CONFORMED COPY
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended: January 28, 1995
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 or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5770 MIAMI LAKES DRIVE, MIAMI LAKES, FLORIDA 33014
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (305) 557-9000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
SHARES OF COMMON STOCK, $.01 PAR VALUE NEW YORK STOCK EXCHANGE
Securities registered pursuant to Section 12(g) of the Act: NONE
(Title of Class)
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 [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
Aggregate market value of the voting stock of the registrant held by
non-affiliates of the registrant at April 6, 1995 (computed by reference to the
last reported sale price of the registrant's Common Stock on the New York Stock
Exchange on such date): $37,176,961.25
Number of shares outstanding of each of the registrant's classes of Common
Stock at April 6, 1995: 3,975,524 shares of Common Stock, $.01 par value per
share; 1,432,034 shares of Class B Common Stock, $.01 par value per share.
DOCUMENTS INCORPORATED BY REFERENCE
Certain portions of the registrant's Annual Report to Shareholders for the
fiscal year ended January 28, 1995 (the "Annual Report") are incorporated by
reference into parts II and IV of this Form 10-K.
Certain portions of the registrant's definitive Proxy Statement pursuant to
Regulation 14A of the Securities Exchange Act of 1934, as amended, which will be
filed with the Commission subsequent to the date hereof, (the "Proxy
Statement"), are incorporated by reference into Part III of this Form 10-K.
<PAGE>
PART I
ITEM 1. BUSINESS
GENERAL
L. LURIA & SON, INC., (the "Company") is a specialty discount retailer
operating 48 stores throughout the State of Florida as of January 28, 1995. The
Company sells a broad line of diamond and gold jewelry, watches, tabletop and
giftware merchandise. In addition, the Company sells housewares, small
appliances, consumer electronics, home furnishings, luggage, cameras and other
merchandise. Merchandise is advertised primarily by direct mail flyers,
newspaper inserts and advertisements. The annual catalog will be discontinued in
fiscal year 1996. In addition, the Company advertises on radio and television.
Although the majority of the Company's stores display samples, with inventories
of such items being maintained in warehouse areas adjoining each store, the
Company has opened nine new superstores. The superstore format masses out most
of the merchandise in the store. The new format will be used in new stores and
in certain existing stores. The Company also maintains a central distribution
facility at its headquarters in Miami Lakes, Florida, and a satellite
distribution facility in Orlando, Florida, which service all of its stores.
The Company was incorporated in Florida in November, 1976 and is the
successor, through combinations of affiliated companies, to a general wholesale
merchandise business established in 1898. The Company discontinued its wholesale
operations in 1970 and, since that time, has conducted a specialty retail
business exclusively. Unless the context indicates otherwise, the term "Company"
refers to L. Luria & Son, Inc. and its predecessors.
MERCHANDISING
The Company sells a broad line of jewelry and nationally advertised brand
name merchandise. During the fiscal year ended January 28, 1995, the principal
categories of merchandise sold by the Company, and the relative contribution of
each category as a percentage of total net sales of the Company, were as
follows:
<TABLE>
<CAPTION>
PERCENT OF NET SALES
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Jewelry and watches ...................... 37% 38% 37%
Consumer electronics, cameras and home
office ................................. 20% 22% 22%
Housewares, home furnishings, luggage and
juvenile ............................... 28% 26% 27%
Tabletop, giftware, clocks, and other .... 15% 14% 14%
---- ---- ----
100% 100% 100%
==== ==== ====
</TABLE>
Profit margins vary among the items sold by the Company, with
jewelry and watches accounting for the highest relative contribution to the
Company's gross margin.
The Company maintains a substantial inventory of loose diamonds and
other precious stones and purchases standard mountings or mountings fabricated
to its specifications. Gems are then set in mountings at the Company's
facilities or are subcontracted to others for setting. The Company accepts
special jewelry orders and offers in-house repairs, sizing, and engraving
services in connection with its jewelry sales.
The Company maintains sufficient inventories of all merchandise
categories to support anticipated sales. The Company significantly increases its
inventory prior to its fall selling season, with such increase generally being
financed through working capital, credit advanced by suppliers on normal trade
terms, and short-term borrowings, if needed. The Company purchases merchandise
from approximately 1,500 suppliers, no one of which accounted for more than 5%
of the Company's total purchases during the fiscal year ended January 28, 1995.
The Company has no long-term purchase commitments with any of its suppliers and
believes that alternative sources of supply are available for each category of
merchandise carried by the Company.
2
<PAGE>
MERCHANDISING (CONTINUED)
A substantial part of the Company's jewelry inventory consists of diamonds
and gold, the market values of which are subject to fluctuations in the world
markets. The Company continuously monitors those markets in an effort to
anticipate price changes and adjusts its purchasing practices and selling prices
in order to minimize its inventory exposure. The Company has not incurred any
material loss due to a decline in market values of diamonds and gold.
The Company's purchasing is done centrally from the Company's headquarters
in Miami Lakes. Virtually all general merchandise is delivered directly to the
Company's central distribution facility located in Miami Lakes and is
distributed on a daily basis to the stores on company trucks. All jewelry items
are shipped directly to a central location at the Company's headquarters, where
they are received, quality-checked, priced, and distributed to the stores.
MARKETING
The Company's marketing program attempts to stimulate high sales volume by
offering merchandise at prices which management believes are generally below
those at which the same or comparable items regularly would be priced in
conventional retail stores and which it believes are competitive with other
merchandisers which operate, as the Company does, on a high volume, gross low
profit margin basis.
The Company's principal promotional efforts are made through color flyers
distributed to persons on the Company's mailing list, as well as color inserts
in newspapers circulated within the Company's markets. The Company also conducts
television, radio, and newspaper advertising. An annual catalog, which has been
printed and made available to customers in the fall of each year, will be
discontinued next year.
The Company's business is affected by the same pattern of seasonality as
retail businesses in general. For the fiscal year ended January 28, 1995,
approximately $ 86 million or 41% of the Company's annual sales occurred in the
fourth quarter ended January 28, 1995, while the Company's net sales were
approximately $ 44 million (21%) in the first quarter; $ 42 million (20%) in the
second quarter; and $ 38 million (18%) in the third quarter. The percentage of
sales occurring in the above mentioned quarters of the fiscal year ended January
28, 1995 is comparable with the percentage of sales in each quarter of the
Company's five most recent fiscal years.
Each of the Company's stores contain a selling area and a contiguous
warehouse facility. The Company displays in the showrooms certain merchandise as
samples in each store's selling area, and the store's warehouse is stocked with
inventory in all merchandise categories. Other items are displayed in bulk
allowing the customer to more quickly select and purchase the merchandise. In
order to serve customers more efficiently, a customer's order is electronically
transmitted to the store warehouse from the selling floor where the order is
processed. The ordered merchandise is then dispatched to the customer pick-up
counter adjacent to the selling area, where payment is received and the
merchandise is delivered. In fiscal 1993, the Company renovated an existing
store into a superstore using a prototype design. In fiscal 1994, the Company
renovated another store into a superstore and opened two new superstores in the
prototype design, and in fiscal 1995 opened five new superstores in the same
design. The new design, which displays more of the merchandise on the selling
floor rather than in the adjoining warehouse, features mass displays,
self-service merchandise, shopping carts and check-out counters, along with an
enlarged jewelry display and selling area. During fiscal year 1994, the Company
took a restructuring charge of $5.5 million to replace twelve existing showrooms
with superstores and to close one showroom and two jewelry mall stores. During
fiscal year 1995, the Company opened five new superstores, and closed six
showrooms and one jewelry mall store.
EMPLOYEES
The number of employees of the Company fluctuates seasonally and reaches its
peak during the Christmas season and its lowest point during the summer months.
At January 28, 1995, the Company had approximately 1,485 full-time employees and
approximately 495 permanent part-time employees. During the 1994 Christmas
season, the Company employed approximately 805 additional part-time employees.
None of the Company's employees are covered by a collective bargaining
agreement.
3
<PAGE>
TRADEMARKS
The Company registered the mark "Luria's", the stylized mark "Luria's", the
mark with the Luria's logo and "LURIA'S, NOW YOU'VE THOUGHT OF EVERYTHING!" with
the Patent and Trademark office. In order to maintain the registrations, the
Company must file a declaration stating that the mark is in use between the
fifth and sixth anniversary of the registration date. Assuming the declaration
of use is filed, the service mark will be valid for a period of ten (10) years
and can be renewed thereafter. The Company believes that registration of the
marks is important to protect the Company's ability to use the marks.
COMPETITION
The retail merchandise business is highly competitive. The Company competes
with a variety of other retail merchandisers, including department, discount,
variety, specialty, catalog showroom stores and warehouse clubs. Many of the
competitors have national sales organizations which are larger and have greater
financial resources than the Company. To the best of the Company's knowledge,
only one competitor, a national chain, operates stores of a similar nature to
those of the Company within its Florida market. This competitor has 43 stores in
the State of Florida. Additionally, the Company also competes with jewelry and
giftware and specialty discount retailers of various sizes in various locations
throughout the Florida market area.
The Company believes that a combination of the following policies, practices
and procedures is the basis for its success: low selling prices on brand-name
merchandise; personalized customer service; dominant assortment of certain
merchandise categories; reduced handling costs through direct delivery to
customers of merchandise in supplier packaging or cartons; and the use of
inserts and flyers which permit customer pre-shopping. Unlike many retailers,
the Company does not maintain charge accounts; however, it does extend credit to
its customers through a private label credit card. Additionally, the Company
accepts all major credit cards.
The Company emphasizes certain aspects of its operations to enable it to
more effectively compete with its competitors. The Company emphasizes jewelry
sales, the use of experienced sales personnel, especially in its jewelry
operations and personalized customer service, particularly in the area of
jewelry and bridal and gift registry.
EXECUTIVE OFFICERS OF THE REGISTRANT
The following is a list of the Company's executive officers at April 6,
1995, including their ages, positions, and business experience for the past five
years.
<TABLE>
<CAPTION>
NAME TITLE AGE
---- ----- ---
<S> <C> <C>
Leonard Luria Chairman of the Board, Chief Executive Officer 71
and Treasurer
Peter P. Luria President, Chief Operating Officer and Director 43
Jeffrey A. Bayer Senior Vice President-Hardlines Merchandising 51
Craig M. Kurlander Senior Vice President-Stores 49
Richard Loebl Senior Vice President-Jewelry Merchandising 44
Duane R. Wolter Senior Vice President, Chief Financial Officer 46
Timothy E. Keeley Vice President-Real Estate 48
Richard H. Liebman Vice President-M.I.S. 46
Nancy Luria-Cohen Vice President and General Counsel 38
Grace E. O'Neill Vice President-Marketing 53
</TABLE>
4
<PAGE>
EXECUTIVE OFFICERS OF THE REGISTRANT (Continued)
LEONARD LURIA has been employed by the Company for 44 years and has been
Chief Executive Officer since 1961. Mr. Luria was also President of the Company
until April 1989
PETER LURIA, a son of Leonard Luria, has been employed by the
Company since 1974 in various capacities at the store, merchandising, and
management levels. He was named President of the Company in April 1989.
JEFFREY A. BAYER has been employed by the Company since 1987. In January, 1991,
Mr. Bayer was promoted to Senior Vice President of Hardlines Merchandising.
CRAIG KURLANDER has been employed by the Company since February, 1995 as
Senior Vice President-Stores. Previously, Mr. Kurlander was Senior Vice
President-Stores for Kay-BEE Toys, a division of Melville Corporation for four
years and before that was Senior Vice President-Stores for Zayre Corp.
RICHARD LOEBL has been employed by the Company since February, 1995 as
Senior Vice President-Jewelry Merchandising. Previously, Mr. Loebl was Senior
Vice President with Finlay's Fine Jewelry for eleven years.
DUANE R. WOLTER has been employed by the Company since January, 1994.
Previously, Mr. Wolter was Senior Vice President-Finance of Hecht's Department
Stores (a division of the May Department Stores Co., Inc.) since 1990.
TIMOTHY E. KEELEY has been employed by the Company since August, 1993 as
Director of Real Estate and became Vice President - Real Estate in October,
1994. Previously, Mr. Keeley was a Senior Real Estate Manager with Toys R Us for
seven years.
RICHARD H. LIEBMAN has been employed by the Company since 1990 as Director of
M.I.S. and became Vice President-M.I.S. in April 1992. Previously, Mr. Liebman
was a consultant with Deloitte and Touche, a national public accounting firm.
NANCY LURIA-COHEN, daughter of Leonard Luria, has been employed by the Company
since 1988 as General Counsel.
GRACE E. O'NEILL has been employed by the Company since September, 1994 as
Vice President-Marketing. Previously, Ms. O'Neill was Vice President-Advertising
for Fay's, Inc. for two years and Director of Advertising and Sales Promotion
for Eckerd Drug Company for six years.
ITEM 2. PROPERTIES
All but six, of the Company's stores are leased to the Company under
long-term leases, two of which are with certain officers and former officers of
the Company or their immediate families. Reference is made to the information
set forth in the Section entitled "Certain Transactions with Management" in the
Company's definitive Proxy Statement which will be filed with the Commission
subsequent to the date hereof pursuant to Regulation 14A under the Securities
Exchange Act of 1934, as amended (the "Proxy Statement"). All of the Company's
stores are located in Florida. In connection with the Company's superstore
strategy, the Company is replacing certain existing showrooms with superstores
in new locations in the same market areas.
Three of the Company's stores were built by the Company on land subject to
long-term land leases at an aggregate cost of approximately $2.6 million. Three
of the Company's stores were built on land owned by the Company.
The basic terms of the leases for the stores expire at various dates ranging
from 1996 to 2043. All but eight of the leases are subject to renewal options at
the option of the Company at either identical or increased rents. Most of the
renewal options are for five- or ten-year terms; in some cases, the Company has
one such option and in others it has several (up to six) successive options.
During the fiscal year ended January 28, 1995, total rentals (excluding real
estate taxes) paid by the Company for all of its stores were approximately $ 8.5
million.
For further information concerning the Company's rental obligations under
its long-term leases, reference is made to the information set forth in Note 5
of "Notes to Financial Statements" on page 12 in the Annual Report of the
Company filed as Exhibit 13 to this Form 10-K.
5
<PAGE>
ITEM 2. PROPERTIES (Continued)
All of the Company's stores are air conditioned, concrete structures, with
contiguous warehouse space and off-street parking. Store sites have been
selected after consideration of such factors as the geographic size of the
market area, traffic patterns, population density, average family income and
existing competition. In addition to the above factors, prospective stores will
be larger facilities with more space allocated to selling area and average
30,000 total square feet. Total capital spending for fiscal year 1996, exclusive
of sale leasebacks, is estimated to be $ 12 million.
The executive and administrative offices of the Company and its central
distribution facility are located in Miami Lakes, Florida, on 8.87 acres of land
owned by the Company. The facilities, which were built to the Company's
specifications, comprise approximately 40,000 square feet of office space and
approximately 163,000 square feet of distribution and warehousing space.
Approximately 92,000 square feet of office and warehouse space is collateral for
an industrial revenue bond due in 2001, with a principal balance of
approximately $ 1.1 million at January 28, 1995.
The Company also maintains a satellite distribution facility which occupies
approximately 34,400 square feet of space. Such space is leased to the Company
under a lease that expires in September 30, 1998.
ITEM 3. LEGAL PROCEEDINGS
The Company has no litigation matters other than routine litigation
incidental to the business, none of which is of a material nature.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None - not applicable.
6
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
Reference is made to the information set forth in the section entitled
"MARKET INFORMATION" on page 15 in the Annual Report filed as Exhibit 13 to this
Form 10-K, which section is incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
Reference is made to the information set forth in the section entitled
"SUMMARY OF SELECTED FINANCIAL DATA" on page 5 in the Annual Report filed as
Exhibit 13 to this Form 10-K, which section is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Reference is made to the information set forth in the section entitled
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS" on page 5 in the Annual Report of the Company filed as Exhibit 13 to
this Form 10-K, which section is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Reference is made to the financial statements of the Company, consisting of
the Balance Sheets at January 28, 1995 and January 29, 1994; the Statements of
Income for the years ended January 28, 1995, January 29, 1994 and January 30,
1993; the Statements of Changes in Shareholders' Equity for the years ended
January 28, 1995, January 29, 1994 and January 30, 1993; and the Statements of
Cash Flows for the years ended January 28, 1995, January 29, 1994 and January
30, 1993, together with the Notes thereto and the Report of Independent Auditors
thereon, on pages 8 through 16 included in the Annual Report to Shareholders of
the Company filed as Exhibit 13 to this Form 10-K, which Financial Statements,
Notes, and Report are incorporated herein by reference. The selected quarterly
financial data required by this item is presented in Note 11 of the Notes to
Financial Statements on page 15 in the Annual Report to Shareholders of the
Company filed as Exhibit 13 to this Form 10-K, which is incorporated herein by
reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
7
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information to be included in the section entitled "ELECTION OF
DIRECTORS" in the Proxy Statement is incorporated herein by reference. For
certain information concerning the executive officers of the Company, see Item 1
- - BUSINESS -Executive Officers.
ITEM 11. EXECUTIVE COMPENSATION
The information to be included in the sections entitled "EXECUTIVE
COMPENSATION" in the Proxy Statement is incorporated herein by reference. The
information included in the Proxy Statement pursuant to Rule 401(i), (k) and (l)
is not incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information to be included in the section entitled "SECURITY OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT" in the Proxy Statement is
incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information to be included in the section entitled "CERTAIN TRANSACTIONS
WITH MANAGEMENT" in the Proxy Statement is incorporated herein by reference.
8
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a)(1) Financial Statements
Incorporated by reference from the 1995 Annual Report:
Report of Independent Auditors.
Balance Sheets January 28, 1995 and January 29, 1994.
Statements of Income for the fiscal years ended
January 28, 1995, January 29, 1994 and January 30, 1993.
Statements of Changes in Shareholders' Equity for the
fiscal years ended January 28, 1995, January 29, 1994 and January
30, 1993.
Statements of Cash Flows for the fiscal years ended January 28,
1995, January 29, 1994 and January 30, 1993.
Notes to Financial Statements.
(a)(2) Financial Statement Schedules
Report of Independent Auditors.
(a)(3) Exhibits
3(a) Restated Articles of Incorporation (incorporated by
reference to Exhibit 3(a) of the Company's Annual
Report on Form 10-K for the fiscal year ended January
31, 1987).
3(b) By-laws, as amended (incorporated by reference to
Exhibit 3(b) of the Company's Annual Report on Form
10-K for the fiscal year ended January 29, 1994).
10(a)(1) Renewal Revolving Credit Note dated July 19, 1994
between the Company and NationsBank of Florida, N.A.
10(a)(2) Revolving Promissory Note dated March 25, 1994 between
the Company and Sun Bank/Miami N.A.
10(b) Lease Agreement, dated May 23, 1969, between the
Company and Leonard Luria, David Brawer, Bernard C.
Gross relating to the premises at 980 S.W. First
Street, Miami, Florida, as modified by Modification
of Lease dated July 1, 1972 and First Modification of
Lease, dated as of September 15, 1978 (incorporated by
reference to Exhibit 13(d) to the Company's
Registration Statement on Form S-1 (Registration
No. 2-62646) filed with the Securities and Exchange
Commission on September 22, 1978).
9
<PAGE>
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a)(3) Exhibits (Continued)
10(d) Lease Agreement, dated September 1, 1973, between the
Company and GLL Associates, relating to the premises at
6411 Taft Street, Hollywood, Florida, as modified by
Modification of Lease dated September 15, 1978
(incorporated by reference to Exhibit 13(h) to the
Company's Registration Statement on Form S-1
(Registration No. 2-62646) filed with the Securities
and Exchange Commission on September 22, 1978).
10(e) Profit Sharing Trust Agreement of the Company, as
amended (incorporated by reference to Exhibit 11(a) to
the Company's Registration Statement on Form S-1
(Registration No. 2-62646) filed with the Securities
and Exchange Commission on September 22, 1978).
10(g)(1) Non-Qualified Stock Option Plan of the Company, as
amended (incorporated by reference to Exhibit 5(b) to
Amendment No. 1 to the Company's Registration Statement
on Form S-1 (Registration No. 2-62646) filed with the
Securities and Exchange Commission on October 31,
1978).
10(g)(2) Stock Option Plan of the Company, as amended,
(incorporated by reference to Exhibit 10(g)(2) of the
Company's Annual Report on Form 10-K for the fiscal
year ended January 30, 1988).
10(g)(3) 1992 Stock Option Plan, as amended (incorporated by
reference to Exhibit 10(g)(3) of the Company's Annual
Report on Form 10-K for the fiscal year ended January
29, 1994).
10(h) Stock Bonus Plan of the Company (incorporated by
reference to Exhibit 10(h) of the Company's Report on
Form 10-Q for the fiscal quarter ended July 31, 1989).
10(i)(1) 1991 Discretionary Bonus Formula for the President of
the Company (incorporated by reference to Exhibit 10(i)
of the Company's Annual Report on Form 10-K for the
fiscal year ended January 30, 1993).
10(i)(2) 1996 Discretionary Bonus Plan for the Officers of the
Company.
10(j) 1993 Directors' Stock Option Plan (incorporated by
reference to Exhibit 10(j) of the Company's Annual
Report on Form 10-K for the fiscal year ended January
29, 1994).
10(k) Form of Indemnification Agreement (incorporated by
reference to Exhibit 10(k) of the Company's Annual
Report on Form 10-K for the fiscal year ended January
29, 1994).
10(l) Letter Agreement, dated January 4, 1993, between Harry
J. Diven, Jr., Director, and the Company, granting
stock option (incorporated by reference to Exhibit
10(l) of the Company's Annual Report on Form 10-K for
the fiscal year ended January 29, 1994).
13 Annual Report to Shareholders of the Company for the
fiscal year ended January 28, 1995 (furnished for the
information of the Commission and not to be deemed
"filed" as part of this report, except for the portions
thereof that are incorporated by reference herein).
22 Subsidiaries of Registrant.
24 Consent of KPMG Peat Marwick LLP.
10
<PAGE>
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a)(3) Exhibits (Continued)
Management employee contracts, compensatory plans and other
arrangements included as part of the exhibits referred to above are as
follows:
10(e) Profit Sharing Trust Agreement of the Company, as
amended.
10(g)(1) Non-Qualified Stock Option Plan of the Company, as
amended.
10(g)(2) Stock Option Plan of the Company, as amended.
10(g)(3) 1992 Stock Option Plan, as amended.
10(h) Stock Bonus Plan of the Company.
10(i)(1) 1991 Discretionary Bonus Formula for the President of
the Company.
10(i)(2) 1996 Discretionary Bonus Formula for the Officers of
the Company.
10(j) 1993 Directors' Stock Option Plan.
11
<PAGE>
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(b) Reports on Form 8-K
None
12
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
By: /s/ Peter Luria
--------------------------
Peter Luria, President and
Chief Operating Officer
Dated: April 27, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
SIGNATURE AND TITLE DATE
/s/ Leonard Luria April 27, 1995
- -------------------------------------
LEONARD LURIA, Chairman of the Board,
Chief Executive Officer and Treasurer
/s/ Peter Luria April 27, 1995
- ---------------------------------------
PETER LURIA, President, Chief Operating
Officer and Director
/s/ Duane R. Wolter April 27, 1995
- ---------------------------------------------
DUANE R. WOLTER, Senior Vice President, Chief
Financial Officer and Principal Accounting Officer
13
<PAGE>
SIGNATURES
SIGNATURE AND TITLE DATE
/s/ Harry J. Diven, Jr. April 27, 1995
- -----------------------------
HARRY J. DIVEN, JR., Director
/s/ Sydney A. Luria April 27, 1995
- -------------------------
SYDNEY A. LURIA, Director
/s/Edwin D. Marks April 27, 1995
- ------------------------
EDWIN D. MARKS, Director
/s/ Jorgen Petersen April 27, 1995
- -------------------------
JORGEN PETERSEN, Director
/s/ Jeremy Serwer April 27, 1995
- -----------------------
JEREMY SERWER, Director
/s/ Harold Wolfson April 27, 1995
- ------------------------
HAROLD WOLFSON, Director
/s/ Cynthia Cohen Turk April 27, 1995
- ----------------------------
CYNTHIA COHEN TURK, Director
14
EXHIBIT INDEX
EXHIBIT DOCUMENT PAGE
----
10(a)(1) Renewal Revolving Credit Note dated July 19, 1994 between the
Company and NationsBank of Florida, N.A.
10(a)(2) Revolving Promissory Note dated March 25, 1994 between the
Company and Sun Bank/Miami N.A.
10(i)(2) 1996 Discretionary Bonus Plan for the Officers of the Company.
13 Annual Report to Shareholders of the Company for the fiscal year
ended January 28, 1995
21 Subsidiaries of Registrant
23 Consent of KPMG Peat Marwick LLP
15
RENEWAL REVOLVING CREDIT NOTE
Atlanta, Georgia
$25,000,000
JULY 19, 1994
FOR VALUE RECEIVED, the undersigned, L. LURIA & SON, INC. (the
"Company"), hereby promises to pay to the order of NATIONSBANK OF FLORIDA, N.A.
(the "Payee"), on May 30, 1995, at a location designated by the Payee, in lawful
money of the United States, and in immediately available funds, the principal
sum of Twenty-Five Million Dollars ($25,000,000), or the aggregate unpaid
principal amount outstanding of all Revolving Credit Loans made by the Payee to
the Company pursuant to the Agreement (defined below), whichever is less, and,
prior to the maturity, to pay interest from the date hereof on said principal
sum, or the outstanding balance thereof, whichever is less, in like money and
funds, at said office, at the times provided in said Agreement, and on the date
of maturity of this Note, at the Applicable Rate. Overdue principal, and to the
extent allowed by law, overdue interest, shall bear interest, payable on demand,
at the Post-Default Rate.
The Payee has been authorized by the Company to endorse on the schedule
attached to this Note the amount and date of each Revolving Credit Loan made by
the Payee, whether such Loan is a Base Rate Loan, or a Libor Rate Loan, the
actual rate of interest applicable to such Loan or the method of determining the
same, the Interest Period (if applicable) for each such Loan, and the date and
amount of each payment of principal thereof received by the Payee, provided that
the failure by the Payee to make any such endorsement shall not affect the
obligation of the Company hereunder.
This Note is the Renewal Note referred to in and entitled to the benefits
of the Second amendment to Loan Agreement Renewal Agreement dated July 19, 1994,
and the original Loan Agreement dated as of January 15, 1991, between the
Company and the Payee, as from time to time amended (the "Agreement"). Unless
otherwise specifically defined herein, any term used herein that is defined in
the Agreement shall have the same meaning when used herein.
Upon the occurrence of an Event of Default, the principal hereof and
accrued interest hereon may become, or may be declared to be, forthwith due and
payable in the manner, upon the conditions and with the effect provided in the
Agreement.
Time is of the essence with respect to all of the obligations of the
Company hereunder, and in case this Note is collected by law or through an
attorney at law, the Company agrees to pay all costs and expenses actually
incurred by Payee in the collection of this Note, including
1
<PAGE>
reasonable attorney's fees, provided the Payee is the prevailing party in
any such case.
The Company may at its option pay all of any part of the principal of
this Note before maturity but only upon the terms provided in the Agreement.
The undersigned hereby waives presentment, demand, notice of dishonor,
protest, and all other notices whatever.
THE COMPANY HEREBY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY PROCEEDING
ENFORCING OR DEFENDING ANY RIGHTS UNDER THIS NOTE.
Given under the hand and seal of the undersigned by its officers duly
authorized.
L. LURIA & SON, INC.
By: /s/ Peter Luria
-----------------
Title: President
2
<PAGE>
STATE OF NEW YORK
COUNTY OF NEW YORK
I HEREBY CERTIFY that this day, before me, an officer duly authorized in
the State and County listed above to take acknowledgements, personally appeared
PETER LURIA, known to me to be the person described in and who executed the
foregoing instrument or who produced _____________ as identification and who
acknowledged before me in this State of New York, County of New York that he
executed same.
This acknowledgement is given for the sole purposes of verifying the
identity of the party who signed the foregoing instrument and the place of its
signing, and not as an indorser, co-maker, guarantor or accommodation party of
any type, and without any liability on the part of the Notary with regard to the
obligations of the foregoing instrument.
WITNESS my hand and official seal this 19th day of July, 1994.
/s/ Roslyn Friedman
---------------------
Notary Public
[Seal]
ROSLYN FRIEDMAN
Notary Public, State of New York
My commission expires:
No. 24-4772534
Qualified in Kings County
Commission Expires May 31, 1996
3
REVOLVING PROMISSORY NOTE
$15,000,000.00 Atlanta, Georgia
March 25, 1994
For value received, L. LURIA & SON, INC., a Florida corporation (the
"BORROWER" or "COMPANY"), which maintains its principal place of business at
5770 Miami Lakes Drive, Miami Lakes, Florida 33014, hereby promises to pay to
the order of SUN BANK/MIAMI, N.A. (the "LENDER"), on May 31, 1994 (the
"Termination Date"), (subject to provisions for extension of the Termination
Date as set forth in the Loan Agreement (as hereinafter defined) at its banking
office located at 777 Brickell Avenue, Miami, Florida 33131 (or at such other
address as the LENDER shall designate in writing to the BORROWER), the principal
sum of FIFTEEN MILLION DOLLARS ($15,000,000.00), or the aggregate unpaid
principal amount of all loans evidenced by this Revolving Promissory Note made
by the LENDER to the BORROWER pursuant to Section 2.1 of the Loan Agreement
hereinafter referred to, whichever is less, in lawful money of the United States
of America, and to pay interest on the unpaid principal balance hereof in like
money at such office from the date hereof until the principal hereof shall have
become due and payable by acceleration or otherwise, at the rate(s) as set forth
in the Loan Agreement ("Applicable Rate") per annum.
Interest payments on this Note shall be paid monthly in arrears (or at the
maturity of the applicable interest period on LIBOR related advances, whichever
first occurs), commencing on April 25, 1994 and continuing thereafter until this
Note is paid in full, and at maturity. Interest on this Note shall be computed
on the actual number of days elapsed over a 360-day year; i.e., 1/360th of a
full year's interest shall accrue for each day any loan evidenced by this Note
is outstanding.
If the principal of this Note or any portion hereof and, to the extent
permitted by law, interest hereon shall not be paid within five (5) days when
due, whether by acceleration or otherwise, the same shall bear interest for any
period during which the same shall be overdue at a rate per annum equal to the
"Prime Rate" as announced by Sun Banks, Inc. plus five percent (5%) and payable
on demand.
This Note is the Note referred to in the Loan Agreement, dated as of March
25, 1994 (said Loan Agreement, as heretofore and from time to time hereafter
modified and amended is referred to herein as the "Loan Agreement"), between the
BORROWER and the LENDER. Each holder hereof is entitled to the benefits and
security provided thereby or referred to therein, to which Loan Agreement
reference is hereby made for a statement thereof. Reference is made
1
<PAGE>
to such Loan Agreement for rights as to the prepayment hereof and the
acceleration of the maturity hereof.
The BORROWER hereby agrees to pay all costs incurred by any holder hereof,
including reasonable attorneys' fees (including those for appellate
proceedings), incurred in connection with any Event of Default (as defined in
the Loan Agreement), or in connection with the collection or attempted
collection or enforcement hereof, or in connection with the protection of any
collateral given as security for the payment hereof, whether or not legal
proceedings may have been instituted.
All parties to this Note, including the BORROWER and any sureties,
endorsers or guarantors, hereby waive presentment for payment, demand, protest,
notice of dishonor, notice of acceleration of maturity, and all defenses on the
ground of extension of time for payment hereof, and agree to continue and remain
bound for the payment of principal, interest and all other sums payable
hereunder, notwithstanding any change or changes by way of release, surrender,
exchange or substitution of any security for this Note or by way of any
extension or extensions of time for payment of principal or interest; and all
such parties waive all and every kind of notice of such change or changes and
agree that the same may be made without notice to or consent of any of them. The
rights and remedies of the holder as provided herein shall be cumulative and
concurrent and may be pursued singularly, successively or together at the sole
discretion of the holder, and may be exercised as often as occasion therefor
shall occur, and the failure to exercise any such right or remedy shall in no
event be construed as a waiver or release of the same.
Anything herein to the contrary notwithstanding, the obligations of the
BORROWER under this Note shall be subject to the limitation that payments of
interest to the LENDER shall not be required to the extent that receipt of any
such payment by the LENDER would be contrary to provisions of law applicable to
the LENDER (if any) which limit the maximum rate of interest which may be
charged or collected by the LENDER; provided, however, that nothing herein shall
be construed to limit he LENDER to presently existing maximum rates of
interest, if an increased interest rate is hereafter permitted by reason of
applicable federal or state legislation, In the event that the BORROWER make any
payment of interest, fees or other charges, however denominated, pursuant to
this Note, which payment causes the interest paid to the LENDER to exceed the
maximum rate of interest permitted by applicable law, any excess over such
maximum shall be applied in reduction of the principal balance owed to the
LENDER as of the date of such payment, or if such excess exceeds the amount of
principal owed to the LENDER as of the date of such payment, the difference
shall be paid by the LENDER to the BORROWER.
THE BORROWER HAS HERETOFORE EXECUTED A REVOLVING CREDIT NOTE
2
<PAGE>
DATED AS OF JANUARY 15, 1991 IN THE ORIGINAL PRINCIPAL AMOUNT OF $25,000,000.00
IN FAVOR OF THE CITIZENS AND SOUTHERN NATIONAL BANK OF FLORIDA, N/K/A
NATIONSBANK (THE "C&S NOTE") AS WELL AS A LOAN AGREEMENT OF SAME DATE (THE "C&S
LOAN AGREEMENT"). BOTH THE C&S NOTE AND C&S LOAN AGREEMENT HAVE BEEN MODIFIED
AND EXTENDED. BORROWER UNDERSTANDS AND AGREES THAT ANY DEFAULT IN THE PAYMENT
OR PERFORMANCE OF ANY OF THE OBLIGATIONS OF THE C&S NOTE OR THE C&S LOAN
AGREEMENT SHALL BE DEEMED TO BE A DEFAULT HEREUNDER AND LENDER SHALL HAVE THE
RIGHT TO ACCELERATE PAYMENT OF ANY SUMS OUTSTANDING HEREUNDER AS IF SUCH
DEFAULT HAD OCCURRED UNDER THE TERMS OF THIS NOTE OR THE LOAN AGREEMENT.
THE BORROWER HEREBY, AND THE LENDER BY ITS ACCEPTANCE OF THIS NOTE,
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT EITHER OF THEM MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS NOTE OR THE CREDIT AGREEMENT AND ANY AGREEMENT
CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH OR THEREWITH, OR ANY COURSE
OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS
OF ANY PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDER MAKING THE
LOAN EVIDENCED BY THIS NOTE.
This Note shall be governed by and construed in accordance with the laws of
the State of Florida.
IN WITNESS WHEREOF, the BORROWER has caused this Note to be dated for
reference as of the date first above written, but has in fact caused this Note
to be executed this 25 day of March, 1994.
L. LURIA & SON, INC., A FLORIDA
CORPORATION
By: /s/ Duane R. Wolter
--------------------
Duane R. Wolter
S.V.P. & CFO
(Corporate Seal)
STATE OF GEORGIA )
COUNTY OF FULTON )
The foregoing instrument was acknowledged before me this 25th day of March,
1994 by Duane R. Wolter as S.V.P. & CFO of L. Luria & Son, Inc., a Florida
corporation, on behalf of the corporation. He has produced VA DL as
identification and did not take an oath.
/s/ [ILLEGIBLE]
-------------------------------
NOTARY PUBLIC, State of Georgia
Print: [ILLEGIBLE]
Commission #: [ILLEGIBLE]
3
LURIA'S
BOARD OF DIRECTORS MEETING
JANUARY 26, 1995
CORPORATE OFFICER
BONUS PROGRAM - FISCAL YEAR 1996
The following is the corporate officers' bonus program for fiscal year
1996. The objective of the program is to incentivise key executives to
perform beyond their current capabilities to achieve above anticipated
corporate earnings results. This is a test plan for one year only.
1. ELIGIBILITY - All corporate officers, excluding the Chairman and
President. Must be employed from March 15, 1995 through time of payout;
April 30, 1996.
2. PERIOD COVERED - Fiscal year ending January, 1996.
3. PERFORMANCE CRITERIA
AUDITED EARNINGS
LEVEL PERFORMANCE OFFICERS' BONUS(1)
I Plan + 15% 10%
II Plan + 25% 15%
III Plan + 50% 25%
IV Plan + 100% 50%
(1) Based on actual salary earned during fiscal year 1996.
4. COST BENEFIT RELATIONSHIP OF PROGRAM
PRE-TAX EARNINGS(2)
LEVEL PLAN INCREMENTAL BONUS COSTS
I $3,323,000 $495,000 $120,000
II $3,323,000 $830,000 $180,000
III $3,323,000 $1,660,000 $300,000
IV $3,323,000 $3,320,000 $600,000
(2) Based on operations of the Company excluding extraordinary
or unusual charges or credits.
5. All officer bonus computations shall be computed before giving effect
to the bonus earned by officers and the president, and after the
computation of other management bonuses.
6. Separate bonus programs are in place for department and store
management, and buyers and assistant buyers.
REPORT OF INDEPENDENT AUDITORS
- -------------------------------------------------------------------------------
To the Board of Directors and Shareholders
L. Luria & Son, Inc.:
We have audited the accompanying balance sheets of L. Luria & Son, Inc. as of
January 28, 1995 and January 29, 1994, and the related statements of income,
changes in shareholders' equity and cash flows for each of the years in the
three-year period ended January 28, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of L. Luria & Son, Inc. as of
January 28, 1995 and January 29, 1994 and the results of its operations and its
cash flows for each of the years in the three-year period ended January 28,
1995, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Miami, Florida
March 24, 1995
- 16 -
<PAGE>
BALANCE SHEETS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
JANUARY 28, January 29,
(Dollars in thousands) 1995 1994
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 11,100 $ 17,371
Accounts receivable 1,634 2,277
Inventories 82,931 87,470
Prepaid expenses 2,716 2,205
---------- ----------
Total current assets 98,381 109,323
---------- ----------
Property and equipment
Land 7,033 3,530
Buildings 14,279 9,908
Furniture and equipment 26,023 25,017
Leasehold improvements 24,790 23,438
Construction in progress 1,362 2,387
---------- ----------
Total 73,487 64,280
---------- ----------
Less accumulated depreciation (33,058) (33,972)
---------- ----------
Property - net 40,429 30,308
---------- ----------
Other assets 214 344
---------- ----------
Total $ 139,024 $ 139,975
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable
Trade $ 43,397 $ 40,260
Other 3,876 3,166
Accrued liabilities 4,361 7,866
Taxes payable 535 2,449
Current portion of long-term debt and obligations under capital leases 206 223
---------- ----------
Total current liabilities 52,375 53,964
---------- ----------
Long-term debt 976 1,126
Obligations under capital leases -- 30
Deferred taxes 1,895 1,283
Commitments and contingencies
Shareholders' equity
Preferred stock, $1 par value, 5,000,000 shares authorized; no shares issued -- --
Common stock, $.01 par value, 14,000,000 shares authorized;
3,991,780 shares issued and outstanding at January 28, 1995;
and 3,987,314 shares issued and outstanding at January 29, 1994 39 39
Class B common stock, $.01 par value, 6,000,000 shares authorized;
1,434,534 shares issued and outstanding at January 28, 1995;
and 1,426,947 shares issued and outstanding at January 29, 1994 14 14
Additional paid-in capital 18,230 18,179
Retained earnings 65,495 65,340
---------- ----------
Total shareholders' equity 83,778 83,572
---------- ----------
Total $ 139,024 $ 139,975
========== ==========
</TABLE>
The accompanying notes to the financial statements are an integral part of these
statements.
- 8 -
<PAGE>
STATEMENTS OF INCOME
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Years Ended
-----------------------------------------------------------
JANUARY 28, January 29, January 30,
(Dollars in thousands except per common share) 1995 1994 1993
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $ 210,654 $ 242,281 $ 235,567
Cost of goods sold, buying and warehousing costs 152,134 176,623 173,382
----------- ----------- -----------
Gross margin 58,520 65,658 62,185
Operating expenses 57,787 57,850 57,439
Restructuring charge -- 5,494 --
----------- ----------- -----------
Income from operations 733 2,314 4,746
Interest expense - net 497 79 159
----------- ----------- -----------
Income before income taxes 236 2,235 4,587
Provision for income taxes 81 840 1,660
----------- ----------- -----------
Net income 155 1,395 2,927
Earnings per common share $.03 $.26 $.55
=========== ============ ============
</TABLE>
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class B
Common Stock Common Stock Additional Common
---------------- ---------------- Paid-in Retained Stock in
(In thousands) Shares Amount Shares Amount Capital Earnings Treasury
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, February 1, 1992 3,536 $ 35 1,816 $ 18 $ 17,568 $ 61,018 $ 0
401(k) Plan contribution 12 128
Conversion of Class B stock 143 2 (143) (2)
Treasury shares acquired (3) (30)
Retirement of treasury stock (30) 30
Stock Bonus Plan awards 3 16
Net income 2,927
------ ------- ------ ------ ---------- --------- ------
Balance, January 30, 1993 3,691 $ 37 1,673 $ 16 $ 17,682 $ 63,945 $ 0
401(k) Plan contribution 9 126
Conversion of Class B stock 246 2 (246) (2)
Treasury shares acquired (7) (88)
Retirement of treasury stock (88) 88
Stock Bonus Plan awards 1 23
Stock Options exercised 47 436
Net income 1,395
------ ------- ------ ------- ---------- --------- ------
Balance, January 29, 1994 3,987 $ 39 1,427 $ 14 $ 18,179 $ 65,340 $ 0
401(k) Plan contribution 19 130
Conversion of Class B stock (8) 8
Treasury shares acquired (7) (92)
Retirement of treasury stock (92) 92
Stock Bonus Plan awards 1 13
Net income 155
------ ------- ------ ------- ---------- --------- ------
BALANCE, JANUARY 28, 1995 3,992 $ 39 1,435 $ 14 $ 18,230 $ 65,495 $ 0
</TABLE>
The accompanying notes to the financial statements are an integral part of these
statements.
- 9 -
<PAGE>
STATEMENTS OF CASH FLOWS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Years Ended
-----------------------------------------------------------
JANUARY 28, January 29, January 30,
(Dollars in thousands) 1995 1994 1993
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities
Net income $ 155 $ 1,395 $ 2,927
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 4,311 3,933 4,101
Deferred taxes (benefit) 612 (1,664) (1,237)
Stock contributions to benefit plans 130 126 128
Write off-disposed property against
restructuring reserve 268 -- --
Reserve for disposal of property -- 2,081 526
(Increase) decrease in other assets 130 217 (195)
(Increase) decrease in accounts receivable 643 351 (1,549)
(Increase) decrease in inventories 4,539 (9,570) 2,306
(Increase) decrease in prepaid expenses (511) 235 (597)
Increase (decrease) in accounts payable 3,847 1,074 (2,166)
Increase (decrease) in accrued liabilities
& taxes payable (5,419) 2,090 6,309
----------- ----------- -----------
Net cash provided by operating activities 8,705 268 10,553
----------- ----------- -----------
Cash flows from investing activities:
Additions to property (14,700) (7,903) (1,785)
----------- ----------- -----------
Net cash (used in) investing activities (14,700) (7,903) (1,785)
----------- ----------- -----------
Cash flows from financing activities:
Borrowings under line of credit agreements 23,100 16,500 12,000
Repayments of borrowings under line of
credit agreements (23,100) (16,500) (12,000)
Repayments of long-term debt and obligations
under capital leases (197) (223) (1,288)
Stock Plan activity 13 459 16
Treasury shares acquired (92) (88) (30)
----------- ----------- -----------
Net cash provided (used in) financing activities (276) 148 (1,302)
----------- ----------- -----------
Net (decrease) increase in cash and cash equivalents (6,271) (7,487) 7,466
Cash and cash equivalents, beginning of year 17,371 24,858 17,392
----------- ----------- -----------
Cash and cash equivalents, end of year $ 11,100 $ 17,371 $ 24,858
=========== =========== ===========
Supplemental disclosures of cash flow information
Cash paid during the year for:
Interest (net of amounts capitalized) $ 740 $ 252 $ 325
Income taxes $ 1,224 $ 3,320 $ 927
=========== =========== ===========
</TABLE>
The accompanying notes to the financial statements are an integral part of these
statements.
- 10 -
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Dollars in thousands)
Years ended January 28, 1995, January 29, 1994 and January 30, 1993
- -------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
- -------------------------------------------------------------------------------
GENERAL - L. Luria & Son, Inc. (the 'Company') operates in a single business
segment, the specialty discount retail industry. The Company reports on a 52-53
week year ending the Saturday nearest January 31. Fiscal years 1995, 1994 and
1993 consisted of 52 weeks.
CASH EQUIVALENTS - The Company considers all highly liquid debt instruments
with original maturities of three months or less to be cash equivalents.
INVENTORIES - Inventories are stated at the lower of FIFO (first in, first
out) cost or market.
PROPERTY AND EQUIPMENT - Property is stated at cost. Depreciation and
amortization are provided primarily on the straight-line method over the
estimated useful lives of the assets, or where applicable, the terms of the
respective leases, as follows:
Buildings 45 years
Leasehold improvements 10 years
Furniture and equipment 10 years
Computer and office equipment 5 years
Interest on borrowed funds is capitalized during construction of property.
During the fiscal years ended January 28, 1995, January 29, 1994 and January 30,
1993, $97, $11 and $0 of interest was capitalized, respectively.
ADVERTISING AND START-UP COSTS - Advertising and promotional expenses and
costs related to the opening of new stores are charged to operations in the
fiscal year to which they pertain.
INCOME TAXES - In February 1992, the Financial Accounting Standards Board
issued Statement No. 109, 'Accounting for Income Taxes.' Statement 109 requires
recognition of deferred tax liabilities and assets for the expected future tax
consequences of events that have been included in the financial statements or
tax returns. Under this method, deferred tax liabilities and assets are
determined based on the difference between the financial statement and tax bases
of assets and liabilities using enacted tax rates in effect for the year in
which the differences are expected to reverse. Under Statement 109, the effect
on deferred tax liabilities and assets of a change in tax rates is recognized in
income in the period that includes the enactment date.
Effective February 2, 1992, the Company adopted Statement 109. There was no
cumulative effect of that change in the method of accounting for income taxes on
the statement of income.
For the fiscal year ended February 1, 1992 and for prior years, the Company
followed the accounting prescribed by Statement of Financial Accounting
Standards No. 96, 'Accounting for Income Taxes' which, similar to Statement 109,
recognized deferred tax liabilities and assets based on the difference between
the financial statement and tax bases of assets and liabilities using enacted
tax rates in effect for the year in which the differences are expected to
reverse.
EARNINGS PER COMMON SHARE - Earnings per common share is computed by dividing
net income by the weighted average number of shares of common stock ('Common
Stock') and Class B common stock ('Class B Stock') outstanding during the year.
The weighted average number of shares used in the computations was 5,410,000,
5,380,000 and 5,353,000 for fiscal years ended 1995, 1994 and 1993,
respectively.
RECLASSIFICATIONS - Certain prior year immaterial amounts have been
reclassified to conform with current year presentation.
2. INVENTORIES
- -------------------------------------------------------------------------------
Inventories at January 28, 1995 and January 29, 1994 are summarized as
follows:
<TABLE>
<CAPTION>
1995 1994
- -----------------------------------------------------
<S> <C> <C>
Jewelry $43,067 $43,557
General Merchandise 39,864 43,913
------- -------
Total $82,931 $87,470
======= =======
</TABLE>
The Company allocates certain buying and warehousing costs to its inventories
in order to match these costs with related revenues. During fiscal years 1995,
1994 and 1993, allocated buying and warehousing costs amounted to $7,495, $7,070
and $6,541, respectively. Buying and warehousing costs remaining in inventory at
January 28, 1995 and January 29, 1994 were approximately $4,708 and $3,575,
respectively.
3. RESTRUCTURING CHARGE
- -------------------------------------------------------------------------------
The Company recorded a restructuring charge of $5,494 in the fourth quarter
of 1994 to support the implementation of its superstore strategy. The charge
covers the cost of replacing twelve existing catalog showrooms with superstores
and the closing of one catalog showroom and two jewelry mall stores. The
components of the charge include the cost of retiring fixed assets, estimated
lease liabilities and the cost of closing the catalog showrooms and jewelry mall
stores. During the fourth quarter of fiscal 1994, the Company closed one of
its catalog showrooms (charging $410 against the restructuring reserve),
opened two new superstores and remodeled an existing store to the new
superstore format. During fiscal 1995, the Company opened five new superstores
and closed six catalog showrooms and
- 11 -
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Dollars in thousands)
Years ended January 28, 1995, January 29, 1994 and January 30, 1993
- -------------------------------------------------------------------------------
one jewelry mall store resulting in a charge to the reserve of $2,835.
A summary of the charges against the restructuring reserve for fiscal year
1995 follows:
bullet write-off of the net book value of disposed property in six closed
catalog showrooms and a jewelry mall store, a non-cash charge in the
amount of $933.
bullet costs of closing seven catalog showrooms and one jewelry mall store in
the amount of $1,036.
bullet losses of $625 associated with merchandise which is no longer carried
under the Company's new superstore format.
bullet payments on leased properties and other carrying costs after their
closing date amounted to $241.
The balance of the reserve of approximately $2,250 will be used in fiscal
year 1996 to close or relocate seven existing catalog showrooms and to close one
jewelry mall store. The Company's restructuring charge was based on a series of
estimates, and the final actual costs could vary from these estimates, depending
on certain factors, principally the Company's ability to sublease, assign or
sell closed locations on acceptable terms.
4. INCOME TAXES
- -------------------------------------------------------------------------------
The components of the provision for income taxes are as follows:
<TABLE>
<CAPTION>
Fiscal Years Ended
---------------------------
1995 1994 1993
- ------------------------------------------------------------------
<S> <C> <C> <C>
Current
Federal $(501) $ 2,179 $ 2,477
State (30) 325 420
----- ------- -------
Total (531) 2,504 2,897
Deferred 612 (1,664) (1,237)
----- ------- -------
Total $ 81 $ 840 $ 1,660
===== ======= =======
</TABLE>
A reconciliation of the Federal statutory rate and the Company's effective
tax rate is as follows:
<TABLE>
<CAPTION>
Fiscal Years Ended
------------------------
1995 1994 1993
- ---------------------------------------------------------------
<S> <C> <C> <C>
US federal tax rate 34.0% 34.0% 34.0%
Effect of:
State income taxes, net of federal
income tax benefit 6.3 3.6 3.0
Graduated rate benefit (5.3) -- --
Other (.7) -- (.8)
----- ---- ----
Effective tax rate 34.3% 37.6% 36.2%
===== ==== ====
</TABLE>
The tax effects of temporary differences that give rise to significant
portions of deferred tax assets and deferred tax liabilities at January 28, 1995
are presented as follows:
<TABLE>
<CAPTION>
JANUARY 28,
1995
- ----------------------------------------------------------------
<S> <C>
Deferred tax assets:
Excess of financial statement basis in reserves
over tax basis $ 1,019
-----------
Deferred tax liabilities:
Property, plant and equipment, primarily due to
accelerated depreciation 1,465
Inventory costs 1,271
Other 178
-----------
Total gross deferred tax liabilities 2,914
-----------
Net deferred tax liabilities $ 1,895
===========
</TABLE>
5. LEASES AND RELATED PARTY TRANSACTIONS
- -------------------------------------------------------------------------------
Substantially all of the Company's store and warehouse facilities and certain
equipment are leased under long-term leases and accounted for as operating
leases. Two of the stores are leased from related parties. Total rental expense
is as follows:
<TABLE>
<CAPTION>
Fiscal Years Ended
--------------------------
1995 1994 1993
- ------------------------------------------------------------------
<S> <C> <C> <C>
Related parties $ 152 $ 198 $ 190
Other 8,385 8,290 7,997
------ ------ ------
Total $8,537 $8,488 $8,187
====== ====== ======
</TABLE>
Future minimum payments on all non-cancellable operating leases in effect at
January 28, 1995 are as follows:
<TABLE>
<CAPTION>
Related
Party
Fiscal Year Leases Other Total
- -----------------------------------------------------------------
<S> <C> <C> <C>
1996 $ 152 $ 7,600 $ 7,752
1997 152 7,014 7,166
1998 152 6,345 6,497
1999 100 6,224 6,324
2000 -- 6,084 6,084
Thereafter -- 48,681 48,681
------- ------- -------
Total $ 556 $81,948 $82,504
======= ======= =======
</TABLE>
- 12 -
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Dollars in thousands)
Years ended January 28, 1995, January 29, 1994 and January 30, 1993
- -------------------------------------------------------------------------------
Certain leases are on a net rental basis and include real estate taxes,
insurance and other items as additions to the minimum annual rental. Certain
other leases include provisions for additional rentals based on gross annual
sales in excess of stipulated amounts increases for real estate taxes, insurance
and other items which exceeded amounts stated in the leases. Contingent rent
expense was immaterial. The majority of the leases are renewable at slightly
escalated rates at the Company's option.
6. EMPLOYEE BENEFIT PLANS
- -------------------------------------------------------------------------------
In 1981, the Board of Directors and shareholders adopted a Stock Option Plan
(the 'Plan') granting options to purchase in the aggregate 203,000 shares of
Common Stock to officers and key employees of the Company at the discretion of
the Compensation and Stock Option Committee of the Board of Directors. In July,
1987, the Plan was amended to provide for grants of both incentive stock options
and non-qualified stock options. All option shares become exercisable in part
beginning two years after date of grant and the term of such options does not
exceed ten years from the date of grant. The Plan expired in October 1991. In
1992, the Board of Directors and shareholders approved the 1992 Stock Option
Plan (the '1992 Plan') granting options to purchase an aggregate of up to
350,000 shares of Common Stock to officers and key employees of the Company at
the discretion of the Compensation and Stock Option Committee of the Board of
Directors. The terms and conditions of the 1992 Plan are essentially the same as
the Plan. Options are exercisable at the discretion of the Compensation and
Stock Option Committee of the Board of Directors. Most option shares become
exercisable in part beginning two years after the date of grant. On June 3,
1993, the Board of Directors and shareholders approved an increase to 500,000 in
the number of shares of Common Stock reserved for grant under the 1992 Plan and
approved the Directors Stock Option Plan ('Directors Plan'). The Directors Plan
grants to non-employee Directors options to purchase an aggregate of up to
70,000 shares of Common Stock. Options are granted at the fair market value at
date of grant. The Directors Plan provides for the annual issuance of options to
purchase 1,000 shares to each Director after each annual meeting.
Changes in the number of shares subject to option and option prices
(exclusive of the Directors Stock Option Plan) are summarized as follows:
<TABLE>
<CAPTION>
Number
of Shares Option Prices
- ----------------------------------------------------------------
<S> <C> <C>
Balance, February 1, 1992 195,000 $ 6.750 - 13.875
--------- ----------------
Granted 145,000 $9.125
Expired/Cancelled (40,833) $ 6.75 - 13.875
Exercised (1,667) $7.875
--------- ----------------
Balance, January 30, 1993 297,500 $ 6.75 - 9.125
--------- ----------------
Granted 72,500 $11.00 - 12.75
Expired/Cancelled (25,004) $ 6.75 - 9.125
Exercised (47,461) $ 6.75 - 7.875
--------- ----------------
Balance, January 29, 1994 297,535 $ 6.75 - 12.75
--------- ----------------
Granted 120,000 $ 7.50 - 9.625
Expired/Cancelled (22,500) $ 9.25 - 11.875
--------- ----------------
Balance, January 28, 1995 395,035 $ 6.75 - 12.75
--------- ----------------
AVAILABLE FOR FUTURE GRANT
AT JANUARY 28, 1995 104,965
=========
</TABLE>
The Stock Bonus Plan (the 'Bonus Plan') authorizes awards in the aggregate of
100,000 shares of Common Stock to officers and key employees of the Company at
the discretion of the Compensation and Stock Option Committee of the Board of
Directors. This Bonus Plan, which expires on April 1, 1999, provides that shares
of Common Stock awarded to any employee shall be delivered to such employee in
equal yearly installments for a period of three years commencing two years after
the date of such award. In fiscal 1990, stock awards for an aggregate of 8,500
shares of Common Stock were made under the Bonus Plan, of which awards for 4,000
shares have expired. No awards were made in subsequent fiscal years.
On September 20, 1991, the Board of Directors approved a formula for awarding
a bonus to the President (the 'President's Bonus') which authorizes a bonus to
be awarded to the President in the event that the Company's profit before taxes
is equal to or greater than $5,000. The formula is effective for five (5) fiscal
years beginning February 2, 1992.
In July 1987, the Board of Directors adopted a Tax Deferred Savings Plan (the
'401(k) Plan') which covers substantially all full-time employees with over one
year of service. The Company's contributions to the 401(k) Plan are at the
discretion of the Board of Directors. In fiscal 1995, 1994 and 1993, 18,756,
8,804 and 12,179 of the Company's shares of Common Stock were contributed to the
401(k) Plan, respectively.
- 13 -
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Dollars in thousands)
Years ended January 28, 1995, January 29, 1994 and January 30, 1993
- -------------------------------------------------------------------------------
7. LONG-TERM DEBT
- -------------------------------------------------------------------------------
An industrial revenue bond is payable in annual principal installments of
$150 plus monthly interest payments at market rates which approximate 65% of the
prime rate. The industrial revenue bond is collateralized by property with a
carrying value at January 28, 1995 of approximately $2,800, representing the
Company's executive offices, central warehouse and certain land.
Future maturities of long-term debt outstanding at January 28, 1995 are as
follows:
<TABLE>
<CAPTION>
Fiscal Year Amount
- ---------------------------------------------------
<S> <C>
1996 $ 150
1997 150
1998 150
1999 150
2000 150
2001 and thereafter 376
-------
Total $ 1,126
=======
</TABLE>
The Company has available $40 million under two lines of credit with interest
payable at LIBOR plus a margin based on a formula not to exceed 1%. The
revolving lines of credit expire on May 30, 1995 and include certain restrictive
covenants regarding financial ratios. The Company expects to renew the lines of
credit under similar terms and conditions. As of January 28, 1995, no amounts
were outstanding under the lines of credit.
8. SHAREHOLDERS' EQUITY
- -------------------------------------------------------------------------------
The Company offers terminating participants of the Tax Deferred Savings Plan
the ability to sell their shares of the Company's Common Stock to the Company at
the market price. Any shares which are repurchased by the Company are returned
to authorized but unissued in the fiscal year acquired. During fiscal 1995,
terminating participants' shares acquired were approximately 6,000 shares.
The Class B Stock differs from the outstanding Common Stock in certain ways.
Holders of Class B Stock are entitled to ten votes per share on each matter that
is submitted to shareholders for approval and entitled to elect 75% of the Board
of Directors. The Common Stock is entitled to a cash dividend preference, such
that each share of Common Stock will be entitled to 110% of any cash dividend to
which each share of Class B Stock is entitled, in the event a cash dividend is
declared.
9. HURRICANE EVENT
- -------------------------------------------------------------------------------
The Company's operations including sales, margin and expenses, were impacted
by Hurricane Andrew, which struck South Florida in August, 1992. The Company
filed a claim under its business interruption insurance policy for profits lost
as a result of the effects of the hurricane. During fiscal year 1994, the
Company received approximately $1,200 in full settlement of the claim, which is
included as an offset to operating expenses.
In addition, during fiscal year 1994, the Company received approximately $790
representing the excess of the insurance proceeds over the book value of the
property destroyed and additional costs incurred as a result of the hurricane.
The Company also obtained a $1,000 settlement in connection with the delay in
the reconstruction of a store destroyed by the hurricane. These amounts are also
included as offsets to operating expenses in the financial statements.
10. COMMITMENTS AND CONTINGENT LIABILITIES
- -------------------------------------------------------------------------------
The Company is a party to various claims, legal actions and complaints
arising in the ordinary course of business. In the opinion of management, the
disposition of these matters will not have a material adverse effect on the
financial condition of the Company.
- 14 -
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Dollars in thousands)
Years ended January 28, 1995, January 29, 1994 and January 30, 1993
- -------------------------------------------------------------------------------
11. QUARTERLY FINANCIAL DATA (UNAUDITED)
- -------------------------------------------------------------------------------
(In thousands, except earnings per common share)
<TABLE>
<CAPTION>
Fiscal Year First Second Third Fourth
January 28, 1995 Quarter Quarter Quarter Quarter
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $ 44,201 $ 42,303 $ 37,697 $ 86,453
Gross margin 12,561 9,881 10,764 25,314
Net income (loss) (310) (1,528) (1,533) 3,526
Earnings (loss) per common share $(.06) $(.28) $(.28) $.65
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Fiscal Year First Second Third Fourth
January 29, 1994 Quarter Quarter Quarter Quarter
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $ 48,341 $ 44,894 $ 44,827 $104,219
Gross margin 14,579 12,948 12,087 26,044
Restructuring charge -- -- -- 5,494
Net income (loss) 271 176 (485) 1,433
Earnings (loss) per common share $.05 $.03 $(.09) $.27
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- 15 -
L. LURIA & SON, INC.
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
1. Luria's Fine Jewelry, Inc. (*)
2. P & L Advertising, Inc. (*)
3. L. Luria & Son Marketing, Inc. (*)
(*) Inactive
16
KPMG Peat Marwick LLP
One Biscayne Tower Telephone 305 358 2300 Telefax 305 577 0544
Suite 2900
2 South Biscayne Boulevard
Miami, FL 33131
CONSENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors
L. Luria & Son Inc.:
We consent to incorporation by reference in the Registration Statement (No.
33-2070) on Form S-8 of L. Luria & Son, Inc. of our report dated March 24, 1995,
relating to the balance sheets of L. Luria & Son, Inc., as of January 28, 1995
and January 29, 1994, and the related statements of income, changes in
shareholders' equity, and cash flows for each of the years in the three-year
period ended January 28, 1995, which report appears in or is incorporated by
reference in the annual report of Form 10-K of L. Luria & Son, Inc.
KPMG PEAT MARWICK LLP
April 6, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
FINANCIAL STATEMENTS - L. LURIA & SON, INC.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JAN-28-1995
<PERIOD-START> JAN-30-1994
<PERIOD-END> JAN-28-1995
<CASH> 985
<SECURITIES> 10,115
<RECEIVABLES> 1,634
<ALLOWANCES> 0
<INVENTORY> 82,931
<CURRENT-ASSETS> 98,381
<PP&E> 73,487
<DEPRECIATION> 33,058
<TOTAL-ASSETS> 139,024
<CURRENT-LIABILITIES> 52,375
<BONDS> 976
<COMMON> 54
0
0
<OTHER-SE> 83,724
<TOTAL-LIABILITY-AND-EQUITY> 139,024
<SALES> 210,654
<TOTAL-REVENUES> 210,654
<CGS> 152,134
<TOTAL-COSTS> 57,787
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 497
<INCOME-PRETAX> 236
<INCOME-TAX> 81
<INCOME-CONTINUING> 155
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 155
<EPS-PRIMARY> .03
<EPS-DILUTED> .03
</TABLE>
