Business Context and Reporting Period
This Form 6-K, filed on August 28, 2009, by Birks & Mayors Inc. (a Canadian corporation), serves as a submission of the Management Proxy Circular and Proxy Card for the Annual Meeting of Shareholders scheduled for September 22, 2009. The filing relates to the fiscal year ended March 28, 2009. The Company operates in the luxury jewelry and retail sector.
Key Financial Metrics
The filing text does not provide a comprehensive income statement, balance sheet, or cash flow statement. Specific financial metrics are limited to the following:
- Auditor Fees: Total audit fees for fiscal year 2009 were approximately $535,000. Audit-related fees were $6,500, and tax fees were $30,000.
- Executive Compensation: Aggregate compensation paid to nine executive officers in fiscal year 2009 was approximately $3,622,000 (salary and bonus). The CEO, Thomas A. Andruskevich, received a salary of $1,251,483 and other annual compensation of $122,204. No cash bonuses were earned by named executive officers in fiscal year 2009.
- Related Party Transactions: The Company purchased approximately $3.0 million of diamonds from Prime Investments SA (a related party) in fiscal year 2009. Management consulting fees paid to Montrovest (and predecessor Iniziativa) totaled approximately $873,000. Architectural services from a director's spouse's firm totaled approximately $327,000.
- Debt and Liquidity: In February and May 2009, the Company received cash advances totaling $5.0 million from Montrovest to finance working capital. These advances bear an annual interest rate of 16% (effective rate ~17.6%) and are subordinated to senior credit facilities.
Material Changes and Corporate Actions
- Executive Departure: Daisy Chin-Lor, Executive Vice President and Chief Marketing Officer, resigned effective June 26, 2009.
- Board Changes: Alain Benedetti resigned from the Board and as Chair of the Audit and Compensation Committees effective May 31, 2009. Louis L. Roquet was appointed to the Audit Committee and named Chair on June 3, 2009.
- Related Party Agreements: A new consulting services agreement was approved on June 30, 2009, with Gestofi, S.A. (affiliated with the Chairman's son) for approximately CDN$13,700 per month, effective August 1, 2009. A management subordination agreement was signed in December 2008 allowing Montrovest to receive a success fee (7% of proceeds over $5 million) if the Company raises equity.
- Share Structure: As of August 26, 2009, there were 3,672,407 Class A voting shares and 7,717,970 Class B multiple voting shares outstanding. Class B shares carry 10 votes per share.
Guidance, Outlook, and Risks
The filing does not contain forward-looking financial guidance, revenue projections, or specific management commentary on market outlook. However, the following risks and contingencies are noted:
- Performance Incentives: The Company did not meet targeted performance requirements for the first cycle of its Executive Management Long-Term Cash Incentive Plan (ending March 28, 2009) and does not expect to meet requirements for the second cycle; no payout is expected.
- Liquidity Dependence: The Company relies on cash advances from its majority shareholder, Montrovest, for working capital, indicating potential liquidity constraints or reliance on related-party financing.
- Related Party Concentration: Significant portions of diamond supply ($3.0 million) and management services ($873,000) are sourced from related parties, creating potential conflicts of interest and dependency risks.
- Executive Retention: Employment agreements for key executives include substantial severance provisions in the event of termination without cause or change of control, representing a contingent liability.
Investor Verification Checklist
- Verify the full consolidated financial statements for the fiscal year ended March 28, 2009, referenced in the filing but not included in this text, to assess revenue, profit, and debt levels.
- Confirm the terms and repayment status of the $5.0 million cash advances from Montrovest and the Company's current senior credit facility capacity.
- Review the specific performance metrics and targets for the Executive Management Long-Term Cash Incentive Plan to understand the criteria for future payouts.
- Assess the competitive pricing of the $3.0 million diamond purchases from Prime Investments SA relative to market rates.
- Monitor the impact of the resignation of the Chief Marketing Officer on the Company's strategic initiatives and e-commerce development.