<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) September 1, 1998
-------------------------------
ZALE CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 0-21526 75-0675400
- --------------------------------------------------------------------------------
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
901 W. Walnut Hill Lane, Irving, Texas 75038-1003
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (972) 580-4000
-----------------------------
Not Applicable
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE> 2
ITEM 5. OTHER EVENTS.
On September 1, 1998, Zale Corporation (the "Company") announced a
stock repurchase program pursuant to which the Company, from time to time and at
management's discretion, may purchase through the current fiscal year up to an
aggregate of $50 million of Zale common stock on the open market.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits.
99 Press Release issued by the Company on September 1,
1998.
<PAGE> 3
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 hereunto duly authorized.
ZALE CORPORATION
Registrant
By: /s/ MARK R. LENZ
---------------------------------
Mark R. Lenz
Senior Vice President, Controller
(principal accounting officer
of the registrant)
Date: September 1, 1998
<PAGE> 4
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
99 Press Release issued by the Company on September 1, 1998.
</TABLE>
<PAGE> 1
EXHIBIT 99
CONTACT: Cynthia T. Gordon
Senior Director, Investor Relations
(972) 580-5047
Laura Moore
Vice President, Corporate Communications
(972) 580-5104
FOR IMMEDIATE RELEASE
ZALE CORPORATION ANNOUNCES 25% INCREASE IN FISCAL 1998
NET EARNINGS AND $50 MILLION STOCK REPURCHASE PROGRAM
DALLAS, Texas, September 1, 1998 - Zale Corporation (NYSE: ZLC), the
nation's largest specialty retailer of fine jewelry, today announced that it
achieved a 25% increase in net earnings during the Company's fiscal year ended
July 31, 1998, reporting diluted earnings per share of $1.70 excluding unusual
items versus earnings of $1.38 for the prior year. Including the unusual items,
diluted earnings per share were $1.84 for the year ended July 31, 1998.
Net sales for fiscal 1998 were $1.314 billion compared to $1.254
billion last year, reflecting a total sales increase of 4.8 % and a comparable
store sales increase of 9.3%. Excluding sales from the Diamond Park Leased
Division, divested in October of 1997, total sales increased 14.2%. Operating
earnings, excluding unusual items increased to $133.4 million from $116.0
million the prior year. Net earnings for the year, excluding the unusual items
were $63.3 million compared to $50.6 million in fiscal 1997. Including the
unusual items, which relate to gains on the sale of the Diamond Park Leased
Division and land surrounding the Company's corporate headquarters, net earnings
were $68.9 million.
Net sales for the fourth quarter were $280.9 million compared to $273.6
million for the same period last year. Comparable store sales increased 9.6% for
the same period. During the recently completed quarter, operating earnings,
excluding unusual items, increased 45% to $16.9 million from $11.6 million for
the same period last year. Net earnings, excluding unusual items, for the
quarter were $5.8 million, or $0.16 per diluted share, compared to $1.6 million,
or $0.04 per diluted share for the same period last year.
<PAGE> 2
"We are extremely pleased with our performance for both the fourth
quarter and the fiscal year. This marks the fifth consecutive quarter of
profitability and the fourth year in a row that earnings have increased in
excess of 20%. With the completion of each quarter and each ensuing year, we
continue to differentiate our business and enhance our strong brand identity in
the eyes of the customer," commented Robert J. DiNicola, Chairman and Chief
Executive Officer. "Successful execution across all facets of the business;
merchandising, marketing, store operations, and the organization's support
areas, continue to drive positive results and position us for continued success
in the upcoming year."
Separately, the Company announced that its Board of Directors has
approved a stock repurchase program pursuant to which the Company, from time to
time and at management's discretion, may purchase through the current fiscal
year, up to an aggregate of $50 million of Zale common stock on the open market.
Having completed a $40 million repurchase plan in June 1998, this repurchase
program represents the Company's second such announcement in the past seven
months.
"Our decision to implement the stock repurchase program demonstrates
our continued confidence in the business. The current financial market
conditions have helped create an opportunity for the Company to further its
commitment to increasing shareholder value and providing the best uses of our
capital resources," commented Mr. DiNicola.
Zale Corporation operates approximately 1,125 specialty retail jewelry
stores located throughout the United States, Guam and Puerto Rico, including
Zales Jewelers, Gordon's Jewelers and Bailey Banks & Biddle Fine Jewelers.
<PAGE> 3
This release includes certain forward-looking information that is based
upon management's beliefs as well as on assumptions made by and data currently
available to management. This information which has been, or in the future may
be, included in reliance on the "safe harbor" provisions on the Private
Securities Litigation Reform Act of 1995, is subject to a number of risks and
uncertainties, including but not limited to the factors identified in the
Company's 10-K and other documents filed with the Securities and Exchange
Commission. Actual results may differ materially from those anticipated in such
forward-looking statements even if experience or future changes make it clear
that any projected results expressed or implied therein may not be realized. The
Company undertakes no obligation to update or revise any forward-looking
statements to reflect subsequent events or circumstances.
# # #
(Tables to follow)
<PAGE> 4
ZALE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED TWELVE MONTHS ENDED
JULY 31, JULY 31,
---------------------------- ----------------------------
1998 1997 1998 1997
----------- ----------- ----------- -----------
(unaudited)
<S> <C> <C> <C> <C>
Net Sales $ 280,867 $ 273,580 $ 1,313,710 $ 1,253,818
Cost of Sales 145,887 141,309 681,908 643,318
----------- ----------- ----------- -----------
Gross Margin 134,980 132,271 631,802 610,500
Selling, General and Administrative Expenses 111,594 116,591 475,846 480,522
Depreciation and Amortization Expense 6,508 4,067 22,565 14,022
Unusual Item - Gain on Sale of Diamond Park Fine
Jewelers Division Assets --- --- (1,634) ---
Unusual Item - Gain on Sale of Land (2,593) --- (7,313) ---
----------- ----------- ----------- -----------
Operating Earnings 19,471 11,613 142,338 115,956
Interest Expense, Net 7,453 8,914 32,039 36,098
----------- ----------- ----------- -----------
Earnings Before Income Taxes 12,018 2,699 110,299 79,858
Income Taxes 4,567 1,079 41,362 29,305
----------- ----------- ----------- -----------
Net Earnings $ 7,451 $ 1,620 $ 68,937 $ 50,553
=========== =========== =========== ===========
Earnings Per Common Share:
Basic $ 0.22 $ 0.05 $ 1.96 $ 1.44
Diluted $ 0.20 $ 0.04 $ 1.84 $ 1.38
Weighted Average Number of Common
Shares Outstanding:
Basic 34,647 34,995 35,201 35,054
Diluted 36,887 36,808 37,368 36,632
</TABLE>
<PAGE> 5
ZALE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
JULY 31, JULY 31,
1998 1997
----------- -----------
<S> <C> <C>
ASSETS
Current Assets:
Cash and Cash Equivalents $ 173,069 $ 32,623
Restricted Cash 6,192 9,013
Customer Receivables, Net 495,468 454,270
Merchandise Inventories 478,467 511,702
Other Current Assets 26,720 39,271
----------- -----------
Total Current Assets 1,179,916 1,046,879
Property and Equipment, Net 162,884 138,011
Other Assets 44,326 43,616
Deferred Tax Asset, Net 58,803 52,700
----------- -----------
Total Assets $ 1,445,929 $ 1,281,206
=========== ===========
LIABILITIES AND STOCKHOLDERS'
INVESTMENT
Current Liabilities:
Current Portion of Long-term Debt $ --- $ 328
Accounts Payable and Accrued Liabilities 187,621 145,721
Deferred Tax Liability, Net 20,800 23,700
----------- -----------
Total Current Liabilities 208,421 169,749
Non-current Liabilities 50,190 53,544
Long-term Debt 480,275 451,459
Excess of Revalued Net Assets Over
Stockholders' Investment, Net 58,982 64,880
Commitments and Contingencies
Stockholders' Investment:
Preferred Stock --- ---
Common Stock 380 350
Additional Paid-In Capital (Includes
Stock Warrants) 477,657 401,121
Unrealized Gains on Securities 2,851 2,182
Accumulated Earnings 211,341 142,404
----------- -----------
692,229 546,057
Treasury Stock (44,168) (4,483)
----------- -----------
Total Stockholders' Investment 648,061 541,574
----------- -----------
Total Liabilities and Stockholders' Investment $ 1,445,929 $ 1,281,206
=========== ===========
</TABLE>
