MIRA
INFORM REPORT
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Report Date : |
29.11.2008 |
IDENTIFICATION DETAILS
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Name : |
ZALE CORPORATION |
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Registered
Office : |
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Country : |
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Financials (as
on) : |
31.07.2008 |
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Date of
Incorporation : |
26.04.1991 |
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Legal Form : |
Public Company quoted NYSE: ZLC |
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Line of Business
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Retailer of Jewellery. |
RATING & COMMENTS
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MIRA’s Rating : |
A |
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RATING |
STATUS |
PROPOSED CREDIT LINE |
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56-70 |
A |
Financial & operational base are regarded healthy. General
unfavourable factors will not cause fatal effect. Satisfactory capability for
payment of interest and principal sums |
Fairly Large |
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Status : |
Good |
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Payment Behaviour : |
Regular |
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Litigation : |
Clear |
GEOPOLITICS
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POLITICAL DATA |
ECONOMIC DATA |
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FORM OF GOVERNMENT ECONOMIC RISK |
Federal
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CURRENCY BRANCH SITUATION |
USD Satisfying |
IDENTIFICATION
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Company Name: |
ZALE CORPORATION |
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Address: |
901 W. Walnut Hill Ln. |
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Phone: Facsimile: ID: State: Managers: |
+ 1 (972)
580-4000 + 1 (972) 580-5523 2261333 Theo Killion, President |
Date founded: |
04-26-1991
This is public company quoted NYSE: ZLC 576,082,160 Shares 0.01 USD 17,600 employees |
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Legal form: |
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Stock: Value: |
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Staff: |
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Business: |
Retailer of jewellery. |
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BANKS
Citibank
Bailey Bank
BUSINESS
Business & Operations:
Zale Corporation operates as a specialty retailer of fine jewelry. The
company operates through three segments: Fine Jewelry, Kiosk Jewelry, and All
Other. The Fine Jewelry segment operates under five brands. Its Zales Jewelers
brand provides moderately priced jewelry with 784 stores in 50 states and
Puerto Rico; Zales Outlet brand offers branded watches, gemstones, gold
merchandise, and diamond fashion and solitaire products in its 143 stores; and
Gordon's Jewelers brand provides jewelry in 261 stores in 35 states of the
United States and Puerto Rico; and the Peoples Jewellers and Mappins Jewellers
brands offers gold jewelry, gemstone jewelry, and watches through 208 stores in
Canada.
The Fine Jewelry segment also sells its products through e-commerce
sites, such as zales.com and gordonsjewelers.com. The Kiosk Jewelry segment
provides gold and silver products primarily under the brand names, including
Piercing Pagoda, Plumb Gold, and Silver and Gold Connection through mall-based
kiosks in 42 states of the
The All Other segment provides insurance and reinsurance facilities for
various types of insurance coverage, such as merchandise replacement coverage,
credit insurance coverage, and group life insurance coverage. As of July 31,
2008, the company operated 1,396 specialty retail jewelry stores and 739 kiosks
in the
SHAREHOLDERS – SUBSIDIARIES
– MANAGERS
The directors of the
company are:
Neal L. Goldberg, Chief
Executive Officer,
Theo Killion, President,
Rodney Carter, Chief
Financial Officer.
The major
holders are:
BREEDEN CAPITAL MANAGEMENT LLC,
GOLDBERG NEAL,
KILLION THEO,
FINANCIALS – COMMERCIAL TRENDS
AND FORECAST
The sales on June 2008 was in the range of
2,138,041,000 USD compared to 2,437,075,000 USD at the same period for the
previous year.
The net income was in the range of 10,801,000 USD compared
to 59,252,000 USD at the same period for the previous year.
All numbers are in thousand
Annual Income
Statement:
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Annual Balance
Sheet
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There are several UCC in
favor of banks and financial institutions listed with the secretary of state of
No legal filing was found.
RATING
Local credit bureau gave a medium credit rate.
The Company is in “good standing”.
This means that all local and federal taxes were paid on due date.
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The cash flow is correct.
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Payments are made on a regular basis.
Our final opinion
This is a large company working on the global market.
The company presents considerable debts. It presents fair shape
comparing to its size.
A credit line may be considered.
SUMMARY
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FINANCIAL SUMMARY |
DEBT COLLECTIONS
AND PAYMENTS |
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PROFITABILITY INDEBTNESS CASH |
Low Heavy Correct |
PUBLIC RECORDS PAYMENTS |
No Regular |
ZALE CORPORATION AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS
OF OPERATIONS
(in thousands, except per
share amounts)
CONSOLIDATED STATEMENTS
OF OPERATIONS
(in thousands, except per
share amounts)
Year Ended July 31,
2008
2007 2006
Saless . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,138,041 $2,152,785 $2,153,955
Cost and expenses:
Cost of sales . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,089,553 1,029,553 1,044,876
Selling, general and
administrative . . . . . . . . . . . . . . . . . . . . . 969,769 967,643 968,179
Cost of insurance
operations . . . . . . . . . . . . . . . . . . . . . . . . . 6,744 6,949 6,878
Depreciation and
amortization . . . . . . . . . . . . . . . . . . . . . . . 60,244 56,595 54,670
Benefit from settlement
of retirement plan . . . . . . . . . . . . . . —
— (13,403)
Derivative loss . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 7,184 1,681
Operating earnings . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,731 84,861 91,074
Interest expense . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (12,364) (18,969) (11,185)
Other income . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,500 — —
Earnings before income
taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 2,867 65,892 79,889
Income tax benefit
(expense) . . . . . . . . . . . . . . . . . . . . . . . . . . 850 (17,783) (20,206)
Earnings from
continuing operations . . . . . . . . . . . . . . . . . . . . . 3,717
48,109 59,683
Earnings (loss) from
discontinued operations, net of taxes . . . . . 7,084 11,143
(6,061)
Net earnings . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 10,801 $ 59,252 $
53,622
Basic net earnings
(loss) per common share:
Earnings from
continuing operations . . . . . . . . . . . . . . . . . . . $ 0.09 $ 0.99 $ 1.22
Earnings (loss) from
discontinued operations . . . . . . . . . . . . . $ 0.16 $
0.23 $ (0.12)
Net earnings per share
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.25 $ 1.22 $ 1.10
Diluted net earnings
(loss) per common share:
Earnings from
continuing operations . . . . . . . . . . . . . . . . . . . $ 0.09 $ 0.98 $ 1.21
Earnings (loss) from
discontinued operations . . . . . . . . . . . . . $ 0.16 $
0.23 $ (0.12)
Net earnings per share
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.25 $ 1.21 $ 1.09
Weighted average number
of common shares outstanding:
Basic . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42,361 48,694
48,808
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . 42,476
48,995 49,211
ZALE CORPORATION AND
SUBSIDIARIES
CONSOLIDATED BALANCE
SHEETS
(in thousands, except per
share amounts)
July
31, 2008 July 31, 2007
ASSETS
Current Assets:
Cash and cash equivalents
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 65,579 $ 37,643
Merchandise inventories
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 779,565
1,021,164
Other current assets .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125,446 113,511
Total current assets .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 970,590 1,172,318
Property and equipment,
net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 297,887 304,396
Goodwill . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . 103,685 100,740
Other assets . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . 35,946 35,187
Deferred tax asset . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. 14,514 1,305
Total assets . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,422,622 $1,613,946
LIABILITIES AND
STOCKHOLDERS’ INVESTMENT
Current liabilities:
Accounts payable and
accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . $ 262,275 $
300,929
Deferred tax liability
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
65,956 73,529
Total current
liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . 328,231
374,458
Long-term debt . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. 326,306 227,306
Other liabilities . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . 169,285 109,609
Commitments and contingencies
(see Notes 9 and 15)
Stockholders’
Investment:
Common stock, par value
$0.01, 150,000 shares authorized; 54,732 and
54,609 shares issued;
31,612 and 49,053 shares outstanding at July 31,
2008 and 2007,
respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 488 487
Additional paid-in
capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
144,456 138,036
Accumulated other
comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . 51,036 45,939
Accumulated earnings .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 879,514 868,111
1,075,494 1,052,573
Treasury stock, at
cost, 23,109 and 5,556 shares at July 31, 2008 and 2007,
respectively . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. (476,694) (150,000)
Total stockholders’
investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 598,800 902,573
Total
liabilities and stockholders’ investment . . . . . . . . . . . . . . . . . . . $1,422,622 $1,613,946
FOREIGN EXCHANGE RATES
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Currency |
Unit
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Indian Rupees |
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US Dollar |
1 |
Rs.49.84 |
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1 |
Rs.76.81 |
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Euro |
1 |
Rs.64.38 |
RATING EXPLANATIONS
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RATING |
STATUS |
PROPOSED CREDIT LINE |
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>86 |
Aaa |
Possesses an extremely sound financial base with the strongest
capability for timely payment of interest and principal sums |
Unlimited |
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71-85 |
Aa |
Possesses adequate working capital. No caution needed for credit
transaction. It has above average (strong) capability for payment of interest
and principal sums |
Large |
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56-70 |
A |
Financial & operational base are regarded healthy. General
unfavourable factors will not cause fatal effect. Satisfactory capability for
payment of interest and principal sums |
Fairly Large |
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41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
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26-40 |
B |
Unfavourable & favourable factors carry similar weight in credit
consideration. Capability to overcome financial difficulties seems
comparatively below average. |
Small |
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11-25 |
Ca |
Adverse factors are apparent. Repayment of interest and principal sums
in default or expected to be in default upon maturity |
Limited with
full security |
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<10 |
C |
Absolute credit risk exists. Caution needed to be exercised |
Credit not
recommended |
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NR |
In view of the lack of information, we have no basis upon which to
recommend credit dealings |
No Rating |
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This score serves as a reference to assess SC’s credit risk
and to set the amount of credit to be extended. It is calculated from a
composite of weighted scores obtained from each of the major sections of this
report. The assessed factors and their relative weights (as indicated through
%) are as follows:
Financial
condition (40%) Ownership
background (20%) Payment
record (10%)
Credit history
(10%) Market trend
(10%) Operational
size (10%)