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 April 30, 1998. 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, 35,260,230 shares outstanding at the close
of business on April 30, 1998.
<PAGE>
TIFFANY & CO. AND SUBSIDIARIES
INDEX TO FORM 10-Q
FOR THE QUARTER ENDED APRIL 30, 1998
PART I - FINANCIAL INFORMATION PAGE
----
Item 1. Financial Statements
Consolidated Balance Sheets - April 30, 1998
(Unaudited), January 31, 1998 and
April 30, 1997 (Unaudited) 3
Consolidated Statements of Earnings - for the
three months ended April 30, 1998
and 1997 (Unaudited) 4
Consolidated Statements of Cash Flows - for
the three months ended April 30, 1998
and 1997 (Unaudited) 5
Notes to Consolidated Financial Statements
(Unaudited) 6-9
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 -
<PAGE>
PART I. Financial Information
Item 1. Financial Statements
TIFFANY & CO. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
April 30, January 31, April 30,
1998 1998 1997
----------- ----------- ----------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 74,609 $ 107,252 $ 87,073
Short-term investments -- -- 15,000
Accounts receivable, less allowances
of $7,762, $6,988 and $6,922 79,983 99,492 61,297
Inventories 422,441 386,431 343,438
Deferred income taxes 20,402 17,373 15,790
Prepaid expenses 25,676 20,539 24,760
---------- --------- ---------
Total current assets 623,111 631,087 547,358
Property and equipment, net 163,460 156,367 129,118
Deferred income taxes 7,451 8,859 9,542
Other assets, net 38,980 30,754 30,518
---------- --------- ---------
$ 833,002 $ 827,067 $ 716,536
========== ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings $ 92,271 $ 90,054 $ 63,066
Accounts payable and accrued liabilities 119,302 118,456 109,207
Income taxes payable 6,850 23,501 5,714
Merchandise and other customer credits 18,099 17,992 14,559
---------- --------- ---------
Total current liabilities 236,522 250,003 192,546
Reserve for product return -- 2,580 5,800
Long-term debt 89,280 90,930 90,855
Postretirement/employment benefit obligations 20,456 20,121 19,525
Other long-term liabilities 24,326 19,709 17,141
Commitments and contingencies
Stockholders' equity:
Common Stock, $.01 par value; authorized
60,000 shares, outstanding 35,260, 34,930 and 34,824 353 349 348
Additional paid-in capital 180,595 168,085 158,354
Retained earnings 300,234 293,689 245,101
Accumulated other comprehensive loss -
Foreign currency translation adjustments (18,764) (18,399) (13,134)
---------- --------- ---------
Total stockholders' equity 462,418 443,724 390,669
---------- --------- ---------
$ 833,002 $ 827,067 $ 716,536
========== ========= =========
</TABLE>
See notes to consolidated financial statements.
- 3 -
<PAGE>
TIFFANY & CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
(in thousands, except per share amounts)
For the
Three Months Ended
April 30,
--------------------
1998 1997
--------- ---------
Net sales $ 226,159 $ 199,699
Cost of sales 105,151 93,445
--------- ---------
Gross profit 121,008 106,254
Selling, general and administrative expenses 100,195 89,212
Provision for uncollectible accounts 347 339
--------- ---------
Earnings from operations 20,466 16,703
Other expenses, net 1,129 1,124
--------- ---------
Earnings before income taxes 19,337 15,579
Provision for income taxes 8,217 6,699
--------- ---------
Net earnings $ 11,120 $ 8,880
======== ========
Net earnings per share:
Basic $ 0.32 $ 0.26
======== ========
Diluted $ 0.31 $ 0.25
======== ========
Weighted average number of common shares:
Basic 35,174 34,722
Diluted 36,343 35,911
See notes to consolidated financial statements.
- 4 -
<PAGE>
TIFFANY & CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
For the
Three Months Ended
April 30,
-------------------
1998 1997
-------- --------
Cash Flows From Operating Activities:
Net earnings $ 11,120 $ 8,880
Adjustments to reconcile net earnings to net cash
(used in)provided by operating activities:
Depreciation and amortization 6,758 5,373
Provision for uncollectible accounts 347 339
Reduction in reserve for product return (2,580) --
Provision for inventories 1,715 3,546
Tax benefit from exercise of stock options 4,400 2,710
Deferred income taxes (1,792) (847)
Provision for postretirement/employment benefits 335 334
Changes in assets and liabilities:
Accounts receivable 18,314 17,174
Inventories (38,597) (18,791)
Prepaid expenses (5,062) (3,579)
Other assets, net (1,234) (498)
Accounts payable 7,124 7,254
Accrued liabilities (4,666) (5,133)
Income taxes payable (16,558) (19,942)
Merchandise and other customer credits 107 322
Other long-term liabilities 1,774 458
-------- --------
Net cash used in operating activities (18,495) (2,400)
-------- --------
Cash Flows From Investing Activities:
Purchase of short-term investments -- (15,000)
Capital expenditures (13,460) (5,396)
Acquisitions, net of liabilities assumed (8,150) --
Proceeds from lease incentives -- 831
-------- --------
Net cash used in investing activities (21,610) (19,565)
-------- --------
Cash Flows From Financing Activities:
Proceeds from(payments on) short-term borrowings 5,323 (10,187)
Repurchase of Common Stock (2,264) --
Proceeds from exercise of stock options 6,864 3,802
Cash dividends on Common Stock (2,461) (1,738)
-------- --------
Net cash provided by(used in) financing activities 7,462 (8,123)
-------- --------
Net decrease in cash and cash equivalents (32,643) (30,088)
Cash and cash equivalents at beginning of year 107,252 117,161
-------- --------
Cash and cash equivalents at end of three months $ 74,609 $ 87,073
======== ========
See notes to consolidated financial statements.
- 5 -
<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 interim statements are unaudited and, in the opinion
of management, include all adjustments (which include only normal
recurring adjustments including the adjustment necessary as a result of
the use of the LIFO(last-in, first-out) 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 April 30, 1998 and the results of operations and
cash flows for the interim periods presented. The Balance Sheet data for
January 31, 1998 is derived from the audited financial statements which
are included in the Company's report on Form 10-K, which should be read in
connection with these financial statements. In accordance with the rules
of the Securities and Exchange Commission, these financial statements 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 months ended April 30, 1998 are not
necessarily indicative of the results of the entire fiscal year.
2. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
------------------------------------------------
Supplemental cash flow information for the three months ended April 30,
1998 and 1997 is as follows:
April 30, April 30,
(in thousands) 1998 1997
-------------- --------- ---------
Cash paid during the three months for:
Interest $ 1,307 $ 1,536
======= =======
Income taxes $20,998 $24,625
======= =======
Details of businesses acquired in
purchase transactions were as follows:
Fair value of assets acquired $12,302 $ --
Less: Liabilities assumed 4,152 --
------- -------
Net cash paid for acquisitions $ 8,150 $ --
======= =======
Supplemental Noncash Investing
and Financing Activities:
Issuance of Common Stock for the
Employee Profit Sharing and
Retirement Savings Plan $ 1,400 $ 1,800
======= =======
- 6 -
<PAGE>
3. INVENTORIES
------------
Inventories at April 30, 1998, January 31, 1998 and April 30, 1997 are
summarized as follows:
April 30, January 31, April 30,
(in thousands) 1998 1998 1997
-------------- --------- ----------- ---------
Finished goods $353,015 $327,314 $293,322
Raw Materials 68,698 57,926 47,525
Work-in-process 3,157 2,918 6,468
-------- -------- --------
424,870 388,158 347,315
Reserves (2,429) (1,727) (3,877)
-------- -------- --------
$422,441 $386,431 $343,438
======== ======== ========
At April 30, 1998, January 31, 1998 and April 30, 1997, $322,765,000,
$292,353,000 and $264,694,000, respectively, of inventories were valued
using the LIFO method. The excess of current cost over the LIFO
inventory value was $16,521,000 at April 30, 1998, $15,870,000 at
January 31, 1998 and $16,041,000 at April 30, 1997. The LIFO valuation
method had the effect of decreasing net earnings by $0.01 and $0.02 per
share in each of the three month periods ended April 30, 1998 and 1997.
4. DEBT
----
During the quarter ended April 30, 1998, the Company's $130,000,000
multicurrency revolving credit facility (the "Credit Facility") was
amended to increase the amount the Company is entitled to borrow to
$160,000,000 and increase the number of participating banks from four
to five. The amended Credit Facility entitles the Company to borrow up
to $31,250,000 on a pro-rata basis from each of the three existing
banks, up to $30,000,000 from the new bank and up to $36,250,000 from
an agent bank at interest rates based on a prime rate or a
reserve-adjusted LIBOR.
5. FINANCIAL HEDGING INSTRUMENTS
-----------------------------
In accordance with the Company's foreign currency hedging program, at
April 30, 1998 the Company had outstanding purchased put options
maturing at various dates through April 22, 1999, giving it the right,
but not the obligation, to sell yen 9,347,000,000 for dollars at
predetermined contract-exchange rates. The deferred unrealized gain on
the Company's purchased put options amounted to $4,374,000 at April 30,
1998. If the market yen-exchange rates at maturity are below the
contract rates, the Company will allow the options to expire.
To mitigate the exchange rate fluctuations primarily related to
intercompany inventory purchases for the Company's business in Japan,
the Company enters into forward exchange yen contracts. At April 30,
1998, the Company had $14,693,000 of such contracts outstanding, which
will mature at various dates through May 26, 1998. At April 30, 1997,
the Company had $9,011,000 of such contracts outstanding, which
subsequently matured on May 27, 1997.
- 7 -
<PAGE>
6. EARNINGS PER SHARE
------------------
Basic earnings per share are computed by dividing net earnings by
the weighted average number of shares outstanding during the period.
Diluted earnings per share are calculated to give effect to potentially
dilutive shares that were outstanding during the period.
The following table summarizes the reconciliation of the numerators and
denominators, as required by SFAS No. 128, for the basic and diluted
EPS computations at April 30 1998 and 1997:
(in thousands, April 30, April 30,
(except per share amounts) 1998 1997
-------------------------- --------- ---------
Net earnings for basic
and diluted EPS $11,120 $ 8,880
======= =======
Weighted average shares
for basic EPS 35,174 34,722
Incremental shares upon conversions:
Stock options 1,169 1,189
------- -------
Weighted average shares
for diluted EPS 36,343 35,911
======= =======
7. COMPREHENSIVE EARNINGS
----------------------
Effective February 1, 1998, the Company adopted SFAS No. 130,
"Reporting Comprehensive Income", which requires disclosure of
comprehensive earnings in interim periods and additional disclosures of
the components of comprehensive earnings on an annual basis.
Comprehensive earnings include all changes in equity during a period
except those resulting from investments by and distributions to
stockholders. Under SFAS No. 130, the Company's foreign currency
translation adjustments, reported separately in stockholders' equity,
are required to be included in the determination of other comprehensive
earnings.
The components of comprehensive earnings for the three months ended
April 30, 1998 and 1997 are as follows:
April 30, April 30,
(in thousands) 1998 1997
-------------- --------- ---------
Net earnings $11,120 $8,880
Other comprehensive loss:
Foreign currency
translation adjustments (365) (3,049)
------ ------
Comprehensive earnings $10,755 $5,831
======= ======
Foreign currency translation adjustments are not adjusted for income
taxes since they relate to investments that are permanent in nature.
Prior year financial statements have been presented to conform with
SFAS No. 130.
- 8 -
<PAGE>
8. ACCOUNTING STANDARD
-------------------
In February 1998, the American Institute of Certified Public
Accountants' Accounting Standards Executive Committee issued Statement
of Position No. 98-1, "Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use," ("SOP No. 98-1"). SOP No. 98-1
requires certain costs incurred in connection with developing or
obtaining internal-use software to be capitalized and other costs to be
expensed. The Company adopted SOP No. 98-1 effective February 1998, and
its application for the quarter ended April 30, 1998 had no material
effect on the Company's financial position or results of operations.
9. SUBSEQUENT EVENT
----------------
On May 21, 1998, the Company's Board of Directors approved a 29%
increase in the Company's quarterly cash dividend on its Common Stock,
from $0.07 per share to $0.09 per share. This dividend will be paid on
July 10, 1998 to stockholders of record on June 19, 1998.
- 9 -
<PAGE>
PART I. Financial Information
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
RESULTS OF OPERATIONS
- ---------------------
Overview
- --------
The Company operates three channels of distribution: U.S. Retail includes retail
sales in Company-operated stores in the U.S., wholesale sales to independent
retailers in the U.S. and wholesale sales of fragrance products 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, the Middle East and Latin America.
The Company's net sales increased 13% to $226,159,000 in the quarter ended April
30, 1998. Combined with a slightly higher gross margin and a lower expense
ratio, net earnings rose 25% to $11,120,000, or $0.31 per diluted share.
Net sales by channel of distribution were as follows:
- -----------------------------------------------------
Three Months
Ended April 30,
-------------------
(in thousands) 1998 1997
- ------------------ -------- --------
U.S. Retail $108,024 $ 87,734
Direct Marketing 21,663 16,727
International Retail 96,472 95,238
-------- --------
$226,159 $199,699
======== ========
U.S. Retail sales rose 23% largely due to 12% comparable store sales growth and
strong sales results in five new stores that were opened during the past year.
Comparable store sales increased 6% in the Company's New York flagship store and
increased 15% in branch stores. Comparable store sales growth was primarily due
to an increased number of retail transactions. Growth was generated by sales to
domestic customers; sales to foreign tourists declined as a percentage of sales
in each of the past several years.
Direct Marketing sales increased 30% in the first quarter due to 22% growth in
corporate division sales and 47% growth in catalog division sales. Although
customer demand was strong during the first quarter of 1998, the increase is in
part due to the Company's April 1997 transition to its new Customer
Service/Distribution Center which adversely affected sales resulting from a
decrease in order fulfillment and catalog mailings. The Company anticipates
increasing its catalog mailings by 15% to approximately 25 million catalogs for
Fiscal 1998.
International Retail sales increased 1% in the first quarter, which equated to a
6% increase on a constant-currencies basis (excluding the effect of translating
local-currency-denominated sales into the generally stronger U.S. dollar). In
Japan, Tiffany's largest international market, total retail sales rose 8% in
local currency and 2% on a comparable store basis. In the prior year's first
quarter, a 26% comparable store sales increase in Japan had reflected strong
consumer demand in anticipation of an April 1, 1997 increase in the consumption
tax.
The Company's reported sales and earnings reflect either a translation-related
benefit from a strengthening Japanese yen or a detriment from a strengthening
- 10 -
<PAGE>
U.S. dollar. The Company maintains a foreign currency hedging program for
merchandise purchase transactions initiated from Japan in order to reduce the
potentially negative impact on the Company's financial results of a significant
strengthening of the U.S. dollar. The hedging program has achieved its objective
by stabilizing product costs, over the short-term, despite exchange rate
fluctuations. However, as a result of the continued weakening of the yen versus
the U.S. dollar, the Company raised its retail prices in Japan by an average of
10%, effective February 1, 1998.
In other Asia-Pacific markets outside Japan, comparable store sales declined
18%. Management attributes this to reduced spending by Japanese travelers to
Hong Kong as well as generally uncertain economic conditions in Asia. In Europe,
comparable store sales increased 24% in local currencies in the first quarter
due to retail sales growth in most markets.
Gross Profit
- ------------
Gross profit as a percentage of net sales (gross margin) was 53.5% in the first
quarter, compared with 53.2% in the prior year. The Company's ongoing gross
margin and pricing strategy is to pass through product-cost increases with
higher retail selling prices, thereby maintaining gross margin at approximately
prior-year levels.
Operating Expenses
- ------------------
Operating expenses (selling, general and administrative expenses plus the
provision for uncollectible accounts) rose 12% in the first quarter. The
increase was primarily due to incremental occupancy, staffing and marketing
expenses related to the Company's worldwide expansion program, as well as to
sales-related variable expenses and incremental expenses related to the new
Customer Service/Distribution Center. However, as a percentage of net sales, the
operating expense ratio improved to 44.5%, from 44.8% in the prior year.
Management's ongoing objective is to reduce the expense ratio by leveraging the
Company's fixed-expense base.
Other Expenses, Net
- -------------------
Other expenses, net were relatively unchanged in the first quarter of Fiscal
1998 as compared with Fiscal 1997. On the basis of current plans, anticipated
share repurchases, interest rates and foreign currency exchange rates,
management expects somewhat higher interest expense for the remaining quarters
of Fiscal 1998.
Provision for Income Taxes
- --------------------------
The provision for income taxes resulted in an effective tax rate of 42.5% in the
first quarter, compared with 43.0% in the prior year, due to a shift in the
geographical business mix toward lower-tax jurisdictions.
New Accounting Standards
- ------------------------
Effective February 1, 1998, the Company adopted SFAS No. 130, "Reporting
Comprehensive Income," which requires disclosure of comprehensive earnings in
interim periods and additional disclosures of the components of comprehensive
earnings on an annual basis. Comprehensive earnings include all changes in
equity during a period except those resulting from investments by and
distributions to stockholders. Under SFAS No. 130, the Company's foreign
currency translation adjustments, reported separately in stockholders' equity,
are required to be included in the determination of other comprehensive
earnings.
In February 1998, the American Institute of Certified Public Accountants'
Accounting Standards Executive Committee issued Statement of Position No. 98-1,
"Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use," ("SOP No. 98-1"). SOP No. 98-1 requires certain costs incurred
- 11 -
<PAGE>
in connection with developing or obtaining internal-use software to be
capitalized and other costs to be expensed. The Company adopted SOP No. 98-1
effective February 1998, and its application for the quarter ended April 30,
1998 had no material effect on the Company's financial position or results of
operations.
Year 2000
- ---------
The Company recognizes the need to ensure that its operations will not be
adversely affected by year 2000 computer hardware and software failures. Certain
systems will, unless modified, be unable to process date-sensitive calculations
using the year 2000. Such failures are a known risk to the future integrity of
the Company's' financial reports and to virtually all aspects of the Company's
operations, including the Company's ability to process sales transactions,
fulfill customer orders and receive and manage inventories and other assets.
Accordingly, the Company has established a disciplined process to identify,
prioritize and evaluate year 2000 problems, and to replace or revise and test
computer software and operating procedures. The objective of these efforts is to
achieve year 2000 compliance with minimal effect on customer service or other
disruption to, or loss of integrity in, business or financial operations. At
this date, sources of potential failure in internal systems have been identified
and conversion efforts are underway. The Company is also in the process of
evaluating year 2000 issues that may be experienced by key merchandise and
service vendors in order to evaluate the potential effect of vendor failure on
the Company's operations; at this date, that evaluation has not been completed.
Successful remediation of year 2000 issues will depend, to some extent, on the
Company's ability to retain or otherwise secure sufficient programming resources
to timely complete this process given the high demand for such resources
throughout the world.
In addition to the cost of internal resources, the Company's cost of achieving
year 2000 compliance is estimated to be $8,000,000 for third-party service
providers and will be incurred through the year ending January 31, 2000.
Cumulative year 2000 costs for such providers are charged to operations and
amounted to $1,372,000 as of April 30, 1998.
FINANCIAL CONDITION
- -------------------
Liquidity and Capital Resources
- -------------------------------
The Company's liquidity needs have been, and are expected to remain, primarily a
function of its seasonal, working capital requirements which have increased due
to the Company's expansion. Management believes that the Company's financial
condition at April 30, 1998 provides sufficient resources to support current
business activities and planned expansion. Working capital (current assets minus
current liabilities) and the corresponding current ratio (current assets divided
by current liabilities) were $386,589,000 and 2.6:1 at April 30, 1998, versus
$381,084,000 and 2.5:1 at January 31, 1998 and $354,812,000 and 2.8:1 at April
30, 1997.
Accounts receivable at April 30, 1998 were 20% below January 31, 1998 (which
represents a seasonally-high point) but were 30% above April 30, 1997. The
increased receivable versus prior year largely reflected sales growth. However,
the lower receivable balance at April 30, 1997 was due to two unusual factors:
delayed fulfillment of orders due to the transition to the new Customer
Service/Distribution Center and lower-than-normal Japan sales volume in April
1997 due to the effect of accelerated consumer spending prior to the April 1,
1997 increase in the consumption tax.
Inventories (which represent the largest portion of total assets) at April 30,
1998 were 9% higher than January 31, 1998 and were 23% above April 30, 1997 in
- 12 -
<PAGE>
order to support overall sales growth, new stores and new products, as well as
to deepen product availability in the engagement jewelry category. 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.
The Company incurred a net cash outflow from operating activities of $18,495,000
in the three months ended April 30, 1998, compared with an outflow of $2,400,000
in the corresponding period a year ago. The increased outflow primarily resulted
from the higher inventory purchases.
Capital expenditures were $13,460,000 in the three months ended April 30, 1998
compared with $5,396,000 in the prior year. The increase was due to costs
associated with new store openings, relocation of an existing store and
expansion of manufacturing and administrative facilities. Based on current
plans, management expects that capital expenditures will be approximately
$70,000,000 in Fiscal 1998.
The Company's sources of working capital are internally-generated cash flows and
borrowings available under a five-year, $160,000,000 multicurrency,
noncollateralized revolving credit facility (amended in the first quarter of
Fiscal 1998 to increase the amount from $130,000,000 and the number of banks
from four to five) which expires on June 30, 2002. 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 and the seasonal working capital increases that are typically required
during the third and fourth quarters of the year.
Seasonality
- -----------
The Company's business is seasonal in nature, with the fourth quarter typically
representing a proportionally greater percentage of annual sales, earnings from
operations and cash flow. Management expects such seasonality to continue.
Risk Factors
- ------------
This document contains certain "forward-looking statements" concerning the
Company's objectives and expectations with respect to store expansion, retail
prices, gross profit, expenses, inventory performance, capital expenditures and
cash flow. In addition, management makes other forward-looking statements from
time to time concerning objectives and expectations for sales, earnings and cash
flow. As a retailer, the Company's success in achieving its objectives and
expectations is partially dependent upon economic conditions and consumer
attitudes. However, certain assumptions are specific to the Company and/or the
markets in which it operates. The following assumptions, among others, are risk
factors which could affect the likelihood that the Company will achieve the
objectives and expectations communicated by management: (i) that new stores and
other sales locations can be leased or otherwise obtained on suitable lease
terms in desired markets and that construction can be completed on a timely
basis; (ii) that existing product supply arrangements, including license
agreements with third-party designers, will continue; (iii) that the market for
high-quality cut diamonds will provide continuity of supply and pricing; (iv)
that new systems, particularly for inventory management, can be successfully
integrated into the Company's operations and that warehousing and distribution
productivity can be further improved to support the Company's worldwide
distribution requirements; and (v) that the exchange relationship between the
Japanese yen and the U.S. dollar will not substantially change during Fiscal
1998.
- 13 -
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27 Financial Data Schedule (SEC/EDGAR only).
(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: June 11, 1998 By: s/s James N. Fernandez
----------------------------------
James N. Fernandez
Executive Vice President - Finance
and Chief Financial Officer
(principal financial officer)
- 14 -
<PAGE>
EXHIBIT INDEX
Exhibit
Number
27 Financial Data Schedule
(submitted to SEC only)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The amount reported for EPS primary and fully diluted is in compliance
with Statement of Financial Accounting Standards No. 128, "Earnings Per
Share" and represents the Basic and Diluted calculation as required by
this standard.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1999
<PERIOD-START> FEB-01-1998
<PERIOD-END> APR-30-1998
<CASH> $74,609,000
<SECURITIES> 0
<RECEIVABLES> 87,745,000
<ALLOWANCES> 7,762,000
<INVENTORY> 422,441,000
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0
0
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</TABLE>
