<PAGE>
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 July 31, 1996. 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, 34,404,864 shares outstanding at
the close of business on July 30, 1996.
<PAGE>
TIFFANY & CO. AND SUBSIDIARIES
INDEX TO FORM 10-Q
FOR THE QUARTER ENDED JULY 31, 1996
PART I - FINANCIAL INFORMATION PAGE
Item 1. Financial Statements
Consolidated Balance Sheets - July 31, 1996
(Unaudited), January 31, 1996 and
July 31, 1995 (Unaudited) 3
Consolidated Statements of Income - for the
three and six months ended July 31, 1996
and 1995 (Unaudited) 4
Consolidated Statements of Stockholders' Equity -
for the three and six months ended
July 31, 1996 (Unaudited) 5
Consolidated Statements of Cash Flows - for
the six months ended July 31, 1996
and 1995 (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 4. Submission of Matters to a Vote of Security-Holders 14
- ------
Item 6. Exhibits and Reports on Form 8-K 15
- ------ --------------------------------
(a) Exhibits
(b) Reports on Form 8-K
- 2 -
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
TIFFANY & CO. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
July 31, January 31, July 31,
1996 1996 1995*
---------- ----------- ----------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and short-term investments $ 20,125 $ 81,966 $ 30,655
Accounts receivable, less allowances
of $5,697,$5,698 and $5,246 65,839 80,084 53,416
Inventories 365,676 311,252 299,698
Deferred income taxes 8,817 8,060 5,637
Prepaid expenses 30,402 20,584 22,951
------- ------- -------
Total current assets 490,859 501,946 412,357
Property and equipment, net 124,742 115,214 120,449
Deferred income taxes 8,368 10,033 6,644
Other assets, net 34,614 27,064 30,577
-------- -------- --------
$658,583 $654,257 $570,027
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings $ 62,203 $ 78,967 $ 55,995
Accounts payable and accrued liabilities 103,380 108,829 87,404
Income taxes payable 827 19,672 7,519
Merchandise and other customer credits 11,939 11,054 9,032
------- ------- ------
Total current liabilities 178,349 218,522 159,950
Long-term trade payable - 25,688 31,103
Reserve for product return 8,261 11,238 13,053
Long-term debt 98,305 101,500 101,500
Postretirement/employment benefit obligation 18,803 18,031 17,457
Other long-term liabilities 14,683 14,900 11,924
Commitments and contingencies
Stockholders' equity:
Common Stock, $.01 par value; authorized
60,000 shares, issued 34,405, 31,976 and 31,492 344 320 314
Additional paid-in capital 146,484 82,460 72,798
Retained earnings 196,295 185,823 156,297
Foreign currency translation adjustments (2,941) (4,225) 5,631
------- ------- ------
Total stockholders' equity 340,182 264,378 235,040
------- ------- -------
$658,583 $654,257 $570,027
======== ======== ========
</TABLE>
* Reclassified for comparative purposes
See notes to consolidated financial statements
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<PAGE>
TIFFANY & CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
For the For the
Three Months Ended Six Months Ended
July 31, July 31,
-------------------- --------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $202,763 $184,682 $383,504 $334,826
Cost of goods sold 95,881 88,264 183,256 161,045
-------- -------- -------- --------
Gross profit 106,882 96,418 200,248 173,781
Selling, general and administrative
expenses 89,561 83,489 170,301 153,761
Provision for uncollectible accounts 443 362 791 696
-------- -------- -------- --------
Income from operations 16,878 12,567 29,156 19,324
Other expenses, net 2,360 3,222 5,700 6,183
-------- ------- ------- -------
Income before income taxes 14,518 9,345 23,456 13,141
Provision for income taxes 6,272 4,037 10,133 5,673
-------- ------- -------- -------
Net income $ 8,246 $ 5,308 $ 13,323 $ 7,468
======== ======== ======== ========
Net income per share:
Primary $ 0.24 $ 0.17 $ 0.39 $ 0.23
======== ======== ======== ========
Fully diluted $ 0.24 $ 0.17 $ 0.39 $ 0.23
======== ======== ======== ========
Weighted average number of common shares:
Primary 34,715 31,924 34,058 31,824
Fully diluted 35,688 33,878 35,541 33,854
</TABLE>
See notes to consolidated financial statements.
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<PAGE>
TIFFANY & CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Foreign
Total Common Stock Additional Currency
Stockholders' ------------- Paid-In Retained Translation
Equity Shares Amount Capital Earnings Adjustments
------------ ------ ------ ---------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
BALANCES, January 31, 1996 $264,378 15,988 $160 $82,620 $185,823 $(4,225)
Two-for-one stock split - 16,195 162 (162) - -
Issuance of Common Stock 1,000 18 - 1,000 - -
Exercise of stock options 6,809 189 2 6,807 - -
Tax benefit from exercise of
stock options 1,303 - - 1,303 - -
Cash dividends on Common Stock (1,131) - - - (1,131) -
Foreign currency translation
adjustments 638 - - - - 638
Net income 5,077 - - - 5,077 -
-------- ------ ---- ------- -------- -------
BALANCES, April 30, 1996 278,074 32,390 324 91,568 189,769 (3,587)
======== ====== ==== ======= ======== =======
Final stock adjustment to reflect
actual two-for-one stock split - 1,002 10 (10) - -
Exercise of stock options 4,151 136 1 4,150 - -
Tax benefit from exercise of
stock options 2,442 - - 2,442 - -
Conversion of Convertible
Subordinated Debentures 49,084 877 9 49,075 - -
Bond fees relating to the
conversion of Convertible
Subordinated Debentures (741) - - (741) - -
Cash dividends on Common Stock (1,720) - - - (1,720) -
Foreign currency translation
adjustments 646 - - - - 646
Net income 8,246 - - - 8,246 -
-------- ------ ---- -------- -------- --------
BALANCES, July 31, 1996 $340,182 34,405 $344 $146,484 $196,295 $(2,941)
======== ====== ==== ======== ======== ========
</TABLE>
See notes to consolidated financial statements
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<PAGE>
TIFFANY & CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
For the
Six Months Ended
July 31,
--------------------
1996 1995*
---------- --------
<S> <C> <C>
Cash Flows From Operating Activities:
Net income $ 13,323 $ 7,468
Adjustments to reconcile net income to net cash
(used in)/provided by operating activities:
Depreciation and amortization 10,390 9,037
Provision for uncollectible accounts 791 696
Reduction in reserve for product return (2,977) (50)
Provision for inventories 2,991 1,310
Deferred income taxes 887 (1,613)
Income tax receivable - 7,925
(Gain)/loss on disposal of fixed assets (17) 609
Provision for postretirement/employment benefits 772 876
(Increase)/decrease in assets and increase/ (decrease) in liabilities:
Accounts receivable 12,074 10,198
Inventories (56,312) (16,610)
Prepaid expenses (10,288) (4,999)
Other assets, net (8,740) 1,354
Accounts payable (2,782) 5,213
Accrued liabilities (1,892) 35
Income taxes payable (18,879) (6,620)
Merchandise and other customer credits 885 503
Other long-term liabilities 357 229
------- ------
Net cash (used in)/provided by operating activities (59,417) 15,561
Cash Flows From Investing Activities:
Capital expenditures (18,904) (15,903)
Proceeds from sale of fixed assets 19 82
Proceeds from lease incentives 1,590 -
-------- -------
Net cash used in investing activities (17,295) (15,821)
-------- -------
Cash Flows From Financing Activities:
Decrease in short-term borrowings (17,053) (11,736)
Prepayment of long-term trade payable (25,649) -
Increase in long-term debt 45,719 -
Proceeds from exercise of stock options 10,960 344
Tax benefit from exercise of stock options 3,745 192
Cash dividends on Common Stock (2,851) (2,203)
------- -------
Net cash provided by/(used in) financing activities 14,871 (13,403)
Net decrease in cash and short-term investments (61,841) (13,663)
Cash and short-term investments at beginning of year 81,966 44,318
Cash and short-term investments at end of six
months $20,125 $30,655
======= =======
Supplemental Disclosure of Cash Flow Information:
Cash paid during the six months for:
Interest expense $ 7,402 $ 6,365
======= =======
Income taxes (Net of $7,925 Federal income tax refund in 1995) $25,353 $ 5,678
======= =======
Supplemental Schedule of Non-Cash Investing and
Financing Activities:
Conversion of Subordinated Debentures to Equity $48,343 $ -
======= =======
Issuance of Common Stock for the Employee Profit
Sharing and Retirement Savings Plan $ 1,000 $ 598
======= =======
</TABLE>
*Reclassified for comparative purposes
See notes to consolidated financial statements
- 6 -
<PAGE>
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 July 31, 1996 and
the results of operations and cash flows for the interim periods
presented. The audited financial statements for January 31, 1996 are
derived from the audited financial statements which are included in the
Company's Form 10-K filing, but do not include all disclosures required by
generally accepted accounting principles.
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 three and six months ended July 31, 1996 and
1995 are not necessarily indicative of the results of the entire fiscal
year.
2. INVENTORIES
Inventories at July 31, 1996, January 31, 1996 and July 31, 1995 are
summarized as follows:
July 31, January 31, July 31,
(in thousands) 1996 1996 1995
-------------- -------- ----------- --------
Finished goods $300,604 $257,344 $247,910
Raw materials 58,983 48,366 48,509
Work in process 10,478 7,217 6,482
------- ------- -------
370,065 312,927 302,901
Reserves (4,389) (1,675) (3,203)
------- ------- -------
$365,676 $311,252 $299,698
======== ======== ========
At July 31, 1996, January 31, 1996 and July 31, 1995 $276,120,000,
$229,300,000 and $205,829,000, 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 $13,506,000, $11,870,000 and $11,070,000 at July 31, 1996,
January 31, 1996 and July 31, 1995, respectively. The LIFO valuation
method had the effect of decreasing net income by $0.01 per share for the
three month periods ended July 31, 1996 and 1995, respectively. The LIFO
valuation method had the effect of decreasing net income by $0.03 and
$0.02 per share for the six month periods ended July 31, 1996 and 1995,
respectively.
- 7 -
<PAGE>
3. EARNINGS PER SHARE
Primary earnings per common share is 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
is 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
the assumed conversion of the subordinated debentures using the "if
converted" method.
4. LONG TERM DEBT
In the first quarter of 1996, the Company borrowed yen 5,000,000,000
($46,805,000) from a lender in Japan. The loan has a 15-year term at a
rate of 4.50%. The proceeds were used for working capital and construction
costs associated with the Company's flagship store in Tokyo which opened
in May 1996, as well as to reduce short-term indebtedness in Japan.
On June 24, 1996 (the "Redemption Date"), the Company redeemed
approximately $900,000 of Tiffany's $50,000,000 principal amount 6-3/8%
Convertible Subordinated Debentures Due 2001 (the "Debentures"). The
remaining $49,100,000 of the Debentures were converted into shares of the
Company's Common Stock at the option of the holders. In accordance with
the terms of the Debentures, the redemption price was 101 percent of
principal amount, subject to conversion of principal at the rate of $28.00
per share (adjusted to reflect the two-for-one stock split in July 1996).
The right of conversion expired at the close of business on the Redemption
Date.
5. FINANCIAL HEDGING INSTRUMENTS
In accordance with the Company's foreign currency hedging program, at July
31, 1996, the Company had outstanding purchased put options maturing at
various dates through January 23, 1998, giving it the right, but not the
obligation, to sell yen 10,709,000,000 for dollars at predetermined
contract-exchange rates. The deferred unrealized loss on the Company's
purchased put options was not material at July 31, 1996. If the market
yen/dollar-exchange rates at maturity are below the contract rates, the
Company will allow the options to expire.
At July 31, 1996, the Company also had $9,882,000 of outstanding forward
exchange yen contracts which matured on August 26, 1996. These contracts
were purchased to support inventory purchases for the Company's business
in Japan. There were no material outstanding forward exchange contracts at
July 31, 1995.
6. COMMON STOCK
On May 16, 1996, the stockholders approved an amendment to the Company's
Restated Certificate of Incorporation to increase the number of common
shares authorized from 30,000,000 to 60,000,000.
- 8 -
<PAGE>
6. (COMMON STOCK CONT.)
On May 16, 1996, the Board of Directors declared a two-for-one split of
the Company's Common Stock, effected in the form of a share distribution
(stock dividend) paid on July 23, 1996 to stockholders of record on June
28, 1996. Stock options and per share data have been retroactively
adjusted to reflect the split.
7. SUBSEQUENT EVENT
On August 14, 1996, Tiffany's Board of Directors declared a quarterly
dividend of $0.05 per common share. This dividend will be paid on October
10, 1996 to stockholders of record on September 20, 1996.
- 9 -
<PAGE>
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 the Americas; Direct Marketing includes corporate
(business-to-business) and catalog sales in the U.S.; and International Retail
includes retail sales through Company-operated stores and boutiques, corporate
sales, and wholesale sales to independent retailers and distributors in the
Asia-Pacific region, Europe, Canada and the Middle East.
Net sales in the three months ended July 31, 1996 (second quarter) increased 10%
over 1995's second quarter. Net sales in the six months ended July 31, 1996
(first half) rose 15% over 1995's first half. Net sales by channel of
distribution were as follows:
Three months Six months
ended July 31, ended July 31,
------------------- ------------------
(in thousands) 1996 1995 1996 1995
- -------------------- -------- -------- -------- --------
U.S. Retail $ 92,499 $ 82,140 $172,895 $143,909
Direct Marketing 22,108 20,357 41,026 39,120
International Retail 88,156 82,185 169,583 151,797
-------- -------- -------- --------
$202,763 $184,682 $383,504 $334,826
======== ======== ======== ========
U.S. Retail sales increased 13% in the second quarter and 20% in the first half
over the corresponding 1995 periods. U.S. comparable store sales rose 6% in the
second quarter and 12% in the first half. U.S. Retail sales growth also
benefitted from the addition of three new stores that opened in the past year --
in Short Hills, New Jersey (September 1995), King of Prussia, Pennsylvania
(November 1995) and Chevy Chase, Maryland (May 1996). Comparable retail sales
growth was primarily due to an increase in the number of transactions generated
by a combination of local-resident customers and foreign tourists. Increases
were also achieved in the Company's wholesale trade and fragrance businesses.
Direct Marketing sales rose 9% in the second quarter and 5% in the first half.
Catalog sales increased 11% in both the second quarter and first half primarily
due to an increased number of orders. Corporate sales increased 7% in the second
quarter and 1% in the first half. Improved corporate sales performance in the
second quarter was due to a higher number of orders and an increased average
order size. In order to increase U.S. market penetration, the Company has
established a corporate division presence in 11 additional U.S. markets in 1996.
However, management believes that its corporate customers remain generally
cautious in their spending and, as such, that the sales environment remains
challenging.
International Retail sales increased 7% in the second quarter and 12% in the
first half. Sales growth occurred in each of the Company's international
regions: Asia-Pacific, Europe, Canada and the Middle East. Specifically, sales
in local-currency in Japan rose 24% in the second quarter and 22% in the first
half. However, when translated into U.S. dollars, these yen-denominated sales
increases were offset by the effect of a weakening of the yen against the dollar
in comparison to 1995. Comparable store sales in Japan in local currency rose 7%
in the second quarter and 13% in the first half. The Company opened its flagship
store on the Ginza in Tokyo in the second quarter;
- 10 -
<PAGE>
although comparable sales growth was adversely affected in several existing
department-store boutiques in Tokyo, total sales in Tokyo were substantially
above 1995 levels. In Europe, comparable store sales in local currencies rose
27% in the second quarter and 25% in the first half due to improved sales
performance in each country.
The Company's reported sales and earnings results benefit from a strengthening
Japanese yen and are adversely affected by a strengthening U.S. dollar. The
Company maintains a foreign currency hedging program for merchandise purchase
transactions initiated from Japan in order to reduce the potential negative
impact on the Company's financial results of a significant strengthening of the
U.S. dollar against the yen. At July 31, 1996, the Company had outstanding
purchased put options maturing at various dates through January 23, 1998, giving
it the right, but not the obligation, to sell yen 10,709,000,000 for dollars at
predetermined contract-exchange rates. The deferred unrealized loss on the
Company's purchased put options was not material at July 31, 1996. If the market
yen/dollar-exchange rates at maturity are below the contract rates, the Company
will allow the options to expire. In addition, at July 31, 1996, the Company had
$9,882,000 of outstanding forward exchange yen contracts, which matured on
August 26, 1996, purchased to support inventory purchases for the Company's
business in Japan. There were no material outstanding forward exchange contracts
at July 31, 1995.
Gross margin (gross profit as a percentage of net sales) was 52.7% in 1996's
second quarter and 52.2% in the first half, compared with 52.2% and 51.9% in the
respective 1995 periods. The modest year-over-year increases primarily reflected
favorable shifts in sales mix toward the Company's retail businesses and product
categories that achieve gross margins above the total company average.
Operating expenses (selling, general and administrative expenses and the
provision for uncollectible accounts) increased 7% and 11% in the second quarter
and first half. The increases were largely due to incremental occupancy,
staffing and marketing expenses related to the Company's worldwide expansion
program, as well as to sales-related variable expenses. Also, the reported rate
of operating expense growth in the second quarter and first half was moderated
due to the effect of translating yen-denominated expenses into dollars. As a
percentage of net sales, operating expenses of 44.4% and 44.6% in 1996's second
quarter and first half were lower than prior-year periods by 1.0 point and 1.5
points.
As a result of the above factors, the Company's income from operations increased
34% in the second quarter and 51% in the first half. Operating margin (income
from operations as a percentage of net sales) in the second quarter increased to
8.3% from 6.8% and in the first half rose to 7.6% from 5.8%.
Other expenses, net in the second quarter were lower than the prior year
primarily due to reduced interest expense related to the conversion and
redemption in June 1996 of the Company's $50,000,000 principal amount, 6-3/8%
Convertible Subordinated Debentures Due 2001.
Net income in the second quarter rose 55% and net margin (net income as a
percentage of net sales) increased to 4.1% from 2.9%. Net income in the first
half rose 78% and net margin rose to 3.5% from 2.2%.
- 11 -
<PAGE>
FINANCIAL CONDITION
Management believes that the Company's financial condition at July 31, 1996
provides sufficient liquidity and resources to support current business activity
and planned expansion. Working capital and the corresponding current ratio were
$312,510,000 and 2.8:1 at July 31, 1996 compared with $283,424,000 and 2.3:1 at
January 31, 1996. Accounts receivable of $65,839,000 at July 31, 1996 were 18%
lower than at January 31, 1996 due to strong, as well as seasonally-related,
collection performance. Inventories (representing the largest component of
working capital and assets) were $365,676,000 at July 31, 1996, or 17% higher
than at January 31, 1996. The increase was primarily due to merchandise
purchases to support sales growth, new stores (including the Company's new
flagship store in Tokyo, Japan) and expanded product offerings. Inventory
turnover was 1.0 times at April 30, 1996 and January 31, 1996. The Company's
ongoing objective is to improve inventory performance through: refinement of
worldwide replenishment systems; focus on the specialized disciplines of product
development, assortment planning and inventory management; improved presentation
and management of display inventories in each store; assortment editing by
product category; and a time-phased program of improvements in warehouse
management and supply chain logistics.
Capital expenditures were $18,904,000 in 1996's first half compared with
$15,903,000 in the first half of 1995. On the basis of current plans, the
Company expects capital expenditures in fiscal 1996 to be approximately
$42,000,000 compared with $26,455,000 in fiscal 1995. The increase is primarily
related to the opening of new retail stores (particularly the Company's flagship
store in Tokyo, Japan), expansion of administrative and office facilities and
costs associated with development of the Company's new customer
service/distribution center in Parsippany, New Jersey.
The Company incurred a net cash outflow from operating activities of $59,417,000
in 1996's first half compared with an inflow of $15,561,000 in 1995's first
half. The increased cash outflow was largely due to higher inventory purchases
compared with 1995's first half. Net-debt (short-term borrowings and long-term
debt, less cash and short-term investments) and the ratio of net-debt to total
capital (net-debt and stockholders' equity) was $140,383,000 and 29% at July 31,
1996 compared with $98,501,000 and 27% at January 31, 1996. The increase in
net-debt was necessary to support working capital increases. It is management's
goal, on an annual basis, to generate cash flow that is sufficient to finance
the Company's business activities and planned expansion.
In the first quarter of 1996, the Company borrowed yen 5,000,000,000
($46,805,000) from a lender in Japan. The loan has a 15-year term at a rate of
4.50%. The proceeds were used for working capital and construction costs
associated with the Company's flagship store in Tokyo which opened in May 1996,
as well as to reduce short-term indebtedness in Japan. The Company also prepaid
a long-term trade payable of yen 2,750,000,000 ($25,807,000) which was due on or
before February 28, 1998, and which related to certain merchandise repurchased
in 1993 as part of the Company's realignment of its Japan business.
On June 24, 1996 (the "Redemption Date"), the Company redeemed approximately
$900,000 of Tiffany's $50,000,000 principal amount 6-3/8% Convertible
Subordinated Debentures Due 2001 (the "Debentures"). The remaining $49,100,000
of the Debentures were converted into shares of the Company's Common Stock at
the option of the holders. In accordance with the terms of the Debentures, the
redemption price was 101 percent of principal amount, subject to conversion of
principal at the rate of $28.00 per share (adjusted to reflect the two-for-one
stock split in July 1996). The right of conversion expired at the close of
business on the Redemption Date.
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<PAGE>
The Company's sources of working capital are internally generated cash flows and
funds available under a five-year, $130,000,000 multicurrency revolving credit
facility established in June 1995. Management anticipates that internally
generated cash flows and funds available under the revolving credit facility
will be sufficient to support the Company's 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 business is seasonal in nature, with the fourth quarter typically
representing a proportionally greater percentage of annual sales, income from
operations and cash flow. Management expects such seasonality to continue in the
future.
- 13 -
<PAGE>
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security-Holders
At Registrant's Annual Meeting of Stockholders held on May 16, 1996 each of the
nominees listed below was elected a director of Registrant to hold office until
the next annual meeting of the stockholders and until his or her respective
successor has been elected and qualified. Tabulated with the name of each of the
nominees elected is the number of Common shares cast for each nominee and the
number of Common shares withholding authority to vote for each nominee. There
were no broker non-votes or abstentions with respect to the election of
directors.
Nominee Voted For Withholding Authority
William R. Chaney 14,666,664 98,728
Jane Dudley 14,661,585 103,807
Samuel L. Hayes III 13,992,328 773,064
Michael J. Kowalski 14,666,338 99,054
Charles K. Marquis 14,666,628 98,764
James E. Quinn 14,664,688 100,704
Yoshiaki Sakakura 13,988,442 776,950
William A. Shutzer 14,666,728 98,664
Geraldine Stutz 14,665,780 99,612
At such meeting, the stockholders approved an amendment to the Company's 1986
Stock Option Plan to increase by 500,000 the number of shares of the Company's
Common Stock available for issuance under that Plan. With respect to such
amendment, 12,479,377 shares were voted to approve, 2,174,453 shares were voted
against, and 111,562 shares abstained from voting. There were no broker non-
votes with respect to the approval of the amendment to the Company's 1986 Stock
Option Plan.
In addition, the stockholders approved the appointment of Coopers & Lybrand
L.L.P. as independent accountants of the Company's fiscal 1996 financial
statements. With respect to such appointment, 14,696,619 shares were voted to
approve, 55,785 shares were voted against, and 12,988 shares abstained from
voting. There were no broker non-votes with respect to the approval of the
appointment of Coopers & Lybrand L.L.P.
The stockholders also approved an amendment to the Company's Restated
Certificate of Incorporation to increase from 30,000,000 to 60,000,000 the
number of shares of Common Stock, $.01 par value, which the Company is
authorized to issue. With respect to such approval, 13,914,324 shares were voted
to approve, 836,846 were voted against, and 14,022 shares abstained from voting.
There were 200 broker non-votes with respect to the approval of the amendment to
the Company's Restated Certificate of Incorporation.
- 14 -
<PAGE>
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: September 12, 1996 By: /s/ James N. Fernandez
------------------------------------
James N. Fernandez
Senior Vice President - Finance
and Chief Financial Officer
(principal financial officer)
- 15 -
<PAGE>
EXHIBIT INDEX
Exhibit Number Description Page
- -------------- -------------------------------------------------- ----
11 Statement re Computation of Per Share Earnings. 17
- 16 -
Item 6. TIFFANY & CO. AND SUBSIDIARIES
EXHIBIT 11 STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
----------------------------------------------
(Unaudited)
(in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
July 31, July 31, July 31, July 31,
1996 1995 1996 1995
---------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
PRIMARY EARNINGS PER SHARE:
Net income on which primary
earnings per share are based $ 8,246 $ 5,308 $13,323 $7,468
====== ====== ====== ======
Weighted average number of
common shares 33,448 31,504 32,853 31,480
Add:
Weighted average effect of the
exercise of stock options 1,267 420 1,205 344
------ ------ ------ ------
Weighted average number of shares on
which primary earnings are based 34,715 31,924 34,058 31,824
====== ====== ====== ======
Primary net income per common share $ 0.24 $ 0.17 $ 0.39 $ 0.23
====== ====== ====== ======
FULLY DILUTED EARNINGS PER SHARE:
Net income on which primary earnings
per share are based $ 8,246 $ 5,308 $ 13,323 $ 7,468
Add:
Interest and fees on convertible
subordinated debt, net of
applicable income taxes 229 428 682 870
---- ------ ------ -----
Net income on which fully diluted
earnings per share are based $ 8,475 $ 5,736 $14,005 $ 8,338
======= ======= ======= =======
FULLY DILUTED EARNINGS PER SHARE:
Weighted average number of common shares
on which fully diluted earnings are based 34,715 32,092 34,162 32,068
Add:
Shares assumed upon conversion
of convertible debt, using the
"if converted" method 973 1,786 1,379 1,786
------- ------- ------ -----
Weighted average number of shares
used in calculating fully diluted
earnings per share 35,688 33,878 35,541 33,854
======= ======= ======= =======
Fully diluted net income per common share $ 0.24 $ 0.17 $ 0.39 $ 0.23
======= ======= ======= =======
</TABLE>
- 17 -
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-31-1997
<PERIOD-START> MAY-01-1996
<PERIOD-END> JUL-31-1996
<CASH> 20,125
<SECURITIES> 0
<RECEIVABLES> 66,048
<ALLOWANCES> (2,927)
<INVENTORY> 365,676
<CURRENT-ASSETS> 490,859
<PP&E> 195,619
<DEPRECIATION> (70,877)
<TOTAL-ASSETS> 658,583
<CURRENT-LIABILITIES> 178,349
<BONDS> 0
0
0
<COMMON> 344
<OTHER-SE> 339,838
<TOTAL-LIABILITY-AND-EQUITY> 658,583
<SALES> 202,763
<TOTAL-REVENUES> 202,763
<CGS> 95,881
<TOTAL-COSTS> 185,885
<OTHER-EXPENSES> 2,360
<LOSS-PROVISION> 443
<INTEREST-EXPENSE> 2,518
<INCOME-PRETAX> 14,518
<INCOME-TAX> 6,272
<INCOME-CONTINUING> 8,246
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,246
<EPS-PRIMARY> 0.24
<EPS-DILUTED> 0.24
</TABLE>
