<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED AUGUST 31, 1998
COMMISSION FILE NUMBER 0-15247
REEDS JEWELERS, INC.
(Exact name of registrant as specified in its charter)
North Carolina 56-1441702
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2525 South Seventeenth Street
Wilmington, North Carolina 28401
(Address of principal executive offices)
(910) 350-3100
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or 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 the number of shares outstanding of each of the issuer's class of
common stock, as of the latest practicable date.
The number of outstanding shares of Common Stock, par value $0.10 per
share, as of October 13, 1998 was 8,464,272.
1
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Part I
Item 1. FINANCIAL STATEMENTS
The consolidated financial statements included herein have been
prepared by Reeds Jewelers, Inc. (the "Company"), without audit, pursuant to the
rules and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations; however, the
Company believes that the disclosures are adequate to make the information
presented not misleading. It is suggested that these consolidated financial
statements are read in conjunction with the financial statements and the notes
thereto included in the Company's latest annual report on Form 10-K for the
fiscal year ended February 28, 1998.
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<PAGE> 3
REEDS JEWELERS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
February 28, August 31, August 31,
1998 1998 1997
------------ ---------- ----------
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents $ 996,000 $ 43,000 $ 42,000
Accounts receivable:
Customers, less allowance for doubtful accounts
of $3,338,000, $3,197,000, and $2,949,000 40,291,000 38,597,000 35,594,000
Other 627,000 632,000 818,000
Merchandise inventories 36,466,000 40,876,000 38,248,000
Deferred income taxes 2,577,000 2,162,000 2,062,000
Other 582,000 631,000 940,000
------------ ------------ ------------
Total current assets 81,539,000 82,941,000 77,704,000
Property and equipment 28,055,000 29,487,000 28,369,000
Less: accumulated depreciation and amortization 16,351,000 17,220,000 15,887,000
------------ ------------ ------------
Net property and equipment 11,704,000 12,267,000 12,482,000
Goodwill, net of accumulated amortization of
$1,655,000, $1,877,000, and $1,431,000 6,741,000 6,518,000 6,964,000
Other 1,002,000 854,000 902,000
------------ ------------ ------------
Total other assets 7,743,000 7,372,000 7,866,000
------------ ------------ ------------
TOTAL ASSETS $100,986,000 $102,580,000 $ 98,052,000
============ ============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable $ 9,369,000 $ 9,448,000 $ 8,329,000
Accrued expenses 5,312,000 3,793,000 3,686,000
Deferred revenue (Note D) 1,548,000 1,230,000 1,432,000
Income taxes 1,998,000 144,000 (285,000)
Current portion of long-term debt 62,000 4,217,000 3,263,000
------------ ------------ ------------
Total current liabilities 18,289,000 18,832,000 16,425,000
Revolving credit note 42,914,000 45,000,000 45,000,000
Long-term debt and subordinated notes payable 11,000 0 43,000
Subordinated notes payable to shareholders 879,000 845,000 879,000
Deferred income taxes 1,768,000 1,185,000 1,889,000
Deferred revenue (Note D) 1,222,000 688,000 1,040,000
------------ ------------ ------------
Total long-term liabilities 46,794,000 47,718,000 48,851,000
Common stock, par value $0.10 per share;
25,000,000 shares authorized; 8,449,752
shares issued and outstanding at February 28, 1998;
8,464,272 shares issued and outstanding
August 31, 1998; 4,224,876 shares
issued and outstanding at August 31, 1997 (Note B) 844,000 846,000 422,000
Additional paid-in capital (Note B) 10,503,000 10,541,000 10,925,000
Retained earnings 24,556,000 24,643,000 21,429,000
------------ ------------ ------------
Total shareholders' equity 35,903,000 36,030,000 32,776,000
------------ ------------ ------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $100,986,000 $102,580,000 $ 98,052,000
============ ============ ============
</TABLE>
3
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REEDS JEWELERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
<TABLE>
<CAPTION>
Three months ended August 31, Six months ended August 31,
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues:
Net sales $ 21,052,000 $ 19,802,000 $41,483,000 $ 40,078,000
Other (principally finance charges) 3,315,000 2,935,000 6,816,000 5,777,000
------------ ------------ ----------- ------------
Total revenues 24,367,000 22,737,000 48,299,000 45,855,000
Costs and expenses:
Cost of sales (including
occupancy costs) 13,815,000 12,705,000 27,059,000 25,667,000
Selling, general, and administrative 8,659,000 8,075,000 17,627,000 17,306,000
Bad debt 912,000 871,000 1,714,000 1,690,000
Interest 918,000 882,000 1,769,000 1,718,000
------------ ------------ ----------- ------------
Total costs and expenses 24,304,000 22,533,000 48,169,000 46,381,000
------------ ------------ ----------- ------------
Earnings before income taxes and
extraordinary item 63,000 204,000 130,000 (526,000)
Income taxes 21,000 75,000 43,000 (166,000)
------------ ------------ ----------- ------------
Net earnings before
extraordinary item 42,000 129,000 87,000 (360,000)
------------ ------------ ----------- ------------
Extraordinary item - loss on early
extinguishment of debt, net of
income tax benefit of $ 40,000 (59,000) (59,000)
------------ ------------ ----------- ------------
Net earnings $ 42,000 $ 70,000 $ 87,000 $ (419,000)
============ ============ =========== ============
Earnings per share
Basic and diluted earnings per share
before extraordinary item $ 0.01 $ 0.02 $ 0.01 $ (0.04)
Extraordinary item - loss on early
extinguishment of debt (0.01) (0.01)
------------ ------------ ----------- ------------
Basic and diluted earnings per share $ 0.01 $ 0.01 $ 0.01 $ (0.05)
============ ============ =========== ============
Weighted average shares
Outstanding (Note B) 8,459,116 8,449,752 8,454,434 8,449,752
============ ============ =========== ============
</TABLE>
4
<PAGE> 5
REEDS JEWELERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six months ended August 31,
1998 1997
----------- ------------
Cash flows from operating activities:
<S> <C> <C>
Net earnings $ 87,000 $ (419,000)
Adjustments to reconcile net earnings to net cash
provided by (used in) operating activities:
Depreciation and amortization 1,697,000 1,532,000
Provision for loss on accounts receivable 1,714,000 1,690,000
(Gain) loss on sale of property and equipment 4,000 (122,000)
Changes in assets and liabilities:
Accounts receivable (25,000) 564,000
Merchandise inventories (4,410,000) (2,159,000)
Other assets 83,000 (406,000)
Trade payables 82,000 (3,161,000)
Accrued expenses (1,494,000) (636,000)
Deferred revenue (852,000) (64,000)
Income taxes (2,022,000) (2,034,000)
----------- ------------
Net cash used in operating activities (5,136,000) (5,215,000)
Cash flows from investing activities:
Proceeds from sale of property and equipment 19,000
Capital expenditures (2,053,000) (2,588,000)
----------- ------------
Net cash used in investing activities (2,053,000) (2,569,000)
Cash flows from financing activities:
Proceeds from revolving credit note 6,261,000 10,091,000
Principal payments on debt (31,000) (2,961,000)
Proceeds from exercise of options on common stock 6,000
----------- ------------
Net cash provided by financing activities 6,236,000 7,130,000
----------- ------------
Net change in cash (953,000) (654,000)
Cash, beginning of period 996,000 696,000
----------- ------------
Cash, end of period $ 43,000 $ 42,000
=========== ============
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 1,769,000 $ 1,778,000
=========== ============
Income taxes $ 1,898,000 $ 1,826,000
=========== ============
</TABLE>
5
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REEDS JEWELERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. MANAGEMENT'S OPINION
These consolidated financial statements should be read in conjunction with
the audited consolidated financial statements and notes thereto for the
fiscal year ended February 28, 1998.
Management of Reeds Jewelers, Inc. believes that the consolidated financial
statements contained herein contain all adjustments necessary to present
fairly the financial position, consolidated results of operations, and cash
flows for the interim period. Management also believes that all adjustments
so made are of a normal and recurring nature.
B. STOCK SPLIT
Weighted average shares and per share amounts have been adjusted for the
two-for-one stock split effective in the form of a 100% stock dividend on
February 20, 1998.
C. RECLASSIFICATIONS
Certain reclassifications were made to the 1997 financial statements to
conform to the classifications used in 1998.
D. DEFERRED REVENUES
For the fiscal years ended February 28, 1998, February 28, 1997 and February
29, 1996, in accordance with FASB Technical Bulletin 90-1, "Accounting for
Separately Priced Extended Warranty and Product Maintenance Contracts,"
revenue from these contracts was deferred and recognized in income on a
straight-line basis over the contract period. This deferred revenue has been
separated into its current and long-term portions on the balance sheet.
Commission costs that are directly related to the acquisition of these
contracts are deferred and charged to expense in proportion to the revenue
recognized. All other costs, such as costs of services performed under the
contracts, general and administrative expenses, and advertising expenses,
are charged to expense as incurred.
During the first quarter of the current year, the Company stopped selling
its own extended service contracts and began selling such contracts on
behalf of unrelated third parties only. These contracts provide for warranty
periods of 24 to 36 months. As a result of this change, the Company will
continue to recognize existing deferred revenues from previously sold
contracts through February 28, 2001 and will now recognize commission
revenue for the unrelated third-party extended warranty plans at the time of
sale.
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<PAGE> 7
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
Sales
Net sales of $21,052,000 for the three months ended August 31, 1998 were 6%
higher than the same period a year earlier. The Company operated 102 stores in
the second quarter of the current year, compared to 100 a year earlier.
Comparable store sales of 3.7% in June, 7.9% in July, and 1.0% in August
resulted in a 3.1% same-store increase for the second quarter. Total
transactions were up .6% and comparable store transactions were 3% higher than
the same quarter last year. For the six-month period ended August 31, 1998, net
sales increased 3.5% to $41,483,000 up from $40,078,000 a year ago. Year-to-date
total transactions were down 3.2% and comparable store transactions were up
1.2%. Comparable store sales year-to-date were 2.9%.
The Company averaged 97.4% in-stock on its key and core items during the second
quarter this year, up 220 basis points from the same quarter last year. The
Company averaged 81.4% in-stock on its entire basic merchandise mix compared to
89.0% during the same quarter last year. During the second quarter of 1998, key
and core merchandise accounted for 47.3% of net sales, 53.8% of the items in the
Company's basic merchandise mix, and 34.2% of its inventory investment. Year to
date, the Company averaged 94.6% in-stock on its key and core items, up 88 basis
points from the first six months of last year, and averaged 83.2% on its entire
basic merchandise mix compared to 88.3% last year same period. For the first six
months of the current year, key and core merchandise accounted for 48.6% of net
sales, 48.7% of the items in the Company's basic merchandise mix, and 37.3% of
its inventory investment.
Sales on the Company's proprietary credit card were up 3.9% and cash sales rose
8.8% during the second quarter of the current year. Credit sales accounted for
49.7% of total net sales, compared to 50.8% during the second quarter of last
year. The average credit sale during the second quarter of 1998 was 7.0% higher
than the same quarter in 1997. The average credit sale was also 4.9 times the
size of the average cash sale, compared to 5.0 times in 1997; the primary reason
for the difference in the average cash and credit sale is the large number of
cash repair sales that yield a lower price per transaction. The Company's credit
marketing efforts resulted in 9.7% more applications being obtained and 10.5%
more new accounts being opened during the second quarter of the current year
than during the same period a year ago. For the first six months of the current
year, the Company's credit card sales were up 1.5% and cash sales were up 5.6%.
Year to date credit sales accounted for 49.2% of total net sales. The average
credit sale for the current year was 7.2% higher than the same period a year
ago, and was 4.8 times the size of the average cash sale. Year to date the
Company has obtained 13.6% more credit applications and has approved 12.4% more
than the first six months of last year.
Gross Profit
During the second quarter of the current year, gross profit increased 2.0% to
$7,237,000 from $7,097,000; the resulting gross margins were 34.4%, down from
35.8%. Excluding occupancy costs, gross profit was 3.7% higher and gross margins
were 140 basis points lower. Sales of gold and semi-precious color, the
Company's highest margin category, fell 8.4%. Sales of watches, the Company's
lowest margin merchandise category, rose 14.0%. Sales of diamonds, the Company's
largest category, rose 6.8%. Gross profit increased 0.1%, and gross margins were
120 basis points lower for the first six months of the current year compared to
same time frame last year.
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<PAGE> 8
Selling, General, and Administrative Expenses (SG&A)
Selling, general, and administrative costs increased 7.2% to $8,659,000 from
$8,075,000 in the current quarter over the same quarter a year earlier. For the
quarter, supplies increased 21.8%, salary costs were up 6.4% and commissions
increased 12.0%, while telephone charges decreased by 12.5% and commercial
insurance costs decreased by 19.1%. For the six months ended August 31, 1998,
SG&A increased 1.9% over the same period one year ago.
Bad Debt Expense
Bad debt increased 4.7% to $912,000 from $871,000 and fell to 4.3% of net sales
for the quarter compared to 4.4% a year earlier. Gross write-offs for bad debts
increased 1.4% and net write-off, after recovery of amounts previously written
off, increased 1.2%. Year to date, the expense was 1.4% higher than a year
earlier, representing 4.1% of total net sales.
Other Revenues
Other revenues increased 12.9% for the three-month period over a year ago. The
$3,315,000 of other revenues resulted from increases of 8.4% in finance charge
revenue, 39.8% in revenues from extended service agreements, 17.2% in credit
insurance income, and 21.8% in late fee income. Finance charges represented
56.5% of other revenues, extended service agreements were 19.9%, credit
insurance income was 8.1%, and late fee income was 8.4%. During the first six
months of the fiscal year, other revenues increased 18.0% to 6,816,000 as a
result of an 8.5% increase in finance charge revenue, an 11.6% increase in
credit insurance income, a 26.1% increase in late fee income, and a 67.8%
increase in revenues from extended service agreements.
During the first quarter of the current year, the Company stopped selling its
own extended service contracts and began selling such contracts on behalf of
unrelated third parties only. These contracts provide for warranty periods of 24
to 36 months. As a result of this change, the Company will continue to recognize
existing deferred revenues from previously sold contracts through February 28,
2001 and will now recognize commission revenue for the unrelated third-party
extended warranty plans at the time of sale. The effect of this change during
the second quarter of this year was an additional $349,000 increase in other
revenues.
Interest Expense
Interest expense rose $36,000 during the quarter to $918,000. Average borrowings
were 3.9% higher than during the second quarter of last year. The Company's
effective interest rate during the current quarter was essentially flat, rising
to 7.38% from 7.37% a year ago. In addition, the Company had paid off its
subordinated debt in June of last year. Year to date, the expense was up $51,000
and remained constant at 4.3% of net sales.
Income Taxes and Net Earnings
The Company's anticipated tax rate was 33% in the second quarter of both years.
The Company earned $42,000 in the quarter ended August 31, 1998 compared to
$70,000 in the previous year. On a basic and diluted basis, the Company earned
$0.01 per share in both the second quarters of 1998 and of 1997. For the first
half of the fiscal year, the Company earned $87,000, or $ 0.01 per share,
compared to a loss of $419,000, or $ 0.05 per share, during the same period last
year.
Non-File UCC Insurance Litigation
In July 1998, the final hearing of fairness for a settlement in this previously
discussed action was held and was approved. The final order provided for, among
other things, the following: the payment of
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<PAGE> 9
$486,000 to a settlement fund and the payment of administrative fees that are
expected to be no more than $135,000. In the fourth quarter of the fiscal year
ended February 28, 1998, the Company recorded a $700,000 charge in anticipation
of this settlement. The Company does not expect payments for this matter to
exceed the set forth amount, and therefore sees no affect on the current year's
financial position. Additional details are available in Item 1 of Part II of
this report.
Year 2000
The Company has completed a full review of all its systems to determine whether
they will operate properly and efficiently after December 31, 1999. The Company
believes that all of its operating systems have been modified, where necessary
and that Year 2000 does not pose a material operational issue or expense for the
Company. The Company had planned on upgrading its software package a year ago,
and since the upgrade was already set up to operate effectively in the Year
2000, no extra costs were incurred to prepare for the Year 2000. The Company
plans on doing a test run on all software packages before fiscal year end
February 28, 1999 to ensure compliance with Year 2000. Discussions with the
Company's external suppliers have been taking place with respect to their
products and services and the Company does not foresee any material problems
with any of its vendors.
Liquidity and Capital Resources
Working Capital
Working Capital increased 4.6% to $64,109,000 at August 31, 1998 from
$61,279,000 at August 31, 1997. Of the $2,830,000 increase, 92.9% resulted from
higher investments in inventories. Current liabilities increased 14.7%,
primarily as the result of the increase in accounts payable due to higher
inventories. The ratio of current assets to current liabilities as of August 31,
1998 was 4.4 to 1, compared to 4.7 to 1 a year earlier.
As of August 31, 1998, customer receivables, net of allowance for doubtful
accounts, were $38,597,000 up $3,003,000 or 8.4% from the same date last year.
Contractual delinquency at the end of the quarter was 11.0% lower than at August
31, 1997, representing 8.9% of the portfolio compared to 10.0%. In calculating
delinquency, the Company considers the entire balance of an account to be
delinquent when an account becomes three payments behind. Credit extension and
collections policies were consistent during each of the two periods.
Merchandise inventories at August 31, 1998 were 6.9% higher than a year earlier
- -- $40,876,000 compared to $38,248,000. The investment in inventories on a per
store basis was up 4.2% from a year earlier. In addition to owned inventories,
the Company's offerings included an additional 25.4% or $10,376,000 in consigned
inventories at August 31, 1998 and an additional 30.1%, or $11,513,000 at August
31, 1997.
Debt
On December 21, 1995 the Company entered into a revolving credit agreement with
two commercial banks whereby the Company could borrow up to $40,000,000 based on
specified percentages of eligible inventory and accounts receivable. In June
1997, the Company increased its revolving credit facility to $45,000,000 and
extended it expiration to July 31, 2000; covenants and other terms remained
unchanged. In May 1998, the Company and the banks agreed to an additional
seasonal increase to $50,000,000 from May 10 through December 31, 1998. The
Company pays interest under the revolving credit facility at 30-day LIBOR plus
160-200 basis points or at the banks' prime rate plus 37 1/2 to 62 1/2 basis
points, depending upon the Company's debt-to-worth ratio. As of August 31, 1998,
the Company's rate was 30-day LIBOR plus 170 basis points.
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Borrowings under the Company's revolving credit facility averaged $48.5 million
during the quarter ended August 31, 1998 and $45.6 million during the same
quarter of 1997. The maximum borrowings outstanding under the facility at any
time during the two quarters were $49.5 million and $47.9 million, respectively.
At August 31, 1998, $49.0 million was outstanding under the facility, compared
to $47.9 million at August 31, 1997. Substantially all of the Company's assets
serve as collateral for the revolving bank facility.
The Company also has subordinated notes totaling $845,000 with three related
parties, with interest payable monthly at the prime rate quoted in The Wall
Street Journal. The notes are unsecured and are subordinate to the revolving
bank note.
Capital Expenditures
Capital expenditures for leaseholds, equipment, furniture and fixtures were
$2,053,000 during the six months ended August 31, 1998, compared to $2,588,000
for the same period in the previous year. During the current quarter, the
Company opened four additional stores in metropolitan areas of Atlanta GA,
Lexington KY, Johnson City TN, and Athens GA. In September 1998 the Company
purchased four stores in Iowa. The Company has existing commitments to open one
additional store in the current year and has two commitments towards the 8-10
planned openings in the next year.
Disclosures Regarding Forward-Looking Statements
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for forward-looking statements to encourage companies to provide prospective
information about their companies without fear of litigation so long as those
statements are identified as forward-looking and are accompanied by meaningful
cautionary statements identifying important factors that could cause actual
results to differ materially from those projected in the statement. Accordingly,
the Company identifies the following factors that could cause the Company's
plans to open 8-10 new stores in the next year to not materialize: (a) lack of
available locations on terms acceptable to the Company; and (b) significant
changes in interest rates. Other factors that could cause the Company's
financial results to differ materially from its plans are: (a) unexpected
changes in the marketing and pricing strategies of competitors; (b) adverse
changes in the political environments of countries providing raw materials for
the jewelry industry; and (c) the loss of key executives.
Impact of Inflation
The Company generally follows the practice of passing on price changes to its
customers. As a result, management believes its operations have not been
materially affected by inflationary factors during the periods reported herein.
Increases in labor and other costs must be recovered through operating
efficiencies and improved gross profits.
At this time, management knows of no other material events or uncertainties that
would cause the financial information contained herein not be indicative of the
operating results or future financial condition of Reeds Jewelers, Inc.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company is from time to time involved in routine litigation
incidental to the conduct of its business. The Company believes that no
currently pending litigation to which it is a party will have a
material adverse effect on its consolidated financial condition or
results of operations.
However, in the past, a subsidiary of the Company purchased non-file UCC
insurance from an unaffiliated insurance carrier for accounts originated
in certain states and charged its customers in those states a non-file
UCC insurance fee equal to the subsidiary's premium cost for that
insurance. Non-file insurance reimbursed the subsidiary for losses on
accounts that resulted from its decision not to file a UCC financing
statement for the collateral securing the account. Several plaintiffs
brought a civil action against numerous finance companies, jewelry
retailers, furniture and appliance retailers, and insurance companies,
specifically including the Company whereby the plaintiffs have
challenged certain aspects of the Company's non-file insurance
practices. This civil action suit was discussed in more detail in
previous filings, including its February 28, 1998 10-K and Annual
Report. In May 1998, the Company received a preliminary approval order
for a settlement, which in July 1998 was approved. The final order
provided for, among other things, the payment of $486,000 to a
settlement fund and the payment of administrative fees that are expected
to be no more than $135,000. The Company does not anticipate this
decision to have any affect on the current years financial statements
due to the fact that at year end February 1998, the Company recorded a
$700,000 charge in anticipation of this decision.
Item 2. Changes in Securities.
Not applicable.
Item 3. Defaults Upon Senior Securities
Not applicable
Item 4. Submission of Matters to a Vote of Security Holders.
(a) The Annual Meeting of Shareholders was held on Tuesday, July
14, 1998, and the following matters were submitted to a vote
of the shareholders:
(b) To elect nine directors (Garland Waddy Garrett, Fenton N.
Hord, Arlene Z. Schreiber, Richard F. Sherman, Alan M. Zimmer,
Herbert J. Zimmer, Jeffrey L. Zimmer, Roberta G. Zimmer, and
William R. Zimmer) to serve until the 1999 Annual Meeting of
Shareholders or until their successors are elected and
qualified: for Garland Waddy Garrett, Fenton N. Hord, Arlene
Z. Schreiber, Richard F. Sherman, Alan M. Zimmer, Herbert J.
Zimmer, and Jeffrey L. Zimmer, 8,097,218 votes were cast in
favor, 152,990 votes were withheld, and 199,544 shares did not
vote: for Roberta G. Zimmer and William R. Zimmer, 8,097,018
votes were cast in favor, 153,190 votes were withheld, and
199,544 did not vote.
(c) To ratify the appointment of Ernst & Young LLP as independent
auditors of the Company for the fiscal year ending February
28, 1999: 8,247,788 votes were cast in favor, 484 votes
against, 1,936 votes abstained, and 199,544 shares did not
vote.
(d) To approve an amendment to the Amended Articles of
Incorporation increasing the number of authorized shares of
common stock to 25,000,000: 7,787,898 votes were cast in
favor, 458,858 were against, 3,452 votes abstained, and
199,544 shares did not vote.
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Item 5. Other Information.
Not applicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
27 Financial Data Schedule (for SEC use only)
(b) Reports on Form 8-K.
Not applicable.
12
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
REEDS JEWELERS, INC.
October 13, 1998 /s/ James R. Rouse
---------------- -------------------------
James R. Rouse
Treasurer and
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF REEDS JEWELERS, INC. FOR THE QUARTER ENDED AUGUST 31,
1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> FEB-28-1999
<PERIOD-START> MAR-01-1998
<PERIOD-END> AUG-31-1998
<CASH> 43
<SECURITIES> 0
<RECEIVABLES> 41,794
<ALLOWANCES> 3,197
<INVENTORY> 40,876
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0
0
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</TABLE>
