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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) February 19, 1998
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ZALE CORPORATION
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(Exact name of registrant as specified in its charter)
DELAWARE 0-21526 75-0675400
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
901 W. Walnut Hill Lane, Irving, Texas 75038-1003
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (972) 580-4000
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Not Applicable
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS.
On February 19, 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 up to an aggregate of $40 million of Zale
common stock on the open market through the current calendar year.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits.
99 Press Release issued by the Company on February 19, 1998.
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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
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Registrant
By: /s/ Mark R. Lenz
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Mark R. Lenz
Senior Vice President,
Controller
(principal accounting officer
of the registrant)
Date: February 19, 1998
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EXHIBIT INDEX
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EXHIBIT
NUMBER DESCRIPTION
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99 Press Release issued by the Company on February 19, 1998.
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EXHIBIT 99
CONTACT: Stephen C. Massanelli
Senior Vice President and Treasurer
(972) 580-5032
Laura Moore
Vice President, Corporate Communications
(972) 580-5104
Naomi Rosenfeld/Carolyn Capaccio
Morgen-Walke Associates
Media Contact:
Stacy Berns
(212) 850-5600
FOR IMMEDIATE RELEASE
ZALE CORPORATION ANNOUNCES STRONG NET EARNINGS FOR THE SECOND QUARTER AND $40
MILLION STOCK REPURCHASE PROGRAM
Dallas, Texas, February 19, 1998--Zale Corporation (NYSE: ZLC), the
nation's largest specialty retailer of fine jewelry, today announced operating
results for the second quarter ended January 31, 1998.
Net sales for the second quarter were $522.0 million compared to $505.1
million last year. Comparable store sales increased 9.4% for the same period.
Operating earnings for the quarter, including a gain on sale of land of $4.7
million, rose to $102.6 million from $90.8 million for the comparative period.
Net earnings for the quarter were $58.9 million, or $1.57 a diluted share,
compared to net earnings of $51.5 million, or $1.41 a diluted share for the
same period last year.
Excluding the gain on sale of land, operating earnings were $97.8
million, or an increase of 7.8%. Net earnings, exclusive of this gain on
sale, were $56.0 million, or $1.49 a diluted share, compared to last year's net
earnings of $51.5 million, or $1.41 a diluted share.
For the year to date, sales totaled $774.5 million, compared to $735.9
million for the same period last year. On a comparable store basis, year to
date sales increased 8.3%. Operating earnings totaled $112.4 million, compared
to $97.0 million for the same period last year, and net earnings totaled $60.0
million, compared to $50.4 million for the same period last year.
"We are very pleased with our strong results as indicated by the fact
that all three of our operating formats are performing at ever increasing
levels of productivity and profitability," commented Robert J. DiNicola,
Chairman and Chief Executive Officer. "This outstanding earnings performance
was achieved even without the recently divested lease operation. Furthermore,
it illustrates our continuing ability to grow the company while maintaining
strict operating disciplines at every level."
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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 calendar
year, up to an aggregate of $40 million of Zale common stock on the open
market.
"Our decision to implement the stock repurchase program clearly
demonstrates confidence in the business and our belief that our company's stock
is currently undervalued. The overall repurchase plan also anticipates the
exercise of approximately 1.9 million Series A Warrants which expire on July
30, 1998," said Mr. DiNicola. "This repurchase program is consistent with our
objective to further enhance shareholder value."
Zale Corporation operates approximately 1,100 retail jewelry stores
located throughout the United States, Guam and Puerto Rico, including Zales
Jewelers, Gordon's Jewelers and Bailey, Banks and Biddle.
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 Form 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.
(Table to Follow)
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ZALE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
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Three Months Ended Six Months Ended
January 31, January 31,
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1998 1997 1998 1997
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<S> <C> <C> <C> <C>
Net Sales $ 522,017 $ 505,083 $ 774,543 $ 735,862
Cost of Sales 270,576 256,771 402,179 376,815
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Gross Margin 251,441 248,312 372,364 359,047
Selling, General and Administrative Expenses 148,249 154,210 256,188 255,929
Depreciation and Amortization Expense 5,356 3,346 10,154 6,156
Unusual Item - Gain on Sale of Diamond Park Fine
Jewelers Division Assets -- -- (1,634) --
Unusual Item - Gain on Sale of Land (4,720) -- (4,720) --
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Operating Earnings 102,556 90,756 112,376 96,962
Interest Expense, Net 8,369 9,501 16,524 17,499
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Earnings Before Income Taxes 94,187 81,255 95,852 79,463
Income Taxes 35,250 29,740 35,869 29,086
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Net Earnings $ 58,937 $ 51,515 $ 59,983 $ 50,377
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Earnings Per Common Share:
Basic $ 1.65 $ 1.47 $ 1.69 $ 1.43
Diluted $ 1.57 $ 1.41 $ 1.60 $ 1.37
Weighted Average Number of Common
Shares Outstanding:
Basic 35,669 35,032 35,450 35,124
Diluted 37,584 36,606 37,576 36,781
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ZALE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
JANUARY 31, JULY 31, JANUARY 31,
1998 1997 1997
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(UNAUDITED) (UNAUDITED)
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ASSETS
Current Assets:
Cash and Cash Equivalents $ 113,708 $ 41,636 $ 26,918
Customer Receivables, Net 548,323 454,270 499,094
Merchandise Inventories 522,328 511,702 573,039
Other Current Assets 26,114 39,271 26,404
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Total Current Assets 1,210,473 1,046,879 1,125,455
Property and Equipment, Net 152,938 138,011 128,862
Other Assets 45,715 43,616 43,663
Deferred Tax Asset, Net 52,700 52,700 56,500
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Total Assets $ 1,461,826 $ 1,281,206 $ 1,354,480
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LIABILITIES AND STOCKHOLDERS'
INVESTMENT
Current Liabilities:
Current Portion of Long-term Debt $ 12 $ 328 $ 5
Accounts Payable and Accrued Liabilities 198,300 145,721 169,385
Deferred Tax Liability, Net 23,700 23,700 32,000
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Total Current Liabilities 222,012 169,749 201,390
Non-current Liabilities 51,885 53,544 53,557
Long-term Debt 480,314 451,459 495,549
Excess of Revalued Net Assets Over
Stockholders' Investment, Net 61,931 64,880 67,829
Commitments and Contingencies
Stockholders' Investment:
Preferred Stock -- -- --
Common Stock 363 350 355
Additional Paid-In Capital (Includes
Stock Warrants) 444,577 401,121 396,090
Unrealized Gains on Securities 2,359 2,182 1,966
Accumulated Earnings 202,387 142,404 142,228
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649,686 546,057 540,639
Treasury Stock (4,002) (4,483) (4,484)
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Total Stockholders' Investment 645,684 541,574 536,155
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Total Liabilities and Stockholders' Investment $ 1,461,826 $ 1,281,206 $ 1,354,480
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