchandising and marketing responsibilities for each of the 29 TIFFANY & CO. boutiques previously operated by Mitsukoshi Ltd., an operator of department stores. As part of this transaction, the Company agreed to repurchase 10 11 $115,000,000 of merchandise previously sold to Mitsukoshi. As a consequence, the Company recorded a $115,000,000 provision for product return in the second quarter of 1993 which reduced gross profit by $57,500,000 and reduced net income by $32,700,000 (net of income tax benefit of $24,800,000), or $2.07 per share. At October 31, 1994, approximately $30,000,000 of merchandise remained to be repurchased throughout the period ending February 28, 1998. No further charges or sales reversals are anticipated in connection with this transaction. Under the new arrangement, Mitsukoshi no longer purchases TIFFANY & CO. merchandise on a wholesale basis for resale in Japan. Instead, Mitsukoshi acts for the Company in the sale of merchandise owned by the Company and the Company recognizes as revenues the retail price charged to the ultimate consumer in Japan (as opposed to the wholesale price previously charged to Mitsukoshi). As a result, the Company's reported sales in the nine-month period showed a significant increase due to the Japan realignment. The Company now holds inventories for sale, establishes retail prices, bears the risk of currency fluctuations, provides one or more brand managers in each boutique, controls merchandising and display within the boutiques, manages inventory and controls and funds all advertising and publicity programs with respect to TIFFANY & CO. merchandise. Mitsukoshi is paid at the rate of approximately 27% of retail sales in compensation for providing boutique facilities and sales and clerical staff, as well as for the collection of receivables and security of store inventories. The new arrangement entails greater seasonality in sales for the Company than did the prior wholesale arrangement with Mitsukoshi. The Company is experiencing greater expenses in Japan under the new arrangement, but is also recording higher revenues at the retail level. In general, management believes that the Company's increased revenues and corresponding gross profit more than offset the increased expenses. As a result of the business realignment in Japan, the Company's reported sales and earnings results benefit from a strengthening Japanese yen and are adversely affected by a strengthening U.S. dollar. To minimize the negative impact of changes in the dollar-yen relationship on the Company's financial results, the Company initiated a foreign currency hedging program in early fiscal 1994. The Company's pre-tax expense related to its hedging program was $271,000 in the third quarter and $637,000 in the nine-month period. Since the realignment, the Company has made a number of changes in its Japan business that have affected sales, gross margins, inventory levels and operating expenses. In June 1994, the Company reduced Japan retail prices by approximately 25% on products that represent approximately 55% of Japan retail sales. This reduction was taken to make pricing for TIFFANY & CO. brand merchandise more competitive with both Japanese and imported brands by reducing the premium to U.S. prices. In the past, typical retail prices of imported luxury goods in Japan reflected a substantial premium to "home market" prices, although a recent trend among retailers in Japan has been to reduce that premium. The premium over U.S. prices for TIFFANY & CO. products is now approximately 50%, based on current exchange rates, and management believes that such pricing is competitive. This June 1994 price reduction, and one for solitaire diamond rings of approximately 20% taken in October 1993, have positively affected sales and earnings in Japan, despite reduced gross margins. 11 12 Other changes made since the realignment, some of which are in the process of being implemented, include the establishment of model stock inventories for each boutique, the installation of the Company's merchandise replenishment system which expedites the flow of merchandise to the boutiques in Japan, the introduction of several new jewelry collections in Japan, an increase in advertising expenditures directed to Japan and improved visual merchandising within the boutiques. Gross margin (gross profit as a percentage of net sales) in the third quarter declined to 52.7% from 53.3% in 1993 primarily due to price reductions implemented in Japan in October 1993 and June 1994. Gross margin in the nine-month period increased to 52.0% from 49.7% in 1993 (excluding the effect of the nonrecurring charge related to the Japan business realignment) primarily due to the effect of recording higher retail sales as part of the Japan business realignment. Operating expenses (selling, general and administrative expenses and the provision for uncollectible accounts) in the third quarter increased 14% over 1993; this resulted from a combination of increased sales-related variable expenses in Japan (primarily commissions paid to department stores), new store expenses and ongoing operating expenses. In the nine-month period, operating expenses increased 24% over 1993, reflecting the effect of the Japan business realignment, as well as factors applicable to the third quarter. As a percentage of net sales, operating expenses were 45.3% in the third quarter and 45.9% in the nine-month period, compared with 47.4% and 45.9% in the respective 1993 periods. Other expenses in the third quarter and nine-month period increased over the corresponding 1993 periods, primarily due to interest expense related to higher average short-term borrowings and higher short-term rates. As a result of the above factors, net income in the third quarter was $4,720,000, or $0.30 per share, compared with $3,255,000, or $0.21 per share, in the prior year. In the nine-month period, net income was $10,046,000, or $0.63 per share, compared with $4,455,000, or $0.28 per share, in 1993 (excluding a nonrecurring charge for the Japan business realignment), and a net loss of $28,258,000, or $1.79 per share (including such charge). FINANCIAL CONDITION LIQUIDITY AND CAPITAL RESOURCES Management believes that the Company's financial condition at October 31, 1994 provides sufficient liquidity and resources to support current business activity and planned expansion. Working capital and the corresponding current ratio were $223,306,000 and 2.2:1 at October 31, 1994 compared with $212,266,000 and 2.4:1 at January 31, 1994. Inventories (which represent the largest component of both working capital and current assets) increased 17% over January 31, 1994. The increase was attributable to merchandise purchases to support sales growth, seasonal increases for the Holiday season, the effect of translating foreign inventories into U.S. dollars, new store openings and expanded product offerings. Inventory turnover was 0.9 times at both October 31, 1994 and January 31, 1994. The Company's objective continues to be improvement in comparable store inventory productivity. 12 13 Capital expenditures of $12,581,000 in the nine-month period compared with $14,410,000 in the comparable 1993 period. The Company incurred a net cash outflow (change in cash and total debt) in the nine-month period primarily as a result of the above referenced factors. Total debt (short-term borrowings and long-term debt) and its ratio to total capital (total debt and stockholders' equity) were $183,684,000 and 47%, respectively, at October 31, 1994 compared with $160,789,000 and 46%, respectively, at January 31, 1994. Inventory and debt levels have been increased to support the Company's long-term, worldwide expansion strategies; however, it is management's goal, subject to achievement of annual sales and earnings growth objectives, to improve inventory turnover, generate excess cash flow and reduce the ratio of total debt to total capital. The Company's sources of working capital are internally-generated funds and funds available under a $100,000,000 revolving credit facility and a yen 2,500,000,000 (approximately $25,000,000) line of credit. In the nine-month period, revolving credit facility funds were used to finance the company's operations and expansion program. A cash inflow expected in the three months ending January 31, 1995 will be used to reduce short-term borrowings. Management anticipates that these sources of funds will be sufficient to support planned worldwide business expansion, as well as seasonal working capital increases typically required during the third and fourth quarters of each year. The Company's long-term plan is to minimize debt increases on an annual basis with an objective of reducing debt leverage from its current level. 13 14 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 11 Statement re Computation of Per Share Earnings. (b) Reports on Form 8-K None. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. TIFFANY & CO. (Registrant) Date: December 9, 1994 By: /s/ James N. Fernandez ------------------------------ James N. Fernandez Senior Vice President - Finance and Chief Financial Officer (principal financial officer) - 14 - 15 EXHIBIT INDEX
Exhibit Sequentially Number Numbered Page - ----------- ------------- 11 Statement Re Computation of Per Share Earnings 27 Financial Data Schedule
- 15 - EX-11 2 STATEMENT RE COMPUTATION OF PER SHARE EARNINGS 1 Item 6. TIFFANY & CO. AND SUBSIDIARIES EXHIBIT 11 STATEMENT RE COMPUTATION OF PER SHARE EARNINGS (Unaudited) (in thousands, except per share data)
Three Months Ended Nine Months Ended --------------------------- -------------------------- Oct. 31, Oct. 31, Oct. 31, Oct. 31, 1994 1993 1994 1993 ------- -------- -------- --------- PRIMARY EARNINGS PER SHARE: Net income/(loss) on which primary earnings per share are based $ 4,720 $ 3,255 $ 10,046 $(28,258) ======== ======== ======== ======== Weighted average number of shares on which primary earnings are based 15,962 15,797 15,876 15,775 ======== ======== ======== ======== Primary net income/(loss) per common share $ 0.30 $ 0.21 $ 0.63 $ (1.79) ======== ======== ======== ======== FULLY DILUTED EARNINGS PER SHARE: Net income/(loss) on which primary earnings per share are based $ 4,720 $ 3,255 $ 10,046 $(28,258) Add: Interest and fees on convertible subordinated debt, net of applicable income taxes 428 461 1,416 1,383 -------- -------- -------- -------- Net income/(loss) on which fully diluted earnings per share are based $ 5,148 $ 3,716 $ 11,462 $(26,875) ======== ======== ======== ======== Weighted average number of common shares used in calculating fully diluted earnings per share 15,991 15,808 15,980 15,796 Shares assumed issued upon conversion of convertible debt, using "if converted" method 893 893 893 893 --------- -------- -------- -------- Weighted average number of shares used in calculating fully diluted earnings per share 16,884 16,701 16,873 16,689 ========= ======== ======== ======== Fully diluted net income/(loss) per common share $ 0.30 $ 0.21 $ 0.63 $ (1.79) ========= ======== ======== ========
NOTE: In anticipation of the 6 3/8% Convertible Subordinated Debenture's dilutive effect in the fourth quarter, fully diluted earnings per share reflect the weighted average number of common shares outstanding under the "if converted" method which assumes conversion as of the bond issuance date of the Debentures. Since the "if converted" method had the effect of increasing fully diluted earnings per share (anti-dilutive) for the three and nine months ending October 31, 1994, primary earnings per share was used for financial statement presentation purposes. - 16 - EX-27 3 FINANCIAL DATA SCHEDULE
5 QTR-3 JAN-31-1995 AUG-01-1994 OCT-31-1994 4,573 0 63,136 (2,057) 305,699 402,876 146,530 (45,224) 551,209 179,570 0 157 0 0 205,112 551,209 160,091 160,091 75,674 148,264 3,533 414 3,241 8,294 3,574 4,720 0 0 0 4,720 0.30 0.30
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