UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE THIRTEEN WEEKS ENDED MAY 4, 1996
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) (I.R.S. Employee Identification No.)
5770 MIAMI LAKES DRIVE, MIAMI LAKES, FLORIDA 33014
(Address of principal executive offices) (Zip Code)
(305) 557-9000
Registrant's telephone number, including area code:
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
Common stock, par value $.01 per share: 4,106,380 shares
outstanding as of May 31, 1996
Class B stock, par value $.01 per share: 1,340,528 shares
outstanding as of May 31, 1996
This filing consists of 10 pages
L. LURIA & SON, INC.
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
PAGE
----
ITEM 1. FINANCIAL STATEMENTS
Condensed Balance Sheets - May 4, 1996 (Unaudited),
April 29, 1995 (Unaudited), and February 3 , 1996.............. 3
Condensed Statements of Operations (Unaudited), for
the thirteen weeks ended May 4, 1996 and April 29, 1995........ 4
Condensed Statements of Cash Flows (Unaudited), for
the thirteen weeks ended May 4, 1996 and April 29, 1995........ 5
Notes to Condensed Financial Statements........................ 6
ITEM 2. Management's discussion and Analysis of Financial
Condition and Results of Operations............................ 7
PART II - OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K............................... 9
Signatures..................................................... 10
2
Item 1. Financial Statements
L. LURIA & SON, INC.
CONDENSED BALANCE SHEETS
(IN THOUSANDS)
MAY 4, APRIL 29, FEBRUARY 3,
ASSETS 1996 1995 1996
----------- ------------ -----------
(unaudited) (undaudited)
Current assets:
Cash and cash equivalents $ 1,454 $ 1,124 $ 4,941
Accounts receivable 1,212 1,402 1,129
Income tax receivable 3,392 0 3,392
Inventories 60,049 83,750 60,087
Prepaid expenses 2,604 2,976 1,037
Deferred taxes 756 0 756
-------- -------- --------
Total current assets 69,467 89,252 71,342
Property, net 37,611 40,055 38,303
Deferred taxes 6,071 0 4,466
Other assets 143 222 238
-------- -------- --------
Total assets $113,292 $129,529 $114,349
======== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Short-term bank borrowing $ 19,860 $ 18,800 $ 0
Accounts payable and accrued liabilities 25,927 24,792 44,262
Deferred taxes 1,839 0 1,839
Current portion of long-term debt 206 206 206
-------- -------- --------
Total current liabilities 47,832 43,798 46,307
-------- -------- --------
Long-term debt 805 939 791
Deferred taxes and other liabilities 2,520 1,995 2,454
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;
4,106,380 shares issued and outstanding at May 4, 1996,
4,011,024 shares issued and outstanding at April
29, 1995; and 4,100,274 issued and outstanding at
February 3, 1996 41 39 41
Class B: $ .01 par value, 6,000,000 shares authorized;
1,340,528 shares issued and outstanding at May 4, 1996; 1,415,534 shares
issued and outstanding at April 29, 1995 and 1,346,634 shares issued and
outstanding at February 3, 1996 13 14 13
Additional paid-in capital 18,220 18,230 18,220
Retained earnings 43,861 64,514 46,523
-------- -------- --------
Total shareholders' equity 62,135 82,797 64,797
-------- -------- --------
Total liabilities and shareholders' equity $113,292 $129,529 $114,349
======== ======== ========
See accompanying notes to condensed financial statements.
3
L. LURIA & SON, INC.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
THIRTEEN WEEKS THIRTEEN WEEKS
ENDED ENDED
(in thousands, except loss per common share) MAY 4, 1996 APRIL 29, 1995
-------------- --------------
Net Sales $ 29,369 $ 37,902
Cost of goods sold, buying and warehousing costs 21,061 26,853
-------- --------
Gross margin 8,308 11,049
Operating expenses 12,305 12,436
-------- --------
Loss from operations (3,997) (1,387)
Interest income (expense) - net (270) (185)
-------- --------
Loss before income tax benefit (4,267) (1,572)
Income tax benefit (1,605) (590)
-------- --------
Net loss $ (2,662) $ (982)
======== ========
Weighted average number of common shares outstanding 5,447 5,427
======== ========
Loss per common share $ (.49) $ (.18)
======== ========
See accompanying notes to condensed financial statements.
4
L. LURIA & SON, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
THIRTEEN WEEKS THIRTEEN WEEKS
ENDED ENDED
MAY 4, 1996 APRIL 29, 1995
-------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (2,662) $ (982)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation 1,028 1,007
Deferred tax (benefit) 0 100
Decrease (Increase) in accounts receivable (83) 231
Decrease (Increase) in inventories 38 (819)
Decrease (Increase) in prepaid expenses (1,567) (260)
Decrease (Increase) in other assets (1,510) (8)
(Decrease) Increase in accounts payable and accrued liabilities (18,269) (27,377)
-------- --------
Net cash used in operating activities (23,025) (28,108)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property (336) (631)
-------- --------
Net cash applied to investing activities (336) (631)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowing under line of credit agreements 19,860 18,800
Repayments of long-term debt 14 (37)
Treasury shares acquired -- --
-------- --------
Net cash provided by financing activities 19,874 18,763
-------- --------
Net decrease in cash and cash equivalents (3,487) (9,976)
Cash and cash equivalents, beginning of period 4,941 11,100
-------- --------
Cash and cash equivalents, end of period $ 1,454 $ 1,124
======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest (net of amounts capitalized) $ 271 $ 121
Income taxes $ 0 $ (49)
See accompanying notes to condensed financial statements.
5
L. LURIA & SON, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
FOR THE THIRTEEN WEEKS ENDED MAY 4, 1996 AND APRIL 29, 1995
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 May 4, 1996 and April 29, 1995, and the results of its operations and cash
flows for the periods ended May 4, 1996 and April 29, 1995. Furthermore, all
adjustments were of a normal or recurring nature.
SEASONALITY
The results of operations for the thirteen weeks ended May 4, 1996 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 1996 L. Luria & Son, Inc. Annual Report,
which is incorporated by reference in Form 10-K.
COMMITMENTS AND CONTINGENCIES
On November 30, 1995 the Company announced that a Florida Circuit Court
jury had returned a verdict of $13.8 million in favor of the Company in a case
in which the Company alleged that its competitor, Service Merchandise Company,
had tortiuously interfered with the Company's business relationship and business
rights at the Sawgrass Mills Shopping Center in Broward County, Florida. The
Company had executed a letter of intent with the shopping center's landlord, had
successfully negotiated a formal lease, but was unable to obtain execution of
the formal lease by the landlord. The jury decided in favor of the Company in
both of its theories: that the letter of intent was a binding contract with
which Service Merchandise had intentionally interfered and that, at the very
least, the letter of intent created a business relationship with which Service
Merchandise had intentionally and wrongfully interfered. The trial judge has
denied various post-trial motions and entered final judgment in favor of the
Company. Service Merchandise has indicated that it will appeal from the final
judgment. No award amount has been reflected in the financial statements.
WORKING CAPITAL
The Company entered into a secured revolving credit arrangement providing up to
$40.0 million. The line available to the Company is based on the value of
inventory. Management believes this line of credit is adequate for its working
capital needs during the fiscal year.
6
L. LURIA & SON, INC.
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
PERIOD ENDED
MAY 4, 1996 APRIL 29, 1995
----------- --------------
Net sales 100.0% 100.0%
Cost of goods sold, buying and
warehousing costs 71.7 70.8
----- -----
Gross margin 28.3 29.2
Operating expenses 41.9 32.9
----- -----
Loss from operations (13.6) (3.7)
Interest income (expense) net (.9) (.5)
----- -----
Loss before income tax (14.5) (4.2)
Income tax benefit (5.4) (1.6)
----- -----
Net loss (9.1)% (2.6)%
===== =====
NET SALES
For the thirteen weeks ended May 4, 1996, net sales were $29,369,000, a 22.5%
decrease compared to the same period last year. Comparable store sales decreased
16.4%. This year's first quarter sales were impacted by operating 43 stores vs.
45 stores in the same period last year, reduced advertising expenditures, and
reduced inventory levels.
GROSS MARGINS
Gross margins as a percent of net sales for the first thirteen weeks of the
current year decreased to 28.3% as compared to 29.2% for the prior year first
quarter due to greater discounts and promoted products as the Company reduces
its inventory in some significant categories in preparation for new product
lines planned for the Fall of Fiscal 1997.
OPERATING EXPENSES
Operating expenses for the current quarter increased as a percent of net sales
to 41.9% this year from 32.9% last year, due primarily to lower sales than last
year. Operating expenses for the quarter were 1.0% below last year's operating
expenses. Approximately $300,000 of carrying costs associated with previously
closed stores has been charged to reserves established in fiscal year 1996. The
Company currently operates eleven superstores, 31 catalog showrooms and one
jewelry mall store.
7
L. LURIA & SON, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
INCOME TAX BENEFIT
The company recognizes deferred tax assets and liabilities 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 are
recognized for future taxable amounts and deferred tax assets are recognized for
future deductions, as well as net operating loss carryforwards, tax credits and
other tax benefits. Income tax benefit for the thirteen-week period ended May 4,
1996 is estimated at 37.6% compared to last year's 37.5% rate for the quarter.
INVENTORIES
At May 4, 1996, inventory levels were $60.0 million versus the February 3, 1996
balance of $60.1 million.
LIQUIDITY AND CAPITAL RESOURCES
The Company had cash and cash equivalents of $1.5 million at May 4, 1996
compared to $1.1 million at April 29,1995. Working capital at May 4, 1996 was
$21.6 million compared to $45.4 million at April 29, 1995 and $25.0 million at
February 3, 1996. Net cash used by operations during the quarter ending May
4,1996 was $23.0 million primarily due to the net operating loss of $2.7
million, a decrease in accounts payable of $18.3 million and an increase in
assets and prepaids of $2.0 million.
In February, 1996 the Company entered into a revolving credit agreement secured
by substantially all assets of the Company and providing up to $40.0 million.
The amount of credit available under the line is based on the value of
inventory. There were borrowings outstanding of approximately $19.9 million at
May 4, 1996.
The Company believes that 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 1997.
8
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibit 27 Financial Data Schedule
b) There were no reports on Form 8-K filed for the thirteen-week
period ended May 4, 1996.
9
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: July 24, 1996 /s/ GERALD NATHANSON
-----------------------
Gerald Nathanson
Chief Executive Officer
and Director
Date: July 24, 1996 /s/ THOMAS A. FLOERCHINGER
----------------------------------------------
Thomas A. Floerchinger
Senior Vice President, Chief Financial Officer
and Principal Accounting Officer