UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Thirteen Weeks Ended July 30, 1994
OR
[ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period From to
Commission File Number 1-8057
L. LURIA & SON, INC.
(Exact name of registrant as specified in its charter)
FLORIDA 59-0620505
(State of incorporation) (IRS Employer Identification No.)
5770 Miami Lakes Drive, Miami Lakes, Florida 33014
(Address of principal executive offices) (zip code)
(305) 557-9000
(Registrant's telephone number, including area code)
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
Common stock, par value $.01 per share: 4,032,465 shares
outstanding as of August 31, 1994
Class B stock, par value $.01 per share: 1,375,844 shares
outstanding as of August 31, 1994
L. LURIA & SON, INC.
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION Page No.
Item 1. Financial Statements
Condensed Balance Sheets - July 30, 1994
(Unaudited), July 31, 1993 (Unaudited),
and January 29, 1994 . . . . . . . . . . . .
Unaudited Condensed Statements of Operations
for the thirteen and twenty-six weeks ended
July 30, 1994 and the thirteen and twenty-six
weeks ended July 31, 1993 . . . . . . . . . .
Unaudited Condensed Statements of Cash Flows
for the twenty-six weeks ended July 30, 1994
and July 31, 1993 . . . . . . . . . . . . . .
Notes to Condensed Financial Statements . . .
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations . . . . . . . . . . . . . . .
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of
Security Holders . . . . . . . . . . . .
Item 6. Exhibits and Reports on Form 8-K . . . .
Signatures . . . . . . . . . . . . . . . . . . . .
Appendix A . . . . . . . . . . . . . . . . . . . .
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
L. LURIA & SON, INC.
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
<S> <C> <C>
(in thousands) July 30, July 31,
1994 1993
ASSETS (Unaudited) (Unaudited)
Current assets:
Cash and cash equivalents $ 6,791 $ 2,500
Accounts receivable 986 832
Inventories 82,328 83,778
Prepaid expenses 3,489 3,511
Total current assets 93,594 90,621
Property, net 32,885 26,585
Other assets 1,374 1,470
Total assets $127,853 $118,676
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Short-term bank borrowing $ 16,700 $ 10,500
Accounts payable and
accrued liabilities 26,522 21,511
Current portion of
long-term debt and
obligations under
capital leases 206 223
Total current liabilities 43,428 32,234
Long-term debt and obligations
under capital leases 1,079 1,255
Deferred taxes 1,521 2,903
Shareholders' Equity:
Preferred stock: $1 par value,
5,000,000 shares authorized;
no shares issued -- --
Common stock:
Common: $.01 par value,
14,000,000 shares authorized
4,032,465 shares issued and
outstanding at July 30,
1994; 3,935,719 shares issued
and outstanding at July 31,
1993; and 3,987,314 shares issued
and outstanding at January 29,
1994 40 39
Class B: $.01 par value,
6,000,000 shares authorized;
1,375,844 shares issued and
outstanding at July 30, 1994;
1,449,547 shares issued and
outstanding at July 31, 1993;
and 1,426,947 issued and
outstanding at January 29,
1994 14 14
Additional paid-in capital 18,269 17,839
Retained earnings 63,502 64,392
Total shareholders' equity 81,825 82,284
Total liabilities and
shareholders' equity $127,853 $118,676
(continued)
<S> <C>
(in thousands) January 29,
1994
ASSETS
Current assets:
Cash and cash equivalents $ 17,371
Accounts receivable 2,277
Inventories 87,470
Prepaid expenses 2,205
Total current assets 109,323
Property, net 29,448
Other assets 1,204
Total assets $139,975
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term bank borrowing $ --
Accounts payable and accrued liabilities 53,567
Current portion of long-term debt and
obligations under capital leases 223
Total current liabilities 53,790
Long-term debt and obligations under
capital leases 1,156
Deferred taxes 1,283
Shareholders' Equity:
Preferred stock: $1 par value, 5,000,000
shares authorized; no shares issued --
Common stock:
Common: $.01 par value, 14,000,000 shares
authorized 4,032,465 shares issued and
outstanding at July 30, 1994; 3,935,719
shares issued and outstanding at July 31,
1993; and 3,987,314 shares issued and
outstanding at January 29, 1994 39
Class B: $.01 par value, 6,000,000 shares
authorized; 1,375,844 shares issued and
outstanding at July 30, 1994; 1,449,547
shares issued and outstanding at
July 31, 1993; and 1,426,947 issued and
outstanding at January 29, 1994 14
Additional paid-in capital 18,353
Retained earnings 65,340
Total shareholders' equity 83,746
Total liabilities and shareholders' equity $139,975
</TABLE>
See accompanying notes to condensed financial statements.
L. LURIA & SON, INC.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
(in thousands, except earnings
(loss) per common share)
Thirteen Weeks Thirteen Weeks
Ended Ended
July 30, 1994 July 31, 1993
Net sales $42,303 $44,894
Cost of goods sold,
buying and warehousing
costs 32,422 31,946
Gross margin 9,881 12,948
Operating expenses 12,240 12,619
Income (loss) from
operations (2,359) 329
Interest income (expense)-
net (89) (46)
Income (loss) before
income tax (2,448) 283
Income tax (benefit) (920) 107
Net income (loss) $(1,528) $ 176
Weighted average number
of common shares
outstanding 5,411 5,371
Earnings (loss) per
common share $ (.28) $ .03
(continued)
<S> <C> <C>
(in thousands, except earnings
(loss) per common share)
Twenty-Six Weeks Twenty-Six Weeks
Ended Ended
July 30, 1994 July 31, 1993
Net sales $86,504 $93,235
Cost of goods sold,
buying and warehousing
costs 64,062 65,708
Gross margin 22,442 27,527
Operating expenses 25,319 26,835
Income (loss) from
operations (2,877) 692
Interest income (expense)-
net (71) 25
Income (loss)before income
tax (2,948) 717
Income tax (benefit) (1,110) 270
Net income (loss) (1,838) 447
Weighted average number of
common shares outstanding 5,411 5,371
Earnings (loss) per common
share $ (.34) $ .08
</TABLE>
See accompanying notes to condensed financial statements.
L. LURIA & SON, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
(in thousands) Twenty-six Weeks Twenty-six Weeks
Ended Ended
July 30, 1994 July 31, 1993
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income (loss) $ (1,838) $ 447
Adjustments to reconcile
net income (loss) to
net cash used in operating
activities:
Depreciation 2,209 1,969
Deferred tax (benefit) 238 (44)
Decrease in accounts
receivable 1,291 1,796
Decrease (Increase) in
inventories 5,142 (5,878)
(Increase) in prepaid
expenses (1,284) (1,071)
(Increase) in other assets (170) (49)
Decrease in accounts payable
and accrued liabilities (27,045) (29,082)
Net cash used in
operating activities (21,457) (31,912)
CASH FLOWS FROM INVESTING
ACTIVITIES:
Additions to property (5,646) (996)
Net cash applied to investing
activities (5,646) (996)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Borrowing under line of credit
agreements 16,700 10,500
Repayments of long-term debt (75) (74)
Repayments of obligations under
capital leases (19) (33)
Treasury shares acquired (83) 157
Net cash provided by financing
activities 16,523 10,550
Net decrease in cash and cash
equivalents (10,580) (22,358)
Cash and cash equivalents,
beginning of period 17,371 24,858
Cash and cash equivalents,
end of period $ 6,791 $ 2,500
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION
Cash paid during the period for:
Interest (net of amounts
capitalized) $ 94 $ 66
Income taxes $ 1,275 $ 3,320
</TABLE>
See accompanying notes to condensed financial statements.
L. LURIA & SON, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
FOR THE THIRTEEN WEEKS ENDED July 30, 1994 AND July 31, 1993
GENERAL
The accompanying condensed financial statements have been prepared
in accordance with the instructions to Form 10-Q of the Securities
and Exchange Commission and in accordance with generally accepted
accounting principles applicable to interim financial statements
and do not include all of the information and footnotes required by
generally accepted accounting principles for complete financial
statements. In the opinion of management of L. Luria & Son, Inc.
(the "Company"), the accompanying condensed financial statements
reflect all adjustments necessary to present fairly the financial
position of the Company as of July 30, 1994 and July 31, 1993, and
the results of its operations and cash flows for the periods ended
July 30, 1994 and July 31, 1993. Furthermore, all adjustments were
of a normal and recurring nature.
SEASONALITY
The results of operations for the thirteen weeks ended July 30,
1994 are not indicative of the results to be expected for the
entire year because the Company's operations are seasonal.
ACCOUNTING POLICIES
The accounting policies followed by the Company are set forth in
Note 1 to the Company's financial statements in the 1994 L. Luria
& Son, Inc. Annual Report, which is incorporated by reference in
Form 10-K.
ACCOUNTING CHANGE
As set forth in Note 2 to the Company's financial statements in the
1994 L. Luria & Son, Inc. Annual Report, which is incorporated by
reference in Form 10-K, in the fourth quarter of fiscal year 1994,
the Company changed its method of valuing jewelry inventory from
the LIFO (last-in, first-out) to the FIFO (first-in, first-out)
method. As required, all prior year financial statements presented
have been restated to reflect this change. Accordingly, results
for the first and second quarters of last year were restated to
reduce earnings by $39,000 or $.01 per share and $34,000 or $.01
per share, respectively.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
SUMMARY
The following table sets forth for the periods indicated
percentages which certain items reflected in the financial data
bear to net sales of the Company:
RELATIONSHIPS TO NET SALES
PERIODS ENDED
<TABLE>
<CAPTION>
<S> <C> <C>
Thirteen Weeks Thirteen Weeks
Ended Ended
July 30, 1994 July 31, 1993
Net sales 100.0% 100.0%
Cost of goods sold,
buying and warehousing
costs 76.6 71.2
Gross margin 23.4 28.8
Operating expenses 28.9 28.1
Income (loss) from
operations (5.5) .7
Interest income
(expense) - net (.2) (.1)
Income (loss) before
income tax (5.7) .6
Income tax (benefit) (2.1) .2
Net income (3.6)% .4%
(continued)
<S> <C> <C>
Twenty-Six Weeks Twenty-Six Weeks
Ended Ended
July 30, 1994 July 31, 1993
Net sales 100.0% 100.0%
Cost of goods sold,
buying and warehousing
costs 74.0 70.5
Gross margin 26.0 29.5
Operating expenses 29.3 28.8
Income (loss) from
operations (3.3) .7
Interest income
(expense) - net ( .1) .1
Income (loss) before
income tax (3.4) .8
Income tax (benefit) (1.3) .3
Net income (2.1)% .5%
</TABLE>
NET SALES
For the thirteen weeks (second quarter) ended July 30, 1994, net
sales decreased $2,591,000, or 5.8%, compared to the same period
last year. Comparable store sales decreased 7.8%. Last year's
second quarter sales benefited from significant hurricane
replacement purchases. In addition, this year's second quarter
sales were impacted by reductions in advertising expenditures and
softening customer retail demand in the South Florida markets.
Sales for the first six months (26 weeks) decreased $6,731,000 or
7.2% while comparable store sales decreased 8.9%.
GROSS MARGINS
Gross margins as a percent of net sales for the thirteen and
twenty-six weeks ended July 30, 1994 were 23.4% compared to 28.8%
for the prior year quarter and 26.0% compared to 29.5%,
respectively. Gross margins were lower primarily due to
substantial markdowns incurred to reduce inventory levels and to
accelerate the reduction of inventory assortments to adjust to the
new superstore format featuring more massed-out merchandise. As of
July 30, 1994, inventories are $1.5 million below last year's level
and $5.1 million below last year-end's level. Jewelry sales as a
percent of sales were 37.8% this year vs. 36.0% last year for the
quarter and 37.8% this year and 36.5% last year for the six month
periods, respectively. As set forth in Note 2 to the Company's
financial statements in the 1994 L. Luria & Son, Inc. Annual
Report, in the fourth quarter of fiscal year 1994, the Company
changed its method of valuing jewelry inventory from the LIFO
(last-in, first-out) to the FIFO (first-in, first-out) method. As
required, all prior year financial statements presented have been
restated to reflect this change. Accordingly, the first quarter
and the second quarter of last year were restated to reduce net
earnings by $39,000 or $.01 per share and $34,000 or $.01 per
share, respectively.
OPERATING EXPENSES
Operating expenses for the current thirteen and twenty-six weeks
periods increased as a percent of net sales to 28.9% this year from
28.1% last year, and to 29.3% from 28.8%, respectively, due
primarily to the shortfall in sales versus last year. Cost
controls reduced the operating expenses by 3% for the quarter and
6% for the six months from last year's expenditure level. Expenses
were reduced from last year's levels in most expense categories,
with significant reductions in advertising and sales promotion,
equipment lease costs, and other overhead expenses. Preopening
expenses related to the three new superstores of $238,000, or $.03
per share, were incurred in the second quarter versus none last
year. As a part of the Restructuring Plan, during the six month
period, the Company relocated two stores and entered into
negotiations on closing or relocating several additional stores.
Approximately $1.3 million of incremental costs associated with
relocating two stores and the carrying costs associated with
previously closed stores have been charged to the Restructuring
Plan reserves established during the fourth quarter of fiscal year
1994. The Company currently operates seven superstores and plans
to open two additional superstores this year.
INTEREST INCOME (EXPENSE) - NET
Net interest expense for the thirteen and twenty-six week periods
ended July 30, 1994 increased compared to the prior year due to
increased short-term borrowings and higher interest rates in the
current year. The increase in short-term borrowings at July 30,
1994 versus last year is due to capital expenditures to support the
Company's superstore strategy.
INCOME TAX (BENEFIT)
Income tax benefit for the thirteen and twenty-six week periods
ended July 30, 1994 is estimated at 37.6% of the pre-tax loss,
which is comparable to last year's income tax expense rate of
37.7%.
INVENTORIES
At July 30, 1994, inventory levels were $82.3 million, or 2% below
last year's $83.8 million due to the Company's inventory control
efforts.
LIQUIDITY AND CAPITAL RESOURCES
At July 30, 1994, the Company had approximately $81.8 million in
shareholders' equity and approximately $1.1 million in long-term
debt and capital leases. Cash and cash equivalents decreased $10.6
million since the end of fiscal 1994 primarily to finance the
payment of inventory and capital expenditures. At July 30, 1994,
the Company had available lines of credit of $45.0 million, of
which $28.2 million remained unused.
The Company believes that cash provided by operations, available
lines of credit and access to the capital markets at competitive
rates will be adequate to meet its working capital and capital
expenditure requirements for fiscal year 1995.
PART II - OTHER INFORMATION
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(c) The annual meeting of shareholders of the Company
was held on June 2, 1994. The following is a brief description of
each matter voted upon at the meeting and the number of votes cast
for, against, or withheld, as well as the number of abstentions:
1. Election of three Directors of the Company
Sydney Luria
Common Stock For: 3,597,170
Common Stock Withheld: 24,208
Jorgen Petersen
Class B Stock For: 1,375,631
Class B Stock Withheld: 1,060
Jeremy R. Serwer
Class B Stock For: 1,375,631
Class B Stock Withheld: 1,060
2. Ratification of appointment of KPMG
Peat Marwick as the Company's
independent certified public
accountants
Common Stock For: 3,613,590
Common Stock Against: 4,961
Common Stock Abstain: 2,872
Class B Stock For: 1,375,737
Class B Stock Against: 0
Class B Stock Abstain: 0
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(b) There were no reports on Form 8-K filed for the
thirteen-week period ended July 30, 1994.
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.
L. LURIA & SON, INC.
Date: September 13, 1994 /s/ Peter Luria
Peter Luria
President and Chief
Operating Officer
Date: September 13, 1994 /s/ Duane R. Wolter
Duane R. Wolter
Sr. Vice President-Finance,
Chief Financial Officer and
Principal Accounting
Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-28-1995
<PERIOD-START> JAN-30-1994
<PERIOD-END> JUL-30-1994
<CASH> 6,670
<SECURITIES> 121
<RECEIVABLES> 986
<ALLOWANCES> 0
<INVENTORY> 82,328
<CURRENT-ASSETS> 93,594
<PP&E> 69,066
<DEPRECIATION> 36,181
<TOTAL-ASSETS> 127,853
<CURRENT-LIABILITIES> 43,428
<BONDS> 1,079
<COMMON> 54
0
0
<OTHER-SE> 81,771
<TOTAL-LIABILITY-AND-EQUITY> 127,853
<SALES> 86,504
<TOTAL-REVENUES> 86,504
<CGS> 64,062
<TOTAL-COSTS> 25,319
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 71
<INCOME-PRETAX> (2948)
<INCOME-TAX> (1110)
<INCOME-CONTINUING> (1838)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1838)
<EPS-PRIMARY> (.34)
<EPS-DILUTED> (.34)
</TABLE>
