UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Thirteen Weeks Ended July 29, 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 of incorporation) (IRS Employer Identification No.)
5770 Miami Lakes Drive, 33014
Miami Lakes, Florida (zip code)
(Address of principal
executive offices)
(305) 557-9000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
Common stock, par value $.01 per share: 4,025,250 shares
outstanding as of July 30, 1995
Class B stock, par value $.01 per share: 1,398,134 shares
outstanding as of July 30, 1995
L. LURIA & SON, INC.
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION PAGE NO.
Item 1. Financial Statements
Condensed Balance Sheets - July 29, 1995
(Unaudited), July 30, 1994 (Unaudited), and
January 28, 1995
Unaudited Condensed Statements of Operations
for the thirteen and twenty-six weeks ended
July 29, 1995 and the thirteen and twenty-six
weeks ended July 30, 1994
Unaudited Condensed Statements of Cash Flows
for the twenty-six weeks ended July 29, 1995
and July 30, 1994
Notes to Condensed Financial Statements
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of
Security Holders
Item 6. Exhibits and Reports on Form 8-K
Signatures
Item 1. FINANCIAL STATEMENTS
L. LURIA & SON, INC.
CONDENSED BALANCE SHEETS
(in thousands) July 29, July 30, January 28,
1995 1994 1995
ASSETS (Unaudited) (Unaudited)
Current assets:
Cash and cash
equivalents $ 894 $ 6,791 $ 11,100
Accounts receivable 982 986 1,634
Inventories 77,150 82,328 82,931
Prepaid expenses 3,414 3,489 2,716
Total current assets 82,440 93,594 98,381
Property, net 40,070 34,005 40,429
Other assets 214 254 214
Total assets $122,724 $127,853 $139,024
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current liabilities:
Short-term bank
borrowing $ 19,950 $16,700 $ --
Accounts payable and
accrued liabilities 18,790 26,522 52,169
Current portion of
long-term debt and
obligations under
capital leases 206 206 206
Total current liabilities 38,946 43,428 52,375
Long-term debt and
obligations under
capital leases 939 1,079 976
Deferred taxes 1,995 1,521 1,895
Shareholders' Equity:
Preferred stock: $1 par
value, 5,000,000 shares
authorized; no shares
issued -- -- --
Common stock:
Common: $.01 par value,
14,000,000 shares authorized
4,025,250 shares issued and
outstanding at July 29, 1995;
4,032,465 shares issued and
outstanding at July 30, 1994;
and 3,991,780 shares issued and
outstanding at January 28,
1995 40 40 39
Class B: $.01 par value,
6,000,000 shares authorized;
1,398,134 shares issued and
outstanding at July 29, 1995;
1,375,844 shares issued and
outstanding at July 30, 1994;
and 1,434,534 issued and
outstanding at January 28,
1995 14 14 14
Additional paid-in capital 18,230 18,269 18,230
Retained earnings 62,560 63,502 65,495
Total shareholders'
equity 80,844 81,825 83,778
Total liabilities and
shareholders' equity $122,724 $127,853 $139,024
See accompanying notes to condensed financial statements.
L. LURIA & SON, INC.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except
loss per common share) Thirteen Thirteen Twenty-six
Weeks Weeks Weeks
Ended Ended Ended
July 29, July 30, July 29,
1995 1994 1995
Net sales $33,840 $42,303 $71,742
Cost of goods sold,
buying and ware-
housing costs 24,512 32,422 51,365
Gross margin 9,328 9,881 20,377
Operating expenses 12,139 12,240 24,573
Loss from operations (2,811) (2,359) (4,196)
Interest income (expense)
- net (313) (89) (499)
Loss before income tax (3,124) (2,448) (4,695)
Income tax (benefit) (1,170) (920) (1,760)
Net Loss $(1,954) (1,528) (2,935)
Weighted average number
of common shares out-
standing 5,417 5,411 5,412
Loss per common share $ (.36) $ (.28) $ (.54)
(continued)
Twenty-six
Weeks
Ended
July 30, 1994
Net sales $86,504
Cost of goods sold,
buying and ware-
housing costs 64,062
Gross margin 22,442
Operating expenses 25,319
Loss from operations (2,877)
Interest income
(expense) - net (71)
Loss before income tax (2,948)
Income tax (benefit) (1,110)
Net Loss (1,838)
Weighted average number
of common shares out-
standing 5,411
Loss per common share $(.34)
See accompanying notes to condensed financial statements.
L. LURIA & SON, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands) Twenty-six Twenty-six
Weeks Weeks
Ended Ended
July 29, 1995 July 30, 1994
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net loss $(2,935) $(1,838)
Adjustments to reconcile
net loss to net cash used
in operating activities:
Depreciation 1,967 2,209
Deferred tax benefit 99 238
Decrease in accounts receivable 652 1,291
Decrease in inventories 5,781 5,142
Increase in prepaid expenses (698) (1,284)
Increase in other assets --- (170)
Decrease in accounts payable
and accrued liabilities (33,378) (27,045)
Net cash used in operating
activities (28,512) (21,457)
CASH FLOWS FROM INVESTING
ACTIVITIES:
Additions to property (1,608) (5,646)
Net cash applied to
investing activities (1,608) (5,646)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Borrowing under line of
credit agreements 19,950 16,700
Repayments of long-term debt (37) (75)
Repayments of obligations under
capital leases --- (19)
Treasury shares acquired (83)
Net cash provided by financing
activities 19,913 16,523
Net decrease in cash and
cash equivalents (10,207) (10,580)
Cash and cash equivalents,
beginning of period 11,100 17,371
Cash and cash equivalents,
end of period $ 893 $ 6,791
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION
Cash paid during the period for:
Interest (net of amounts
capitalized) $ 519 $ 94
Income taxes $ (212) $ 1,275
See accompanying notes to condensed financial statements.
L. LURIA & SON, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
FOR THE THIRTEEN WEEKS ENDED July 29, 1995 AND July 30, 1994
GENERAL
The accompanying condensed financial statements have been prepared
in accordance with the instructions to Form 10-Q of the Securities
and Exchange Commission and in accordance with generally accepted
accounting principles applicable to interim financial statements
and do not include all of the information and footnotes required by
generally accepted accounting principles for complete financial
statements. In the opinion of management of L. Luria & Son, Inc.
(the "Company"), the accompanying condensed financial statements
reflect all adjustments necessary to present fairly the financial
position of the Company as of July 29, 1995 and July 30, 1994, and
the results of its operations and cash flows for the periods ended
July 29, 1995 and July 30, 1994. Furthermore, all adjustments were
of a normal and recurring nature.
SEASONALITY
The results of operations for the thirteen weeks ended July 29,
1995 are not indicative of the results to be expected for the
entire year because the Company's operations are seasonal.
ACCOUNTING POLICIES
The accounting policies followed by the Company are set forth in
Note 1 to the Company's financial statements in the 1995 L. Luria
& Son, Inc. Annual Report, which is incorporated by reference in
Form 10-K. Certain prior year immaterial amounts have been
reclassified to conform with current year presentations.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
SUMMARY
The following table sets forth for the periods indicated
percentages which certain items reflected in the financial data
bear to net sales of the Company:
RELATIONSHIPS TO NET SALES
PERIODS ENDED
Thirteen Thirteen Twenty-six
Weeks Weeks Weeks
Ended Ended Ended
July 29, July 30, July 29,
1995 1994 1995
Net sales 100.0% 100.0% 100.0%
Cost of goods sold,
buying and ware-
housing costs 72.4 76.6 71.6
Gross margin 27.6 23.4 28.4
Operating expenses 35.9 28.9 34.2
Loss from operations (8.3) (5.5) (5.8)
Interest expense-net (.9) (.2) ( .7)
Loss before income tax (9.2) (5.7) (6.5)
Income tax benefit (3.5) (2.1) (2.4)
Net income (5.7)% (3.6)% (4.1)%
(continued)
Twenty-six
Weeks
Ended
July 30,
1994
Net sales 100.0%
Cost of goods sold,
buying and ware-
housing costs 74.0
Gross margin 26.0
Operating expenses 29.3
Loss from operations (3.3)
Interest expense-net (.1)
Loss before income tax (3.4)
Income tax benefit (1.3)
Net income (2.1)%
NET SALES
For the thirteen weeks (second quarter) ended July 29, 1995, net
sales decreased 8,463,000 or 20.0% compared to the same period last
year. Comparable store sales decreased 25.8%. Sales were impacted
by operating 43 stores versus 50 stores in the same period last
year and a softening of customer demand. In addition,
approximately $3.1 million of last year's second quarter sales were
attributed to the special promotion sales at two stores that closed
and relocated during the second quarter of last year. Sales for
the first six months (26 weeks) decreased $14,762,000 or 17.1%,
while comparable store sales decreased 19.5%.
GROSS MARGINS
Gross margins as a percent of net sales for the thirteen and
twenty-six weeks ended July 29, 1995 were 27.6% compared to 23.4%
for the prior year quarter. For the twenty-six weeks ended July
29, 1995, gross margins as a percent of net sales were 28.4%
compared to 26.0% for the prior year. Gross margins were
benefitted to some degree due to a better product mix in 1995. In
addition, gross margins were lower in 1994 primarily due to
substantial markdowns incurred to reduce inventory levels and to
accelerate the reduction of inventory assortments to adjust to the
new superstore format featuring more massed out merchandise. As of
July 29, 1995, inventories were $5.2 million below last year's
level and $5.8 million below last year-end's level. For the
quarter, jewelry sales as a percent of sales were 39.8% this year
versus 38.5% last year. For the first six months, jewelry sales
were 39.0% this year versus 37.8% last year. As set forth in Note
2 to the Company's financial statements in the 1994 L. Luria & Son,
Inc. Annual Report, in the fourth quarter of fiscal year 1994, the
Company changed its method of valuing jewelry inventory from the
LIFO (last-in, first-out) to the FIFO (first-in, first-out) method.
As required, all prior year financial statements presented have
been restated to reflect this change.
OPERATING EXPENSES
Operating expenses for the current thirteen week period increased
as a percent of net sales to 35.9% this year from 28.9% last year.
For the twenty-six week period, operating expenses as a percent of
net sales increased to 34.2% from 29.3% last year. The increase
was due primarily to the shortfall in sales this year versus last
year. Operating expenses decreased by 2.9% for the six months from
last year's expenditure level. This is a result of cost controls
executed within the first quarter. As a part of the Restructuring
Plan, during the six month period, the Company closed four stores
and entered into negotiations for relocating several additional
stores. Approximately $0.3 million of incremental costs associated
with previously closed stores have been charged to the
Restructuring Plan reserves established during the second quarter
of fiscal year 1995. The Company currently operates nine
superstores and plans to open two additional superstores this year.
INTEREST INCOME (EXPENSE) - NET
Net interest expense for the thirteen and twenty-six week periods
ended July 29, 1995 increased compared to the prior year due to
increased short-term borrowings and higher interest rates in the
current year. The increase in short-term borrowings at July 29,
1995 versus last year is due to capital expenditures to support the
Company's superstore strategy.
INCOME TAX (BENEFIT)
Income tax benefit for the thirteen and twenty-six week periods
ended July 29, 1995 is estimated at 37.6% of the pre-tax loss,
which is comparable to last year's income tax expense.
INVENTORIES
At July 29, 1995, inventory levels were $77.2 million, or 6% below
last year's $82.3 million due to the Company's inventory control
efforts.
LIQUIDITY AND CAPITAL RESOURCES
At July 29, 1995, the Company had approximately $80.8 million in
shareholders' equity and approximately $0.9 million in long-term
debt and capital leases. Cash and cash equivalents decreased $10.2
million since the end of fiscal 1995 primarily to finance the
payment of inventory and capital expenditures. At July 29, 1995,
the Company had available lines of credit of $30.0 million, of
which $9.9 million remained unused.
The Company believes that cash provided by operations, available
lines of credit and access to the capital markets at competitive
rates will be adequate to meet its working capital and capital
expenditure requirements for fiscal year 1996.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(c) The annual meeting of shareholders of the Company was
held on June 1, 1995. The following is a brief description of each
matter voted upon at the meeting and the number of votes cast for,
against, or withheld, as well as the number of abstentions:
Election of two Directors of the Company
Harry Diven, Jr.
Common Stock For: 3,069,102
Common Stock Withheld: 50,705
Peter Luria
Class B Stock For: 1,430,124
Class B Stock Withheld: 0
Ratification of appointment of KPMG Peat Marwick as the Company's
independent certified public accountants
Common Stock For: 3,082,125
Common Stock Against: 29,025
Common Stock Abstain: 8,657
Class B Stock For: 1,430,124
Class B Stock Against: 0
Class B Stock Abstain: 0
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) None.
(b) There were no reports on Form 8-K filed for the thirteen-
week period ended July 29, 1995.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
L. LURIA & SON, INC.
Date: September 12, 1995 /s/ Peter Luria
Peter Luria
President and Chief
Operating Officer
Date: September 12, 1995 /s/ Joanna Diaz
Joanna Diaz
Corporate Controller/
Principal Accounting
Officer