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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended January 28, 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 No. 1-8899
Claire's Stores, Inc.
(Exact name of registrant as specified in its charter)
Delaware 59-0940416
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
3 S.W. 129th Avenue, Pembroke Pines, Florida 33027
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (305) 433-3900
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
Common Stock, $.05 par value New York Stock Exchange, Inc.
Securities registered pursuant to Section 12(g) of the Act:
Title of each class
Class A Common Stock, $.05 par value
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
Indicate by check mark if disclosure of delinquent filers pursuant to item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
At March 31, 1995, the aggregate market value of the 17,423,763 shares of
voting stock held by non-affiliates of the registrant was $228,686,889.
At March 31, 1995, there were outstanding 19,576,816 shares of
registrant's Common Stock, $.05 par value, and 1,318,706 shares of the
registrant's Class A Common Stock, $.05 par value, including 82,759 Treasury
Shares.
DOCUMENTS INCORPORATED BY REFERENCE
The Proxy Statement for the 1995 Annual Meeting of Stockholders is
incorporated by reference into Part III.
PART 1
Item 1. Business
General
Claire's Stores, Inc. (the "Company"), operating through its subsidiaries,
Claire's Boutiques, Inc. ("Claire's"), Claire's Puerto Rico Corp. ("CPRC"),
Claire's Canada Corp. ("CCC") and Claire's Nippon Co., Ltd. ("Nippon), is a
leading mall-based retailer of popular-priced women's fashion accessories.
As of March 31, 1995, the Company operated a total of 1,214 such stores in 48
states, Canada, the Caribbean and Japan. These include 1,032 Claire's
Boutiques" stores, 130 "Topkapi" stores, 27 "Dara Michelle" stores and 15
L'ccessory stores (collectively the "Fashion Accessory Stores"). The Company
also operates 10 trend gift stores under the name "Arcadia", "Art Explosion"
or "E. 57th" (collectively the "Trend Gift Stores").
The Fashion Accessory Stores specialize in selling popular-priced women's
fashion accessories designed to appeal to females from ages 13 to 40.
Merchandise in the Fashion Accessory Stores ranges in price between $2 and
$20, with the average product priced about $4. The stores average
approximately 889 square feet and are primarily located in enclosed shopping
malls. The Company's Dara Michelle, L'ccessory and Topkapi stores are
similar in size and format to the Claire's Boutiques stores and give the
Company the ability to add a second store location in malls that currently
have a successful Claire's Boutiques store. Based on its knowledge of
competitors, the Company believes that its Fashion Accessory Stores comprise
the largest chain of specialty retail stores in the United States devoted to
the sale of popular-priced women's fashion accessories.
The Trend Gift Stores sell T-shirts, unframed posters, calendars and
stationery products, seasonal items and other trend gift items. These stores
are located in enclosed shopping malls and vary in size from approximately
900 to 3,000 square feet. Merchandise in the Trend Gift Stores ranges in
price between $1 to $75, with most sales in the $5 to $10 range.
Costume jewelry, including hair ornaments, pierced earrings and fees for
piercing ears, accounts for a majority of sales. The balance consists of
other fashion accessories, totebags and trend gifts. The following table
compares sales of each category of merchandise sold by the Company for the
last three fiscal years:
Fiscal Year Ended
Jan. 28, Jan. 29, Jan. 30,
1995 1994 1993
(In thousands)
Costume jewelry $196,057 $180,279 $161,829
Other fashion accessories 94,277 89,718 76,375
Totebags 6,982 7,559 5,490
Trend gifts 4,119 4,137 4,293
$301,435 $281,693 $247,987
- 2 -
Sales of each category of merchandise vary from period to period depending on
current fashion trends. The Company experiences the traditional retail
pattern of peak sales during the Christmas, Easter and back-to-school
periods. Sales as a percentage of total sales in each of the four quarters
of the fiscal year ended January 28, 1995 ("Fiscal 1995") were 21%, 22%, 23%
and 34% in the first, second, third and fourth quarters, respectively.
At March 31, 1995, the Company had approximately 5,500 employees, 54% of whom
were part-time. Part-time employees typically work up to 20 hours per week.
The Company has no collective bargaining agreements with any labor unions and
considers its employee relations to be good.
Fashion Accessory Stores
The Fashion Accessory Stores, averaging approximately 889 square feet, are
located primarily in enclosed shopping malls. Each store uses
Company-designed displays which permit the presentation of a wide variety of
items in a relatively small space.
The stores are distinctively designed for customer identification, ease of
shopping and quantity of selection. Store hours are dictated by the mall
operators and the stores are typically open from 10:00 A.M. to 9:00 P.M.,
Monday through Saturday, and, where permitted by law, from Noon to 5:00 P.M.
on Sunday.
Virtually all sales are made in cash, although the stores also accept credit
cards. The Company permits returns for exchange or refund.
The Company purchases its merchandise from approximately 300 suppliers.
Substantially all of the costume jewelry and fashion accessories sold are
purchased from importers or imported directly, and most of the totebags are
purchased from importers. All merchandise is shipped from the suppliers to
the Company's distribution facility in Wood Dale, Illinois, a suburb of
Chicago. After inspection, merchandise is shipped via common carrier to the
individual stores. Stores typically receive three to five shipments a week.
Except as stated below, responsibility for managing the Fashion Accessory
Stores rests with the President and Chief Operating Officer of Claire's, who
reports to the President of the Company. The Company currently employs a
total of 117 District Managers for the Fashion Accessory Stores, each of whom
oversees approximately ten stores in his or her respective geographic area
and reports to one of nine Regional Managers. Each Regional Manager reports
to one of two Territorial Vice Presidents, who in turn report to the
President of Claire's. Each store is staffed by a Manager, an Assistant
Manager and one or more part-time employees. A majority of the District
Managers have been promoted from within the organization, while a majority of
the Regional Managers were hired externally.
The Company expanded its international store base by opening 45 stores in
Canada in Fiscal 1995. The Company plans to open an additional 30 to 40
stores in Canada in Fiscal 1996. In addition, the Company entered into a
50/50 joint venture agreement to open Claire's Boutiques stores in Japan.
The Company and its joint venture partner, Jusco Co., Ltd., a Japanese
company, opened its first stores in Japan in November 1994. The initial
results of operating in Japan has been quite positive. Current plans call
for opening approximately 20 additional stores in Japan in Fiscal 1996. Net
sales and identifiable assets outside the United States represented less than
10% of consolidated net sales or identifiable assets in Fiscal 1995.
- 3 -
Trend Gift Stores
During Fiscal 1995, the Company closed three Trend Gift Stores. It is the
Company's intention to continue to take advantage of opportunities to either
close the remaining Trend Gift Stores or convert them to Fashion Accessory
Stores. This policy is due to Management's decision to discontinue the gift
division concept.
Item 2. Properties
The Company's 1,214 stores are located in 48 states, Canada, the Caribbean
and Japan. The Company leases all of its stores, generally for terms of
seven to ten years. Under the leases, the Company pays a fixed minimum rent
and/or rentals based on gross sales in excess of specified amounts. The
Company also pays certain other expenses (e.g., common area maintenance
charges and real estate taxes) under the leases. The internal layout and
fixtures of each store are designed by management and constructed under
contracts with third parties.
Most of the Company's stores are located in enclosed shopping malls. Some
stores are located within a central business district, while others are
located in "open-air" outlet malls. The Company actively seeks locations
that meet its criteria and opens new stores when opportunities are found
within its budget for expansion. Criteria include geographic location and
demographic aspects of communities surrounding the mall, acceptable anchor
tenants, suitable location within a mall, appropriate space availability and
proposed rental rates. In choosing new locations, the Company generally
attempts to cluster stores geographically, thus affording economies of scale
in supervision. The Company believes that sufficient desirable locations are
available to accommodate its expansion plans. The Company refurbishes its
existing stores on a regular basis.
The Company has closed 66 stores in the last three fiscal years. The stores
were closed because of lack of profit potential or the unwillingness of the
landlord to renew the lease on terms acceptable to the Company. Nine of
these stores were closed due to the down-sizing of the Trend Gift division.
The Company has not experienced any substantial difficulty in renewing
desired store leases and has no reason to expect any such difficulty in the
future. For each of the last three years, no individual store accounted for
more than one percent of total sales.
The Company opened 137 Fashion Accessory Stores during Fiscal 1995 and has
opened as of March 31, 1995 a net 11 stores in the current fiscal year ending
February 3, 1996 ("Fiscal 1996"). The Company plans to continue opening
Fashion Accessory Stores when suitable locations are found and satisfactory
lease negotiations are concluded. The Company's initial investment in new
stores opened during the last fiscal year, including leasehold improvements
and fixtures, but excluding inventories, averaged approximately $85,000 per
store.
The offices and distribution center of the Company's stores are located in
Wood Dale, Illinois. Of the facility's approximately 176,000 square feet,
150,000 square feet are devoted to receiving and distribution. The facility
is a one story industrial building constructed in 1985 and equipped with
automated systems for receiving, processing and shipping merchandise to the
stores. The lease for this space expires on June 30, 1996. The Company does
not intend to extend the lease on this facility.
- 4 -
In January 1995, Claire's purchased for $7.4 million, land and a building
located in Hoffman Estates, Illinois. Claire's intends to relocate its
offices and distribution facility to this location in early 1996. The
facility is located on 24.8 acres and consists of 247,000 total square feet
with 201,000 square feet devoted to receiving and distribution and 46,000
square feet for office space. The unused acreage allows Claire's the ability
to expand its facility in the future by an additional 100,000 square feet.
In August 1990, Claire's entered into a lease which expires on July 31, 2001
for 40,000 square feet of office space in Wood Dale, Illinois. Under the
terms of the lease, Claire's is required to pay taxes, utilities, insurance
costs and maintenance costs. Due to a downsizing of the corporate staff, it
was decided that the additional space would not be needed, and in March 1992,
approximately 30,000 square feet of the space was subleased to an unrelated
third party. The sublease term runs parallel to the original lease. Claire's
is currently seeking to sublease the remaining 10,000 square feet.
The Company leases from Rowland Schaefer & Associates (formerly Two Centrum
Plaza Associates) approximately 30,000 square feet in Pembroke Pines,
Florida, where it maintains its executive, accounting and finance offices.
Rowland Schaefer & Associates is a general partnership of two corporate
general partners which are owned by the Chairman of the Board and President
of the Company and members of his immediate family, both of whom are Vice
Presidents of Claire's. The lease provides for the payment by the Company of
annual base rent of approximately $447,000, which is subject to annual
cost-of-living increases, and a proportionate share of all taxes and
operating expenses of the building. The lease expires on July 31, 2000 and
may be extended, at the option of the Company, for an additional five-year
term.
The Company also owns 10,000 square feet of office space in Miami, Florida.
In November 1992, 5,000 square feet of the space was leased to an unrelated
third party. The lease term is for three years. The remaining 5,000 square
feet of space is being utilized as a storage facility for the Company. The
Company also leases executive office space in New York City under a lease
which expires on October 31, 1998, and is the beneficial owner of two
cooperative apartments in New York City.
Item 3. Legal Proceedings
There are no material legal proceedings pending to which the Company or any
of its subsidiaries is a party or of which any of their property is subject.
Item 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to a vote of security holders during the
fourth quarter of Fiscal 1995.
- 5 -
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
The Company has two classes of common stock, par value $.05 per share,
outstanding: Common Stock having one vote per share and Class A Common Stock
having ten votes per share. The Common Stock is traded on the New York Stock
Exchange, Inc. ("NYSE") under the symbol CLE. The Class A Common Stock has
only limited transferability and is not traded on any stock exchange or in
any organized market. However, the Class A Common Stock is convertible on a
share-for-share basis into Common Stock and may be sold, as Common Stock, in
open market transactions. The following table sets forth, for the fiscal
quarters of the Company indicated, the high and low closing prices of the
Common Stock on the NYSE Composite Tape and the per share dividends declared
on the Common Stock and the Class A Common Stock. No dividends had been
declared on the Class A Common Stock prior to Fiscal 1995. At March 31,
1995, the approximate number of record holders of shares of Common Stock and
Class A Common Stock was 2,252 and 1,004, respectively.
Closing Prices Dividends Dividends
of on on Class A
Common Stock Common Stock Common Stock
Year Ended January 28, 1995 High Low
First Quarter $23.13 $16.50 $ .03 $ -
Second Quarter 17.63 9.50 .03 .015
Third Quarter 13.63 10.13 .03 .015
Fourth Quarter 13.63 11.00 .03 .015
Year Ended January 29, 1994
First Quarter $17.75 $12.63 $.025 -
Second Quarter 16.13 12.13 .025 -
Third Quarter 18.00 12.00 .025 -
Fourth Quarter 19.50 16.00 .025 -
In 1985, the Board of Directors instituted a quarterly dividend on the Common
Stock of $.025 per share. In February 1994, the Board of Directors increased
the quarterly dividend to $.03 per share and in July 1994 declared a
quarterly dividend of $.015 per share on the Class A Common Stock. The Board
expects to continue this policy; however, there is no assurance that
dividends will continue to be paid since they are dependent upon earnings,
the financial condition of the Company and other factors, including certain
restrictive provisions of the Company's loan agreements.
- 6 -
Item 6. Selected Financial Data
Fiscal Year Ended
Jan. 28 Jan. 29 Jan. 30 Feb. 1 Feb. 2
1995 1994 1993 1992 1991
(In thousands except per share amounts)
Operating Statement Data:
Net sales $301,435 $281,693 $247,987 $234,162 $235,305
Income from continuing
operations 23,855 23,634 14,551 5,226 22,356
Loss from operations
of discontinued
subsidiary - - - (2,047) (1,903)
Loss on disposal of dis-
continued subsidiary - - - (11,927) -
Net income (loss) $ 23,855 $ 23,634 $ 14,551 $ (8,748) $ 20,453
Income (Loss) Per Share
From:
Income from continuing
operations $ 1.15 $ 1.15 $ .71 $ .26 $ 1.10
Loss from operations
of discontinued
subsidiary - - - (.10) (.09)
Loss on disposal of dis-
continued subsidiary - - - (.59) -
Net income (loss) $ 1.15 $ 1.15 $ .71 $ (.43) $ 1.01
Cash dividends per share:
Common stock $ .12 $ .10 $ .10 $ .10 $ .10
Class A Common Stock $ .045 $ - $ - $ - $ -
Balance Sheet Data:
Current assets $ 78,670 $ 69,253 $ 64,038 $ 40,352 $ 52,971
Current liabilities 29,963 27,092 40,785 19,778 23,638
Working capital 48,707 42,161 23,253 20,574 29,333
Total assets 158,578 135,219 128,878 111,586 127,870
Long-term obligations 6,464 8,212 11,254 27,827 30,602
Stockholders' equity 122,151 99,915 76,839 63,981 73,630
- 7 -
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
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:
Fiscal Year Ended
January 28, January 29, January 30,
1995 1994 1993
Net sales 100.0% 100.0% 100.0%
Cost of sales, occupancy and
buying expenses 46.1 46.2 47.1
Gross profit 53.9 53.8 52.9
Selling, general and administrative 36.8 35.8 37.5
Depreciation and amortization 4.6 4.6 5.2
Income before interest (income)
expense and income taxes 12.5 13.4 10.2
Interest (income) expense, net (0.3) 0.1 0.7
Income before income taxes 12.8 13.3 9.5
Income taxes 4.9 4.9 3.6
Net income 7.9% 8.4% 5.9%
- 8 -
Results of Operations
From the fiscal year ended January 30, 1993 ("Fiscal 1993") to January
28, 1995 ("Fiscal 1995"), the Company's net sales increased at a
compounded annual rate of 10%. Net Income increased from $14,551,000 in
Fiscal 1993 to $23,855,000 in Fiscal 1995.
Fiscal 1995 Compared to Fiscal 1994
Net sales increased by $19,742,000, or 7%, to $301,435,000 in Fiscal 1995
compared to $281,693,000 for the year ended January 29, 1994 ("Fiscal
1994"). The increase for the period resulted primarily from the addition
of a net 114 stores. The sales increase from the additional stores was
partially offset by a decrease in same-store sales of 2%. The same-store
sales decline was primarily due to a lack of a significant fashion trend.
In Fiscal 1994, the Company quickly responded to consumer demand for
"Chokers". This fashion item was sold at a retail price which was in
excess of the Company average, thus increasing the average unit retail
price of merchandise sold. The combination of a significant fashion item
in the prior year and the higher average unit retail price related to
that item caused this year's same-store sales volume to decrease, as
stated above.
Cost of sales, occupancy and buying expenses increased by $8,921,000, or
7%, to $139,092,000 in Fiscal 1995 compared to $130,171,000 in Fiscal
1994. The principal reasons for this increase was the rise in the number
of stores and volume of merchandise sold. As a percentage of net sales,
these expenses were 46% for both Fiscal 1995 and Fiscal 1994. The effect
of the same-store sales decline discussed above was mitigated by the
benefit realized by the Company's continuing expansion of its overseas
merchandise buying program.
Selling, general and administrative expenses increased by $10,185,000, or
10%, to $110,887,000 in Fiscal 1995 from the Fiscal 1994 level of
$100,702,000. The increase noted was due to the increase in the cost of
operating the additional stores. In addition, the Company incurred
expenses related to its expansion into Canada and Japan. These expenses
are not expected to have a significant impact going forward. As a
percentage of net sales, these expenses increased to approximately 37% in
Fiscal 1995 compared to 36% in Fiscal 1994. The increase noted was
mainly attributable to the decrease in same-store sales discussed
previously, thus making fixed expenses a larger percentage of sales.
Depreciation and amortization increased by $908,000, or 7%, to
$13,882,000 in Fiscal 1995 from the Fiscal 1994 level of $12,974,000. The
increase was primarily due to the 11% increase in new stores and
approximately 100 stores which were remodelled during the year. In
addition, the Company made a significant investment to enhance its
management information systems.
Due to the increase in cash levels and the reduction of long-term debt,
interest income exceeded interest expense in Fiscal 1995. As a
percentage of sales, interest income, net of interest expense, was .3%
for Fiscal 1995 compared to interest expense, net of interest income, of
.1% in Fiscal 1994. The average debt balance decreased to $6,000,000
during Fiscal 1995 from $10,850,000 in Fiscal 1994. The cash balance
during Fiscal 1995 averaged approximately $38,300,000 compared to
approximately $24,630,000 in Fiscal 1994. The weighted average interest
rates paid by the Company during Fiscal 1995 and Fiscal 1994 were 8.1%
and 7.3%, respectively. These rates are directly related to the bank's
prime rate.
- 9 -
Income taxes increased by $739,000 to $14,620,000 in Fiscal 1995 compared
to $13,881,000 in Fiscal 1994. The Company's effective tax rates
remained relatively constant from fiscal year to fiscal year.
Fiscal 1994 Compared to Fiscal 1993
Net sales increased by $33,706,000, or 14%, in Fiscal 1994 to
$281,693,000 compared to $247,987,000 for Fiscal 1993. The increase for
Fiscal 1994 resulted primarily from same-store sales increases of 8%. In
addition to the same-store sales increases, total sales benefited from
the addition of a net 48 stores. The same-store sales increases were
primarily due to the Company focusing on maintaining adequate stock of
its core fashion accessory merchandise and aggressive marketing to
increase the average sale amount. This is evident by the increase in the
inventory turn to 3.3 times for Fiscal 1994 compared to an inventory turn
of 3.1 times during Fiscal 1993. In addition, the Company has increased
inventory levels of its core fashion accessory merchandise.
Cost of sales, occupancy and buying expenses increased by $13,310,000, or
11%, to $130,171,000 in Fiscal 1994 compared to $116,861,000 in Fiscal
1993. The principal reasons for the increase in Fiscal 1994 were the
rise in the number of stores and the volume of merchandise sold. As a
percentage of net sales, these expenses were 46% for Fiscal 1994 compared
to 47% for Fiscal 1993. The decrease as a percentage of sales was not as
acute as might be expected given the same-store sales increases described
above. Even though fixed expenses such as rent and rent support, which
are included in cost of sales, represented a smaller percentage of net
sales, the Company incurred certain expenses related to the expansion of
its overseas merchandise buying program, the benefit of which the Company
expects to realize in the near future. In addition to the cost of the
Company's expansion of its overseas merchandise buying program, the
Company tested sales promotions whereby a free gift was given away with
each purchase over a specified dollar amount. This promotion
successfully increased the average sale and generated profitable sales.
However, due to the cost of the free gift, which was included in cost of
sales, the margins realized by these incremental promotional sales were
lower than the "normal" margin realized on sales not included in the
promotion.
Selling, general and administrative expenses increased by $7,797,000, or
8%, to $100,702,000 in Fiscal 1994 compared to $92,905,000 in Fiscal
1993. The increase in Fiscal 1994 was primarily due to the increase in
the number of stores. Specifically, increases were noted in store
payroll, including the cost of store personnel bonuses and health care.
As a percentage of net sales, these expenses decreased to approximately
36% in Fiscal 1994 compared to 37% in Fiscal 1993. The decrease noted
was mainly attributable to the increase in same-store sales discussed
previously, thus making fixed expenses a smaller percentage of sales.
Depreciation and amortization decreased by $61,000, or less than 1%, to
$12,974,000 in Fiscal 1994 compared to $13,035,000 in Fiscal 1993. The
decrease noted in Fiscal 1994 compared to Fiscal 1993 was primarily due
to the majority of new stores opening later in the second half of Fiscal
1994 than in previous years. In addition, many assets placed into
service in previous years became fully depreciated in Fiscal 1994 and
were thus only depreciated for a portion of the year.
- 10 -
Interest expense, net of interest income, decreased by $1,386,000, or 81%, in
Fiscal 1994 to $331,000 compared to $1,717,000 in Fiscal 1993. The decrease
in Fiscal 1994 from Fiscal 1993 is primarily attributable to the decrease in
the average debt balance outstanding and the increase in the Company's
average available cash balance. During Fiscal 1994, the average debt balance
decreased to approximately $10,850,000 from the Fiscal 1993 average of
approximately $25,420,000. The cash balance during Fiscal 1994 averaged
approximately $24,630,000 compared to an average of approximately $19,800,000
in Fiscal 1993. The weighted average interest rates paid by the Company
during Fiscal 1994 and Fiscal 1993 were 7.3% and 8.5%, respectively. These
rates are directly related to the bank's prime rate and the rate the Company
paid on its since-retired 8-1/2% convertible subordinated notes.
Income taxes increased by $4,963,000 to $13,881,000 in Fiscal 1994 compared
to $8,918,000 in Fiscal 1993. The Company's effective tax rates remained
relatively constant from fiscal year to fiscal year.
Impact of Inflation
Inflation has not affected the Company, as it has generally been able to pass
along inflationary increases in its costs through increased sales prices.
Liquidity and Capital Resources
Company operations have historically provided a strong, positive cash flow
which, together with the Company's credit facilities, provides adequate
liquidity to meet the Company's operational needs. Cash and cash equivalents
totalled $48,473,000 at the end of Fiscal 1995.
Net cash provided by operating activities amounted to $37,030,000 in Fiscal
1995 compared to $34,750,000 in Fiscal 1994 and $34,430,000 in Fiscal 1993.
The Company's current ratio (current assets over current liabilities) was
2.63:1.0 for Fiscal 1995 and 2.56:1.0 for Fiscal 1994.
At the end of Fiscal 1995, the Company had available a $10 million credit
line with a bank to finance the Company's letters of credit and working
capital requirements. This facility matures on January 31, 1997.
During Fiscal 1995, the Company continued to expand and remodel its store
base. Significant capital projects included the opening of 137 new stores
and remodelling approximately 100 stores. In addition, the Company continued
to invest in technology and purchased a new distribution center in Hoffman
Estates, Illinois. The Company expects to begin utilization of the new
facility in early 1996. Funds expended for capital improvements in Fiscal
1995 totalled $24,762,000 compared to $12,831,000 in Fiscal 1994 and
$8,093,000 in Fiscal 1993. In the year ending February 3, 1996 ("Fiscal
1996"), capital expenditures are expected to be approximately $19,000,000 as
the Company continues to invest in its store base and technology.
In May 1994, the Board of Directors authorized the purchase of up to 500,000
shares of the Company's Common Stock in the open market from time to time.
59,000 shares were repurchased at an average price of $13.74. Subsequent to
May 1994, the Company reissued 25,000 Treasury shares as fulfillment of its
obligations under its stock option plans.
The Company has significant cash balances, a consistent ability to generate
cash flow from operations and available funds under its credit line. The
Company foresees no difficulty in maintaining its present financial condition
and liquidity and the ability to finance its capital expenditure plan and
other foreseeable future needs.
- 11 -
Item 8. Financial Statements and Supplementary Data Page No.
Independent Auditors' Reports 13-14
Consolidated Balance Sheets at January 28, 1995 and
January 29, 1994 15
Consolidated Statements of Income for
the three fiscal years ended January 28, 1995 16
Consolidated Statements of Changes in Stockholders' Equity
for the three fiscal years ended January 28, 1995 17
Consolidated Statements of Cash Flows for
the three fiscal years ended January 28, 1995 18
Notes to Consolidated Financial Statements 19-24
Selected Quarterly Financial Data (Unaudited) 25
- 12 -
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
Claire's Stores, Inc.
We have audited the accompanying consolidated balance sheets of Claire's
Stores, Inc. and subsidiaries as of January 28, 1995 and January 29, 1994,
and the related consolidated statements of income, changes in stockholders'
equity and cash flows for the years then ended. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Claire's
Stores, Inc. and subsidiaries as of January 28, 1995 and January 29, 1994,
and the results of their operations and their cash flows for the years then
ended in conformity with generally accepted accounting principles.
/S/KPMG PEAT MARWICK LLP
Fort Lauderdale, Florida
March 17, 1995
- 13 -
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
Claire's Stores, Inc.
We have audited the accompanying consolidated statements of operations,
changes in stockholders' equity and cash flows of Claire's Stores, Inc. and
subsidiaries for the year ended January 30, 1993. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the results of operations and cash flows for the year ended January
30, 1993 in conformity with generally accepted accounting principles.
/S/DELOITTE & TOUCHE LLP
Certified Public Accountants
Fort Lauderdale, Florida
April 2, 1993
- 14 -
CLAIRE'S STORES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
Jan. 28, Jan. 29,
1995 1994
ASSETS (In thousands)
Current assets:
Cash and cash equivalents $ 48,473 $ 41,128
Inventories 24,330 22,694
Prepaid expenses and other current
assets 5,867 5,431
Total current assets 78,670 69,253
Property and equipment:
Land and building 8,267 793
Furniture, fixtures and equipment 61,088 51,455
Leasehold improvements 73,617 71,162
142,972 123,410
Less accumulated depreciation
and amortization (72,705) (62,571)
70,267 60,839
Other assets 9,641 5,127
$158,578 $135,219
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 11,705 $ 9,664
Income taxes payable 7,500 7,350
Accrued expenses 10,086 9,527
Dividends payable 672 551
Total current liabilities 29,963 27,092
Long-term debt 3,000 6,000
Deferred credits 3,464 2,212
Stockholders' equity:
Preferred stock, par value $1.00 per
share; authorized 1,000,000 shares,
issued and outstanding 0 shares - -
Class A common stock, par value $.05 per
share; authorized 20,000,000 shares,
issued 1,315,627 shares and
1,344,638 shares 66 67
Common stock, par value $.05 per
share; authorized 50,000,000 shares,
issued 19,554,895 shares and 19,431,280
shares 978 972
Additional paid-in capital 13,618 12,261
Foreign currency translation adjustments (115) -
Retained earnings 108,372 86,921
122,919 100,221
Treasury stock, at cost (82,759
and 48,759 shares, respectively) (768) (306)
122,151 99,915
Commitments and contingencies - -
$158,578 $135,219
See accompanying notes to consolidated financial statements.
- 15 -
CLAIRE'S STORES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Fiscal Year Ended
Jan. 28, Jan. 29, Jan. 30,
1995 1994 1993
(In thousands except per share amounts)
Net sales $ 301,435 $ 281,693 $ 247,987
Cost of sales, occupancy and
buying expenses 139,092 130,171 116,861
Gross profit 162,343 151,522 131,126
Other expenses:
Selling, general and
administrative 110,887 100,702 92,905
Depreciation and amortization 13,882 12,974 13,035
Interest (income) expense, net (901) 331 1,717
123,868 114,007 107,657
Income before income taxes 38,475 37,515 23,469
Income taxes 14,620 13,881 8,918
Net income $ 23,855 $ 23,634 $ 14,551
Net income per share $ 1.15 $ 1.15 $ .71
See accompanying notes to consolidated financial statements.
- 16 -
CLAIRE'S STORES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Foreign
Class A Additional Currency
Common Common Paid-In Translation Retained Treasury
Stock Stock Capital Adjustments Earnings Stock Total
(In thousands)
Balance,
February 1, 1992 $ 69 $ 958 $ 10,676 $ - $ 52,584 $ (306) $ 63,981
Net income - - - - 14,551 - 14,551
Class A Common
Stock converted
to Common Stock (1) 1 - - - - -
Stock options
exercised - 1 148 - - - 149
Issuance of below
market stock
options - - 75 - - - 75
Cash dividends
($.10 per
common share) - - - - (1,917) - (1,917)
Balance,
January 30, 1993 68 960 10,899 - 65,218 (306) 76,839
Net income - - - - 23,634 - 23,634
Class A Common
Stock converted
to Common Stock (1) 1 - - - - -
Stock options
exercised - 11 1,287 - - - 1,298
Issuance of below
market stock
options - - 75 - - - 75
Cash dividends
($.10 per
common share) - - - - (1,931) - (1,931)
Balance,
January 29, 1994 67 972 12,261 - 86,921 (306) 99,915
Net income - - - - 23,855 - 23,855
Class A Common
Stock converted
to Common Stock (1) 1 - - - - -
Stock options
exercised - 4 832 - - - 836
Cash dividends
($.12 per
Common share and
$.045 per Class
A Common share) - - - - (2,404) - (2,404)
Foreign currency
translation
adjustments - - - (115) - - (115)
Purchase of Treasury
Stock - - - - - (811) (811)
Issuance of Treasury
Stock - - (68) - - 349 281
Conversion of
Debentures - 1 166 - - - 167
Tax benefit from
exercised stock
options - - 427 - - - 427
Balance,
January 28, 1995 $ 66 $ 978 $ 13,618 $ (115) $108,372 $ (768) $122,151
See accompanying notes to consolidated financial statements.
- 17 -
CLAIRE'S STORES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Fiscal Year Ended
Jan. 28, Jan. 29, Jan. 30,
1995 1994 1993
(In thousands)
Cash flows from operating activities:
Net income $ 23,855 $ 23,634 $ 14,551
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation and amortization 13,882 12,974 13,035
Deferred income taxes (1,914) (2,890) (3,002)
Loss on retirement of property and
equipment 1,465 1,401 970
Other (2) 75 76
Change in assets and liabilities:
(Increase) decrease in -
Inventories (1,636) (2,881) (1,124)
Prepaid expenses and other assets (2,622) (826) 2,489
Increase (decrease) in -
Trade accounts payable 2,041 961 146
Income taxes payable 150 550 6,208
Accrued expenses 559 (209) (348)
Deferred credits 1,252 1,961 1,429
Net cash provided by operating
activities 37,030 34,750 34,430
Cash flows from investing activities:
Acquisition of property and
equipment which represents net
cash used in investing activities (24,762) (12,831) (8,093)
Cash flows from financing activities:
Proceeds from long-term debt - 10,000 -
Principal payments on long-term debt (3,000) (29,000) -
Proceeds from stock options exercised 1,117 1,103 149
Dividends paid (2,281) (1,926) (1,917)
Purchase of Treasury Stock (811) - -
Proceeds from conversion of debentures 167 - -
Net cash used in financing
activities (4,808) (19,823) (1,768)
Effect of foreign currency exchange
rate changes on cash and cash
equivalents (115) - -
Net increase in cash and cash
equivalents 7,345 2,096 24,569
Cash and cash equivalents at
beginning of year 41,128 39,032 14,463
Cash and cash equivalents at
end of year $ 48,473 $ 41,128 $ 39,032
See accompanying notes to consolidated financial statements.
- 18 -
CLAIRE'S STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation - The consolidated financial statements include the
accounts of the Company and its wholly-owned subsidiaries. All material
intercompany balances and transactions have been eliminated in consolidation.
Fiscal Year - The Company's fiscal year ends on the Saturday closest to January
31. Fiscal years 1995, 1994 and 1993 each consisted of 52 weeks.
Cash and Cash Equivalents - For purposes of the statement of cash flows, the
Company considers all highly liquid debt instruments purchased with a maturity
of three months or less to be cash equivalents.
Inventories - Merchandise inventories are stated at the lower of cost or market.
Cost is determined by the first-in, first-out basis on the retail method.
Property and Equipment - Property and equipment are recorded at cost.
Depreciation is computed on the straight-line method over the estimated useful
lives of the building and the furniture, fixtures and equipment, which range
from three to twenty-five years. Amortization of leasehold improvements is
computed on the straight-line method based upon the shorter of the estimated
useful lives of the assets, or the terms of the respective leases.
Net Income Per Share - Primary income per share is based on the weighted average
number of shares of Class A Common Stock and Common Stock outstanding during
the period (20,780,000 shares in Fiscal 1995, 20,637,000 shares in Fiscal
1994 and 20,550,000 shares in Fiscal 1993).
Income Taxes - The Company accounts for income taxes under the provisions of
Statement of Financial Accounting Standards ("SFAS") No. 109 which generally
requires recognition of 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 assets and
liabilities are determined based on the difference between the financial
statements and tax bases of assets and liabilities, using enacted tax rates in
effect for the year in which the differences are expected to reverse. In
addition, SFAS No. 109 requires the adjustment of previously deferred income
taxes for changes in tax rates under the liability method.
Foreign Currency Translation - The financial statements of the Company's
foreign operations are translated into U.S. dollars. Assets and liabilities are
translated at current exchange rates while income and expense accounts are
translated at the average rates in effect during the year.
Resulting translation adjustments are accumulated as a component of
stockholders' equity.
Fair Value of Financial Instruments - The Company's financial instruments
consist primarily of current assets, current liabilities and long-term debt.
Current assets and liabilities are stated at fair market value; long-term
debt, which is at current market interest rates, approximates fair market value.
Reclassifications - Certain items in the prior year financial statements have
been reclassified to conform with the Fiscal 1995 presentation.
- 19 -
2. CREDIT FACILITIES
January 28, January 29,
1995 1994
(In thousands)
Long-term debt:
Working capital credit line $ - $ -
Term note due 1996 3,000 6,000
$ 3,000 $ 6,000
The Company has an unsecured revolving line of credit of $10 million with
a bank for letters of credit and working capital needs. Interest on the
outstanding balance is at the bank's prime rate plus 1/2% through October
31, 1994 and at the prime rate thereafter. The credit agreement matures
on January 31, 1997. At January 28, 1995 and January 29, 1994, no
borrowings were outstanding under this line of credit.
On March 11, 1993, the Company entered into a $10 million term note with
a bank. The term note matures on January 31, 1996 and accrues interest
at the bank's prime rate.
The bank credit agreement and term note contain various restrictive
covenants which include, among other things, the requirement to maintain
minimum tangible net worth, restrictions on fixed asset additions,
restrictions on certain additional indebtedness, requirements to maintain
certain financial ratios and restrictions which limit the amount of
dividends the Company can declare to the lesser of $.15 per share or an
aggregate of $3,300,000 for Fiscal 1995 and $.20 per share or an
aggregate of $4,400,000 for the fiscal year ending February 3, 1996. In
addition, the bank requires the Company to maintain a compensating
balance of $1,000,000 during the period January 1 through August 31 of
each year.
3. INCOME TAXES
Income taxes consist of the following:
Fiscal Year Ended
Jan. 28, Jan. 29, Jan. 30,
1995 1994 1993
(In thousands)
Federal:
Current $14,870 $15,597 $11,038
Deferred (1,779) (2,688) (2,780)
13,091 12,909 8,258
State:
Current 1,164 1,174 882
Deferred (135) (202) (222)
1,029 972 660
Foreign:
Current 500 - -
$14,620 $13,881 $ 8,918
- 20 -
The approximate tax effect on each type of significant temporary difference
for which the asset is included in prepaid expenses and other current
assets and other assets on the accompanying balance sheets is as follows:
Deferred Tax Consequences at January 28,1995
(In thousands)
Assets Liabilities Total
Depreciation $2,305 $ - $2,305
Accrued expenses 1,462 - 1,462
Discontinued operations 124 - 124
Other 1,413 - 1,413
$5,304 $ - $5,304
Deferred Tax Consequences at January 29,1994
Assets Liabilities Total
Depreciation $ 720 $ - $ 720
Accrued expenses 1,539 - 1,539
Discontinued operations 186 - 186
Other 945 - 945
$3,390 $ - $3,390
The provision for income taxes differs from an amount computed at the
statutory rates as follows:
Jan. 28, Jan. 29, Jan. 30,
1995 1994 1993
Income taxes at
statutory rates 35% 35% 34%
State income taxes,
net of federal tax
benefit 3 3 3
Other - - 1
38% 38% 38%
4. STOCKHOLDERS' EQUITY
Preferred Stock - The Company has authorized 1,000,000 shares of $1 par
value preferred stock, none of which has been issued. The rights and
preferences of such stock may be designated in the future by the Board of
Directors.
Class A Common Stock - The Class A Common Stock has only limited
transferability and is not traded on any stock exchange or any organized
market. However, the Class A Common Stock is convertible on a
share-for-share basis into Common Stock and may be sold, as Common Stock,
in open market transactions. The Class A Common Stock has ten votes per
share. Dividends declared on the Class A Common Stock are limited to 50% of
the dividends declared on the Common Stock.
Treasury Stock - Treasury stock acquired is recorded at cost. Occasionally,
the Company uses treasury stock to fulfill its obligations under its stock
option plans. When stock is issued pursuant to the stock option plans, the
difference between the cost of treasury stock issued and the option price
is charged or credited to additional paid-in capital.
- 21 -
5. STOCK OPTIONS
In April 1991, the Board of Directors of the Company adopted, and in June
1991 the Company's stockholders approved, the Claire's Stores, Inc. 1991
Stock Option Plan (the "1991 Plan"). The 1991 Plan replaced the
Company's 1982 Incentive Stock Option Plan (the "1982 Plan") and the
Company's 1985 Non-Qualified Stock Option Plan (the "1985 Plan"),
although options granted under such plans will remain outstanding. Under
the 1991 Plan, the Company may grant either incentive stock options,
non-qualified stock options, tandem stock appreciation rights and stock
appreciation rights exercisable in conjunction with stock options to
purchase up to 1,000,000 shares of Common Stock, plus any shares unused
or recaptured under the 1982 Plan or the 1985 Plan. Incentive stock
options granted under the 1991 Plan are exercisable at prices equal to
the fair market value of shares at the date of grant, except that
incentive stock options granted to any person holding 10% or more of the
total combined voting power or value of all classes of capital stock of
the Company, or any subsidiary of the Company, carry an exercise price
equal to 110% of the fair market value at the date of grant. No stock
option or stock appreciation right may be exercised less than one year
after the date granted. Each incentive stock option, non-qualified stock
option or stock appreciation right will terminate ten years after the
date of grant (or such shorter period as specified in the grant) and may
not be exercised thereafter.
Tandem stock appreciation rights granted in conjunction with options may
be exercised only to the extent, during the period and on the conditions
that their related options are exercisable and may not be exercised after
the expiration or termination of their related options. Incentive stock
options currently outstanding are exercisable at various rates beginning
one year from the date of grant, and expire five to ten years after the
date of grant. Non-qualified stock options currently outstanding are
exercisable at prices equal to the fair market value of the shares, or
one dollar below the fair market value, at the date of grant and expire
five to ten years after the date of grant.
At January 28, 1995, options to purchase 77,312, 115,000 and 294,500
shares of Common Stock were exercisable under the 1982 Plan, 1985 Plan
and 1991 Plan, respectively. Options to purchase an additional 30,138,
20,000 and 256,375 shares were outstanding, but not yet exercisable, at
January 28, 1995 under the 1982 Plan, 1985 Plan and 1991 Plan,
respectively. There were 637,194 shares of Common Stock available for
future option grants under the 1991 Plan at January 28, 1995.
In October 1992, stock options to purchase an aggregate of 300,000 shares
of Common Stock at a purchase price of $11.14 per share were granted to
the Chairman of the Board and President of the Company. These options
are non-qualified and were not issued under the 1991 Plan.
- 22 -
Transactions and other information relating to the 1982 Plan, 1985 Plan and
the 1991 Plan are summarized as follows:
1982 Plan 1985 Plan 1991 Plan Range of
Number of Number of Number of option price
shares shares shares per share
Outstanding,
February 1, 1992 354,500 229,100 167,000 $2.63 - 15.25
Granted - - 205,500 7.00 - 11.75
Exercised (2,000) (20,000) - 2.63 - 4.75
Cancelled (33,000) - - 4.75 - 11.50
Outstanding,
January 30, 1993 319,500 209,100 372,500 3.50 - 15.25
Granted - - 166,750 13.75 - 16.25
Exercised (175,250) (24,100) (9,375) 3.50 - 11.50
Cancelled - - (7,500) 7.00 - 7.00
Outstanding,
January 29, 1994 144,250 185,000 522,375 6.50 - 16.25
Granted - - 165,000 10.63 - 12.63
Exercised ( 13,300) ( 50,000) ( 52,250) 6.50 - 13.75
Cancelled ( 23,500) - ( 84,250) 6.50 - 16.25
Outstanding,
January 28, 1995 107,450 135,000 550,875 6.50 - 16.25
6. EMPLOYEE BENEFIT PLAN
In the fiscal year ended February 1, 1986, the Company adopted a Profit
Sharing Plan under Section 401(k) of the Internal Revenue Code. This plan
allows employees who serve more than 1,000 hours per year to defer up to
18% of their income through contributions to the plan. In line with the
provisions of the plan, for every dollar the employee contributes the
Company will contribute an additional $.50, up to 2% of the employee's
salary. In Fiscal 1995, Fiscal 1994 and Fiscal 1993, the cost of Company
matching contributions was $299,000, $244,000 and $185,000, respectively.
The Company does not have any post-employment or post-retirement benefit
plans other than above.
7. COMMITMENTS
The Company leases retail stores, offices and warehouse space and certain
equipment under operating leases which expire at various dates through the
year 2005 with options to renew certain of such leases for additional
periods. The lease agreements covering retail store space provide for
minimum rentals and/or rentals based on a percentage of net sales. Rental
expense for each of the three fiscal years ended January 28, 1995 was as
follows:
1995 1994 1993
(In thousands)
Minimum rentals $36,711 $32,800 $29,394
Rentals based on net sales 1,180 1,490 1,183
Other rental expense-equipment 8,638 7,846 7,180
Total rental expense $46,529 $42,136 $37,757
- 23 -
Minimum aggregate rental commitments under non-cancelable operating leases
are summarized by fiscal year ending as follows:
(In thousands)
1996 $ 45,188
1997 41,465
1998 37,043
1999 33,236
2000 28,114
Thereafter 63,483
$248,529
Certain leases provide for payment of real estate taxes, insurance and
certain other operating expenses of the properties. In other leases,
certain of these costs are included in the basic contractual rental
payments.
8. STATEMENTS OF CASH FLOWS
Payments of income taxes were $16,014,000 in Fiscal 1995, $16,414,000 in
Fiscal 1994 and $5,670,000 in Fiscal 1993. Payments of interest were
$488,000 in Fiscal 1995, $866,000 in Fiscal 1994 and $2,184,000 in Fiscal
1993.
9. INCOME STATEMENTS
Advertising expense for the three fiscal years ended January 28, 1995 was
$4,614,000, $3,029,000 and $2,553,000.
10. RELATED PARTY TRANSACTIONS
The Company leases from Rowland Schaefer & Associates (formerly Two Centrum
Plaza Associates) approximately 30,000 square feet of office space in a
building where it maintains its executive and accounting and finance
offices. The lease for this space expires on July 31, 2000 and may be
extended at the option of the Company for an additional five-year term.
Rowland Schaefer & Associates is a general partnership of two corporate
general partnerships which are owned by the Chairman of the Board and
President of the Company and members of his immediate family, both of whom
are Vice Presidents of Claire's. The lease provides for the payment by the
Company of annual base rent of approximately $447,000, which is subject to
annual cost-of-living increases, and a proportionate share of all taxes and
operating expenses of the building.
- 24 -
SELECTED QUARTERLY FINANCIAL DATA (Unaudited)
Fiscal Year Ended January 28, 1995
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Year
(In thousands except per share amounts)
Net sales $63,656 $64,926 $69,500 $103,353 $301,435
Gross profit 33,319 33,268 35,653 60,103 162,343
Net income 2,652 2,029 2,895 16,279 23,855
Net income per share $ .13 $ .10 $ .14 $ .78 $ 1.15
Fiscal Year Ended January 29, 1994
(In thousands except per share amounts)
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Year
Net sales $58,052 $61,784 $65,242 $96,615 $281,693
Gross profit 29,926 31,646 34,119 55,831 151,522
Net income 2,011 2,659 3,477 15,487 23,634
Net income per share $ .10 $ .13 $ .17 $ .75 $ 1.15
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
See the Company's Current Report on Form 8-K, filed with the Securities
and Exchange Commission on December 28, 1993 and as amended, January
12, 1994 for information relating to the change in the Company's
independent accountants, the text of which is incorporated herein by
reference.
- 25 -
PART III
Items 10,11,12 and 13. Directors and Executive Officers of the Registrant;
Executive Compensation ; Security Ownership of Certain Beneficial Owners and
Management; and Certain Relationships and Related Transactions.
The information required by these items is omitted because the Company will
file a definitive proxy statement pursuant to Regulation 14A under the
Securities Exchange Act of 1934 for the Company's 1995 Annual Meeting of
Stockholders containing such information, which information is incorporated
herein by reference as if set out in full.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) List of documents filed as part of this report.
Page No.
1. Financial Statements
Independent Auditors' Reports 13-14
Consolidated Balance Sheets at January 28, 1995 and
January 29, 1994 15
Consolidated Statements of Income for the three
fiscal years ended January 28, 1995 16
Consolidated Statements of Changes in Stockholders'
Equity for the three fiscal years ended January 28, 1995 17
Consolidated Statements of Cash Flows
for the three fiscal years ended January 28, 1995 18
Notes to Consolidated Financial Statements 19-24
2. Financial Statement Schedules
All schedules have been omitted since the required information is
included in the consolidated financial statements or the notes thereto,
or the omitted schedules are not applicable.
3. Exhibits
(3)(a) Restated Certificate of Incorporation of the Company, as
amended (incorporated by reference to Exhibit 3(a) to the
Company's Annual Report on Form 10-K for the fiscal year
ended February 1, 1992).
(3)(b) Amended By-laws of the Company
(4)(a) Revolving Credit Agreement dated as of October 22, 1992
between the Company and its subsidiaries and The Bank of
Tokyo Trust Company (incorporated by reference to exhibit
4(a) to the Company's Annual Report on Form 10-K for the
fiscal year ended January 30, 1993).
- 26 -
(4)(b) First Amendment dated as of March 11, 1993 to the Revolving
Credit Agreement (incorporated by reference to exhibit 4(b)
to the Company's Annual Report on form 10-K for the fiscal
year ended January 30, 1993).
(4)(c) Second Amendment dated as of May 28, 1993 to the Revolving
Credit Agreement (incorporated by reference to exhibit
4(c) to the Company's Annual Report on form 10-K for the
fiscal year ended January 29, 1994).
(4)(d) Third Amendment dated as of February 28, 1994 to the
Revolving Credit Agreement (incorporated by reference to
exhibit 4(d) to the Company's Annual Report on form 10-K
for the fiscal year ended January 29, 1994).
(4)(e) Fourth Amendment dated as of March 27, 1995 to the
Revolving Credit Agreement.
(4)(f) Fifth Amendment dated as of April 3, 1995 to the Revolving
Credit Agreement.
(10)(a) Incentive Stock Option Plan of the Company, as amended
(incorporated by reference to Exhibit 10(a) to the
Company's Annual Report on Form 10-K for the fiscal year
ended February 1, 1986).
(10)(b) Lease between La Salle National Bank and Claire's
Boutiques, Inc. dated July 31, 1984 (incorporated by
reference to Exhibit 10(h) to the Company's Annual Report
on Form 10-K for the fiscal year ended February 2, 1985).
(10)(c) Amendment to Lease between La Salle National Bank and
Claire's Boutiques, Inc. dated December 11, 1985
(incorporated by reference to Exhibit 10(c) to the
Company's Annual Report on Form 10-K for the fiscal year
ended February 1, 1986).
(10)(d) Non-Qualified Stock Option Plan of the Company, as amended
(incorporated by reference to Exhibit 10(e) to the
Company's Annual Report on Form 10-K for the fiscal year
ended February 1, 1986).
(10)(e) 401(k) Profit Sharing Plan, as amended (incorporated by
reference to Exhibit 10(e) to the Company's Annual Report
on Form 10-K for the fiscal year ended February 1, 1992).
(10)(f) Office Lease Agreement dated September 8, 1989 between the
Company and Two Centrum Plaza Associates (incorporated by
reference to Exhibit 10(h) to the Company's Annual Report
on Form 10-K for the fiscal year ended February 2, 1991).
(10)(g) Amendment of Office Lease Agreement dated July 31, 1990
between the Company and Two Centrum Plaza Associates
(incorporated by reference to Exhibit 10(i) to the
Company's Annual Report on Form 10-K for the fiscal year
ended February 2, 1991).
(10)(h) Addendum to Office Lease dated September 8, 1989 between
the Company and Two Centrum Plaza Associates (incorporated
by reference to Exhibit 10(j) to the Company's Annual
Report on Form 10-K for the fiscal year ended February 2,
1991).
- 27 -
(10)(i) Lease between Chancellory Commons I Limited Partnership and
Claire's Boutiques, Inc. dated August 31, 1990
(incorporated by reference to Exhibit 10(i) to the
Company's Annual Report on Form 10-K for the fiscal year
ended February 1, 1992).
(10)(j) 1991 Stock Option Plan of the Company (incorporated by
reference to Exhibit 10(j) to the Company's Annual Report
on Form 10-K for the fiscal year ended February 1, 1992).
(10)(k) Employment Agreement dated as of October 19, 1992, between
the Company and Rowland Schaefer (incorporated by reference
to exhibit (10)(k) to the Company's Annual Report on form
10-K for the fiscal year ended January 30, 1993).
(10)(l) Non-Qualified Stock Option Agreement dated October 19, 1992
between the Company and Rowland Schaefer (incorporated by
reference to exhibit (10)(l) to the Company's Annual Report
on form 10-K for the fiscal year ended January 30, 1993).
(21) Subsidiaries of the Company.
(24) Consents of independent auditors.
(b) Reports on Form 8-K.
On December 28, 1993 and January 12, 1994, a Current report on Form
8-K, as amended, was filed with respect to a change in Registrant's
certifying accountant. No financial statements were required to be
filed.
- 28 -
SIGNATURES
Pursuant to the requirements of Section 13 of 15(d) 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.
CLAIRE'S STORES, INC.
By /S/Rowland Schaefer
Rowland Schaefer
President and Chairman
of the Board of Directors
April 5, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities indicated on April 5, 1995.
/S/ Rowland Schaefer President and
Rowland Schaefer Chairman of the Board of Directors
(Principal Executive Officer)
/S/ Ira D. Kaplan Chief Financial Officer and Treasurer
Ira D. Kaplan (Principal Financial Officer)
/S/ Harold E. Berritt Director
Harold E. Berritt
/S/ Fred D. Hirt Director
Fred D. Hirt
/S/ Bruce G. Miller Director
Bruce G. Miller
/S/ Sylvia Schaefer Director
Sylvia Schaefer
/S/ Marla Schaefer Director
Marla Schaefer
/S/ Joel J. Silver Director
Joel J. Silver
- 29 -
SIGNATURES
Pursuant to the requirements of Section 13 of 15(d) 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.
CLAIRE'S STORES, INC.
By
Rowland Schaefer
President and Chairman
of the Board of Directors
April 5, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities indicated on April 5, 1995.
President and
Rowland Schaefer Chairman of the Board of Directors
(Principal Executive Officer)
Chief Financial Officer and Treasurer
Ira D. Kaplan (Principal Financial Officer)
Director
Harold E. Berritt
Director
Fred D. Hirt
Director
Bruce G. Miller
Director
Sylvia Schaefer
Director
Marla Schaefer
Director
Joel J. Silver
- 29 -
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BY-LAWS
of
CLAIRE'S STORES, INC.
ARTICLE I
OFFICES
Section 1. The location of the principal office of the Corporation in the
State of Delaware shall be in the City of Wilmington, County of New Castle.
Section 2. The Corporation may also have offices at such other places both
within and without the State of Delaware as the Board of Directors may from time
to time determine or the business of the Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. All meetings of the stockholders for the election of Directors
shall be held at the principal office of the Corporation in the State of
Delaware or at such other place within or without the State of Delaware as
may from time to time be fixed by the Board of Directors and as may be
specified in the respective notices of meeting or duly executed waivers of
notice.
Section 2. The annual meeting of stockholders shall be held on such date
and at such time as shall be designated from time to time by the Board of
Directors and stated in the notice of the meeting, at which meeting the
stockholders shall elect Directors by a plurality vote and transact such other
business as may properly be brought before the meeting.
Section 3. Written notice of the annual meeting shall be given to each
stockholder entitled to vote thereat, at least ten days before the date fixed
for the meeting.
Section 4. At least ten days before every election of Directors, a
complete list of the stockholders entitled to vote at said election, arranged in
alphabetical order, with the residence of each and the number of voting shares
held by each, shall be prepared by the Secretary. Such list shall be open to
the examination of any stockholder for said ten days either at a place within
the city, town or village where the election is to be held and which place
shall be specified in the notice of meeting, or if not so specified, at the
place where said meeting is to be held, and shall be produced and kept at the
time and place of election during the whole time thereof, and subject to the
inspection of any stockholder who may be present.
Section 5. The Board of Directors may close the stock transfer books of
the Corporation for a period not exceeding sixty days preceding the date of any
meeting of stockholders or the date for payment of any dividend or the date for
the allotment of rights or the date when any change or conversion or exchange of
capital stock shall go into effect or the date in connection with obtaining the
consent of stockholders for any purpose. In lieu of closing the stock books as
aforesaid, the Board of Directors may fix in advance a date, not exceeding sixty
days preceding the date of any meeting of stockholders, or the date for the
payment of any dividend, or the date for the allotment of rights, or the date
when any change or conversion or exchange of capital stock shall go into effect
or the date in connection with obtaining such consent, as a record date for the
determination of the stockholders entitled to notice of, and to vote at, any
such meeting, and any adjournment thereof, or entitled to receive payment of
any such dividend, or to any such allotment of rights, or to exercise the
rights in respect of any such change, conversion or exchange of capital
stock, or to give such consent, and in such case such stockholders and only
such stockholders as shall be stockholders of record on the date so fixed
shall be entitled to such notice of, and to vote at, such meeting and any
adjournment thereof, or to receive payment of such dividend, or to receive
such allotment of rights, or to exercise such rights, or to give such
consent, as the case may be, notwithstanding any transfer of any stock on the
books of the Corporation after any such record date fixed as aforesaid.
Section 6. Special meetings of the stockholders for any purpose or
purposes, unless otherwise prescribed by statute or by the Certificate of
Incorporation, shall be held at the principal office of the Corporation in the
State of Delaware or at such other place within or without the State of Delaware
as may be designated in the notice of said meeting, upon call of the Chairman of
the Board or the President or a majority of the Board of Directors.
Section 7. Written notice of a special meeting of stockholders, stating
the time and place thereof, shall be given to each stockholder entitled to vote
thereat at least ten days before the date fixed for such meeting.
Section 8. The holders of record of stock, issued and outstanding and
entitled to vote thereat, present in person or represented by proxy,
representing a majority of the number of votes entitled to be cast shall
constitute a quorum at all meetings of stockholders except as otherwise
provided by statute, by the Certificate of Incorporation or by these By-Laws.
If, however, such quorum shall not be present or represented at any meeting
of the stockholders, the stockholders entitled to vote thereat, present in
person or represented by proxy, shall have power to adjourn the meeting from
time to time, without notice other than announcement at the meeting, until a
quorum shall be present or represented. At such adjourned meeting at which a
quorum shall be present or represented, any business may be transacted at the
meeting as originally called.
Section 9. When a quorum is present at any meeting, the vote of the
holders of stock having a majority of the voting power, present in person or
represented by proxy, shall decide any question brought before such meeting,
unless the question is one upon which by express provision of the statutes or of
the Certificate of Incorporation or of these By-Laws, a different vote is
required, in which case such express provision shall govern and control the
decision of such question.
Section 10. Any vote on stock of the Corporation may be given by the
stockholder entitled thereto in person or by his proxy appointed by an
instrument in writing, subscribed by such stockholder or by his attorney
thereunto authorized and delivered to the secretary of the meeting; provided,
however, that no proxy shall be voted on after three years from its date
unless said proxy provides for a longer period. Except where the transfer
books of the Corporation shall have been closed or a date shall have been
fixed as a record date for the determination of stockholders entitled to
vote, no share of stock shall be voted at any election of Directors which
shall have been transferred on the books of the Corporation within twenty
days next preceding such election of Directors.
ARTICLE III
DIRECTORS
Section 1. The property and business of the Corporation shall be managed
by its Board of Directors which may exercise all such powers of the Corporation
and do all such lawful acts and things as are not by statute or by the
Certificate of Incorporation or by these By-Laws directed or required to be
exercised or done by the stockholders.
Section 2. The number of members that shall comprise the Board of
Directors of the Corporation shall be not less than three nor more than nine as
the Board of Directors from time to time shall decide. The Directors shall be
elected at the annual meeting of stockholders of the Corporation, to serve until
the following annual meeting or until their successors are duly elected and
shall qualify.
Section 3. Vacancies and newly created directorships resulting from any
increase in the authorized number of Directors may be filled by a majority of
the Directors then in office, though less than a quorum, and the Directors so
chosen shall hold office until the next succeeding annual meeting of
stockholders or until their successors are duly elected and shall qualify,
unless sooner displaced pursuant to law; provided, however, that, if one or
more Directors shall resign from the Board, effective at a future date, the
remaining Directors who have not resigned may fill such vacancy or vacancies
or they may request the resigning Directors to participate in filling such
vacancy or vacancies and in either case, the vote thereon shall become
effective at the future date aforesaid. The votes taken pursuant to this
Section 3 need not be by ballot.
Meetings of the Board of Directors
Section 4. The Directors of the Corporation may hold their meetings,
both regular and special, either within or without the State of Delaware.
Section 5. The first meeting of the newly elected Board may be held
immediately after each annual meeting of the stockholders at the same place at
which such annual meeting is held, and no notice of such meeting shall be
necessary.
Section 6. Regular meetings of the Board may be held without notice at
such time and place as shall from time to time be determined by the Board.
Section 7. Special meetings of the Board may be called by the Chairman
of the Board or the President on at least two days' notice to each Director,
either personally or by mail, by telegram or facsimile transmission. Meetings
may be held at any time without notice if all the Directors are present, or
if at any time before or after the meeting those not present waive notice of
the meeting in writing.
Section 8. At all meetings of the Board, a majority of the number of
Directors then in office shall constitute a quorum for the transaction of
business and the act of a majority of the Directors present at a meeting at
which there is a quorum shall be the act of the Board of Directors, except as
may be otherwise specifically provided by statute or by the Certificate of
Incorporation or by these By-Laws. If a quorum shall not be present at any
meeting of Directors, the Directors present thereat may adjourn the meeting
from time to time without notice other than announcement at the meeting,
until a quorum shall be present.
Committees of Directors
Section 9. The Board of Directors may, by resolution passed by a majority
of the whole Board, designate an Executive Committee to consist of two (2) or
more Directors as the Board may from time to time determine. The Executive
Committee shall have and may exercise all the powers of the Board of Directors
in the management of the business and the affairs of the Corporation, and shall
have power to authorize the seal of the Corporation to be affixed to all papers
which may require it, but neither the Executive Committee nor any other
Committee appointed by the Board shall have the power to fill vacancies in
the said Committee; provided, however, that, in the absence or
disqualification of any member of the Executive Committee or of any other
Committee appointed by the Board, the member or members thereof present at
any meeting and not disqualified from voting, whether or not he or they
constitute a quorum, may unanimously appoint another member of the Board to
act at the meeting in the place of any such absent or disqualified member,
subject, however, to the right of the Board of Directors to designate one or
more alternate members of such Committee, which alternate members shall have
power to serve, subject to such conditions as the Board may prescribe, as a
member or members of said Committee during the absence or inability to act of
any one or more members of said Committee. The Board of Directors shall have
the power at any time to change the membership of the Executive Committee, to
fill vacancies in it, or to dissolve it. The Executive Committee may make
rules for the conduct of its business and may appoint such Committees and
assistants as it may from time to time deem necessary. A majority of the
members of the Executive Committee shall constitute a quorum. Unless
otherwise ordered by the Board, each member of the Executive Committee shall
continue to be a member thereof until the expiration of his term of office as a
Director (or, in the case of his reelection as a Director, until the expiration
of his new term of office) or until sooner removed by the Board. Meetings of
the Executive Committee shall be held at the principal office of the
Corporation in the State of Delaware or at such other place or places within
or without the State of Delaware as shall be specified in the notice or
waiver of notice of meeting or specified by resolution of the Board or the
Executive Committee.
Section 10. The Board of Directors may also, by resolution or resolutions
passed by a majority of the whole Board, designate one or more other Committees,
each Committee to consist of two or more of the Directors of the Corporation,
which, to the extent provided in said resolution or resolutions shall have and
may exercise the power of the Board of Directors in the management of the
business and affairs of the Corporation and shall have power to authorize the
seal of the Corporation to be affixed to all papers which require it. Such
Committee or Committees shall have such name or names as may be determined from
time to time by resolution adopted by the Board of Directors.
Section 11. Whenever requested by the Board of Directors, a Committee
shall keep regular minutes of its proceedings and report the same to the Board
when required.
Compensation of Directors
Section 12. Directors may, by resolution of the Board, receive a fixed
annual sum or other compensation for acting as Directors, payable quarterly or
at such other intervals as the Board shall fix, and/or a fixed sum or other
compensation and expenses of attendance, if any, for attendance at each regular
or special meeting of the Board; provided that nothing herein contained shall be
construed to preclude any Director from serving the Corporation, or any
subsidiary or affiliated corporation, in any other capacity and receiving
compensation therefor. Members of special or standing Committees may be allowed
like compensation for attending Committee meetings.
Informal Action by Directors
Section 13. Unless otherwise restricted by the Certificate of
Incorporation or these By-Laws, any action required or permitted to be taken at
any meeting of the Board of Directors or of any Committee thereof may be taken
without a meeting, if prior to such action a written consent thereto is signed
by all members of the Board or of such Committee, as the case may be, and such
written consent is filed with the minutes or proceedings of the Board or
Committee.
Removal of Directors
Section 14. At any special meeting of the stockholders, duly called as
provided in these By-Laws, any Director or Directors may by the affirmative vote
of the holders of a majority of all the shares of stock outstanding and entitled
to vote for the election of Directors be removed from office only for cause, and
the remaining directors may fill any vacancy or vacancies created by such
removal.
Indemnification of Directors and Officers
Section 15. The Corporation shall indemnify any Director, officer,
employee or agent of the Corporation, or any person who is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, to the
fullest extent permitted under applicable law.
ARTICLE IV
NOTICES
Section 1. Whenever, under the provisions of the statutes or of the
Certificate of Incorporation or of these By-Laws, notice is required to be given
to any Director or stockholder, it shall not be construed to mean personal
notice, but such notice may be given in writing, by mail addressed to such
Director or stockholder at such address as appears on the books of the
Corporation, and such notice shall be deemed to be given at the time when the
same shall be thus mailed.
Section 2. Whenever any notice is required to be given under the
provisions of the statutes or of the Certificate of Incorporation or of these
By-Laws, a waiver thereof in writing signed by the person or persons entitled to
said notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
ARTICLE V
OFFICERS
Section 1. The officers of the Corporation shall be chosen by the Board
of Directors and shall be a Chairman of the Board, a President, a Secretary and
a Treasurer. The Board of Directors may also choose one or more Vice Presidents
and one or more Assistant Secretaries and Assistant Treasurers. Any two or more
offices may be held by the same person. The Board may appoint such other
officers and agents as it shall deem necessary, who shall hold their offices
for such terms and shall exercise such powers and perform such duties as
shall be determined from time to time by the Board.
Section 2. The Board of Directors at its first meeting after each annual
meeting of stockholders shall choose a Chairman of the Board, a President, a
Treasurer and a Secretary, none of whom need be a member of the Board.
Section 3. The officers of the Corporation shall hold office until their
successors are chosen and qualify. Any officer elected or appointed by the Board
of Directors may be removed either with or without cause at any time by
affirmative vote of a majority of the whole Board of Directors. If the office of
any officer becomes vacant for any reason, the vacancy shall be filled by the
Board of Directors.
Chairman of the Board
Section 4. The Chairman of the Board shall be the chief executive officer
of the Corporation and have general supervision of the business of the
Corporation and over its several officers, subject to the control of the Board
of Directors. He shall, unless another person is designated by the Board of
Directors, preside at all meetings of the stockholders. He shall sign and
execute in the name of the Corporation, all deeds, mortgages, bonds,
contracts or other instruments authorized by the Board of Directors, except
where required or permitted by law to be otherwise signed and executed and
except in cases where the signing and execution thereof shall be delegated by
the Board of Directors or by these By-Laws to some other officer or agent of
the Corporation; and in general, shall perform all the duties incident to the
office of the chief executive officer of the Corporation.
President
Section 5. The President shall be the chief operating officer of the
Corporation next to and under the direction of the Chairman of the Board. He
shall, in the absence of the Chairman of the Board, preside at all meetings of
stockholders and directors, have general supervision of the affairs of the
Corporation, sign or counter-sign all certificates, contracts and other
instruments of the Corporation as authorized by the Board of Directors, and he
shall perform all such other duties and have such other powers as the Board of
Directors may from time to time designate.
Executive Vice President
Section 6. The Executive Vice President, if any, and any additional Vice
Presidents, shall perform such duties as the Chairman of the Board, the
President or the Board of Directors may, from time to time, designate.
Secretary and Assistant Secretaries
Section 7. The Secretary shall record all the proceedings of the meetings
of the stockholders and Directors in a book to be kept for that purpose, and
shall perform like duties for the standing Committees when requested. He shall
give, or cause to be given, notice of all meetings of the stockholders and
special meetings of the Board of Directors, and shall perform such other duties
as may be prescribed by the Board of Directors, Chairman of the Board or
President, under whose supervision he shall be. He shall keep in safe custody
the seal of the Corporation and when authorized by the Board, affix the same
to any instrument requiring it and, when so affixed, it shall be attested by his
signature or by the signature of the Treasurer or an Assistant Treasurer or an
Assistant Secretary.
Section 8. The Assistant Secretaries in order of their seniority shall,
in the absence or disability of the Secretary, perform the duties and exercise
the powers of the Secretary and shall perform such other duties as the Chairman
of the Board, the President or the Board of Directors shall prescribe.
Treasurer and Assistant Treasurer
Section 9. The Treasurer shall have custody of the corporate funds and
securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the Corporation in
such depositories as may be designated by the Board of Directors.
Section 10. He shall disburse the funds of the Corporation as may be
ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the Chairman of the Board, the President
and the Board of Directors, at its regular meetings, or when the Board of
Directors so requires, an account of all his transactions as Treasurer and of
the financial condition of the Corporation.
Section 11. He shall perform all duties incident to the office, and any
duties that may be assigned to him by the Board of Directors, the Chairman of
the Board or the President.
Section 12. If required by the Board of Directors, he shall give the
Corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the Board for the faithful performance of the duties of his
office and for the restoration to the Corporation, in case of his death,
resignation, retirement or removal from office, of all books, papers, vouchers,
money and other property of whatever kind in his possession or under his control
belonging to the Corporation.
Section 13. The Assistant Treasurers in the order of their seniority,
unless otherwise determined by the Board of Directors, shall, in the absence or
disability of the Treasurer, perform the duties and exercise the powers of the
Treasurer. They shall perform such other duties as the Chairman of the Board,
the President or the Board of Directors may from time to time prescribe.
ARTICLE VI
CERTIFICATES OF STOCK
Section 1. The interest of each stockholder of the Corporation shall be
evidenced by certificates for shares of stock in such form as the Board of
Directors may from time to time prescribe in accordance with the law. The
certificates of stock shall be numbered and shall be entered in the books of the
Corporation as they are issued. They shall exhibit the holder's name and number
of shares and shall be signed by the Chairman of the Board, the President or the
Executive Vice President and the Treasurer or an Assistant Treasurer or the
Secretary or an Assistant Secretary.
Section 2. The Board of Directors may appoint one or more transfer clerks
or one or more transfer agents and one or more registrars, and may require all
certificates of stock to bear the signature or signatures of any of them.
Section 3. Where a certificate is signed (1) by a transfer agent or an
assistant transfer agent, or (2) by a transfer clerk acting on behalf of the
Corporation and a registrar, the signature of the Chairman of the Board,
President, Executive Vice President, Treasurer, Assistant Treasurer, Secretary
or Assistant Secretary of the Corporation may be facsimile. In case any officer
or officers who have signed, or whose facsimile signature or signatures have
been used on, any such certificate or certificates shall cease to be such
officer or officers of the Corporation, whether because of death, resignation
or otherwise, before such certificate or certificates shall have been
delivered by the Corporation, such certificate or certificates may
nevertheless be adopted by the Corporation and be issued and delivered as
though the person or persons who signed such certificate or certificates or
whose facsimile signature or signatures have been used thereon have not
ceased to be such officer or officers of the Corporation.
Section 4. The shares of stock of the Corporation shall be transferable
on the books of the Corporation by the registered holder thereof in person or by
his attorney, upon surrender for cancellation of certificates for the same
number of similar shares, with an assignment and power of transfer endorsed
thereon or attached thereto, duly executed and with such proof of the
authenticity of the signature as the Corporation or its agents may reasonably
require.
Section 5. The Corporation shall be entitled to treat the holder of
record of any share or shares of stock as the holder in fact thereof and,
accordingly, shall not be bound to recognize any equitable or other claim to
or interest in such share or shares on the part of any other person, whether
or not it shall have express or other notice thereof, except as otherwise
provided by the laws of Delaware.
Lost Certificates
Section 6. The Board of Directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the Corporation alleged to have been lost or destroyed,
upon the making of an affidavit of that fact by the person claiming the
certificate of stock to be lost or destroyed. When authorizing the issuance
of a new certificate or certificates, the Board of Directors may, in its
discretion, and as a condition precedent to the issuance thereof, require the
owner of such lost or destroyed certificate or certificates, or his legal
representative, to advertise the same in such manner as it shall require
and/or give the Corporation a bond in such sum as it may direct as indemnity
against any claim that may be made against the Corporation with respect to
the certificate alleged to have been lost or destroyed.
ARTICLE VII
CORPORATION BOOKS
Section 1. All the books of the Corporation may be kept outside of
Delaware at such place or places as the Board of Directors may from time to time
determine.
ARTICLE VIII
GENERAL PROVISIONS
Section 1. Dividends upon the capital stock of the Corporation, subject
to the provisions of the Certificate of Incorporation, if any, may be declared
by the Board of Directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in property or in shares of the capital stock,
subject to the provisions of the Certificate of Incorporation.
Section 2. Before payment of any dividend, there may be set aside out of
any funds in the Corporation available for dividends, such sum or sums as the
Directors, from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the Corporation, or for such other
purposes as the Directors shall think conducive to the interest of the
Corporation, and the Directors may modify or abolish any such reserve in the
manner in which it was created.
Execution of Instruments
Section 3. All checks, notes, drafts, bills of exchange, orders for the
payment of money, bonds, debentures, obligations, bills of lading, commercial
documents and other negotiable and/or non-negotiable instruments, contracts and
formal documents (other than certificates of stock) shall be signed by such
officer or officers or agent or agents as shall be thereunto authorized from
time to time by the Board of Directors. The seal of the Corporation may be
affixed to such instruments and papers requiring the same as shall have been
duly signed and may be attested by the Secretary or one of the Assistant
Secretaries or by the Treasurer or one of the Assistant Treasurers or by
other officer.
Fiscal Year
Section 4. The fiscal year of the Corporation shall be fixed by the
resolution of the Board of Directors; otherwise it shall be a calendar year.
Corporate Seal
Section 5. The corporate seal shall have inscribed thereon the name of
the Corporation, the year of its organization and the words "Corporate Seal,
Delaware". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
Voting Upon Stocks
Section 6. Unless otherwise ordered by the Board of Directors or
Executive Committee, the Chairman of the Board, the President, the Executive
Vice President or any of the Vice Presidents authorized thereto in writing by
the Chairman of the Board or the President shall have full power and
authority on behalf of the Corporation to attend and to act and to vote, or
to give, on behalf of the Corporation, a proxy to attend and to act and to
vote at any meeting of the stockholders of any corporation in which the
Corporation may hold stock, and at any such meeting he or such proxy shall
possess and may exercise, for the purpose of such meeting, any and all of the
rights and powers incident to the ownership of said stock, and which as the
owner thereof, the Corporation might have possessed and exercised if present.
The Board of Directors or Executive Committee by resolution from time to time
may confer like powers upon any other person or persons.
ARTICLE IX
AMENDMENTS
Section 1. Subject to the provisions of law and the Certificate of
Incorporation, these By-Laws may be altered, amended or repealed, in whole or in
part, or new By-Laws may be adopted, by the stockholders or by the Board of
Directors; provided, however, that notice of such alteration, amendment, repeal
or adoption of new By-Laws be contained in the notice of such meeting of
stockholders or Board of Directors as the case may be.
FOURTH AMENDMENT TO REVOLVING CREDIT AND TERM LOAN AGREEMENT
THIS FOURTH AMENDMENT TO REVOLVING CREDIT AND TERM LOAN AGREEMENT is
made as of the 27th day of March, 1995, by and among CLAIRE'S STORES, INC.,
CLAIRE'S BOUTIQUES, INC., CLAIRE'S CANADA CORP., CLAIRE'S PUERTO RICO CORP.,
CSL, INC., CBI DISTRIBUTING CORP. (each a "Borrower" and, jointly and
severally, the "Borrowers"), and THE BANK OF TOKYO TRUST COMPANY ("Lender"), a
banking corporation organized under the laws of the State of New York.
BACKGROUND
On October 22, 1992, the Borrowers and Lender entered into a Revolving
Credit Agreement (the "Original Loan Agreement"), whereby Lender agreed to
make revolving loans to the Borrowers in an amount up to $10,000,000. On
March 11, 1993, the Borrowers and Lender amended the Original Loan Agreement
pursuant to a First Amendment to Revolving Credit Agreement whereby, Lender
made a $10,000,000 term loan to the Borrowers and permitted the Borrowers to
repay $25,000,000 in subordinated indebtedness.
On May 28, 1993, the Borrowers and Lender further amended the Original
Loan Agreement pursuant to a Second Amendment to Revolving Credit and Term
Loan Agreement (the "Original Loan Agreement" as so amended, the "Loan
Agreement") to permit the Borrowers to grant a lien to Fleet Leasing
Corporation on certain personal property of Borrowers in connection with the
opening of several new retail store locations.
On February 28, 1994, the Borrowers and Lender further amended the Loan
Agreement pursuant to Third Amendment to Revolving Credit and Term Loan
Agreement to permit the addition of certain Borrowers to the Loan Agreement
and to extend the Term, reduce the Revolving Interest Rate and change certain
fee amounts.
Borrowers have requested that Lender amend the Loan Agreement to provide
for a standby Letter of Credit facility and Lenders are willing to do so on
the terms and conditions hereafter set forth.
NOW, THEREFORE, for good and valuable consideration, receipt of which is
hereby acknowledged, the parties hereto agree as follows:
AGREEMENT
1. All capitalized terms not otherwise defined herein shall have the
meanings given to them in the Loan Agreement.
2. Section 2.8 of the Loan Agreement is hereby amended in its entirety
to provide as follows:
"2.8 Letters of Credit. Subject to the terms and conditions
hereof, Lender shall issue sight and standby Letters of Credit ("Letters of
Credit") provided, however, that Lender will not be required to issue any
Letters of Credit to the extent that the face amount of such Letters of Credit
would then cause the sum of (i) the outstanding Revolving Advances plus (ii)
outstanding Letters of Credit (with the requested Letter of Credit being
deemed to be outstanding for purposes of this calculation) to exceed the
Maximum Loan Amount. The maximum amount of outstanding standby Letters of
Credit shall not exceed $2,500,000 in the aggregate at any time. All
disbursements or payments related to Letters of Credit shall be deemed to be
Revolving Advances and shall bear interest at the Revolving Interest Rate;
Letters of Credit that have not been drawn upon shall not bear interest.
Letters of Credit shall be subject to the terms and conditions set forth in
the Continuing Letter of Credit Agreement attached hereto as Exhibit 2.8."
3. Section 2.9(b) of the Loan Agreement by replacing the words "six
months" with the word "twelve months".
4. Section 3.2 of the Loan Agreement is hereby amended in its entirety
to provide as follows:
"3.2 Letter of Credit Fees.
A. Borrowers shall pay Lender (i) (A) for issuing or causing the
issuance of a standby Letter of Credit, a fee computed at a rate per annum of
one and one quarter percent (1.25%) on the outstanding amount thereof from
time to time, (B) for issuing a sight Letter of Credit an opening fee equal to
the greater of (a) a rate per annum of three tenths of one percent (0.3%) of
the face amount thereof or (b) $75 for each Letter of Credit opened, (ii) a
fee equal to that which is then being charged by Bank to customers in
connection with comparable letters of credit and (iii) Bank's other customary
charges payable in connection with Letters of Credit as in effect from time to
time (which charges shall be furnished to Borrowing Agent by Lender upon
request) (the fees set forth in (i), (ii) and (iii) are referred to as the
"Letter of Credit Fees"). Such fees and charges shall be payable, (i) in the
case of a standby Letter of Credit, (A) upon the opening of such standby
Letter of Credit and (B) upon each increase in the outstanding amount thereof,
(ii) in the case of a sight Letter of Credit, upon its opening and at the time
of each increase in face amount thereof and (iii) at such other times as Bank
customarily imposes fees with respect to letters of credit. Any such charge
in effect at the time of a particular transaction shall be the charge for that
transaction, notwithstanding any subsequent change in Bank's prevailing
charges for that type of transaction. All Letter of Credit Fees payable
hereunder shall be deemed earned in full on the date when the same are due and
payable hereunder and shall not be subject to rebate or proration upon the
termination of this Agreement for any reason.
B. On demand, Borrowers will cause cash to be deposited and
maintained in an account with Lender, as cash collateral, in an amount equal
to outstanding Letters of Credit, and each Borrower hereby irrevocably
authorizes Lender, in its discretion, on such Borrower's behalf and in such
Borrower's name, to open such an account and to make and maintain deposits
therein, or in an account opened by such Borrower, in the amounts required to
be made by such Borrower, out of any funds of such Borrower coming into
Lender's possession at any time. Lender will invest such cash collateral
(less applicable reserves) in such short-term money-market items as to which
Lender and such Borrower mutually agree and the net return on such investments
shall be credited to such account and constitute additional cash collateral.
No Borrower may withdraw amounts credited to any such account except upon
payment and performance in full of all Obligations and termination of this
Agreement or, if sooner upon expiration of the Letter of Credit."
5. This Fourth Amendment is conditioned upon receipt by Lender of an
executed copy of this Fourth Amendment signed by all Borrowers.
6. Except as expressly amended hereby, the Loan Agreement remains in
full force and effect and this Fourth Amendment does not and shall not be
deemed to constitute a waiver, forbearance or release of any claim, demand,
action or cause of action arising under the Loan Agreement or any other
instruments, documents or agreements executed and delivered in connection
therewith or herewith.
7. This Fourth Amendment, the Loan Agreement and the documents
executed concurrently herewith and therewith contain the entire understanding
between Borrowers and Lender and supersede all prior agreements and
understandings, if any, relating to the subject matter hereof. Any promises,
representations, warranties or guarantees not herein contained or contained in
the Loan Agreement, and hereinafter made shall have no force and effect unless
in writing, signed by Borrowers' and Lender's respective officers. Neither
this Fourth Amendment nor any portion or provisions hereof may be changed,
modified, amended, waived, supplemented, discharged, cancelled or terminated
orally or by any course of dealing, or in any manner other than by an
agreement in writing, signed by the party to be charged. Borrowers
acknowledge that they have been advised by counsel in connection with the
execution of this Fourth Amendment and the documents executed concurrently
herewith and are not relying upon oral representations or statements
inconsistent with the terms and provisions of this Fourth Amendment.
IN WITNESS WHEREOF, this Fourth Amendment has been duly executed in New
York, New York, on the day and year specified at the beginning hereof.
CLAIRE'S STORES, INC.
By: /s/ Ira Kaplan
[SEAL] Name: Ira Kaplan
Title: Chief Financial Officer
CLAIRE'S BOUTIQUES, INC.
By: /s/ Ira Kaplan
[SEAL] Name: Ira Kaplan
Title: Chief Financial Officer
CSL, INC.
By: /s/ Ira Kaplan
[SEAL] Name: Ira Kaplan
Title: Chief Financial Officer
CBI DISTRIBUTING CORP.
By: /s/ Ira Kaplan
[SEAL] Name: Ira Kaplan
Title: Chief Financial Officer
CLAIRE'S CANADA CORP.
By: /s/ Ira Kaplan
[SEAL] Name: Ira Kaplan
Title: Chief Financial Officer
SIGNATURES CONTINUES ON NEXT PAGE
CLAIRE'S PUERTO RICO CORP.
By: /s/ Ira Kaplan
[SEAL] Name: Ira Kaplan
Title: Chief Financial Officer
THE BANK OF TOKYO TRUST COMPANY
By: /s/ John L. Koenigsberg
[SEAL] Name: JOHN L. KOENIGSBERG
Title: VICE PRESIDENT
FIFTH AMENDMENT TO REVOLVING CREDIT AND TERM LOAN AGREEMENT
THIS FIFTH AMENDMENT TO REVOLVING CREDIT AND TERM LOAN AGREEMENT is made
as of the 3rd day of April, 1995, by and among CLAIRE'S STORES, INC., CLAIRE'S
BOUTIQUES, INC., CLAIRE'S CANADA CORP., CLAIRE'S PUERTO RICO CORP., CSL, INC.,
CBI DISTRIBUTING CORP. (each a "Borrower" and, jointly and severally, the
"Borrowers"), and THE BANK OF TOKYO TRUST COMPANY ("Lender"), a banking
corporation organized under the laws of the State of New York.
BACKGROUND
On October 22, 1992, the Borrowers and Lender entered into a Revolving
Credit Agreement (the "Original Loan Agreement"), whereby Lender agreed to
make revolving loans to the Borrowers in an amount up to $10,000,000. On March
11, 1993, the Borrowers and Lender amended the Original Loan Agreement
pursuant to a First Amendment to Revolving Credit Agreement (the "First
Amendment") whereby, Lender made a $10,000,000 term loan to the Borrowers and
permitted the Borrowers to repay $25,000,000 in subordinated indebtedness.
On May 28, 1993, the Borrowers and Lender amended the Original Loan
Agreement pursuant to a Second Amendment to Revolving Credit and Term Loan
Agreement (the "Second Amendment") to permit the Borrowers to grant a lien to
Fleet Leasing Corporation on certain personal property of Borrowers in
connection with the opening of several new retail store locations.
On February 28, 1994, the Borrowers and Lender further amended the
Original Loan Agreement pursuant to Third Amendment to Revolving Credit and
Term Loan Agreement (the "Third Amendment") to permit the addition of certain
Borrowers and to extend the Term, reduce the Revolving Interest Rate and
change certain fee amounts.
On March 27, 1995, the Borrowers and Lender further amended the Original
Loan Agreement pursuant to a Fourth Amendment to Revolving Credit and Term
Loan Agreement (the "Fourth Amendment") to provide for a standby letter of
credit facility. The Original Loan as amended by the First Amendment, the
Second Amendment, the Third Amendment and Fourth Amendment is referred to as
the "Loan Agreement".
The Borrowers have requested Lender to extend the Term and provide for
alternative interest rate pricing and Lender is willing to do so on the terms
and conditions hereafter set forth.
NOW, THEREFORE, for good and valuable consideration, receipt of which is
hereby acknowledged, the parties hereto agree as follows:
AGREEMENT
1. All capitalized terms not otherwise defined herein shall have the
meaning given to them under the Loan Agreement.
2. Section 1.2 of the Loan Agreement is hereby amended by (a) deleting
the definitions of "Revolving Interest Rate" and "Term Loan Interest Rate" (b)
modifying in its entirety the definitions of "Permitted Dividends" and "Term",
and (c) inserting additional defined terms as follows:
"Base Rate" - the variable rate of interest announced or quoted by
Lender from time to time as its United States of America prime rate for
commercial loans, whether or not such rate is the lowest rate charged by
Lender to its most preferred borrowers; and, if the prime rate for commercial
loans is discontinued by Lender as a standard, a comparable reference rate
designated by Lender as a reasonable substitute therefor shall be the Base
Rate.
"Base Rate Loans" - any Loans bearing interest computed by reference to
the Base Rate.
"Eurodollar Loan" - any Loans bearing interest computed by reference to
the Eurodollar Rate.
"Eurodollar Rate" - for any Eurodollar Loan, for the then current
Interest Period relating thereto, the rate per annum (such Eurodollar Rate to
be rounded, if necessary, to the next higher 1/16 of one (1%) percent) equal
to the quotient of (a) LIBOR, divided by (b) a number equal to 1.00 minus the
aggregate of the rates (expressed as a decimal) of reserve requirements
current on the day that is three (3) Business Days prior to the beginning of
the Interest Period (including without limitation basic, supplemental,
marginal and emergency reserves) under any regulation promulgated by the Board
of Governors of the Federal Reserve System (or any other governmental
authority having jurisdiction over the Lender) as in effect from time to time,
dealing with reserve requirements prescribed for Eurocurrency funding
including any reserve requirements with respect to "Eurocurrency liabilities"
under Regulation D of the Board of Governors of the Federal Reserve System.
"Interest Period" - the period provided for any Eurodollar Loan pursuant
to Section 3.1A(2).
"LIBOR" - for any Eurodollar Loan for the then current Interest Period,
the rate of interest equal to the average (rounded upwards, if necessary, to
the nearest 1/16 of 1%) of the rates per annum at which Dollar deposits in
immediately available funds are offered by the Bank of Tokyo Ltd. to
depositors in the London interbank eurodollar market as at or about 2:00 p.m.
New York time two (2) Business Days prior to the beginning of such Interest
Period, for delivery on the first day of such Interest Period, and in an
amount approximately equal to the amount of such Eurodollar Loan for a period
approximately equal to such Interest Period.
"Loans" - all loans made by Lender pursuant to this Agreement,
including, without limitation, all Revolving Advances and Term Loans.
"Permitted Dividends" shall mean (i) during the fiscal year of Borrowers
ending January 28, 1995, the lesser of $.15 per Share or an aggregate of
$3,300,000, (ii) during the fiscal year of Borrowers ending February 3, 1996,
the lesser of $.20 per Share or an aggregate of $4,400,000, and (iii) during
the fiscal year of Borrowers ending February 1, 1997, the lesser of $.15 per
Share or an aggregate of $4,000,000.
"Term" shall mean (a) the Closing Date through January 31, 1997 with
respect to Revolving Advances, as such date may be extended pursuant to
Section 13.1 hereof and (b) the First Amendment Closing Date through January
31, 1996 with respect to the Term Loan.
3. Section 3.1 of the Loan Agreement is hereby amended by (a) amending
Section 3.1 in its entirety and by (b) inserting a new section 3.1A as
follows:
"3.1 Interest, Fees and Charges.
Interest shall accrue on the principal amount of Base Rate Loans
outstanding at the end of each day at a fluctuating rate per annum equal to
the Base Rate with respect to those Revolving Credit Loans and that portion of
the Term Loan consisting of Base Rate Loans. Interest on all Base Rate Loans
shall be payable in arrears on the last day of each month. After the date
hereof, the foregoing rate of interest shall be increased or decreased, as the
case may be, by an amount equal to any increase or decrease in the Base Rate,
with such adjustments to be effective as of the opening of business on the day
that any such change in the Base Rate becomes effective. The Base Rate in
effect on the date hereof shall be the Base Rate effective as of the opening
of business on the date hereof, but if this Agreement is executed on a day
that is not a Business Day, the Base Rate in effect on the date hereof shall
be the Base Rate effective as of the opening of business on the last Business
Day immediately preceding the date hereof. Eurodollar Loans shall bear
interest on the principal amount thereof owing, at a rate per annum equal to,
with respect to Revolving Credit Loans and the Term Loan, two and one-half
percent (2.5%) above the applicable Eurodollar Rate. Upon and after the
occurrence of an Event of Default and during the continuation thereof, the
Obligations shall bear interest at a per annum rate which is two percent (2%)
higher than the then applicable interest rate payable by Borrower.
3.1A Eurodollar Loans.
(1). Notwithstanding anything to the contrary contained herein (a)
in the event Borrower desires to obtain a Eurodollar Loan, it shall give
Lender prior written irrevocable notice no later than 11:00 a.m. New York City
time on the third (3rd) Business Day prior to the requested borrowing date
specifying (i) its election to obtain a Eurodollar Loan (ii) the date of the
proposed borrowing (which shall be a Business Day) and (iii) the amount to be
borrowed, which amount shall be an integral multiple of $100,000. In no event
shall Borrower be permitted to have outstanding at any one time Eurodollar
Loans with more than three (3) different Interest Periods. In addition, and
notwithstanding any other provision of this Agreement, Borrower shall have no
right to request or obtain a Eurodollar Loan at any time that an Event of
Default exists.
(2). Provided that no Event of Default has occurred which is then
continuing, each interest period of a Eurodollar Loan shall commence on the
date such Eurodollar Loan is made and shall end on the date which is one (1)
month, two (2) months or three (3) months later, as may then be requested by
Borrower ("Interest Period") provided that:
(i) any Interest Period which would otherwise end on a day
which is not a Business Day shall end on the next preceding or
succeeding Business Day as is the Lender's custom in the market to
which such Eurodollar Loan relates;
(ii) there remains a minimum of one (1) month in the original
Term (or if this Agreement has been renewed, in the then applicable
renewal Term);
(iii) all Interest Periods of the same duration which commence
on the same date shall end on the same date; and
(iv) each Interest Period which commences before, and would
otherwise end after the last day of the Term shall end on the last
day of the Term.
Notwithstanding the foregoing, Borrower may obtain or convert to Eurodollar
Loans with Interest Periods of greater than one (1) month but less than three
(3) months in order to make principal payments on the Term Loans, or as may
otherwise be agreeable to Lender.
(3). Provided that no Event of Default has occurred which is then
continuing, Borrower may, on any Business Day, convert any Base Rate Loan into
a Eurodollar Loan. If Borrower desires to convert a Base Rate Loan, it shall
give Lender not less than four (4) Business Days' prior written notice (prior
to 11:00 a.m. New York City time on such Business Day), specifying the date of
such conversion and the amount to be converted. Each conversion into or
conversion of a Eurodollar Loan shall be an integral multiple of $100,000.
After giving effect to any conversion of Base Rate Loans to Eurodollar Loans,
Borrower shall not be permitted to have outstanding at any one time Eurodollar
Loans with more than three (3) different Interest Periods.
(4). Borrower shall have the right on three (3) Business Days'
prior irrevocable written notice to Lender to (i) subject to the provisions of
Section 3.1A(5) continue any Eurodollar Loan into a subsequent Interest Period
of the same or a different permitted duration, in each case subject to the
satisfaction of the following conditions:
(i) in the case of a continuation of less than all Eurodollar
Loans, the Eurodollar Loans continued shall each be in a minimum
principal amount of $100,000 and in integral multiples thereof;
(ii) accrued interest on a Eurodollar Loan (or portion thereof)
being continued shall be paid by Borrower at the time of
continuation; and
(iii) no Eurodollar Loan (or portion thereof) may be continued
as a Eurodollar Loan if an Event of Default has occurred which is
then continuing.
If Borrower shall fail to give timely notice of its election to continue
any Eurodollar Loan or portion thereof as provided above, or if such
continuation shall not be permitted, such Eurodollar Loan or portion thereof,
unless such Loan shall be repaid, shall automatically be converted into a Base
Rate Loan at the end of the Interest Period then in effect with respect to
such Eurodollar Loan.
(5). Borrower may prepay any Loan in whole at any time or in part
from time to time, without premium or penalty provided that a Eurodollar Loan
may only be prepaid on the last Business Day of the then current Interest
Period with respect thereto. Borrower shall specify the date of prepayment of
Loans which are Eurodollar Loans and the amount of Loans to be prepaid. In the
event that any prepayment of a Eurodollar Loan is made on a date other than
the last Business Day of the then current Interest Period with respect
thereto, Borrower shall indemnify Lender therefor in accordance with Section
3.1A(6) hereof.
(6). Borrower shall indemnify Lender and hold Lender harmless from
and against any and all losses or expenses that Lender may sustain or incur as
a consequence of any prepayment or any default by Borrower in the payment of
the principal of or interest on any Eurodollar Loan or failure by Borrower to
complete a borrowing of, a prepayment of or conversion of or to a Eurodollar
Loan after notice thereof has been given, including (but not limited to) any
interest payable by Lender to lenders of funds obtained by it in order to make
or maintain its Eurodollar Loans hereunder, and any other loss or expense
incurred by Lender by reason of the liquidation or reemployment of deposits or
other funds acquired by Lender to make, continue, convert into or maintain, a
Eurodollar Loan.
(7). Notwithstanding any other provision hereof, if any applicable
law, treaty, regulation or directive, or any change therein or in the
interpretation or application thereof, shall make it unlawful for Lender (for
purposes of this subsection (7), the term "Lender" shall include Lender and
the office or branch where Lender or any corporation or bank controlling
Lender makes or maintains any Eurodollar Loans) to make or maintain its
Eurodollar Loans, or if with respect to any Interest Period, Lender is unable
to determine the Eurodollar Rate relating thereto, or adverse or unusual
conditions in or changes in applicable law relating to the London Eurodollar
interbank market make it, in the reasonable good faith judgment of Lender,
impracticable, to fund therein any of the Eurodollar Loans or make the
projected Eurodollar Rate unreflective of the actual costs of funds therefor
to Lender, the obligation of Lender to make Eurodollar Loans hereunder shall
forthwith be suspended during the pendency of such circumstances and Borrower
shall, if any affected Eurodollar Loans are then outstanding, promptly upon
request from Lender, convert such affected Eurodollar Loans into Base Rate
Loans."
4. Section 3.2(B) is amended in its entirety to provide as follows:
"B. Intentionally Omitted."
5. Section 3.7 of the Loan Agreement is hereby amended by inserting
the words "or the London interbank eurodollar market" after the word "Lender"
appearing in subclause (c).
6. Section 3.9 of the Loan Agreement is hereby amended by (i)
renumbering Section 3.9 as Section 3.10 and (ii) deleting the words "Section
3.7 and 3.8" and inserting the words "Sections 3.7, 3.8 and 3.9" and by
inserting a new Section 3.9 as follows:
"3.9. Basis for Determining Interest Rate Inadequate or Unfair. In
the event that Lender shall have determined in its reasonable good faith
judgment that:
A. reasonable means do not exist for ascertaining the Eurodollar
Rate for any Interest Period; or
B. Dollar deposits in the relevant amount and for the relevant
maturity are not available in the London interbank eurodollar
market with respect to an outstanding Eurodollar Loan, a proposed
Eurodollar Loan, or a proposed conversion of a Base Rate Loan into
a Eurodollar Loan;
Lender shall give Borrower prompt written, telephonic or telegraphic notice of
its determination of such effect. If such notice is given, (i) any such
requested Eurodollar Loan shall be made as a Base Rate Loan, unless Borrower
shall notify Lender no later than 10:00 a.m. (New York City time) three (3)
Business Days prior to the date cf such proposed borrowing, that the request
for such borrowing shall be cancelled or made as an unaffected type of
Eurodollar Loan, and (ii) any Base Rate Loan which was to have been converted
to an affected type of Eurodollar Loan shall be continued as or converted into
a Base Rate Loan, or, if Borrower shall notify Lender, no later than 10:00
a.m. (New York City time) three (3) Business Days prior to the proposed
conversion, shall be maintained as an unaffected type of Eurodollar Loan."
7. Section 6.4 of the Loan Agreement is hereby amended by deleting the
amount "$74,000,000" and inserting in its place the amount "$100,000,000".
8. Section 6.5 of the Loan Agreement is hereby amended by inserting,
after the words "January 28, 1995" the following:
"and each Fiscal year ended thereafter"
9. This Fifth Amendment is conditioned upon (i) receipt by Lender of
an executed copy of this Fifth Amendment signed by all Borrowers, (ii) payment
by Borrowers of an extension fee of $10,000 to Lender, (iii) payment by
Borrowers of all unpaid legal fees owed to counsel to Lender in connection
with the preparation and negotiation of the Fifth Amendment and this Fifth
Amendment and (iv) receipt by Lender of an Amended and Restated Revolving
Credit Note, all of the foregoing in form and substance satisfactory to Lender
with such satisfaction to be evidenced by Lender's execution of this Fifth
Amendment.
10. Except as expressly amended hereby, the Loan Agreement remains in
full force and effect and this Fifth Amendment does not and shall not be
deemed to constitute a waiver, forbearance or release of any claim, demand,
action or cause of action arising under the Loan Agreement or any other
instruments, documents or agreements executed and delivered in connection
therewith or herewith.
11. This Fifth Amendment, the Loan Agreement and the documents executed
concurrently herewith and therewith contain the entire understanding between
Borrowers and Lender and supersede all prior agreements and understandings, if
any, relating to the subject matter hereof. Any promises, representations,
warranties or guarantees not herein contained or contained in the Loan
Agreement, and hereinafter made shall have no force and effect unless in
writing, signed by Borrowers' and Lender's respective officers. Neither this
Fifth Amendment nor any portion or provisions hereof may be changed, modified,
amended, waived, supplemented, discharged, cancelled or terminated orally or
by any course of dealing, or in any manner other than by an agreement in
writing, signed by the party to be charged. Borrowers acknowledge that they
have been advised by counsel in connection with the execution of this Fifth
Amendment and the documents executed concurrently herewith and are not relying
upon oral representations or statements inconsistent with the terms and
provisions of this Fifth Amendment.
IN WITNESS WHEREOF, this Fifth Amendment has been duly executed in New
York, New York, on the day and year specified at the beginning hereof.
CLAIRE'S STORES, INC.
By: /s/ Rowland Schaefer
[SEAL] Name: Rowland Schaefer
Title: Chairman of the Board
and President
CLAIRE'S BOUTIQUES, INC.
By: /s/ Rowland Schaefer
[SEAL] Name: Rowland Schaefer
Title: Chairman of the Board
and President
SIGNATURES CONTINUED ON NEXT PAGE
CSL, INC.
By: /s/ Rowland Schaefer
[SEAL] Name: Rowland Schaefer
Title: Chairman of the Board
and President
CBI DISTRIBUTING CORP.
By: /s/ Rowland Schaefer
[SEAL] Name: Rowland Schaefer
Title: Chairman of the Board
and President
CLAIRE'S CANADA CORP.
By: /s/ Rowland Schaefer
[SEAL] Name: Rowland Schaefer
Title: Chairman of the Board
and President
CLAIRE'S PUERTO RICO CORP.
By: /s/ Rowland Schaefer
[SEAL] Name: Rowland Schaefer
Title: Chairman of the Board
and President
THE BANK OF TOKYO TRUST COMPANY
By: /s/ John Koenigsberg
[SEAL] Name: John Koenigsberg
Title: Vice President
AMENDED AND RESTATED REVOLVING CREDIT NOTE
$10,000,000.00 New York, New York
April 3, 1995
FOR VALUE RECEIVED, the undersigned corporations, jointly and severally,
hereby promise to pay to the order of The Bank of Tokyo Trust Company
("Lender"), at its offices at 1251 Avenue of the Americas, 12th Floor, New
York, New York 10016 or at such other place as the holder may from time to
time designate:
(i) the principal sum of TEN MILLION and 00/100 ($10,000,000.00)
DOLLARS, or such lesser amount of Advances as may otherwise be due and payable
under the Revolving Credit and Term Loan Agreement dated October 22, 1992
among the undersigned and Lender (as amended from time to time, "Credit
Agreement") payable in full no later than January 31, 1997.
(ii) interest on the principal amount of this Revolving Credit Note from
time to time outstanding, payable, in arrears, on the first day of each month
commencing with the month of November, 1992, at the Base Rate for those
Revolving Loans which are Base Rate Loans and at the Eurodollar Rate plus two
and one-half percent (2.5%) for those Revolving Loans which are Eurodollar
Loans. In no event, however, shall interest exceed the maximum interest rate
permitted by law. During such time as an Event of Default has occurred,
interest shall be payable at the Default Rate.
This Revolving Credit Note is entitled to the benefits of the Credit
Agreement and is subject to all of the agreements, terms and conditions
therein contained. All terms not otherwise defined herein shall have the
meaning ascribed thereto in the Credit Agreement.
This Revolving Credit Note may be prepaid, in full, on the terms and
conditions set forth in the Credit Agreement.
If an Event of Default under Article X(g) of the Credit Agreement shall
occur, then this Revolving Credit Note shall immediately become due and
payable, without notice, together with reasonable attorneys' fees if the
collection hereof is placed in the hands of an attorney to obtain or enforce
payment hereof. In any other Event of Default shall occur under the Credit
Agreement or any other agreement between Lender and the undersigned which is
not cured within any applicable grace period, then this Revolving Credit Note
shall, at the option of the holder, immediately become due and payable,
without notice, together with reasonable attorneys' fees, if the collection
hereof is placed in the hands o an attorney to obtain or enforce payment
hereof.
This Revolving Credit Note is being delivered in the State of New York,
and shall be construed and enforced in accordance with the laws of such State.
The undersigned expressly waives any presentment, demand, protest,
notice of protest, or notice of any kind except as expressly provided in the
Credit Agreement.
This Revolving Credit Note amends, restates and replaces in its entirety
that certain Amended and Restated Revolving Credit Note dated February 28,
1994 in the original principal amount of $10,000,000 from the Borrowers to
Lender.
CLAIRE'S STORES, INC.
By: /s/ Rowland Schaefer
[SEAL] Name: Rowland Schaefer
Title: Chairman of the Board
and President
CLAIRE'S BOUTIQUES, INC.
By: /s/ Rowland Schaefer
[SEAL] Name: Rowland Schaefer
Title: Chairman of the Board
and President
CSL, INC.
By: /s/ Rowland Schaefer
[SEAL] Name: Rowland Schaefer
Title: Chairman of the Board
and President
CBI DISTRIBUTING CORP.
By: /s/ Rowland Schaefer
[SEAL] Name: Rowland Schaefer
Title: Chairman of the Board
and President
CLAIRE'S CANADA CORP.
By: /s/ Rowland Schaefer
[SEAL] Name: Rowland Schaefer
Title: Chairman of the Board
and President
CLAIRE'S PUERTO RICO CORP.
By: /s/ Rowland Schaefer
[SEAL] Name: Rowland Schaefer
Title: Chairman of the Board
and President
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
On this 3rd of April, 1995, before me personally came Rowland Schaefer,
to me known, who, being by me duly sworn, did depose and say that he is the
Chairman of the Board and President of Claire's Stores, Inc., the corporation
described in and which executed the foregoing instrument; that he knows the
seal of said corporation; that the seal affixed to said instrument is such
corporate seal; that it was so affixed by order of the board of directors of
said corporation, and that he signed his name thereto by like order.
/s/ Miriam L. Cohen
NOTARY PUBLIC
MIRIAM L. COHEN
STATE OF NEW YORK ) Notary Public, State of New York
) ss. No. 24-4894828
COUNTY OF NEW YORK) Qualified in Kings County
Commission Expires April 20, 1998
On this 3rd of April, 1995, before me personally came Rowland Schaefer,
to me known, who, being by me duly sworn, did depose and say that he is the
Chairman of the Board and President of Claire's Boutiques, Inc., the
corporation described in and which executed the foregoing instrument; that he
knows the seal of said corporation; that the seal affixed to said instrument
is such corporate seal; that it was so affixed by order of the board of
directors of said corporation, and that he signed his name thereto by like
order.
/s/ Miriam L. Cohen
NOTARY PUBLIC
MIRIAM L. COHEN
STATE OF NEW YORK ) Notary Public, State of New York
) ss. No. 24-4894828
COUNTY OF NEW YORK) Qualified in Kings County
Commission Expires April 20, 1998
On this 3rd of April, 1995, before me personally came Rowland Schaefer,
to me known, who, being by me duly sworn, did depose and say that he is the
Chairman of the Board and President of Claire's Puerto Rico Corp., the
corporation described in and which executed the foregoing instrument; that he
knows the seal of said corporation; that the seal affixed to said instrument
is such corporate seal; that it was so affixed by order of the board of
directors of said corporation, and that he signed his name thereto by like
order.
/s/ Miriam L. Cohen
NOTARY PUBLIC
MIRIAM L. COHEN
Notary Public, State of New York
No. 24-4894828
Qualified in Kings County
Commission Expires April 20, 1998
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
On this 3rd of April, 1995, before me personally came Rowland Schaefer,
to me known, who, being by me duly sworn, did depose and say that he is the
Chairman of the Board and President of CSL, Inc., the corporation described in
and which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by order of the board of directors of said corporation,
and that he signed his name thereto by like order.
/s/ Miriam L. Cohen
NOTARY PUBLIC
MIRIAM L. COHEN
STATE OF NEW YORK ) Notary Public, State of New York
)ss. No. 24-4894828
COUNTY OF NEW YORK) Qualified in Kings County
Commission Expires April 20, 1998
On this 3rd of April, 1995, before me personally came Rowland Schaefer,
to me known, who, being by me duly sworn, did depose and say that he is the
Chairman of the Board and President of CBI Distributing Corp., the corporation
described in and which executed the foregoing instrument; that he knows the
seal of said corporation; that the seal affixed to said instrument is such
corporate seal; that it was so affixed by order of the board of directors of
said corporation, and that he signed his name thereto by like order.
/s/ Miriam L. Cohen
NOTARY PUBLIC
MIRIAM L. COHEN
STATE OF NEW YORK ) Notary Public, State of New York
) ss. No. 24-4894828
COUNTY OF NEW YORK) Qualified in Kings County
Commission Expires April 20, 1998
On this 3rd of April, 1995, before me personally came Rowland Schaefer,
to me known, who, being by me duly sworn, did depose and say that he is the
Chairman of the Board and President of Claire's Canada Corp., the corporation
described in and which executed the foregoing instrument; that he knows the
seal of said corporation; that the seal affixed to said instrument is such
corporate seal; that it was so affixed by order of the board of directors of
said corporation, and that he signed his name thereto by like order.
/s/ Miriam L. Cohen
NOTARY PUBLIC
MIRIAM L. COHEN
Notary Public, State of New York
No. 24-4894828
Qualified in Kings County
Commission Expires April 20, 1998
EXHIBIT (22)
CLAIRE'S STORES, INC. AND SUBSIDIARIES
SUBSIDIARIES OF THE REGISTRANT
NameState/Country of Incorporation
Claire's Boutiques, Inc. Delaware
Dara Michelle, Inc. Delaware
CSL, Inc. Delaware
CBI Distributing Corp. Delaware
RSI International Limited Hong Kong
Claire's Puerto Rico Corp. Delaware
Claire's Canada Corp. Delaware
Claire's Nippon Co., Ltd. Japan
Consent of Independent Auditors
The Board of Directors
Claire's Stores, Inc.:
We consent to incorporation by reference in the registration statements (Nos.
2-87559, 2-99678, 33-47676, 33-41966) on Forms S-8 of Claire's Stores, Inc. of
our report dated March 17, 1995, relating to the consolidated balance sheets
of Claire's Stores, Inc. and subsidiaries as of January 28, 1995 and January
29, 1994, and the related consolidated statements of income, stockholders'
equity and cash flows for each of the years in the two-year period ended
January 28, 1995, which report appears in the January 28, 1995 annual report
on Form 10-K of Claire's Stores, Inc.
/S/KPMG PEAT MARWICK LLP
Fort Lauderdale, Florida
April 4, 1995
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statements No.
2-87559, 2-99678, 33-47676 and 33-41966 on form S-8, of Claire's Stores, Inc.
of our report dated April 2, 1993, appearing in the Annual Report on Form 10-K
of Claire's Stores, Inc. for the year ended January 28, 1995.
/S/DELOITTE & TOUCHE LLP
Certified Public Accountants
Fort Lauderdale, Florida
April 4, 1995