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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
Current Report
Dated May 22, 2007
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 2.02. Results of Operations and Financial Condition
On May 22, 2007, Zale Corporation issued a press release reporting its
financial results for the third fiscal quarter ended April 30, 2007. 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 third quarter and nine months ended April 30, 2007
that excludes the impact of derivative versus hedge accounting on the Company's
gold and silver contracts, and reflects lifetime jewelry protection plans as if
they were amortized using percentage-of-cost-expected-to-be incurred method. In
addition, the attached press release includes a presentation of earnings and
earnings per share for the third quarter and nine months ended April 30, 2006,
excluding impairment charges associated with closing certain Bailey Banks &
Biddle stores, severance charges relating to certain executive management
changes, a benefit resulting from the settlement of certain retirement benefit
obligations and a benefit from repatriated Canadian earnings under the American
Jobs Creation Act. Earnings and earnings per share excluding these items would
not be considered measures of financial performance under generally accepted
accounting principles (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.
In addition, the Company believes the adjusted earnings and earnings
per share measures provide useful information to investors, particularly in
evaluating the performance of the Company in the current year, compared to prior
periods and in comparison to the Company's earnings guidance. The Company's
earnings guidance for fiscal year 2007 was based on hedge accounting treatment
for gold and silver contracts that were entered into to establish the purchase
cost of its gold and silver inventory. The Company's adoption of derivative
accounting significantly impacted the Company's earnings and earnings per share
during the third quarter and nine months ended April 30, 2007. Similarly, the
Company believes it is useful to provide investors information regarding its
lifetime jewelry protection plans determined on a basis comparable to the prior
periods, and on a consistent basis to the Company's earnings guidance. In the
second quarter ended January 31, 2007, the Company altered the jewelry
protection plan product offering to its customers to increase the price of the
products in conjunction with increasing the period under which services could be
rendered. Due to the change in the offering, the Company adopted a straight-line
method for recognizing revenue associated with these products in lieu of its
previous methodology which recognized revenue on a percentage basis over the
service period based on how the costs were expected to be incurred. The change
in accounting method significantly impacted the Company's earnings and earnings
per share during the quarter and nine months ended April 30, 2007. Further, the
impairment charges, store closing charges and severance charges and the benefits
related to the settlement of certain retirement obligations and repatriated
Canadian earnings relate to events that had a significant impact during the
applicable quarter or nine month period and will recur in unpredictable amounts
and with unpredictable frequency 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: May 22, 2007 By: /s/ Cynthia T. Gordon
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Cynthia T. Gordon
Senior Vice President,
Controller
(principal accounting officer
of the Registrant)
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EXHIBIT INDEX
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99.1 Press Release of Zale Corporation issued May 22, 2007.