<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
FOR ANNUAL REPORTS OF EMPLOYEE STOCK PURCHASE, SAVINGS
AND SIMILAR PLANS PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
[Mark One]
[ X ] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT
OF 1934 [FEE REQUIRED]
For the fiscal year ended November 30, 1994.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from -------- to -----------.
Commission file number: 1-10157.
L.A. GEAR, INC.
EMPLOYEE STOCK SAVINGS PLAN
(Full title of the plan; address is the same as
that of the issuer named below)
L.A. GEAR, INC.
2850 Ocean Park Boulevard
Santa Monica, California 90405
(Name of issuer of securities held pursuant to the plan
and the address of its principal executive office)
<PAGE>2
Required Information: Financial Statements and Exhibits
(a) Financial Statements and Supplementary Schedules
Page #
------------------------------------------------ ------
Report of Independent Accountants............................ F-1
Financial Statements
--------------------
Statement of Assets Available for Plan Benefits -
November 30, 1994 and 1993................................ F-2
Statement of Changes in Assets Available for Plan Benefits -
Year ended November 30, 1994.............................. F-3
Note to Financial Statements................................. F-4 to F-8
Supplementary Schedules*
-----------------------
Item 27A-Form 5500:
Investments Held at November 30, 1994 (Schedule I)........ F-9
Item 27D-Form 5500:
Transactions or Series of Transactions in Excess of 5%
of the Current Value of Plan Assets for the year ended
November 30, 1994 (Schedule V)............................ F-10
* All other schedules required by the Department of Labor
Rules and Regulations for Reporting and Disclosure under the
Employee Retirement Income Security Act of 1974 and not included
herein have been omitted because they are not applicable, or
because the required information has been included in the notes
to the financial statements.
(b) Exhibits
--------
Consent of Price Waterhouse LLP, Independent Accountants is
included in the Registration Statement on Form S-8 of L.A. Gear, Inc.
dated November 15, 1995, as Exhibit No. 23 filed contemporaneously
herewith.
<PAGE>3
Signature
Pursuant to the requirements of the Securities Exchange Act
of 1934, the 401(k) Plan Committee of L.A. Gear, Inc. has duly
caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
L.A. GEAR, INC. EMPLOYEE
STOCK SAVINGS PLAN
By: /s/ Victor J. Trippetti
-----------------------
Victor J. Trippetti
Member, 401(k) Plan Committee
<PAGE>4
REPORT OF INDEPENDENT ACCOUNTANTS
---------------------------------
To the Participants and Advisory Committee of the
L.A. Gear, Inc. Employee Stock Savings Plan
In our opinion, the accompanying Statement of Assets Available
for Plan Benefits and the related Statement of Changes in Assets
Available for Plan Benefits present fairly, in all material
respects, the assets available for plan benefits of the L.A.
Gear, Inc. Employee Stock Savings Plan at November 30, 1994 and
1993, and the changes in assets available for plan benefits for
the year ended November 30, 1994, in conformity with generally
accepted accounting principles. These financial statements are
the responsibility of the plan's management; our responsibility
is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in
accordance with generally accepted auditing standards which
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, assessing the accounting principles used
and significant estimates made by management, and evaluating the
overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed
above.
Our audits were performed for the purpose of forming an opinion
on the basic financial statements taken as a whole. The
additional information included in schedules I and V is presented
for purposes of additional analysis and is not a required part of
the basic financial statements but is additional information
required by ERISA. Such information has been subjected to the
auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a
whole.
/s/ Price Waterhouse LLP
- ------------------------
Price Waterhouse LLP
Los Angeles, California
November 13, 1995
F-1
<PAGE>5
<TABLE>
L.A. GEAR, INC.
EMPLOYEE STOCK SAVINGS PLAN
STATEMENT OF ASSETS AVAILABLE FOR PLAN BENEFITS
<CAPTION>
November 30,
----------------
1994 1993
---- ----
<S> <C> <C>
Investments at fair value:
Sweep Account $ 48,200 $ 27,091
Money Market Fund 420,905 402,429
Asset Allocation Fund 993,745 766,498
Bond Index Fund 501,221 536,642
Growth Stock Fund 922,872 630,156
S&P 500 Stock Fund 757,560 681,359
L.A. Gear, Inc. Common Stock 487,804 689,015
Participant Loans 231,162 142,720
--------- ----------
Total investments 4,363,469 3,875,910
--------- ---------
Employer contributions receivable 397,240 399,070
Employee contributions receivable - 53,792
--------- ---------
397,240 452,862
--------- ---------
Assets available for Plan benefits $4,760,709 $4,328,772
========== ==========
</TABLE>
The accompanying notes are an integral part of the financial state
ments.
F-2
<PAGE>6
<TABLE>
L.A. GEAR, INC.
EMPLOYEE STOCK SAVINGS PLAN
STATEMENT OF CHANGES IN ASSETS AVAILABLE FOR PLAN BENEFITS
----------------------------------------------------------
<CAPTION>
Year Ended
November 30, 1994
-----------------
<S> <C>
Additions to assets attributed to:
Contributions:
Participants $1,411,023
Employer 397,240
Rollovers 69,676
------------
1,877,939
------------
Investment (loss) income:
Net depreciation in fair value
of investments (494,486)
Interest and dividend income 32,241
------------
(462,245)
------------
Total sources of assets 1,415,694
------------
Deductions from assets attributed to:
Benefits and Expenses:
Benefits paid to participants 980,922
Administrative expenses 2,835
------------
Total application of assets 983,757
------------
Increase in assets available for Plan benefits 431,937
Assets available for Plan benefits:
Beginning of year 4,328,772
------------
End of year $4,760,709
============
</TABLE>
The accompanying notes are an integral part of the financial
statements.
F-3
<PAGE>7
L.A. GEAR, INC.
EMPLOYEE STOCK SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
-----------------------------
NOTE 1 - GENERAL DESCRIPTION OF THE PLAN:
- -----------------------------------------
The L.A. Gear Inc. Employee Stock Savings Plan (the Plan) became
effective December 1, 1985 and was amended and restated effective
August 1, 1993 to conform to current law. The Plan is subject to
the provisions of the Employee Retirement Income Security Act of
1974 (ERISA).
The Plan is a defined contribution plan sponsored by L.A. Gear,
Inc. (the Company), and also functions as an employee stock
savings plan under Section 4975(e) of the Internal Revenue Code
(the Code). The Plan covers all qualified employees, as defined
by the Plan, provided they have completed at least three months
of service and are 21 years of age or older. Plan participants
should refer to the Plan agreement for more complete information.
Administrative Fees
- -------------------
Substantially all costs and expenses of administering the Plan
are paid by the Company.
Contributions
- -------------
Participants in the Plan may contribute, on a tax-deferred basis,
from 1% to 17% of their compensation, up to a maximum annual
contribution as defined by the Plan. Alternatively, participants
may elect to make after-tax contributions to the Plan in an
amount which does not exceed 10% of the limits as prescribed by
the Plan. Participants may change their deferral percentage
and/or after-tax contribution election as of any date but only
once in any three-month period. The Company may make
contributions to the Plan in an amount determined by the Board of
Directors of the Company, acting at its sole discretion. In 1994
and 1993, all Company contributions were made in L.A. Gear, Inc.
common stock. Total annual additions to a participant's account
may not exceed the lesser of $30,000 or 25% of the participant's
taxable compensation.
Participants are 100% vested in their deferred compensation and
rollover contribution accounts, and become vested in Company
contributions as follows: 20% vested after one year of service
under the plan, 40% vested after two years, 60% vested after
three years, 80% vested after four years and 100% vested after
five years, or upon death, disability or attainment of age 65.
Any amount forfeited by an employee terminating the Plan before
he/she is fully vested remains in the Plan and is applied toward
the funding of employer contributions in future Plan years.
There were approximately $52,600 and $64,900 in forfeitures at
November 30, 1994 and 1993, respectively, which would be or were
utilized to reduce Company contributions.
F-4
<PAGE>8
NOTE 1: (Continued)
- ------
Investments
- -----------
Effective August 1, 1993, the Plan was amended to allow
participants to direct contributions among the available
investment funds administered by Wells Fargo Bank.
Participant Account Balances
- ----------------------------
Separate accounts are maintained for each participant's deferred
compensation, rollover and Company contribution balances.
Earnings of the Plan are allocated to the participant accounts
according to the ratio that a participant's account balance bears
to the total of all participant account balances. Company
matching contributions are allocated based on participant
deferrals.
Benefits
- --------
Upon normal retirement at age 65, early retirement at age 55
(with 10 years of service), disability, death or certain hardship
cases, participants or their beneficiaries are entitled to
receive their vested balances in either a lump sum distribution
or in installments. Pursuant to Plan provisions, participants
may request loans secured by their account balances up to fifty
percent of their vested balance in the Plan.
Plan Termination
- ----------------
Although the Company has not expressed any intent to terminate
the Plan, the Company has the right to do so at any time. Upon
Plan termination, participants automatically become 100% vested
in Company contributions.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
- ---------------------------------------------------
Basis of Presentation
- ---------------------
The accompanying financial statements were prepared on the
accrual basis of accounting.
Investments
- -----------
As of November 30, 1994, the Plan participated in five collective
trust funds managed by Wells Fargo Bank.
The investment in each investment fund is maintained in shares.
The trustee determines the share values of each investment fund
as of each trade date. To the extent an investment fund is
composed of collective investment funds of the trustee, the net
asset and share values are determined in accordance with the
rules governing the collective investment funds. The net asset
value of each investment fund is based on the fair market value
of its underlying assets.
F-5
<PAGE>9
NOTE 2: (Continued)
- ------
The investment in L.A. Gear, Inc. common stock is stated at fair
market value as determined by the closing price on the New York
Stock Exchange on the valuation date. The net change in the fair
value of investments including realized and unrealized gains and
losses is reflected in the accompanying Statement of Changes in
Assets Available for Plan Benefits with Fund Information.
Participant loans are comprised of loans with interest rates
ranging from 8% to 12% per annum with related terms ranging from
3 to 5 years.
NOTE 3 - INVESTMENTS:
- --------------------
Participants direct the investment of their contributions into
various funds administered by Wells Fargo Bank. All
contributions are temporarily deposited in a sweep account prior
to allocating the funds into the following investments:
Money Market Fund - This fund invests in a variety of money
market instruments including: U.S. Government and agency
obligations, bank obligations and short-term corporate debt
instruments.
Asset Allocation Fund - This fund attempts to earn a high level
of total investment return by allocating its investments among
three asset classes - common stocks, U.S. Treasury bonds and
money market instruments.
Bond Index Fund - This fund seeks the total rate of return of the
U.S. market for issued and outstanding high grade corporate and
U.S. Government bonds.
Growth Stock Fund - This fund seeks above-average capital
appreciation by investing primarily in growth-oriented common
stocks.
S&P 500 Stock Fund - This fund invests its assets primarily in
the same stocks and in substantially the same percentages as the
S&P 500 Composite Price Index.
L.A. Gear, Inc. Common Stock - All L.A. Gear, Inc. common stock
is valued based upon the closing price on the New York Stock
Exchange as of the respective reporting date.
Activity in each investment alternative is summarized in the
schedule on page F-7.
F-6
<PAGE>10
<TABLE>
L.A. GEAR, INC. EMPLOYEE STOCK SAVINGS PLAN
STATEMENT OF CHANGES IN ASSETS
AVAILABLE FOR BENEFITS WITH FUND INFORMATION
FOR THE YEAR ENDED NOVEMBER 30, 1994
<CAPTION>
Participant Directed Non-Participant Directed
------------------------------------------------------ --------------------------------
Money Asset Bond Growth S&P 500 L. A. Gear,
Market Allocation Index Stock Stock Inc. Common Participant Sweep
Fund Fund Fund Fund Fund Stock Loans Account Total
--------- --------- --------- --------- --------- --------- --------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Additions to assets
attributed to:
Contributions:
Participants $ 201,266 $ 404,128 $ 159,152 $ 368,379 $ 272,721 $ 5,377 $ 1,411,023
Employer/forfeitures 434,586 (37,346) 397,240
Rollovers 1,223 24,764 17,042 13,682 12,965 69,676
--------- --------- --------- --------- --------- --------- --------- -------- -----------
202,489 428,892 176,194 382,061 285,686 439,963 (37,346) 1,877,939
Investment income:
Net (depreciation)
appreciation in fair
value of investments (35,513) (20,539) 24,830 5,299 (468,563) (494,486)
Interest and dividend
income 14,548 16,512 1,181 32,241
--------- --------- --------- --------- --------- --------- --------- -------- -----------
14,548 (35,513) (20,539) 24,830 5,299 (468,563) 16,512 1,181 (462,245)
Transfers in 15,052 128,153 61,881 205,086
--------- --------- --------- --------- --------- --------- --------- -------- -----------
Total sources of
assets 217,037 393,379 155,655 421,943 290,985 (28,600) 144,665 25,716 1,620,780
--------- --------- --------- --------- --------- --------- --------- -------- -----------
Deductions from assets
attributed to:
Benefits paid to
participants 189,583 159,217 128,988 143,142 182,862 116,300 56,223 4,607 980,922
Administrative
expenses 557 697 475 597 501 8 2,835
--------- --------- --------- --------- --------- --------- --------- -------- -----------
190,140 159,914 129,463 143,739 183,363 116,308 56,223 4,607 983,757
Transfers out 16,348 21,751 67,656 41,198 58,133 205,086
--------- --------- --------- --------- --------- --------- --------- -------- -----------
Total applications of
assets 206,488 181,665 197,119 143,739 224,561 174,441 56,223 4,607 1,188,843
--------- --------- --------- --------- --------- --------- --------- -------- -----------
Net increase
(decrease) 10,549 211,714 (41,464) 278,204 66,424 (203,041) 88,442 21,109 431,937
Assets available for benefits:
Balance beginning of
year 410,356 782,031 542,685 644,668 691,136 1,088,085 142,720 27,091 4,328,772
--------- --------- --------- --------- --------- --------- --------- -------- -----------
Balance end of year $ 420,905 $ 993,745 $ 501,221 $ 922,872 $ 757,560 $ 885,044 $ 231,162 $ 48,200 $ 4,760,709
========= ========= ========= ========= ========= ========= ========= ======== ===========
</TABLE>
F-7
<PAGE>11
NOTE 4 - FEDERAL INCOME TAXES:
The Internal Revenue Service determined on January 17, 1989 that the Plan
constitutes a qualified Plan under Sections 401(a), 401(k), and 4975(e) of the
Internal Revenue Code and that the trust is exempt from income taxes under
Section 501(a) of the Code. A refiling for tax exempt status with the Internal
Revenue Service is currently in process. However, the Company believes that
the Plan will continue to maintain its tax exempt status.
NOTE 5 - SUBSEQUENT EVENTS:
Subsequent to the Plan year end, it was determined that the Plan had received
excess contributions from certain highly compensated participants and thereby
was not in compliance with the annual non-discrimination test for 1994. As
allowed by the Code, the Plan remedied such non-compliance prior to July 31,
1995.
In November 1995, the Plan was amended to provide for the following:
[bullet] Company matching contributions will be made on a bi-weekly basis
to coincide with participant contributions. Prior to the amendment, all
Company matching contributions were made at the end of the Plan year.
[bullet] Participants may elect to have 50% of the Company matching
contribution to be made in cash. Prior to the amendment, all Company
matching contributions were made in L.A. Gear, Inc. common stock.
[bullet] Participants may elect to contribute to the L.A. Gear Stock
Fund which invests in L.A. Gear, Inc. common stock. Prior to the amendment,
participant contributions were limited to the Wells Fargo collective trust
funds with only Company matching contributions invested in L.A. Gear, Inc.
common stock.
The amendment to the Plan is effective for the Plan year beginning December 1,
1995.
The fair market value of the November 30, 1994 Plan investment in Company
common stock decreased during the period from December 1, 1994 to November 13,
1995 by $309,122.
F-8
<PAGE>12
SCHEDULE I
<TABLE>
L.A. GEAR, INC.
EMPLOYEE STOCK SAVINGS PLAN
ITEM 27A-FORM 5500:
INVESTMENTS HELD AT
NOVEMBER 30, 1994
<CAPTION>
Identity of Issuer, Borrower or Similar
Units Party and Description of Investment Cost Fair Value
- ------ ------------------------------------------------ ----------- -----------
<S> <C> <C> <C>
Sweep Account $ 48,200 $ 48,200
34,151 Collective Funds - Money Market Fund 420,905 420,905
67,832 Collective Funds - Asset Allocation Fund 1,029,700 993,745
41,838 Collective Funds - Bond Index Fund 512,526 501,221
75,091 Collective Funds - Growth Stock Fund 915,435 922,872
46,734 Collective Funds - S&P 500 Stock Fund 736,250 757,560
89,341 L.A. Gear, Inc. Common Stock 798,709 487,804
Participant loans (interest rates between 8%-12%) 231,162 231,162
----------- -----------
Total investments held $ 4,692,887 $ 4,363,469
=========== ===========
</TABLE>
F-9
<PAGE>13
SCHEDULE V
<TABLE>
L.A. GEAR, INC.
EMPLOYEE STOCK SAVINGS PLAN
ITEM 27D-FORM 5500
TRANSACTIONS OR SERIES OF TRANSACTIONS IN EXCESS OF
5% OF THE CURRENT VALUE OF PLAN ASSETS FOR THE
YEAR ENDED NOVEMBER 30, 1994
<CAPTION>
Identity of Party Description Purchases Sales Gain or
Involved of Assets Number Cost Number Cost Proceeds (loss)
-------- --------- ------ ---- ------ ---- -------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Money Market Fund Participating units 47 $ 258,554 82 $ 254,627 $ 254,627
Asset Allocation Fund Participating units 65 505,419 73 250,251 242,658 $ (7,593)
Growth Stock Fund Participating units 64 440,641 66 176,278 172,756 (3,522)
S&P 500 Stock Fund Participating units 58 308,136 76 229,209 237,235 8,026
L.A. Gear, Inc.* Common stock 6 461,552 60 214,288 167,408 (46,880)
<FN>
*Party in interest.
</TABLE>
F-10
