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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
Current Report
Dated August 31, 2006
of
ZALE CORPORATION
A Delaware Corporation
IRS Employer Identification No. 75-0675400
SEC File Number 001-04129
901 West Walnut Hill Lane
Irving, Texas 75038
(972) 580-4000
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Securities Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Securities Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Securities Act (17 CFR 240.13e-2(c))
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Item 1.01. Entry into a Material Definitive Agreement
The stock incentive plans of Zale Corporation (the "Company") historically
have provided for the exercise or base price for stock options and stock
appreciation rights to equal the closing price on the day preceding the day of
grant. In response to the compensation disclosure rules recently adopted by the
Securities and Exchange Commission, the Company's Board of Directors concluded
that it would be preferable for the exercise or base price to instead be the
closing price on the day of grant. As a result, on August 29, 2006, the Board of
Directors approved amendments to both the Zale Corporation 2003 Incentive Stock
Plan (the "2003 Plan") and the Zale Corporation Outside Directors' 2005 Stock
Incentive Plan (the "2005 Plan") changing the exercise or base price to the
closing price on the day of grant for grants made subsequent to the amendments.
Stock options granted under the 2003 Plan and 2005 Plan are made pursuant
to individual agreements, the forms of which have been filed as exhibits to the
Company's Annual Report on Form 10-K. In addition, the form of non-qualified
stock option award agreement under the 2003 Plan is attached hereto as Exhibit
10.1.
Item 2.02. Results of Operations and Financial Condition
On August 31, 2006, the Company issued a press release reporting its
financial results for the fourth fiscal quarter and full year ended July 31,
2006. A copy of the press release is being furnished as Exhibit 99.1 and is
incorporated herein by reference.
The attached press release includes a presentation of earnings and earnings
per share for the fourth quarter ended July 31, 2006, excluding inventory
write-downs at the Zales and Bailey Banks & Biddle brands, a charge related to
the termination of an information technology initiative that does not meet the
needs of the business, and an asset impairment charge related to certain test
stores, an after-tax accrued percent rent adjustment related to prior periods,
and a net increase in taxes primarily related to Canadian earnings (together,
the "fourth quarter charges"). In addition, the attached press release includes
earnings and earnings per share for the twelve months ended July 31, 2006, that
exclude the fourth quarter charges as well as a charge related to the closing of
certain Bailey Banks & Biddle locations, a charge related to Chief Executive
Officer and Chief Operating Officer severance, a benefit from the settlement of
certain retirement benefit obligations, and a tax benefit related to income
repatriated from Canada under the American Jobs Creation Act. Earnings and
earnings per share excluding such items are not measures of financial
performance under GAAP and should not be considered as alternatives to earnings
and earnings per share as computed under GAAP for the applicable period.
Management will use earnings and earnings per share measures adjusted to
exclude these items as part of its evaluation of the performance of the Company.
Further, the Company believes the adjusted earnings and earnings per share
measures provide useful information to investors because the items excluded
relate to events that had a significant impact during the quarter and will recur
with unpredictable frequency and significance in the future.
The information set forth under this Item 2.02 and in Exhibit 99.1 is being
furnished and shall not be deemed "filed" for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated
by reference in any filing under the Securities Act of 1933, as amended, except
as shall be expressly set forth by specific reference in such filing.
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 hereunto duly authorized.
ZALE CORPORATION
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Registrant
Date: August 31, 2006 By: /s/ Cynthia T. Gordon
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Cynthia T. Gordon
Senior Vice President,
Controller
(principal accounting officer
of the Registrant)
EXHIBIT INDEX
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10.1 Zale Corporation 2003 Stock Incentive Plan, as Amended, Non
Qualified Stock Option Plan Agreement
99.1 Press Release of Zale Corporation issued August 31, 2006.