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December 22, 2013
17:49 EDTTIFTiffany lowers FY14 outlook after Dutch court rules in favor of Swatch Group
As previously disclosed by Tiffany & Co (TIF) in filings with the SEC, certain claims and counterclaims had been pending between and among The Swatch Group and its wholly-owned subsidiary Tiffany Watch Co. and Tiffany & Co. and its wholly-owned subsidiaries, Tiffany and Company and Tiffany NJ under the agreements entered into by and among the Swatch Parties and the Tiffany Parties that came into effect in December 2007. Such claims and counterclaims had been pending in a confidential arbitration before an arbitral panel convened pursuant to the Arbitration Rules of the Netherlands Arbitration Institute in the Netherlands. On December 21, the arbitral panel issued an award in favor of the Swatch Parties. While one of the three members of the arbitral panel issued a Dissenting Opinion stating that the claims of the Swatch Parties should have been dismissed, in the majority opinion and award, the Swatch Parties substantially prevailed as to liability, and the Tiffany Parties substantially prevailed as to the methods of calculating damages. Pursuant to the material provisions of the arbitral award: In respect of certain breaches of the Tiffany Parties under the Agreements, Tiffany is to pay the Swatch Parties CHF 402.7M, or approximately USD $449.5M, plus interest thereon from June 30, 2012 to the date of payment at the statutory compound interest rate for damages under applicable Dutch law. The Tiffany Parties are required to pay two-thirds of the costs of the arbitration. That amount is Euro 0.6M, or approximately USD $0.8M. The Tiffany Parties are also required to pay two-thirds of the reasonable legal fees, expenses and other costs incurred by the Swatch Parties in connection with the arbitration. These amounts, which are to be paid in multiple currencies, aggregate to approximately USD $8.8M. The Agreements were deemed terminated by the arbitral award as of March 1, 2013. Tiffany will record a charge for the after-tax impact of the award, which is estimated to be approximately $295M $305M, in Q4. Tiffany & Co. intends to fund any amounts to be paid by the Tiffany Parties from immediately available cash on hand and funds available under its existing debt facilities. The management of Tiffany & Co. believes that the charges associated with this award will reduce earnings per diluted share for the fiscal year ended January 31, 2014 by $2.30 - $2.35 relative to the guidance issued on November 26 of $3.65 - $3.75.
News For TIF From The Last 14 Days
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April 15, 2014
10:00 EDTTIFOn The Fly: Analyst Upgrade Summary
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08:47 EDTTIFTiffany China business poised to continue growth, says Sterne Agee
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08:19 EDTTIFTiffany upgraded to Overweight from Equal Weight at Stephens
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April 11, 2014
08:12 EDTTIFTiffany announces General Counsel to retire
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April 9, 2014
09:20 EDTTIFBofA/Merrill's retail analysts hold an analyst/industry conference call
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