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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 February 3, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File 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: (954) 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 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, 1996, the aggregate market value of the 26,672,815 shares of
voting stock held by non-affiliates of the registrant was $483,444,772.
At March 31, 1996, there were outstanding 29,865,602 shares of
registrant's Common Stock, $.05 par value, and 1,959,801 shares of the
registrant's Class A Common Stock, $.05 par value, including 124,139 Treasury
Shares.
DOCUMENTS INCORPORATED BY REFERENCE
The Proxy Statement for the 1996 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 Accessories UK Ltd ("CUK") and its
50%-owned subsidiary Claire's Nippon Co., Ltd. ("Nippon"), is a leading
mall-based retailer of popular-priced women's fashion accessories. As of
March 31, 1996, the Company operated a total of 1,422 such stores in 49
states, Canada, the Caribbean, the United Kingdom and Japan. These include
1,206 "Claire's Boutiques" or "Claire's Accessories" stores, 97 "Topkapi"
stores, 39 "The Icing" stores, 48 "Bow Bangles" stores, 19 "Dara Michelle"
stores and 5 "L'ccessory" stores (collectively the "Fashion Accessory Stores").
The Company also operates 8 trend gift stores under the name "Arcadia" or "Art
Explosion" (collectively the "Trend Gift Stores").
In February 1996, Claire's purchased certain assets of The Icing, Inc. which
had filed for liquidation under Chapter 7 of the United States Bankruptcy
Code. The assets consisted of the assumption of 85 real property leases,
furniture, fixtures and equipment. The Company plans to remodel these stores
prior to opening for business. The level of remodeling is dependent on
several factors including the current condition of the store's furniture,
fixtures and equipment and remaining term of the lease. In malls where there
is not an existing Claire's store, the store will be renamed "Claire's
Accessories". All of the stores opened as of March 31, 1996 are operating
under The Icing name. Claire's expects all of these stores to be open by May
31, 1996.
Also in February 1996, the Company, through its wholly owned subsidiary ,
Claire's Accessories UK Ltd, purchased the assets of Bow Bangles, PLC., a
retail operator of fashion accessory stores with locations throughout the
United Kingdom. Bow Bangles, PLC. had filed for administrative protection
under United Kingdom Bankruptcy Laws. The assets purchased included the
assumption of 48 store leases and certain furniture, fixtures and equipment.
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 at about $4. The stores average 919
square feet and are primarily located in enclosed shopping malls. The
Company's Topkapi, The Icing, Bow Bangles, Dara Michelle and L'ccessory
stores are similar in size and format to the Claire's Boutiques and Claire's
Accessories stores and give the Company the ability to have multiple store
locations in malls that currently have a successful Claire's Boutiques or
Claire's Accessories 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 World 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.
- 2 -
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
Feb. 3, Jan. 28, Jan. 29,
1996 1995 1994
(In thousands)
Costume jewelry $244,876 $196,057 $180,279
Other fashion accessories 87,507 94,277 89,718
Totebags 9,087 6,982 7,559
Trend gifts 3,411 4,119 4,137
$344,881 $301,435 $281,693
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 February 3, 1996 ("Fiscal 1996") were 20%, 22%, 23%
and 35% in the first, second, third and fourth quarters, respectively.
At March 31, 1996, the Company had approximately 6,650 employees, 52% 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 919 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 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.
- 3 -
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 129 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 eleven Regional Managers. Each Regional Manager
reports to one of three 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 continues to expand its international operations. In addition to
the acquisition of the 48 Bow Bangles stores in the United Kingdom, 27 stores
were opened in Canada in Fiscal 1996. The Company now operates 72 stores in
Canada. The Company plans to open an additional 15 to 20 stores in Canada in
the fiscal year ending February 1, 1997 ("Fiscal 1997"). Store expansion
continued in Japan as the Company, with its joint venture partner, Jusco Co.,
Ltd., a Japanese Company, opened 14 stores in Fiscal 1996, bringing the total
number of stores operating in Japan to 16. Current plans call for opening
approximately 30 additional stores in Japan in Fiscal 1997. Net sales and
identifiable assets outside the United States represented less than 10% of
consolidated net sales or identifiable assets in Fiscal 1996.
Trend Gift Stores
During Fiscal 1996, the Company closed one Trend Gift Store. 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 1,422 stores operating as of March 31, 1996 are located in 49
states, Canada, the United Kingdom, the Caribbean and Japan. The Company
leases all of its stores, generally for terms of seven to ten years (up to 25
years in the United Kingdom). 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, while
some stores are located within a central business district and 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.
- 4 -
The Company has closed 69 stores in the last three fiscal years, primarily
because of lack of profit potential or the unwillingness of the landlord to
renew the lease on terms acceptable to the Company. Five 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 142 Fashion Accessory Stores during Fiscal 1996 and has
opened as of March 31, 1996 a net 96 stores in the first two months of Fiscal
1997. 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 $95,000 per store.
The offices of Claire's and the distribution center for 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.
Rather, the Company intends to relocate these offices and distribution
facility in June 1996 to a building located in Hoffman Estates, Illinois,
purchased by Claire's in January 1995 for $7.4 million. 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. Unused acreage at this sight will allow Claire's 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 $480,000, 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.
- 5 -
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 is currently on a month to month basis. 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 1996.
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 (as adjusted to give effect
to the three-for-two stock split effective February 21, 1996). No dividends
had been declared on the Class A Common Stock prior to Fiscal 1995. At March
31, 1996, the approximate number of record holders of shares of Common Stock
and Class A Common Stock was 1,872 and 923, respectively.
Closing Prices Dividends Dividends
of on on Class A
Common Stock Common Stock Common Stock
Year Ended February 3, 1996 High Low
First Quarter $ 9.67 $ 8.08 $.02 $.01
Second Quarter 13.33 9.17 .02 .01
Third Quarter 15.33 12.67 .02 .01
Fourth Quarter 14.67 11.17 .02 .01
Year Ended January 28, 1995
First Quarter $15.42 $11.00 $.02 $ -
Second Quarter 11.75 6.33 .02 .01
Third Quarter 9.08 6.75 .02 .01
Fourth Quarter 9.08 7.33 .02 .01
- 6 -
In 1985, the Board of Directors instituted a quarterly dividend on the Common
Stock of $.017 per share. In February 1994, the Board of Directors increased
the quarterly dividend to $.02 per share and in July 1994 declared a
quarterly dividend of $.01 per share on the Class A Common Stock. In
January 1996, the Board of Directors increased the quarterly dividend to
$.03 per share on the Common Stock and $.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 credit facility.
Item 6. Selected Financial Data
Fiscal Year Ended
Feb. 3 Jan. 28 Jan. 29 Jan. 30 Feb. 1
1996(1) 1995 1994 1993 1992
(In thousands except per share amounts)
Operating Statement Data:
Net sales $344,881 $301,435 $281,693 $247,987 $234,162
Income from continuing
operations 30,915 23,855 23,634 14,551 5,226
Loss from operations
of discontinued
subsidiary - - - - (2,047)
Loss on disposal of dis-
continued subsidiary - - - - (11,927)
Net income (loss) $ 30,915 $ 23,855 $ 23,634 $ 14,551 $ (8,748)
Income (Loss) Per Share(2)
From:
Income from continuing
operations $ .99 $ .77 $ .77 $ .47 $ .17
Loss from operations
of discontinued
subsidiary - - - - (.07)
Loss on disposal of dis-
continued subsidiary - - - - (.39)
Net income (loss) $ .99 $ .77 $ .77 $ .47 $ (.29)
Cash dividends per
share (2):
Common stock $ .08 $ .08 $ .07 $ .07 $ .07
Class A Common stock $ .04 $ .03 $ - $ - $ -
Balance Sheet Data:
Current assets $103,762 $ 78,670 $ 69,253 $ 64,038 $ 40,352
Current liabilities 30,521 29,963 27,092 40,785 19,778
Working capital 73,241 48,707 42,161 23,253 20,574
Total assets 187,782 158,578 135,219 128,878 111,586
Long-term obligations 4,325 6,464 8,212 11,254 27,827
Stockholders' equity 152,936 122,151 99,915 76,839 63,981
(1) Consists of 53 weeks.
(2) Adjusted to give effect to the three-for-two Stock split effective
February 21, 1996.
- 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
February 3, January 28, January 29,
1996 1995 1994
Net sales 100.0% 100.0% 100.0%
Cost of sales, occupancy and
buying expenses 45.8 46.1 46.2
Gross profit 54.2 53.9 53.8
Other expenses:
Selling, general and administrative 36.1 36.8 35.8
Depreciation and amortization 4.3 4.6 4.6
Interest (income) expense, net (0.6) (0.3) 0.1
39.8 41.1 40.5
Income before income taxes 14.4 12.8 13.3
Income taxes 5.4 4.9 4.9
Net income 9.0% 7.9% 8.4%
- 8 -
Results of Operations
From the fiscal year ended January 29, 1994("Fiscal 1994") to February 3,
1996 ("Fiscal 1996"), the Company's net sales increased at a compounded
annual rate of 10%. Net Income increased from $23,634,000 in Fiscal 1994
to $30,915,000 in Fiscal 1996.
Fiscal 1996 Compared to Fiscal 1995
Net sales increased by $43,446,000, or 14%, to $344,881,000 in Fiscal
1996 compared to $301,435,000 for the year ended January 28, 1995
("Fiscal 1995"). The increase for the period resulted primarily from the
addition of a net 108 stores in North America and same-store sales
increases of 3%. The same-store sales increases were primarily due to the
Company refocusing its merchandising strategy to its core customer -
female teenagers. In addition, inventories were increased to offer a
larger assortment of merchandise for sale and to meet the anticipated
increase in customer demand.
Cost of sales, occupancy and buying expenses increased by $18,765,000, or
13%, to $157,857,000 in Fiscal 1996 compared to $139,092,000 in Fiscal
1995. The principal reason for this increase was the rise in the number
of stores and volume of merchandise sold. As a percentage of net sales,
these expenses decreased to 45.8% for Fiscal 1996 compared to 46.1% for
Fiscal 1995. The decrease as a percentage of sales was primarily due to
the increase in same-store sales as discussed above. As same-store sales
increase, occupancy and buying expenses, which are essentially fixed,
decrease as a percentage of sales.
Selling, general and administrative ("SG&A") expenses increased by
$13,574,000, or 12%, to $124,461,000 in Fiscal 1996 from the Fiscal 1995
level of $110,887,000. The increase noted was due to the increase in the
cost of operating the additional stores. As a percentage of net sales,
these expenses decreased to approximately 36% in Fiscal 1996 compared to
37% in Fiscal 1995. The decrease in SG&A as a percentage of sales is
primarily attributable to the increase in same-store sales as previously
discussed and the leverage of fixed expenses with the addition of 108 net
stores in North America.
Depreciation and amortization increased by $1,087,000, or 8%, to
$14,969,000 in Fiscal 1996 from the Fiscal 1995 level of $13,882,000. The
increase was primarily due to the investment in 128 new stores, and the
remodeling of approximately 100 stores in North America. In addition,
the Company continued to invest in its management information systems.
Due to the increase in cash levels and the reduction of long-term debt,
interest income again exceeded interest expense in Fiscal 1996. As a
percentage of sales, interest income, net of interest expense, was .6%
for Fiscal 1996 compared to .3% in Fiscal 1995. The average debt balance
decreased to $3,000,000 during Fiscal 1996 from $6,000,000 in Fiscal
1995. The cash balance during Fiscal 1996 averaged approximately
$44,400,000 compared to approximately $38,300,000 in Fiscal 1995. The
weighted average interest rates paid by the Company during Fiscal 1996
and Fiscal 1995 were 8.9% and 8.1%, respectively. These rates are
directly related to the bank's prime rate.
Income taxes increased by $4,074,000 to $18,694,000 in Fiscal 1996
compared to $14,620,000 in Fiscal 1995. The Company's effective tax
rates remained relatively constant from fiscal year to fiscal year.
- 9 -
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 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 the 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 reason 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 remodeled 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.
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.
- 10 -
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 totaled $59,323,000 at the end of Fiscal 1996.
Net cash provided by operating activities amounted to $28,749,000 in
Fiscal 1996 compared to $37,030,000 in Fiscal 1995 and $34,750,000 in
Fiscal 1994. The Company's current ratio (current assets over current
liabilities) was 3.40:1.0 for Fiscal 1996 and 2.63:1.0 for Fiscal 1995.
At the end of Fiscal 1996, 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 1996, the Company continued to expand and remodel its store
base. Significant capital projects included the opening of 142 new
stores and remodeling approximately 100 stores. In addition, the Company
continued to invest in technology. In Fiscal 1995, the Company purchased
a new distribution center in Hoffman Estates, Illinois. The Company
expects to begin utilization of the new facility in June 1996. Funds
expended for capital improvements in Fiscal 1996 totaled $15,083,000
compared to $24,762,000 in Fiscal 1995 and $12,831,000 in Fiscal 1994.
In the year ending February 1, 1997 ("Fiscal 1997"), capital expenditures
are expected to be approximately $20,000,000 as the Company continues to
invest in its store base and technology.
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 plans and other foreseeable future needs.
- 11 -
Item 8. Financial Statements and Supplementary Data Page No.
Independent Auditors' Report 13
Consolidated Balance Sheets at February 3, 1996 and
January 28, 1995 14
Consolidated Statements of Income for
the three fiscal years ended February 3, 1996 15
Consolidated Statements of Changes in Stockholders' Equity
for the three fiscal years ended February 3, 1996 16
Consolidated Statements of Cash Flows for
the three fiscal years ended February 3, 1996 17
Notes to Consolidated Financial Statements 18-23
Selected Quarterly Financial Data (Unaudited) 24
- 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 February 3, 1996 and January 28,
1995, and the related consolidated statements of income, changes in
stockholders' equity and cash flows for each of the years in the three
year period ended February 3, 1996. 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 February 3, 1996 and January
28, 1995, and the results of their operations and their cash flows for
each of the years in the three year period ended February 3, 1996 in
conformity with generally accepted accounting principles.
/S/KPMG PEAT MARWICK LLP
Fort Lauderdale, Florida
March 26, 1996
- 13 -
CLAIRE'S STORES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
Feb. 3, Jan. 28,
1996 1995
ASSETS (In thousands)
Current assets:
Cash and cash equivalents $ 59,323 $ 48,473
Inventories 32,383 24,330
Prepaid expenses and other current
assets 12,056 5,867
Total current assets 103,762 78,670
Property and equipment:
Land and building 8,347 8,267
Furniture, fixtures and equipment 63,957 61,088
Leasehold improvements 74,156 73,617
146,460 142,972
Less accumulated depreciation
and amortization (77,114) (72,705)
69,346 70,267
Other assets 14,674 9,641
$187,782 $158,578
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 10,745 $ 11,705
Income taxes payable 6,800 7,500
Accrued expenses 11,991 10,086
Dividends payable 985 672
Total current liabilities 30,521 29,963
Long-term debt - 3,000
Deferred credits 4,325 3,464
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 1,915,294 shares and
1,973,441 shares 96 66
Common stock, par value $.05 per
share; authorized 50,000,000 shares,
issued 29,767,814 shares and 29,332,343
shares 1,488 978
Additional paid-in capital 16,126 13,618
Foreign currency translation adjustment (22) (115)
Retained earnings 136,016 108,372
153,704 122,919
Treasury stock, at cost (124,139 shares) (768) (768)
152,936 122,151
Commitments and contingencies
$187,782 $158,578
See accompanying notes to consolidated financial statements.
- 14 -
CLAIRE'S STORES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Fiscal Year Ended
Feb. 3, Jan. 28, Jan. 29,
1996 1995 1994
(In thousands except per share amounts)
Net sales $ 344,881 $ 301,435 $ 281,693
Cost of sales, occupancy and
buying expenses 157,857 139,092 130,171
Gross profit 187,024 162,343 151,522
Other expenses:
Selling, general and
administrative 124,461 110,887 100,702
Depreciation and amortization 14,969 13,882 12,974
Interest (income) expense, net (2,015) (901) 331
137,415 123,868 114,007
Income before income taxes 49,609 38,475 37,515
Income taxes 18,694 14,620 13,881
Net income $ 30,915 $ 23,855 $ 23,634
Net income per share $ .99 $ .77 $ .77
See accompanying notes to consolidated financial statements.
- 15 -
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 Adjustment Earnings Stock Total
(In thousands)
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
($.07 per
common share) - - - - (1,931) - (1,931)
Balance,
January 29, 1994 67 972 12,261 - 86,921 (306) 99,915
Net income - - - - 23,855 - 23,855
Class A Common
Stock converted
to Common Stock (1) 1 - - - - -
Stock options
exercised - 4 832 - - - 836
Cash dividends
($.08 per
Common share and
$.03 per Class
A Common share) - - - - (2,404) - (2,404)
Foreign currency
translation
adjustment - - - (115) - - (115)
Purchase of Treasury
Stock - - - - - (811) (811)
Issuance of Treasury
Stock - - (68) - - 349 281
Conversion of
Debentures - 1 166 - - - 167
Tax benefit from
exercised stock
options - - 427 - - - 427
Balance,
January 28, 1995 66 978 13,618 (115) 108,372 (768) 122,151
Net income - - - - 30,915 - 30,915
Class A Common
Stock converted
to Common Stock (2) 2 - - - - -
Stock options
exercised - 12 2,508 - - - 2,520
Cash dividends
($.08 per
Common share
and $.04 per
Class A Common
share) - - - - (2,743) - (2,743)
Three-for-two stock
split 32 496 - - (528) - -
Foreign currency
translation
adjustment - - - 93 - - 93
Balance,
February 3, 1996$ 96 $1,488 $ 16,126$ (22) $136,016$ (768) $152,936
See accompanying notes to consolidated financial statements.
- 16 -
CLAIRE'S STORES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Fiscal Year Ended
Feb. 3, Jan. 28, Jan. 29,
1996 1995 1994
(In thousands)
Cash flows from operating activities:
Net income $ 30,915 $ 23,855 $ 23,634
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation and amortization 14,969 13,882 12,974
Deferred income taxes (1,526) (1,914) (2,890)
Loss on retirement of property and
equipment 1,047 1,465 1,401
Other (1) (2) 75
Change in assets and liabilities:
(Increase) in -
Inventories (8,053) (1,636) (2,881)
Prepaid expenses and other assets (9,708) (2,622) (826)
Increase (decrease) in -
Trade accounts payable (960) 2,041 961
Income taxes payable (700) 150 550
Accrued expenses 1,905 559 (209)
Deferred credits 861 1,252 1,961
Net cash provided by operating
activities 28,749 37,030 34,750
Cash flows from investing activities:
Acquisition of property and
equipment which represents net
cash used in investing activities (15,083) (24,762) (12,831)
Cash flows from financing activities:
Proceeds from long-term debt - - 10,000
Principal payments on long-term debt (3,000) (3,000) (29,000)
Proceeds from stock options exercised 2,520 1,117 1,103
Dividends paid (2,429) (2,281) (1,926)
Purchase of Treasury Stock - (811) -
Proceeds from conversion of debentures - 167 -
Net cash used in financing
activities (2,909) (4,808) (19,823)
Effect of foreign currency exchange
rate changes on cash and cash
equivalents 93 (115) -
Net increase in cash and cash
equivalents 10,850 7,345 2,096
Cash and cash equivalents at
beginning of year 48,473 41,128 39,032
Cash and cash equivalents at
end of year $ 59,323 $ 48,473 $ 41,128
See accompanying notes to consolidated financial statements.
- 17 -
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 year 1996 consisted of 53 weeks. Fiscal years 1995 and 1994 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 (31,350,000 shares in Fiscal 1996, 31,170,000 shares in Fiscal
1995 and 30,956,000 shares in Fiscal 1994).
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.
- 18 -
Fair Value of Financial Instruments - The Company's financial instruments
consist primarily of current assets and current liabilities. Current assets and
liabilities are stated at fair market value.
Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
New Accounting Standard
In March 1995, the Financial Accounting Standards Board issued Statement No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long Lived
Assets to be Disposed Of," which became effective for fiscal years beginning
after December 15, 1995. This standard establishes accounting standards for
the impairment of long-lived assets, certain identifiable intangibles, and
goodwill related to those assets to be held and used and for long-lived
assets and certain intangibles to be disposed of. The Company believes that
adoption of this standard will not have a material impact on the financial
condition or operating results of the Company.
2. CREDIT FACILITIES
February 3, January 28,
1996 1995
(In thousands)
Long-term debt:
Working capital credit line $ - $ -
Term note due 1996 - 3,000
$ - $ 3,000
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. The credit agreement matures on January
31, 1997. At February 3, 1996 and January 28, 1995, 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 matured and was paid on January 31, 1996.
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 $.10 per share or an aggregate of $3,300,000 for Fiscal 1995 and $.13
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.
- 19 -
3. INCOME TAXES
Income taxes consist of the following:
Fiscal Year Ended
Feb. 3, Jan. 28, Jan. 29,
1996 1995 1994
(In thousands)
Federal:
Current $17,619 $14,870 $15,597
Deferred (1,364) (1,779) (2,688)
16,255 13,091 12,909
State:
Current 2,151 1,164 1,174
Deferred (162) (135) (202)
1,989 1,029 972
Foreign:
Current 450 500 -
$18,694 $14,620 $13,881
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 February 3,1996
(In thousands)
Assets Liabilities Total
Depreciation $3,537 $ - $3,537
Accrued expenses 1,880 - 1,880
Accrued rent expense 953 - 953
Other 461 - 461
$6,831 $ - $6,831
Deferred Tax Consequences at January 28,1995
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
The provision for income taxes differs from an amount computed at the
statutory rates as follows:
Feb. 3, Jan. 28, Jan. 29,
1996 1995 1994
Income taxes at
statutory rates 35% 35% 35%
State income taxes,
net of federal tax
benefit 3 3 3
38% 38% 38%
- 20 -
4. STOCKHOLDERS' EQUITY
Stock Splits - In January 1996, the Company's Board of Directors declared a
3-for-2 stock split of its Common stock and Class A common stock in the form
of a dividend 50 percent distribution.
On February 21, 1996, 9,906,680 shares of Common stock and 653,807 shares of
Class A common stock were distributed to stockholders of record as of February
7, 1996. Shareholders' equity has been adjusted to give recognition of the
stock split by reclassifying from retained earnings to the Common stock and
Class A common stock accounts the par value of the additional shares arising
from the split. In addition, all references in the financial statements to
number of shares, per share amounts, stock option data and market prices of
the Company's stock have been restated.
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.
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 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 1,500,000 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.
- 21 -
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 February 3, 1996, options to purchase 86,460, 27,750 and 383,001 shares
of Common Stock were exercisable under the 1982 Plan, 1985 Plan and 1991
Plan, respectively. Options to purchase an additional 16,665, 24,750 and
813,324 shares were outstanding, but not yet exercisable, at February 3,
1996 under the 1982 Plan, 1985 Plan and 1991 Plan, respectively. There
were 431,653 shares of Common Stock available for future option grants
under the 1991 Plan at February 3, 1996.
In October 1992, stock options to purchase an aggregate of 450,000 shares
of Common Stock at a purchase price of $7.43 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.
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,
January 30, 1993 479,250 313,650 558,750 $2.33 - 10.17
Granted - - 250,125 9.17 - 10.83
Exercised (262,875) (36,150) ( 14,063) 2.33 - 7.67
Cancelled - - ( 11,250) 4.67 - 4.67
Outstanding,
January 29, 1994 216,375 277,500 783,562 4.33 - 10.83
Granted - - 247,500 7.08 - 8.42
Exercised ( 19,950) ( 75,000) ( 78,375) 4.33 - 9.17
Cancelled ( 35,250) - ( 126,375) 4.33 - 10.83
Outstanding,
January 28, 1995 161,175 202,500 826,312 4.33 - 10.83
Granted - - 577,500 8.08 - 13.08
Exercised ( 15,750) (150,000) ( 196,425) 4.67 - 10.83
Cancelled ( 42,300) - ( 11,062) 7.67 - 11.58
Outstanding
February 3, 1996 103,125 52,500 1,196,325 4.33 - 13.08
6. EMPLOYEE BENEFIT PLAN
The Company has 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 1996, Fiscal
1995 and Fiscal 1994, the cost of Company matching contributions was
$295,000, $299,000 and $244,000, respectively. The Company does not have
any post-employment or post-retirement benefit plans other than above.
- 22 -
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 2006 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 February 3, 1996 was as
follows:
1996 1995 1994
(In thousands)
Minimum rentals $41,391 $36,711 $32,800
Rentals based on net sales 782 1,180 1,490
Other rental expense-equipment 9,013 8,638 7,846
Total rental expense $51,186 $46,529 $42,136
Minimum aggregate rental commitments under non-cancelable operating leases
are summarized by fiscal year ending as follows:
(In thousands)
1997 $ 55,913
1998 51,851
1999 47,304
2000 40,976
2001 33,674
Thereafter 85,152
$314,870
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 $20,883,000 in Fiscal 1996, $16,014,000 in
Fiscal 1995 and $16,414,000 in Fiscal 1994. Payments of interest were
$340,000 in Fiscal 1996, $488,000 in Fiscal 1995 and $866,000 in Fiscal
1994.
9. 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 $480,000, which is subject to
annual cost-of-living increases, and a proportionate share of all taxes and
operating expenses of the building.
- 23 -
SELECTED QUARTERLY FINANCIAL DATA (Unaudited)
Fiscal Year Ended February 3, 1996
(In thousands except per share amounts)
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Year
Net sales $68,054 $77,296 $79,842 $119,689 $344,881
Gross profit 34,886 40,347 41,868 69,922 187,023
Net income 2,038 4,149 5,016 19,712 30,915
Net income per share $ .07 $ .13 $ .16 $ .63 $ .99
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 $ .09 $ .07 $ .09 $ .52 $ .77
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure
Not Applicable.
- 24 -
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 1996 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' Report 13
Consolidated Balance Sheets at February 3, 1996 and
January 28, 1995 14
Consolidated Statements of Income for the three
fiscal years ended February 3, 1996 15
Consolidated Statements of Changes in Stockholders'
Equity for the three fiscal years ended February 3, 1996 16
Consolidated Statements of Cash Flows
for the three fiscal years ended February 3, 1996 17
Notes to Consolidated Financial Statements 18-23
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 (incorporated by reference
to Exhibit 3(b) to the Company's Annual Report on form 10-K
for the fiscal year ended January 28, 1995).
(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).
- 25 -
(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 (incorporated by reference to
Exhibit 4(e) to the Company's Annual Report on form 10-K
for the fiscal year ended January 28, 1995).
(4)(f) Fifth Amendment dated as of April 3, 1995 to the Revolving
Credit Agreement (incorporated by reference to Exhibit 4(f)
to the Company's Annual Report on form 10-K for the fiscal
year ended January 28, 1995).
(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).
- 26 -
(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).
(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) 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) Consent of independent auditor.
(b) Reports on Form 8-K.
None.
- 27 -
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 11, 1996
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
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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 11, 1996
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
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