-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TAEXrnR8kJkJPUCklSTzBGsW0lsHPgQ5xXKniVhZe8rBbyvlrjj48eZZcshu7cJQ Sc0XXQu2TAaN/2KKIvJNdA== 0001127264-01-000056.txt : 20010427 0001127264-01-000056.hdr.sgml : 20010427 ACCESSION NUMBER: 0001127264-01-000056 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20010203 FILED AS OF DATE: 20010413 FILER: COMPANY DATA: COMPANY CONFORMED NAME: S&K FAMOUS BRANDS INC CENTRAL INDEX KEY: 0000723924 STANDARD INDUSTRIAL CLASSIFICATION: 5600 IRS NUMBER: 540845694 STATE OF INCORPORATION: VA FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: SEC FILE NUMBER: 000-11682 FILM NUMBER: 1602079 BUSINESS ADDRESS: STREET 1: 11100 W BROAD ST STREET 2: PO BOX 31800 CITY: RICHMOND STATE: VA ZIP: 23294-1800 BUSINESS PHONE: 8043462500 MAIL ADDRESS: STREET 1: P O BOX 31800 CITY: RICHMOND STATE: VA ZIP: 23294-1800 10-K405 1 0001.txt FORM 10-K405 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark One) [ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended February 3, 2001 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. 0-11682 S&K FAMOUS BRANDS, INC. - - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Virginia 54-0845694 - - ------------------------------------ ------------------------------------ (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 11100 West Broad Street, P. O. Box 31800, Richmond, Virginia 23294-1800 - - -------------------------------------------------------------------------------- (Address of principal executive offices) Registrant's telephone number, including area code: (804) 346-2500 ------------------ Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered - - --------------------------- ----------------------------------------------- None Securities registered pursuant to Section 12(g) of the Act: Common Stock $.50 par value -------------------------------------- (Title of Class) 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. (X) The aggregate market value of the voting stock held by nonaffiliates of the registrant as of April 11, 2001, was approximately $9,489,000. This figure was calculated by multiplying (i) the mean between the high and low prices for the registrant's common stock on April 11, 2001, as reported by The Nasdaq Stock Market, by (ii) the number of shares of the registrant's common stock not held by the officers or directors of the registrant or any persons known to the registrant to own more than five percent of the outstanding common stock of the registrant. Such calculation does not constitute an admission or determination that any such officer, director or holder of more than five percent of the outstanding common stock of the registrant is an affiliate of the registrant. As of April 11, 2001, 4,088,949 shares of the registrant's Common Stock, $0.50 par value were outstanding. Documents Incorporated by Reference The portions of the 2000 Annual Report to Shareholders ("2000 Annual Report") for the fiscal year ended February 3, 2001, referred to in Part II, are incorporated by reference into Part II. The portions of the Proxy Statement for the Company's Annual Meeting of Shareholders to be held on May 31, 2001, referred to in Part III, are incorporated by reference into Part III. 2 PART I. Item 1. Business -------- (a) General Development of Business S&K Famous Brands, Inc. (the "Company") has been in business for 34 years. The Company began operations with one store and as of March 24, 2001 operates 237 stores. The Company was incorporated in Virginia in 1970, as successor to a business established in 1967. As used herein, the term "Company" includes the Company and its predecessors. The Company's corporate headquarters is located at 11100 West Broad Street, Richmond, Virginia; the telephone number is (804) 346-2500. For a discussion of the Company's business and its development during the fiscal year ended February 3, 2001 ("fiscal 2001"), see "Narrative Description of Business." (b) Financial Information about Industry Segments The Company operates in one segment, the retail sale of men's tailored clothing, furnishings, sportswear and accessories. Accordingly, data with respect to separate industry segments is not applicable and has not been reported herein. (c) Narrative Description of Business General - - ------- The Company is engaged in the retail sale of men's apparel, that includes a full line of men's suits, sportcoats, slacks, shirts, ties, sportswear, shoes and related accessories, through stores trading as S&K Famous Brand Menswear (S&K). The Company sells in-season, first-quality, men's apparel, primarily with nationally recognized brand names, at 20% to 40% less than regular, full-priced department and specialty store prices. The Company's operations are generally conducted under the name S&K Famous Brand Menswear. As of March 24, 2001 there are 237 stores in 27 states: Virginia, Alabama, Arkansas, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Michigan, Mississippi, Missouri, New Jersey, New York, North Carolina, Ohio, Oklahoma, Pennsylvania, South Carolina, Tennessee, Texas, West Virginia and Wisconsin. Except for three locations, all of the S&K stores are located either in strip shopping centers or enclosed shopping malls. During fiscal 2001, the Company opened 15 new S&K stores, totaling approximately 61,300 square feet, in the following localities: Alabama: Birmingham (1), Trussville Iowa: Des Moines Kentucky: Louisville Florida: Jacksonville(1) , Sarasota, Tampa Louisiana: Alexandria(1) Maryland: Hanover Mississippi: South Haven New York Clay(1) North Carolina: Garner South Carolina: Myrtle Beach(1) Tennessee: Nashville(1) Virginia: Roanoke(1) (1) These new stores were relocated from previous locations which were closed. Additionally, in fiscal 2001, the Company closed 17 under-performing stores (seven of which were relocations), approximating 66,100 square feet, which were at the end of their lease term and which had not met the Company's sales and profitability expectations: Birmingham, Alabama; Ft. Myers, Jacksonville and Naples, Florida; Evansville, Indiana; Eddyville, Kentucky; Alexandria, Louisiana; Clay, New York, Upper Arlington, Ohio; Erie, Pennsylvania; Myrtle Beach, South Carolina; Bartlett and Nashville, Tennessee; Ft. Worth, Texas; Richmond and Roanoke, Virginia; and Kenosha, Wisconsin. 3 The following table summarizes information concerning store openings and closings during the fiscal years presented:
Fiscal Year Ended - - ------------------------------------------------------------------------------------------------- Stores: 2/03/01 1/29/00 1/30/99 1/31/98 1/25/97 - - ------------------------------------------------------------------------------------------------- Open at beginning of year 240 233 211 194 184 Closed during year 17 15 8 9 8 Opened during year 15 22 30 26 18 - - ------------------------------------------------------------------------------------------------- Open at end of year 238 240 233 211 194 - - ------------------------------------============================================================= Relocations 7 1 2 8 2 - - -------------------------------------------------------------------------------------------------
During fiscal 2002, the Company plans to open approximately 10 new stores and close 10 under-performing locations. As of March 24, 2001, the Company has opened two new stores (both of which were relocations): Augusta, Georgia and York, Pennsylvania and closed a store in Toledo, Ohio. Average sales per selling square foot for the stores included in comparable store sales statistics were: $213, $214, $218, $226, and $218 in the fiscal years ended 2001 through 1997, respectively. Other than the general economic and competitive environment, average sales per selling square foot are primarily influenced by three factors: sales levels in existing stores from year to year; the proportion of newer stores which, although profitable, might not have reached sales levels of more mature stores; and an increasing number of additional stores in existing markets, where the Company does not expect sales levels to be as high as in markets in which the Company operates a single store. New stores opened in existing markets may negatively impact existing store sales while increasing total market sales. The number of stores opened in existing markets were 14, 18, 16, 26 and 8, in fiscal years ended 2001 through 1997, respectively. Merchandise and Marketing - - ------------------------- The merchandise offered in the Company's stores feature a wide variety of nationally recognized labels from America's leading manufacturers as well as the Company's exclusive, private labels. This first-quality merchandise is purchased directly from manufacturers or produced to S&K's specifications and sold at prices substantially lower than those regularly charged by department and specialty stores. The Company does not purchase any "seconds" or "irregulars". S&K offers a complete line of men's apparel: suits, sportcoats, furnishings, casual clothing, shoes and accessories. Additionally, the Company offers a custom-order program for the hard-to-fit customer with an emphasis toward the "Big & Tall" market. The Company's "Corporate Casual" collection is sportcoat driven, with a coordinating slack and sportswear focus, and responds to the trend toward relaxed dress codes in the workplace. S&K's sales associates provide the level and quality of customer service generally found only in exclusive men's clothing stores. These services include providing basic alterations at modest cost, soliciting comments from customers as to their satisfaction with the merchandise and services, maintaining customer files on special preferences, and offering a liberal refund policy for returned merchandise, including a money-back guarantee. S&K promotes its Premier Club program for those customers who shop with the Company on a repeat basis. Members of the Premier Club receive periodic mailings throughout the year which usually contain special promotional opportunities, as well as free alterations for the life of garments purchased. Additionally, the Company has an Elite Rewards Program which it believes further strengthens customer loyalty by awarding additional incentives to those customers who reach various purchase levels on an annual basis. 4 The Company offers the S&K Premier Charge Card as another payment option for it's customers and believes this also enhances its customer service. Customers pay no annual fee and may even have special financing arrangements. Additionally, this program allows S&K to communicate regularly with S&K Premier Charge Card customers via their monthly statement. S&K uses television as its primary advertising medium. Additionally, newspaper may be used occasionally for certain promotions or special events such as holiday sales or grand openings. The Company uses direct mail for Premier Club promotions and prospective customer mailings. The direct mail programs allow the Company to target Premier Club customers who have been the most responsive and loyal to S&K in the past or potential customers who fit the Company's demographic profile. Purchasing and Distribution - - --------------------------- Purchasing for all of the Company's stores is directed from the Company's headquarters in Richmond, Virginia, by it's Senior Vice President - Merchandise/Divisional Merchandise Manager. The Company purchases branded merchandise directly from a number of nationally recognized manufacturers that produce labels such as Jones New York, Bill Blass, Daniel Hechter, Andrew Fezza, Emanuel Ungaro, Evan Picone, Claiborne for Men, Chaps by Ralph Lauren and Oleg Cassini. These purchases consist primarily of merchandise produced specifically from orders placed by S&K well in advance of manufacturers' production cycles allowing them to purchase fabrics advantageously and schedule production during off-peak manufacturing periods. The Company believes these buying practices enable it to sell this merchandise at prices generally 20% to 40% below prices regularly offered by full-priced department and specialty stores. The Company also uses a number of high quality men's clothing factories which manufacture goods to its specifications for Company-owned labels, such as Roberto Villini, Kilburne & Finch, Tailors Row, Club Run, Fenzia, Deansgate and others. The Roberto Villini label is carried on suits, sportcoats and dress slacks tailored in Italy from some of the finest Italian fabrics and imported exclusively for S&K, as well as on complementing shirts and ties. The Kilburne & Finch label is carried on the Company's opening price point suit programs. The Tailors Row label (as well as Tailors Row Finery), which includes suits, blazers and slacks, offers a 100% worsted wool product with an exceptional level of tailoring and complements the Company's other clothing lines. The various manufacturing programs enable the Company to better control the quality, selection and depth of its merchandise and supplement apparel purchased from brand name manufacturers. S&K works diligently to establish and maintain good vendor relationships. The Company purchases merchandise from approximately 200 vendors. Except for two vendors who accounted for approximately 18% and 11%, respectively, no other vendors exceeded 10% of the Company's purchases in fiscal 2001. S&K does not believe that the loss of any vendor would significantly impact the Company. The Company does not maintain any long-term purchase commitments or arrangements with any supplier and believes that there will be sufficient sources of merchandise to support its expansion plans with no adverse effect on its purchasing practices. S&K has a basic item replenishment program with its major suppliers for much of its merchandise to fulfill customers' needs on a timely basis and increase the Company's inventory turnover. Substantially all of the Company's merchandise is received centrally at its 110,000 square foot distribution center in Richmond, Virginia. While the Company does have a program in place to ship direct to the stores from its vendors, most merchandise is sorted, priced (if not pre-ticketed by the vendor) and distributed from the distribution center. S&K's stores within an average 200 mile radius of Richmond receive merchandise once a week with deliveries generally made by the Company's own trucks. Deliveries are made one to two times a week to stores outside this radius using common carriers or package delivery companies. The Company continually enhances and refines its allocation and distribution processes (generally through technology improvements), and is in the process of implementing the ability to electronically communicate with a few selected vendors with the goal to shorten delivery time. The Company believes that through these enhancements and the 5 availability of direct vendor shipments to its stores that there is sufficient capacity for receiving, storing and shipping merchandise to support the Company's future expansion plans. Store Operations - - ---------------- Each store is under the direction of a general manager who is supervised by a district or area manager. The district managers generally supervise ten to fifteen stores while area managers supervise five to six stores. The district and area managers visit the stores frequently to review merchandise needs, personnel training and performance, and adherence to the Company's operating procedures. The Company also has a few market managers who maintain general manager responsibilities for their home store while supervising one or two other stores in the same market. The Company believes this program will assist in developing individuals for promotion to district or area manager. The Company uses a multi-disciplinary training course specifically developed for S&K associates. All store associates participate in this 75-day self study program, which the Company calls its "Gold Star" program. This program sets a personalized standard of performance for each sales associate on a weekly basis and closely monitors their progress. Additionally, throughout the year, the Company conducts numerous one-week, in-house training seminars for selected management trainees and full-time sales associates. These developmental programs are enhanced by continuous on-the-job training, video training and periodic, in-district meetings conducted by district and area managers or one of the four Vice Presidents - Operations. Annually, all general managers are brought to Richmond to participate in a 4-day corporate training and team building session. The Company stresses promotion from within, and most of the Company's general managers and district managers have been promoted in this manner. S&K has cash bonuses and other incentive plans in effect for its store and district managers which are based upon individual and store performance. Each store employs an average of six sales associates, some on a part-time basis. A weekly sales goal is established for each sales associate. The Company evaluates weekly productivity reports and conducts semi-annual Management by DevelopmentR goal reviews to assess each associate's performance. All sales are accepted with cash, personal checks or independent credit cards (Visa/Master Card/Discover/S&K Premier Charge Card). The Company assumes no credit risk on credit card purchases but pays a customary percentage of those sales to a credit card processor as a service charge. The Company has a liberal refund policy on returned merchandise. Information Management and Point-of-Sale System - - ----------------------------------------------- Inventory records are controlled centrally and updated daily utilizing an automated point-of-sale (POS) system. Each store's POS system is polled nightly by the Company's computerized information system. This system assimilates all data and interfaces with the Company's automated merchandise control, ordering, replenishment and open-to-buy systems. Physical inventories are conducted in the stores twice a year to verify and enhance the accuracy of the merchandise information system. Additionally, the store managers provide daily information to the central office where it is subjected to various sales, cash and inventory procedures. All stores have a customized POS system which includes the following features: automatic price lookup including promotional pricing on markdown items, the ability to scan barcoded merchandise price tickets, the ability to capture and track Premiere Club purchase activity, store and employee productivity reporting capabilities including manpower scheduling, recording hours worked for all store employees, a merchandise locator service, alterations tracking and the ability to send and receive electronic mail. The Company monitors the performance of its POS systems and works closely with the vendor to develop enhancements to this software. 6 Store Expansion - - --------------- The Company plans to continue its policy of pursuing suitable locations and opening new stores when attractive opportunities are presented. The strategy for expansion is to increase sales and market share through the development of additional store locations in both existing and new markets, subject to favorable economic conditions. The Company is currently seeking new S&K store locations in the eastern half of the United States. The criteria used in selecting sites for new stores include the geographic locations and the demographics and psychographics of the surrounding area. Based on S&K's research, the Company locates its stores in areas that appear most likely to be receptive to the Company's retailing strategy. These store sites could be in regional shopping malls or strip shopping centers generally located near a regional mall, or in outlet centers. With respect to store sites in these centers, the Company considers the principal anchor stores located in the center, tenant mix and the positioning of the Company's site within that center. The S&K stores are designed to provide what the Company believes is required by the modern-day value-conscious consumers of menswear. The Company's store formats are designed to attract a broad mix of customers by providing the customer with the opportunity to make purchases quickly during leisure time as well as having quality merchandise displayed in attractive store settings. Additionally, each store format incorporates the latest advances in merchandising techniques. The Company currently has three formats: approximately 51% of the stores are considered to be traditional stores, 24% are outlets and 25% are superstores. The 3,900 square foot traditional S&K store provides a specialty store setting and is generally located in or near regional malls in mid-size markets. The 3,500 square foot outlet store is located within outlet centers and is designed to attract the bargain shopper. The 4,500-6,500 square foot superstore carries a much broader merchandise assortment, especially in tailored clothing. The larger format also enables the Company to use "shop concepts" within the store, i.e. - formal shop, Big & Tall shop, shoes, etc., as well as attractively display its "Corporate Casual" collection. Seasonality - - ----------- The Company's business is highly seasonal, with peak sales periods occurring during the fourth fiscal quarter, which includes the Christmas season. The fourth fiscal quarter generally accounts for approximately 30-33% of the Company's net sales and 50-55% of its net earnings for a fiscal year. Working Capital - - --------------- The Company has historically funded its working capital from internally generated funds and from bank borrowings and expects these sources to continue to be adequate for the foreseeable future. Competition - - ----------- The retail men's apparel business is highly competitive. The Company's stores compete with department stores, other men's specialty stores and discount clothing stores. The Company competes on the basis of price, quality and selection of merchandise, as well as customer service and store location. Many of its competitors are considerably larger than the Company and have substantially greater financial and other resources. At various times throughout the year, department store chains and full-priced specialty shops offer brand name merchandise at substantial markdowns, which may result in prices matching or less than those regularly offered by the Company. Employees - - --------- As of February 3, 2001, the Company had approximately 2,200 employees, more than half of whom worked part-time. A number of part-time employees are usually added during the Christmas holiday season. None of the Company's employees are covered by collective bargaining agreements. The Company considers its employee relations to be good. 7 New Accounting Pronouncements - - ----------------------------- In December 1999, the Securities and Exchange Commission ("SEC") issued Staff Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition in Financial Statements". SAB 101 summarizes certain of the SEC's views in applying accounting principles generally accepted in the United States of America to revenue recognition in financial statements. During fiscal 2001, SAB 101 had no impact on the recognition, presentation, or disclosure of revenue for the Company. In March, 2000, the Financial Accounting Standards Board ("FASB") issued Interpretation No 44 ("FIN 44"), "Accounting for Certain Transactions involving Stock Compensation, an interpretation of APB Opinion No. 25". FIN 44 clarifies the application of APB 25 "Accounting for Stock-Based Compensation", for certain issues, including the definition of an employee and the treatment of the acceleration of stock options. FIN 44 is generally effective for transactions occurring after July 1, 2000, but is applicable for certain transactions dating back to December 1998. FIN 44 had no impact on the Company's financial condition or results of operation for fiscal 2001. Information Regarding Forward-Looking Statements - - ------------------------------------------------ The provisions of the Private Securities Litigation Reform Act of 1995 (the "Act") provide companies with a "safe harbor" when making forward-looking statements. This "safe harbor" encourages companies to provide prospective information about their companies without fear of litigation. The Company wishes to take advantage of the "safe harbor" provisions of the Act and is including this section in its Annual Report on Form 10-K in order to do so. Company statements that are not historical facts, including statements about management's expectations for fiscal year 2002 and beyond, are forward-looking statements and involve various risks and uncertainties. Factors that could cause the Company's actual results to differ materially from management's projections, forecasts, estimates and expectations include, but are not limited to, the following: (a) changes in the amount and degree of promotional intensity exerted by current competitors and potential new competitors many of whom are, or may be, larger and have greater financial and marketing resources; (b) changes in general U.S. economic conditions including, but not limited to, consumer credit availability, interest rates, inflation, and consumer sentiment about the economy in general; (c) changes in availability of working capital and capital expenditure financing, including the availability of the Company's existing working capital credit facilities to support development of retail stores; (d) changes in the availability on acceptable terms of appropriate real estate locations for expansion; (e) the presence or absence of new products or product features in the merchandise categories the Company sells and changes in the Company's actual merchandise sales mix, including the trend toward corporate casual attire; (f) changes in availability of or access to both domestic and foreign sources of merchandise inventory; (g) the ability to maintain an effective leadership team in a dynamic environment of changes in the cost or availability of a suitable work force to manage and support the Company's service-driven operating strategy; (h) changes in production or distribution costs of the Company's advertising; and (i) unusual weather patterns. The Company assumes no obligation to update publicly or release revisions to any forward-looking statements, whether as a result of new information, future events or otherwise. 8 The United States retail industry and the specialty apparel retail industry in particular are dynamic by nature and have undergone significant changes in recent years. The Company's ability to anticipate and successfully respond to continuing challenges is key to achieving its expectations. Trademarks and Service Marks - - ---------------------------- The Company believes it has the right to use all trademarks and service marks necessary to conduct its business as currently operated. The Company considers these marks and the accompanying customer recognition and goodwill to be valuable to its business, particularly in the case of its "S&K"-related service marks and logos. The Company believes its existing rights to use such marks can be preserved through continued use of the marks and, where applicable, renewal of registrations. (d) Financial Information about Foreign and Domestic Operations and Export Sales The Company has no foreign operations or export sales. Item 2. Properties ---------- As of March 24, 2001 all but one of the Company's 237 stores are leased. The Company owns a superstore which it built and opened in March 1998. With the exception of three free-standing locations, all the stores are located in strip shopping centers, enclosed malls, or outlet centers. The square footage of the stores varies with store format. The traditional S&K store generally ranges in size from approximately 3,500 to 4,500 square feet, the outlet stores from 3,000 to 4,000 square feet and the superstores from 4,500 to 6,500 square feet. All stores are located in close proximity to population centers, department stores and other retail operations and are often situated near a major highway or thoroughfare. As leases expire, the Company generally exercises a renewal option when desirable. It is S&K's strategy to negotiate its leases to include termination clauses exercisable within two years of initial occupancy. By exercising this termination clause when appropriate, S&K is able to minimize any long-term effect of opening an undesirable location which would be unable to meet volume and profitability expectations. Additionally, these termination clauses give the Company flexibility to relocate a store should a more attractive site become available in that market. In most cases, the Company's new stores have been profitable, on an operating basis, in the first full fiscal quarter of their operation. The company closed seventeen stores in fiscal 2001 (seven of which were relocations): Birmingham, Alabama; Ft. Myers, Jacksonville and Naples, Florida; Evansville, Indiana; Eddyville, Kentucky; Alexandria, Louisiana; Clay, New York; Upper Arlington, Ohio; Erie, Pennsylvania; Myrtle Beach, South Carolina; Bartlett and Nashville, Tennessee; Ft. Worth, Texas; Richmond and Roanoke, Virginia; and Kenosha, Wisconsin. As of March 24, 2001, the Company operated 237 stores in 27 states. The following summary recaps the number of current locations by state. Number of stores Virginia ........................................... 25 Alabama ............................................ 12 Arkansas ........................................... 4 Florida ............................................ 20 Georgia ............................................ 10 Illinois ........................................... 9 Indiana ............................................ 11 Iowa ............................................... 3 Kansas ............................................. 3 Kentucky ........................................... 5 Louisiana .......................................... 4 Maine .............................................. 2 Maryland ........................................... 2 9 Michigan ........................................... 14 Mississippi ........................................ 2 Missouri ........................................... 3 New Jersey ......................................... 1 New York ........................................... 17 North Carolina ..................................... 24 Ohio ............................................... 13 Oklahoma ........................................... 2 Pennsylvania ....................................... 8 South Carolina ..................................... 13 Tennessee .......................................... 15 Texas .............................................. 8 West Virginia ...................................... 2 Wisconsin .......................................... 5 --- Total .............................................. 237 Store leases generally provide for an annual base rent of between $4.00 and $26.00 per square foot. Most leases contain provisions which require the payment of a percentage of sales as additional rent, generally when sales reach specified levels. The Company's executive offices are located at its Corporate Headquarters and Central Distribution Center in Richmond, Virginia, and are owned by the Company. The total facility contains approximately 130,000 square feet, with the distribution center occupying approximately 110,000 of that square footage. Item 3. Legal Proceedings ------------------ There are no legal proceedings against the Company which are expected to have a material adverse effect upon the Company or its financial condition. Item 4. Submission of Matters to a Vote of Security Holders --------------------------------------------------- None. 10 Executive Officers of the Registrant - - ------------------------------------ The executive officers of the Company who serve at the discretion of the Board of Directors are as follows: Stuart C. Siegel, 58, is Chairman of the Board of Directors of the Company, and is Chief Executive Officer. Donald W. Colbert, 51, is President and Chief Operating Officer and is a director of the Company. Robert E. Knowles, 51, is Executive Vice President, Chief Financial Officer, Secretary and Treasurer. Mr. Knowles is a Certified Public Accountant. Weldon J. Wirick, III, 50, is Senior Vice President--Operations. Robert F. Videtic, 53, is Senior Vice President, Divisional Merchandise Manager. Prior to January, 2001, Mr. Videtic was Vice President, Divisional Merchandise Manager 11 PART II Item 5. Market for the Registrant's Common Equity and Related Stockholder ----------------------------------------------------------------- Matters - - ------- Please see page 12 of the 2000 Annual Report under the caption "Selected Quarterly Data," which is incorporated herein by reference. During the fiscal year ended February 3, 2001, the Company contributed 8,126 shares of its common stock to the S&K Famous Brands Employees' Savings/Profit Sharing Plan. The contribution was exempt from registration pursuant to section 3 (a) 2 of the Securities Act of 1933, as amended, because the Plan does not permit employee contributions to be invested in the Company's securities. Item 6. Selected Financial Data ----------------------- Please see page 3 of the 2000 Annual Report under the caption "Five-Year Summary of Selected Financial Data," which is incorporated herein by reference. Item 7. Management's Discussion and Analysis of Financial Condition and Results ----------------------------------------------------------------------- of Operations - - ------------- Please see pages 3 and 4 of the 2000 Annual Report under the caption "Management's Discussion and Financial Review," which is incorporated herein by reference. Item 7A. Quantitative and Qualitative Disclosures About Market Risk ---------------------------------------------------------- Please see page 4 of the 2000 Annual Report under the caption "Interest Rate Risk", which is incorporated herein by reference. Item 8. Financial Statements and Supplementary Data ------------------------------------------- Please see Part IV, Item 14 (a) 1., captioned "Financial Statements," for a list of financial statements which are incorporated herein by reference from the 2000 Annual Report. Please see page 12 of the 2000 Annual Report under the caption "Selected Quarterly Data," which is incorporated herein by reference. Item 9. Changes in and Disagreements with Accountants on Accounting and --------------------------------------------------------------- Financial Disclosure - - -------------------- None. 12 PART III Item 10. Directors and Executive Officers of the Registrant -------------------------------------------------- Please see page 3 of the registrant's definitive Proxy Statement under the caption "Information Regarding Nominees", for information concerning directors, which is incorporated herein by reference. Please see section entitled "Executive Officers of the Registrant" in Part I of this report for information concerning executive officers. Item 11. Executive Compensation ---------------------- Please see pages 5-6 and page 10 of the registrant's definitive Proxy Statement under the captions "Executive Compensation" and "Compensation Committee Interlocks and Insider Participation," and page 4 of the registrant's definitive Proxy Statement under the caption "Directors' Compensation", which are incorporated herein by reference. Item 12. Security Ownership of Certain Beneficial Owners and Management -------------------------------------------------------------- Please see pages 1-2 of the registrant's definitive Proxy Statement under the captions "Security Ownership of Certain Beneficial Owners" and "Security Ownership of Management," which is incorporated herein by reference. Item 13. Certain Relationships and Related Transactions ---------------------------------------------- Please see page 4 and page 7 of the registrant's definitive Proxy Statement under the captions "Certain Relationships and Related Transactions" and "Stock Purchase Loan Plans" which are incorporated herein by reference. 13 PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K (a) Documents filed as part of this report: Page in Annual Report ------------- 1. Financial Statements: --------------------- The following financial statements of S&K Famous Brands, Inc. and report of independent accountants, included in the registrant's 2000 Annual Report are incorporated by reference in Item 8: Statements of Income for the fiscal years ended February 3, 2001, January 29, 2000, and January 30, 1999 5 Statements of Changes in Shareholders' Equity for the fiscal years ended February 3, 2001, January 29, 2000, and January 30, 1999 5 Balance Sheets at February 3, 2001, January 29, 2000, and January 30, 1999. 6 Statements of Cash Flows for the fiscal years ended February 3, 2001, January 29, 2000, and January 30, 1999 7 Notes to Financial Statements 8-11 Report of Independent Accountants 12 2. Financial Statement Schedules: ------------------------------ None. 3. Exhibits required to be filed by Item 601 of Regulation S-K: ------------------------------------------------------------ See INDEX TO EXHIBITS (b) Reports on Form 8-K filed during the last quarter of the year ended February 3, 2001. None.
Except for the information referred to in Items 5, 6, 7, 7A, 8 and 14(a) 1. hereof, the 2000 Annual Report to Shareholders for the fiscal year ended February 3, 2001 shall not be deemed to be filed pursuant to the Securities Exchange Act of 1934. 14 SIGNATURES Pursuant to the requirements of Section 13 or 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. S&K FAMOUS BRANDS, INC. Date: April 12, 2001 /s/ Stuart C. Siegel --------------------------------------- STUART C. SIEGEL Chairman of the Board and Chief Executive Officer (Principal Executive Officer) Date: April 12, 2001 /s/ Robert E. Knowles --------------------------------------- ROBERT E. KNOWLES Executive Vice President, Chief Financial Officer, Secretary and Treasurer (Principal Financial Officer) Date: April 12, 2001 /s/ Janet L. Jorgensen --------------------------------------- JANET L. JORGENSEN Vice President and Controller, Chief Accounting Officer (Principal Accounting Officer) 15 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 and on the dates indicated. Date: April 12, 2001 /s/ Stuart C. Siegel --------------------------------------- STUART C. SIEGEL, Chairman of the Board of Directors Date: April 12, 2001 /s/ Robert L. Burrus, Jr. --------------------------------------- ROBERT L. BURRUS, JR., Director Date: April 12, 2001 /s/ Donald W. Colbert --------------------------------------- DONALD W. COLBERT, President and Chief Operating Officer, Director Date: April 12, 2001 /s/ Andrew M. Lewis --------------------------------------- ANDREW M. LEWIS, Director Date: April 12, 2001 /s/ Steven A. Markel --------------------------------------- STEVEN A. MARKEL, Director Date: April 12, 2001 /s/ Troy A. Peery, Jr. --------------------------------------- TROY A. PEERY, JR., Director Date: April 12, 2001 /s/ Marshall B. Wishnack --------------------------------------- MARSHALL B. WISHNACK, Director 16 INDEX TO EXHIBITS Exhibit No. (3) Articles of incorporation and bylaws a. Registrant's Amended and Restated Articles of Incorporation (conformed to include amendments to date), filed as Exhibit 3(a) to registrant's Quarterly Report on Form 10-Q for the quarter ended July 31, 1999, are expressly incorporated herein by this reference. b. Amendment to registrant's Bylaws dated March 27, 2001 and registrant's amended and restated Bylaws (conformed to include amendments to date). (4) Instruments defining the rights of security holders, including indentures. a. Amended and Restated Credit Agreement dated as of May 31, 1997, between the registrant and Signet Bank/Virginia (now First Union National Bank), filed as Exhibit 4(b) to the registrant's Quarterly Report on Form 10-Q for the quarter ended July 26, 1997, is expressly incorporated herein by this reference. b. Bond Purchase Agreement and Agreement of Sale dated December 1, 1983, by and among registrant and Industrial Development Authority of the County of Henrico, Virginia, Bank of Virginia, and Bank of Virginia Trust Company, filed as Exhibit 2(d) to registrant's Form 8-A Registration Statement (File #0-11682), is incorporated herein by this reference. c. First Amendment to Bond Purchase Agreement and Agreement of Sale dated November 1, 1984, by and among registrant, Industrial Development Authority of the County of Henrico, Virginia, and United Virginia Bank (now Crestar Bank), filed as Exhibit 19 to the registrant's Quarterly Report on Form 10-Q for the quarter ended October 27, 1984 (File #0- 11682), is expressly incorporated herein by this reference. d. First Amendment to Amended and Restated Credit Agreement dated April 2, 1999 between registrant and First Union National Bank as successor- in-interest to Signet Bank/Virginia filed as Exhibit 4(b) to the registrant's Quarterly Report on Form 10-Q for the quarter ended May 1, 1999, is expressly incorporated herein by this reference e. Second Amendment dated July 30, 1999 to Amended and Restated Credit Agreement dated May 31, 1997 between registrant and First Union National Bank as successor-in-interest to Signet Bank/Virginia filed as Exhibit 4(b) to the registrant's Quarterly Report on Form 10-Q for the quarter ended July 31, 1999, is expressly incorporated herein by this reference. f. Credit Agreement dated as of May 31, 2000, between the registrant and SunTrust Bank, filed as Exhibit 4(a) to the registrant's Quarterly Report on Form 10-Q for the quarter ended July 29, 2000, is expressly incorporated herein by this reference. g. Third Amendment dated May 31, 2000 to Amended and Restated Credit Agreement dated May 31, 1997 between registrant and First Union National Bank as successor-in-interest to Signet Bank/Virginia filed as Exhibit 4(b) to the registrant's Quarterly Report on Form 10-Q for the quarter ended July 29, 2000, is expressly incorporated herein by this reference. (10) Material Contracts *a. Deferred compensation agreements dated February 1, 1988, between registrant and the following officers of the registrant: Stuart C. Siegel, Donald W. Colbert, Robert E. Knowles and Weldon J. Wirick, III, filed as Exhibit 19(a) to registrant's Quarterly Report on Form 10-Q for the quarter ended April 30, 1988 (File #0-11682), are expressly incorporated herein by this reference. *b. 1983 Stock Option Plan as amended on May 28, 1987, filed as Exhibit 10(c) to registrant's Annual Report on Form 10-K for the year ended January 30, 1988 (File #0-11682), is expressly incorporated herein by this reference. *c. Executive Split Dollar Life Insurance Plan and Executive Split Dollar Life Insurance Agreement, dated May 1, 1990, between registrant and Stuart C. Siegel with a schedule of other participants and their respective coverage amounts, filed as Exhibit 10(e) to registrant's Annual Report on Form 10-K for the year ended January 30, 1993 (File #0-11682), is expressly incorporated herein by this reference. *d. 1991 Stock Option Plan, filed as Exhibit 19 to registrant's Quarterly Report on Form 10-Q for the quarter ended July 27, 1991 (File #0-11682), is expressly incorporated herein by this reference. *e. Amendment to 1991 Stock Option Plan, filed as Exhibit 19 to registrant's Quarterly Report on Form 10-Q for the quarter ended May 1, 1993 (File #0-11682), is expressly incorporated herein by this reference. *f. Amendment to 1991 Stock Option Plan, filed as Exhibit 10(g) to registrant's Annual Report on Form 10-K for the year ended January 31, 1998 (file #0-11682), is expressly incorporated herein by this reference. *g. 1995 Stock Purchase Loan Plan filed as Exhibit A to the registrant's definitive proxy statement for the Annual Meeting of Shareholders held on May 25, 1995 (file #0-11682) is expressly incorporated herein by this reference. *h. 1999 Stock Incentive Plan filed as Exhibit A to the registrant's definitive proxy statement for the Annual Meeting of Shareholders held on May 19, 1999 (file #0-11682) is expressly incorporated herein by this reference. *i. 2000 Stock Purchase Loan Plan filed as Exhibit A to the registrant's definitive proxy statement for the Annual Meeting of Shareholders held on May 18, 2000 (file #0-11682) is expressly incorporated herein by this reference. (13) Annual report to security holders, Form 10-Q or quarterly report to security holders a. Registrant's 2000 Annual Report to Shareholders ("2000 Annual Report") for the fiscal year ended February 3, 2001. (23) Consents of Experts and Counsel a. Consent of Independent Accountants * Management contract or compensatory plan or arrangement of the Company required to be filed as an exhibit. EX-3.B 2 0002.txt AMENDMENT TO BYLAWS Exhibit (3)b. APPROVED AT BOARD OF DIRECTORS MEETING OF MARCH 27, 2001 Mr. Siegel next proposed an amendment to the Bylaws of the Company to decrease the number of directors from eight to seven. After discussion, it was: RESOLVED: that the first sentence of Section 3.2 of the Bylaws of the Corporation be amended to read as follows: "The number of Directors shall be seven (7)." RESTATED BYLAWS OF S & K FAMOUS BRANDS, INC. (Conformed to include amendments to date) ARTICLE I OFFICES Section 1.1. Principal Office. The principal office of the Corporation shall ----------------- be at 11100 West Broad Street, Richmond, Virginia. Section 1.2. Registered Office. The Registered Office of the Corporation in ------------------ Virginia (as required by law) shall be at such place as the Board of Directors shall from time to time by resolution determine, and may, but need not, be at the principal office of the Corporation. Section 1.3. Other Offices. The Corporation may, in addition to its -------------- principal office, have offices at such other places either within or without Virginia as the Board of Directors may from time to time appoint or as the business of the Corporation may require. ARTICLE II STOCKHOLDERS' MEETINGS Section 2.1. Annual Meetings. The annual meeting of the stockholders of the ---------------- Corporation shall be held on the last Thursday in May of each year, if not a legal holiday in Virginia, and if a legal holiday, then on the next succeeding business day. If, in the judgment of the President or the Board of Directors, an annual meeting of stockholders should not be held on the day designated in these Bylaws because of the unavailability of necessary information, or for other sufficient reason, a substitute annual meeting may be called in accordance with the provisions of Section 2.2 of this Article. Any meeting so called shall be designated and treated for all purposes as the annual meeting. Section 2.2. Special Meetings. A special meeting of the stockholders may be ----------------- called by the Chairman of the Board of Directors, the President, or the Board of Directors, or by Stockholders if required by law, or, at the direction of any of the foregoing, the Secretary. Only business within the purpose or purposes described in the notice for a special meeting of Stockholders may be conducted at the meeting. Section 2.3. Place of Meetings. Each annual and special meeting of the ------------------ stockholders shall be held at the principal office of the Corporation or at such other place, within or without Virginia, as the Board of Directors may designate in the notice of the meeting. Section 2.4. Notice of Meetings. Written notice of each annual and special ------------------- meeting of the stockholders shall be given by or at the direction of the officer or other persons calling the meeting. The notice shall state the place, day and hour of the meeting and such other information as may be required by law and, in the case of a special meeting, the purpose or purposes for which the meeting is called. Except as otherwise required herein or by law, a copy of the notice shall be delivered personally or mailed to each stockholder of record entitled to vote at such meeting not less than ten days nor more than fifty days before such meeting. If mailed, such notice shall be deemed given when deposited in the United States mail, postage prepaid, addressed to the stockholder at his or her address as it appears on the stock transfer books of the Corporation, unless he or she shall have filed with the Secretary of the Corporation a written request that notices be mailed to some other address, in which case it shall be mailed to the address designated in such request. Notice of a stockholders' meeting to act on an amendment of the articles of incorporation or on a reduction of stated capital or on a plan of merger, consolidation or exchange shall be given in the manner provided above not less than twenty-five nor more than fifty days before the date of the meeting. Any such notice shall be accompanied by a copy of the proposed amendment or plan of reduction or merger, consolidation or exchange. Section 2.5. Waiver of Notice. Any notice herein or by law required may be ----------------- waived in a writing signed by the person entitled to the notice before or after the time of the event for which notice was required to be given, and such waiver shall be the equivalent of the giving of notice. A stockholder who attends a meeting shall be deemed to have had timely and proper notice of the meeting, unless such stockholder attends for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. No notice of the reconvening of any adjourned or recessed meeting need be given. Section 2.6. Quorum. Except as otherwise provided by law or in the articles ------- of incorporation, at any meeting of the stockholders of the Corporation, the presence in person or by proxy of the holders of a majority in number of the outstanding shares of stock entitled to vote at such meeting shall constitute a quorum for the transaction of business. In the absence of a quorum, a majority in voting power of the stockholders present in person or by proxy and entitled to vote may adjourn the meeting from time to time and from place to place until a quorum is obtained. At any such adjourned meeting at which a quorum is present, any business may be transacted that might have been transacted at the meeting as originally called. Section 2.7. Organization. At any meeting of the stockholders, the Chairman ------------- of the Board or, if he or she is absent or no Chairman of the Board is in office, the President or, in their absence, a person chosen by a majority vote of the stockholders present in person or by proxy and entitled to vote shall act as chairman of the meeting. The Secretary or an Assistant Secretary or, in the discretion of the chairman, any person designated by him or her shall act as secretary of the meeting. Section 2.8. Business and Order of Business. At any meeting of the ------------------------------- stockholders, such business may be transacted as may properly be brought before such meeting, whether or not such business is stated in the notice of meeting or in waiver of notice thereof, except as otherwise by law or by these bylaws expressly provided. The order of business of all meetings of stockholders shall be as determined by the chairman, but such order of business may be changed by a majority in voting power of the stockholders present in person or by proxy and entitled to vote at the meeting. Section 2.9. Voting. Except as otherwise provided by law, only the holders ------- of shares given voting power by and as provided in the articles of incorporation shall be entitled to vote upon matters to be voted upon by the stockholders. At any meeting of stockholders held for any purpose, each holder of record of stock entitled to vote thereat shall be entitled to vote the shares of such stock standing in his or her name on the books of the Corporation on the date determined in accordance with Section 6.7. Except for the election of directors, the holders of shares permitted to vote shall be entitled to one vote for each outstanding share held on each matter submitted to a vote at a meeting of stockholders; and if a quorum is present, the affirmative vote of the majority of the shares represented at the meeting and entitled to vote on the subject matter shall be the act of the stockholders, unless the vote of a greater number or voting by classes is required by law or the articles of incorporation. Directors shall be elected upon the vote provided in Section 3.3. Section 2.10. Method of Voting. Any stockholder entitled to vote may vote ----------------- either in person or by proxy executed in writing by the stockholder or his duly authorized attorney-in-fact and delivered to the secretary of the meeting or other designated person. No proxy shall be valid after eleven months from its date unless the proxy provides for a longer period. No authorization of an attorney-in-fact to execute a proxy shall be valid after ten years from its date, but such proxies may be accepted as valid in the absence of notice to the contrary. At any time before the shares to which a proxy relates are voted, the proxy may be revoked by a written notice to the secretary of the meeting, which revocation may be in the form of a substitute proxy. Section 2.11. Taking of Votes. Any vote taken at a meeting of stockholders ---------------- shall be viva voce or by ballot as the chairman of the meeting may decide, except that upon demand for a vote by ballot on any question or election made in person or by proxy by any stockholder or stockholders holding in the aggregate at least one-fifth of the stock entitled to vote on any question, such vote shall be by ballot. Section 2.12. Voting List. At least ten days before each meeting of ------------ stockholders, a complete list of the stockholders entitled to vote at any such meeting or any adjournment thereof, with the address of and the number of shares held by each, shall be prepared and kept on file subject to inspection by any stockholder during regular business hours at the principal office of the Corporation, at its registered office or at the office of its transfer agent or registrar. Such list shall also be produced and kept open at the time and place of the meeting and shall be subject to inspection by any stockholder during the meeting. The original stock transfer books shall be prima facie evidence who are the stockholders entitled to examine such list or transfer books or to vote at any meeting of stockholders. Section 2.13. Election Inspectors. Two or more inspectors of election may -------------------- be appointed by the Board of Directors before each meeting of the stockholders; and if no such appointment has been made, or if any inspector thus appointed shall not be present, the chairman of the meeting may, and if requested by stockholders holding in the aggregate at least one-fifth of the stock entitled to vote at the meeting shall, appoint such an inspector or inspectors to determine the qualifications of voters, the validity of proxies and the number of shares represented at the meeting, to supervise voting and to ascertain the results thereof. Section 2.14. Action by Stockholders Without a Meeting. Any action required ----------------------------------------- to be taken at a meeting of the stockholders of the Corporation, or which may be taken at such a meeting, may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the stockholders entitled to vote with respect to the subject matter thereof. Such consent shall have the same force and effect as a unanimous vote of stockholders. ARTICLE III DIRECTORS Section 3.1. General Powers. The business and affairs of the Corporation --------------- shall be managed by the Board of Directors, and all corporate powers shall be exercised by the Board of Directors, except as otherwise expressly required by these bylaws, by the articles of incorporation or by law. Section 3.2. Number, Term of Office and Qualifications. The number of ------------------------------------------ directors shall be seven (7). A Board of Directors shall be elected annually in the manner provided in these bylaws, and each director shall hold office until the annual meeting next following his election and until his or her successor shall have been elected, or until his or her death, resignation or removal. No decrease in the number of directors by amendment to these bylaws shall have the effect of shortening the term of any incumbent director. Directors need not be stockholders or residents of Virginia unless the articles of incorporation so require. Section 3.3 Election. At any meeting of stockholders for the election of -------- directors, a quorum being present, every stockholder entitled to vote on the election of directors shall have the right to vote in person or by proxy the number of shares owned by him or her for as many persons as there are directors to be elected at that time and for whose election he or she has a right to vote. The persons receiving the greatest number of votes shall be the directors even though not receiving a majority. If the election of directors shall not be held on the day designated for the annual meeting of stockholders or at any adjournment of such meeting, the Board of Directors shall cause the election to be held at a special meeting of the stockholders as soon thereafter as may be convenient. Section 3.4. Annual Meeting. The Board of Directors may meet, without notice --------------- of such meeting for the purpose of the election of officers and the transaction of other business, on the same day as, at the place at which and as soon as practicable after each annual election of directors is held. Such annual meeting may be held at any other time or place specified in a notice given hereinafter provided for special meetings of the Board of Directors or in a waiver of notice thereof. Section 3.5. Regular Meetings. Regular meetings of the Board of Directors ----------------- may be held at such times and places as may be fixed from time to time by action of the Board of Directors. Section 3.6. Special Meetings. Special meetings of the Board of Directors ----------------- shall be held whenever called by the Chairman of the Board, the President, any two or more directors or, at the direction of any of the foregoing, the Secretary. Section 3.7. Place of Meeting, etc. The Board of Directors may hold its ---------------------- meetings at such place or places within or without Virginia as the Board of Directors may from time to time by resolution designate or (unless contrary to resolution of the Board of Directors) at such place as shall be designated in the respective notices or waivers of notice thereof. In the absence of any designation, the meeting shall be held at the principal office of the Corporation. Section 3.8. Participation by Conference Telephone. Unless otherwise -------------------------------------- restricted by the articles of incorporation, members of the Board of Directors or any committee designated thereby may participate in any meeting of the Board of Directors or committee by means of a conference telephone or similar communications equipment whereby all persons participating in the meeting can hear each other, and participation by such means shall constitute presence in person at such meeting. When such a meeting is conducted my means of a conference telephone or similar communications equipment, a written record shall be made of the action taken at such meeting. Section 3.9. Notice of Meetings. Unless required by resolution of the Board ------------------- of Directors, notice of any regular meeting of the Board need not be given. Notice of each special meeting shall be mailed to each director at his or her residence or usual place of business at least three days before the date on which the meeting is to be held; or such notice shall be sent to each director at such place by telegraph, cable, or wireless or be delivered to him or her personally or by telephone not later than twenty-four hours before the time at which the meeting is to be held. Every such notice shall state the time and place of the meeting, but need not state the business to be transacted nor the purposes of the meeting. No notice of the reconvening of any adjourned or recessed meeting need be given. Section 3.10. Waivers of Notice of Meeting. Anything in these bylaws or in ----------------------------- any resolution adopted by the Board of Directors to the contrary notwithstanding, proper notice of any meeting of the Board of Directors shall be deemed to have been given to any director if such notice shall be waived by him in writing (including telegraph, cable or wireless) before or after the meeting. Neither the business to be transacted nor the purpose of the meeting, whether regular or special, need be specified in the waiver. A director who attends a meeting shall be deemed to have had timely and proper notice thereof, unless he or she attends for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. Section 3.11. Organization of Meeting. At each meeting of the Board of ------------------------ Directors, the Chairman of the Board or, if he or she is absent or no Chairman of the Board is in office, the President or, in their absence, a director chosen by the majority of the directors present shall act as chairman. The Secretary of the Corporation or an Assistant Secretary or, in the discretion of the chairman, any person appointed by the Secretary shall act as secretary of the meeting. Section 3.12. Quorum and Manner of Acting. A majority of the number of ---------------------------- directors at the time fixed by these bylaws shall constitute a quorum for the transaction of business. The act of a majority of the directors present at any meeting at which a quorum is present shall be the act of the Board of Directors. In the absence of a quorum, a majority of the directors present may adjourn the meeting from time to time until a quorum be had. The directors shall act only as a Board, and the individual directors shall have no power as such. Section 3.13. Action by Directors Without a Meeting. Any action required to -------------------------------------- be taken at a meeting of the Board of Directors or that may be taken at a meeting of the Board of Directors or of a committee established by the Board of Directors may be taken without a meeting if a consent in writing setting forth the action shall be signed either before or after such action by all of the directors or all of the members of the committee, as the case may be. Such consent shall have the same force and effect as an unanimous vote. Section 3.14. Resignations. Any director of the Corporation may resign at ------------- any time, orally or in writing, by notifying the Chairman of the Board, President or Secretary of the Corporation. Such resignation shall take effect at the time therein specified, and, unless otherwise specified, the acceptance of such resignation shall not be necessary to make it effective. Section 3.15. Removal of Directors. Any director may be removed at any time, --------------------- either with or without cause, by the affirmative vote of a majority in voting power of the stockholders of record of the Corporation entitled to elect a successor, given in person or by proxy at a special meeting of such stockholders called expressly for that purpose, at which a quorum shall be present. Section 3.16. Vacancies. Any vacancy in the Board of Directors, caused by ---------- death, resignation, removal, disqualification or any other cause (other than an increase by more than two in the number of directors) may be filled for the unexpired term by the majority vote of the remaining directors then in office, though less than a quorum, at any regular or special meeting of the Board of Directors. Section 3.17. Compensation. Each director who is not a salaried employee of ------------- the Corporation may be paid such amount per annum or such fees for attendance at directors' meetings, or both, and such additional amounts for service upon committees as the Board of Directors shall from time to time determine, together with reimbursement for the reasonable expenses incurred by him or her in connection with the performance of his or her duties. Nothing in this section shall preclude any director from serving the Corporation or its subsidiaries in any other capacity and receiving proper compensation therefor. Section 3.18. Executive Committee. The Board of Directors may, by resolution -------------------- adopted by a vote of a majority of the number of directors at the time fixed by these bylaws, designate two or more of their number as an Executive Committee. While the Board of Directors is not in session, the Executive Committee, if there then be such a committee, shall have and exercise all of the authority of the Board of Directors in the management of the business and affairs of the Corporation, subject to the restrictions hereinafter set out and further subject to such limitations upon its authority as the Board of Directors may from time to time impose. In no event shall the Executive Committee, or any other committee, have authority to approve an amendment to the articles of incorporation, a plan of merger or consolidation, a plan of exchange under which the Corporation would be acquired, the sale, lease or exchange, or the mortgage or pledge for a consideration other than money, of all, or substantially all, of the property and assets of the Corporation otherwise than in the usual and regular course of the business of the Corporation, or the voluntary dissolution of the Corporation or revocation of voluntary dissolution procedures. Section 3.19. Other Committees. In addition to an Executive Committee, the ----------------- Board of Directors may, by resolution adopted by a vote of a majority of the directors present at a meeting at which a quorum is present, designate other committees consisting of two or more directors. Such other committees may include an Audit Committee, which may recommend the selection of auditors and accountants, review the adequacy of internal financial controls and review the scope and results of the audit or other financial statements. Section 3.20. Operation of Committees. Unless the Board of Directors by ------------------------ resolution otherwise provides, each committee shall choose its own chairman and secretary and shall record all its acts and proceedings and report the same from time to time to the Board of Directors. Regular meetings of any committee, of which no notice shall be necessary, may be held at such times and in such places as shall be determined by a majority of the committee. Special meetings of any committee may be called at the request of any member of the committee. Notice of any special meeting of a committee shall be given by the person calling the same as provided by these bylaws for special meetings of the full Board of Directors. Notice of any such meeting may be waived as provided by these bylaws in the case of meetings of the full Board of Directors. A majority of any committee shall constitute a quorum for the transaction of business, and the act of a majority of those present at any meeting at which a quorum is present shall be the act of the committee. Action by a committee may be taken without a meeting as provided in Section 3.13. Members of any such committee shall act only as a committee and the individual members shall have no power as such. The Board of Directors shall have the power at any time to change the members of, fill vacancies in and discharge any committee, either with or without cause. The appointment of any director to any committee, if not sooner terminated, shall automatically terminate upon the expiration of his or her term as a director or upon the earlier cessation of his or her membership on the Board of Directors. ARTICLE IV OFFICERS Section 4.1. Officers. The officers of the Corporation shall be a President, --------- a Treasurer and a Secretary and, where elected, a Chairman of the Board, one or more Vice Presidents, and the holders of such other offices as may be established in accordance with the provisions of Section 4.3. Any two or more offices may be held by the same person; provided that the same person shall not hold the offices of both President and Secretary, unless the Corporation has only one stockholder, in which event such stockholder may hold all offices. The officers shall have such authority and shall perform such duties as generally pertain to their offices and as may lawfully be provided by these bylaws or by resolution of the Board of Directors not inconsistent with these bylaws. Section 4.2. Election, Term of Office and Qualifications. Except as provided -------------------------------------------- for subordinate officers in Section 4.3, the officers shall be elected annually by the Board of Directors as soon as practicable after the annual election of Directors in each year and may be elected at such other time or times as the Board of Directors shall determine. Each officer shall hold office until his or her successor shall have been duly chosen and shall qualify or until his or her death, resignation or removal in the manner hereinafter provided. Section 4.3. Subordinate Officers. The Board of Directors may from time to --------------------- time establish officers in addition to those designated in Section 4.1 with such duties as are provided in these bylaws or as the Board of Directors may from time to time determine. Such subordinate officers may be elected or appointed by the Board of Directors or may be appointed by such other officers as may be designated by the Board of Directors. Section 4.4. Removal. Any officer may be removed, either with or without -------- cause, by resolution declaring such removal to be in the best interests of the Corporation and adopted at any regular or special meeting of the Board of Directors by a majority of the directors then in office. Any officer appointed otherwise than by the Board of Directors also may be removed, with or without cause, by any officer having authority to appoint whenever such officer considers such removal to be in the best interest of the Corporation. Any such removal shall be without prejudice to the recover of damages for breach of the contract rights, if any, of the person removed. Election or appointment of an officer or agent shall not of itself, however, create contract rights. Section 4.5. Resignations. Any officer may resign at any time by giving oral ------------- or written notice to the Board of Directors, the Chairman of the Board, the President or the Secretary of the Corporation. Any such resignation shall take effect at the date of receipt of such notice or at any later time therein specified; and, unless otherwise specified, the acceptance of such resignation shall not be necessary to make it effective. No resignation hereunder, however, or the acceptance thereof by the Board of Directors shall prejudice the contract or other rights, if any, of the Corporation with respect to the person resigning. Section 4.6. Vacancies or Absences. A vacancy in any office because of ---------------------- death, resignation, removal, disqualification or any other cause shall be filled for the unexpired portion of the term by the Board of Directors or by such other officer as may be designated by the Board of Directors. During the absence of any officer of the Corporation, or his or her disqualification or inability to act, the President (if not absent, disqualified or unable) may by written order or the Board of Directors may by resolution delegate the powers of such officer to any other officer or employee of the Corporation. Section 4.7. Compensation. Salaries or other compensation of the officers ------------- may be fixed from time to time by the Board of Directors or in such manner as it shall determine. No officer shall be prevented from receiving his or her salary by reason of the fact that he or she is also a director of the Corporation. Section 4.8. Chairman of the Board of Directors. The Chairman of the Board ----------------------------------- of Directors, shall be the chief executive officer of the corporation and shall have general direction of the business, affairs and property of the Corporation and over its several offices. He shall see that all orders and resolutions of the Board of Directors are carried into effect, and he shall have power to sign all contracts and agreements authorized by the Board of Directors unless it otherwise directs. He shall do and perform such other duties as from time to time may be assigned to him by the Board of Directors. Section 4.9. President. The President shall be the chief operating officer ---------- of the Corporation. He shall perform all duties incident to the office of President and such other duties as from time to time may be assigned to him by the Chairman of the Board or the Board of Directors and as may be prescribed in these Bylaws. He shall have power to sign all contracts and agreements authorized by the Board of Directors unless it otherwise directs. In addition, he shall exercise all the powers and discharge all duties of the Chairman of the Board during the latter's absence or inability to act. Section 4.10. Vice Presidents. The Vice President or Vice Presidents shall ---------------- perform such duties as from time to time may be assigned by the Board of Directors, any duly authorized committee of directors or the President, and shall have such other powers and authorities as are elsewhere in these bylaws conferred upon them. In the order designated by the Board of Directors from time to time (and if no such designation is made, in the order of election as Vice Presidents), the Vice Presidents shall, during the absence, disqualification or inability to act of the President, exercise all of the functions and perform all of the duties of the President. Section 4.11. Treasurer. Except as may otherwise be specifically provided by ---------- the Board of Directors or any duly authorized committee thereof, the Treasurer shall have the custody of and be responsible for all funds and securities of the Corporation; receive and receipt for money paid to the Corporation from any source whatsoever; deposit all such moneys in the name of the Corporation in such banks, trust companies or other depositories as shall be selected in accordance with the provisions of these bylaws; against proper vouchers, cause such funds to be disbursed by check or draft on the authorized depositories of the Corporation signed in such manner as shall be determined in accordance with the provisions of these bylaws; regularly enter or cause to be entered in books to be kept by him or her or under his or her direction full and adequate accounts of all money received and paid for the account of the Corporation; in general, perform all the duties incident to the office of Treasurer and such other duties as from time to time may be assigned by the Board of Directors, any duly authorized committee of directors, or the President; and have such other powers and authorities as are elsewhere in these bylaws conferred. Section 4.12. Secretary. The Secretary shall act as secretary of all ---------- meetings of stockholders and the Board of Directors; shall keep the minutes thereof in the proper book or books to be provided for that purpose; shall see that all notices required to be given by the Corporation are duly given and served; shall be the custodian of the seal of the Corporation and shall affix the seal or cause it to be affixed to all documents the execution of which on behalf of the Corporation under its corporate seal is duly authorized in accordance with the provisions of these bylaws; shall have charge of the books, records and papers of the Corporation relating to its organization and management as a corporation and shall see that any reports or statements relating thereto, required by law or otherwise, are properly kept and filed; shall, in general, perform all the duties incident to the office of Secretary and such other duties as from time to time may be assigned by the Board of Directors, any duly authorized committee of directors or the President; and shall have such other powers and authorities as are elsewhere in these bylaws conferred upon him or her. Section 4.13. Assistant Treasurers and Assistant Secretaries. Assistant ----------------------------------------------- Treasurers and Assistant Secretaries shall perform such duties as shall be assigned by the Treasurer and the Secretary, respectively, the Board of Directors, any duly authorized committee of directors, or the President; and shall have such other powers and authorities as are elsewhere in these bylaws conferred upon them. Section 4.14. Certain Officers to Give Bonds. Every officer, agent or ------------------------------- employee of the Corporation who may receive, handle or disburse money for its account or who may have any of the Corporation's property in his or her custody or be responsible for its safety or preservation may be required, in the discretion of the Board of Directors, to give bond in such sum and with such sureties and in such form as shall be satisfactory to the Board of Directors for the faithful performance of the duties of such office and for the restoration to the Corporation in the event of death, resignation or removal from office of such officer, of all books, papers, vouchers, moneys and other property of whatsoever kind in his or her custody belonging to the Corporation. ARTICLE V CONDUCT OF BUSINESS Section 5.1. Execution of Contracts and Other Documents. Except as otherwise ------------------------------------------- required by law, the articles of incorporation or these bylaws, the Board of Directors or any duly authorized committee or directors may authorize any officer or officers, agent or agents, in the name and on behalf of the Corporation to enter into any contract or execute any deed or other instrument, and any such authority may be general or confined to specific instances. Whenever the Board of Directors or duly authorized committee of directors, in authorizing or directing the execution of any contract, deed or other instrument, shall fail to specify the officer or officers or other agent or agents who are to execute the same, such contract, deed, or other instrument shall be executed on behalf of the Corporation by the Chairman of the Board, the President or any Vice President and, where necessary or appropriate, the corporate seal shall be affixed thereto and attested by the Secretary or any Assistant Secretary. Section 5.2. Loans. Any officer or officers or agent or agents of the ------ Corporation authorized by the Board of Directors or by any duly authorized committee of directors may effect loan or advances at any time for the Corporation in the ordinary course of the Corporation's business from any bank, trust company or other institution, or from any firm, corporation or individual, and for such loans and advances may make, execute and deliver promissory notes, bonds or other certificates or evidence of indebtedness of the Corporation, and when authorized so to do, may pledge, hypothecate or transfer any securities or other property of the Corporation as security for any such loans or advances. Such authority conferred by the Board of Directors or any duly authorized committee of directors may be general or confined to specific instances. Section 5.3. Checks, Drafts, Etc. All checks, drafts and other orders for -------------------- payment of money out of the funds of the Corporation shall be signed on behalf of the Corporation in such manner as shall from time to time be determined by resolution of the Board of Directors or any duly authorized committee of directors. Section 5.4. Deposits. The funds of the Corporation not otherwise employed --------- shall be deposited from time to time to the order of the Corporation in such banks, trust companies or other depositaries as the Board of Directors or any duly authorized committee of directors may from time to time select, or as may be selected by an officer or officers or agent or agents of the Corporation to whom such power may from time to time be delegated by the Board of Directors or any duly authorized committee of directors. Section 5.5. Securities Held by Corporation. Unless otherwise provided by ------------------------------- resolution of the Board of Directors, the President may from time to time himself, or by such proxy or proxies, attorney or attorneys, or other agent or agents of the Corporation as he or she shall designate, in the name and on behalf of the Corporation cast the votes to which the Corporation may be entitled as a stockholder or otherwise in any other corporation or entity at meetings or consent in writing to any action by any such other corporation or entity; and the President may instruct the person or persons so appointed as to the manner of casting such votes or giving such consent and execute or cause to be executed on behalf of the Corporation and under its corporate seal, or otherwise, such written proxies, consents, waivers or other instruments as he or she may deem necessary or desirable. ARTICLE VI CAPITAL STOCK Section 6.1. Stock Certificates. Every stockholder of the Corporation shall ------------------- be entitled to a certificate or certificates, in form approved by the Board of Directors, certifying the number and class of shares of the capital stock of the Corporation owned by him or her. Each certificate shall be signed by the President or a Vice President, and by the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary or any other officer of the Corporation authorized by these bylaws or a resolution of the Board of Directors. The signatures of the officers upon a certificate may be facsimiles if the certificate is countersigned by a transfer agent or registered by a registrar other than the Corporation itself or an employee of the Corporation. If any officer who has signed or whose facsimile signature has been placed upon a stock certificate shall have ceased to be an officer of the Corporation before the certificate is issued, it may be issued by the Corporation with the same effect as if he or she were an officer at the date of its issue. All stock certificates of the Corporation shall be numbered and shall be entered in the books of the Corporation as they were issued. No fractional shares shall be issued. Section 6.2. Scrip. In lieu of fractional shares, the Board of Directors may ------ issue scrip in registered or bearer form that shall entitle the holder to receive a certificate for a full share upon the surrender of such scrip aggregating a full share. Scrip shall not entitle the holder to exercise voting rights and except as otherwise provided therein, shall not entitle the holder to receive dividends thereon or to participate in any of the assets of the corporation in the event of liquidation. The Board of Directors may cause scrip to be issued subject to the condition that it shall become void if not exchanged for certificates representing full shares before a specified date, or subject to the condition that the shares for which such scrip is exchangeable may be sold by the Corporation and the proceeds thereof held for the holders of such scrip, or subject to any other conditions that the Board of Directors may deem advisable. When a shareholder would otherwise be entitled to a fractional share upon a conversion of shares or a dividend payable in shares, the Board of Directors may, in lieu of issuing scrip, authorize payments in cash based on the fair value of the shares as determined by the Board of Directors and their determination, in the absence of fraud, shall be final. Section 6.3. Stock Ledger. A record shall be kept by the Secretary, transfer ------------- agent or by any other officer, employee or agent designated by the Board of Directors of the name and address of the person, firm or corporation holding capital stock represented by certificates of the Corporation, the number of shares of each class or series represented by such certificates, respectively, the respective dates thereof and, in case of cancellation, the respective dates of cancellation. Section 6.4. Registered Stockholders. Only stockholders of record on the ------------------------ stock records of the Corporation shall be entitled to be treated by the Corporation as the holders of the stock standing in their respective names, and except to the extent, if any, required by law, the Corporation shall not be obligated to recognize any equitable or other claim to or interest in any share on the part of any other person, whether or not it shall have express or other notice thereof. Section 6.5. Registration of Transfers. Registration of transfers of stock -------------------------- shall be made on the stock transfer books upon surrender of the certificate therefor, endorsed or accompanied by a written assignment signed by the holder of record or by the holder's duly authorized attorney-in-fact. The Board of Directors may from time to time make reasonable regulations governing transfers of stock and other securities. Unless otherwise required by law, no transfer shall be registered that would violate the terms of any written agreement to which the Corporation, and either the transferor or transferee, is a party. Section 6.6. Cancellation. Every certificate surrendered to the Corporation ------------- for exchange or transfer shall be cancelled, and no new certificate or certificates shall be issued in exchange for any existing certificate until such existing certificate shall have been so cancelled, except in cases provided for in Section 6.8. Section 6.7. Record Dates. For the purpose of determining stockholders ------------- entitled to notice of or to vote at any meeting of stockholders to receive payment of any dividend, or in order to make a determination of stockholders for any other proper purpose, the Board of Directors may fix in advance a date as the record date for any such determination of stockholders, such date to be not more than fifty days before the date on which the particular action requiring such determination of stockholders is to be taken. In such event, only those stockholders as shall be stockholders of record on the date so fixed shall be entitled to be treated as stockholders of the Corporation for the purposes of the action for which the determination of stockholders is being made, notwithstanding any transfer of any stock on the books of the Corporation after such record date. If no record date is fixed, the date on which the notice of the meeting is mailed or the date on which the resolution of the Board of Directors declaring a dividend is adopted, as the case may be, shall be the record date for such determination of stockholders. When a determination of stockholders entitled to vote at any meeting of stockholders has been made as herein provided, such determination shall apply to any adjournment thereof. Section 6.8. Lost Certificates. Any person claiming a certificate of stock ------------------ to be lost, stolen or destroyed shall furnish proof of that fact satisfactory to an officer of the Corporation and shall agree, with such surety as may be prescribed by the Board of Directors of the Corporation, to indemnify and save the Corporation harmless from and against all liabilities, damages, costs and expenses arising out of the loss, theft or destruction, whereupon a new certificate may be issued of the same tenor and for the same number of shares as the one alleged to be lost, stolen or destroyed. The Board of Directors may at any time authorize the issuance of a new certificate to replace a certificate alleged to be lost, stolen or destroyed upon such other lawful terms and conditions as it shall from time to time prescribe. Section 6.9. Dividends. Dividends upon the capital stock of the Corporation ---------- may be declared by the Board of Directors at any regular or special meeting as provided by the laws of Virginia and the articles of incorporation. Before payment of any dividend or making any distribution of profits, there may be set aside out of the surplus or net profits of the Corporation such sum or sums as the Board of Directors from time to time, in their absolute discretion, think proper as a reserve fund for meeting contingencies, for equalizing dividends, for repairing or maintaining any property of the Corporation or for such other purposes as the Directors shall deem in the best interests of the Corporation. ARTICLE VII MISCELLANEOUS Section 7.1. Seal. The corporate seal of the Corporation shall be in such ----- form as may be approved from time to time by the Board of Directors. Section 7.2. Fiscal Year. The books of account of the Corporation shall be ------------ kept and annual financial statements shall be prepared on the basis of a calendar or other fiscal year to be determined by resolution of the Board of Directors. Section 7.3. Books and Records. The Corporation shall maintain correct and ------------------ complete books and records of account and shall keep minutes of the proceedings of its stockholders, the Board of Directors and any designated committees thereof. Section 7.4. Inspection of Books and Records. Any person who shall have been -------------------------------- a stockholder of record for at least six months immediately preceding his or her demand or who shall be the holder of record of at least five percent of all the outstanding shares of the Corporation's stock, upon written demand stating the purpose thereof, shall have the right to examine, in person or by agent or attorney, at any reasonable time or times, for any proper purpose, the Corporation's books and records of accounts, minutes and records of stockholders, and to make copies or extracts therefrom. Section 7.5. Financial Statements. Upon the written request of any --------------------- stockholder, the Corporation shall mail to such stockholder its most recent published financial statement showing in reasonable detail its assets and liabilities and the results of its operations. ARTICLE VIII INDEMNIFICATIONS Section 8.1. Indemnification. The Corporation shall indemnify any director, ---------------- officer, employee, or agent as provided by the laws of Virginia and the articles of incorporation. ARTICLE IX AMENDMENTS Section 9.1. By the Directors. The Board of Directors by a majority vote ----------------- thereof shall have the power to make, alter, amend or repeal the bylaws of the Corporation at any regular or special meeting thereof. This power shall not be exercised by the Executive Committee. Section 9.2. By the Stockholders. All bylaws shall be subject to amendment, -------------------- alteration or repeal by the stockholders entitled to vote at any annual or at any special meeting. The stockholders, at any annual or at any special meeting, may provide that certain bylaws by them adopted, approved or designated may not be amended, altered or repealed, except by a certain specified percentage in interest of the stockholders or by a certain specified percentage in interest of a particular class of stockholders. EX-13 3 0003.txt EXHIBIT 13 FIVE-YEAR SUMMARY OF SELECTED FINANCIAL DATA (Dollar and share amounts in thousands, except per share data)
Fiscal Year Ended ------------------------------------------------------------------------------------------ February 3, January 29, January 30, January 31, January 25, 2001 2000 1999 1998 1997 ------------------- ---------------- --------------- ---------------- ---------------- INCOME STATEMENT DATA: Net sales ................................ $ 167,913 $ 162,792 $ 154,446 $ 144,983 $ 130,222 Gross profit.............................. 83,083 78,431 73,640 68,898 60,268 Selling, general and administrative expenses.............. 71,753 66,977 61,561 57,964 51,779 Interest.................................. 869 1,068 772 536 546 Depreciation and amortization ............ 3,239 3,071 2,757 2,404 2,242 Net income................................ 4,531 4,899 5,486 4,981 4,610 EARNINGS PER SHARE DATA: Basic earnings per share.................. $ 1.04 $ 1.04 $ 1.09 $ 0.99 $ 0.91 Diluted earnings per share................ 1.04 1.04 1.07 0.97 0.91 Weighted average shares outstanding - basic ............................... 4,373 4,719 5,040 5,026 5,066 Weighted average shares outstanding - including dilutive potential common shares............................... 4,375 4,729 5,119 5,118 5,092 BALANCE SHEET DATA: Working capital........................... $ 43,769 $ 43,670 $ 45,021 $ 35,000 $ 33,804 Inventories............................... 52,031 51,538 50,779 43,896 41,511 Net property and equipment................ 18,522 19,607 19,713 17,833 14,755 Total assets.............................. 79,948 79,828 79,296 69,446 62,429 Long-term debt (including current maturities).................. 9,230 10,019 12,377 4,260 4,340 Shareholders' equity...................... 55,866 55,303 53,717 49,521 45,109 Book value per share...................... 13.60 11.88 11.02 9.88 8.90 Current ratio............................. 4.7:1 4.8:1 5.3:1 3.6:1 4.1:1 Number of stores at year end.............. 238 240 233 211 194
MANAGEMENT'S DISCUSSION AND FINANCIAL REVIEW RESULTS OF OPERATIONS The following table sets forth certain items in the Statements of Income as a percentage of net sales for fiscal years 2001, 2000, and 1999.
Percentage of Net Sales Fiscal Year Ended 2/3/01 1/29/00 1/30/99 ------------ ------------- ------------ Net sales.......................................... 100.0 100.0 100.0 Cost of sales....................................... 50.5 51.8 52.3 ------------ ------------- ------------ Gross profit ...................................... 49.5 48.2 47.7 Other costs and expenses: Selling, general and administrative............ 42.7 41.1 39.9 Interest....................................... 0.5 0.7 0.5 Depreciation and amortization ................. 1.9 1.9 1.8 Other income, net.............................. --- (0.3) (0.2) ------------ ------------- ------------ Income before income taxes.......................... 4.4 4.8 5.7 Provision for income taxes.......................... 1.7 1.8 2.2 ------------ ------------- ------------ Net income.......................................... 2.7 3.0 3.5 ============ ============= ============
Page 3 Year Ended February 3, 2001 Compared to Year Ended January 29, 2000 Net sales increased by 3%, or $5.1 million, from fiscal 2000 (a 52-week year) to fiscal 2001 (a 53-week year). This increase in net sales is the result of an additional week of sales in fiscal 2001 as well as the addition of 15 new stores and the closing of 17 stores (seven of which were relocations). Comparable store sales were even for the 53-week year; however, on a basis comparable to last year's 52-week period, same store sales decreased 1%. Cost of sales in fiscal 2001 was 50.5% of net sales compared to 51.8% of net sales in fiscal 2000. The 1.3% of net sales reduction was primarily due to a change in the mix of merchandise sold to inventory with higher initial markup and, to a lesser extent, lower markdowns as a percentage of merchandise sold. Selling, general and administrative expenses in fiscal 2001 were 42.7% of net sales compared to 41.1% of net sales in fiscal 2000. This 1.6% of net sales increase was primarily attributable to higher cost and frequency of advertising in the first half of fiscal 2001 related to the Company's heavier emphasis on marketing which included the launch of a branding message campaign. The Company's second half marketing costs were generally in-line with levels experienced in fiscal 2000. To a lesser degree, the increase is related to higher store occupancy and supervision costs, as well as year end incentive bonuses. Interest expense in fiscal 2001 was .5% of net sales compared to .7% of net sales in fiscal 2000 and is primarily attributable to lower average borrowing levels in fiscal 2001 offset in part by average annual interest rates which increased from 5.6% to 6.8%. Other income, net in fiscal 2000 included $665,000 ($412,000 after tax, or $.09 per diluted share) representing a non-recurring gain on the sale of real estate. Year Ended January 29, 2000 Compared to Year Ended January 30, 1999 Net sales increased by 5%, or $8.3 million, from fiscal 1999 to fiscal 2000. This increase in net sales reflects the addition of 22 new stores and 15 closures (one of which was a relocation). Comparable store sales decreased 1% primarily due to reduced customer traffic in a group of outlet stores, lower than planned sales in sportcoats and the opening of new stores in existing markets. Cost of sales in fiscal 2000 was 51.8% of net sales compared to 52.3% of net sales in fiscal 1999. The .5% of net sales reduction was primarily due to lower markdowns on merchandise sold, offset to a lesser degree by higher inventory shrinkage. Selling, general and administrative expenses in fiscal 2000 were 41.1% of net sales compared to 39.9% of net sales in fiscal 1999. This 1.2% of net sales increase was the net result of higher store occupancy and payroll costs, and to a lesser degree, higher group health claims offset by lower year end incentive bonuses. Interest expense in fiscal 2000 was .7% of net sales compared to .5% of net sales in fiscal 1999 and is primarily attributable to higher average borrowings in fiscal 2000. Other income, net in fiscal 2000 included $665,000 ($412,000 after tax, or $.09 per diluted share) representing a gain on the sale of real estate. LIQUIDITY AND CAPITAL RESOURCES In fiscal 2001, the Company funded its operating activities, including capital expenditures for the opening of new stores, and its repurchases of common stock, from internally generated funds and from bank borrowings. During fiscal 2001, the Company opened 15 new stores, closed 17 stores (seven of which were relocated), and remodeled several others. During fiscal 2002, the Company believes it will open approximately 10 new stores while also closing/relocating approximately 10 under-performing locations and does not expect this to significantly impact liquidity or capital resources. The Company believes that its sources of liquidity and capital resources will continue to be sufficient to fund its operations, capital expenditures and stock repurchase initiatives. Operating activities provided net cash of $7.5 million and $9.0 million in fiscal 2001 and fiscal 2000, respectively, and used net cash of $1.1 million in fiscal 1999. The change between fiscal 2001 and 2000 relates to increases in working capital. The change between fiscal 2000 and 1999 was attributable to the $6.1 million reduction in inventory growth year over year and, to a lesser extent, the year over year growth in payables in fiscal 2000 compared to a reduction in fiscal 1999. Net cash used for investing activities in fiscal 2001 approximated $2.8 million and was primarily for the purpose of store expansion and remodeling and, to a lesser degree, the development of the Company's internet store. Net cash used for investing activities in fiscal 2000 approximated $3.0 million and included $4.3 million in capital expenditures related to store expansion, remodels and completion of its point of sale equipment rollout in approximately 150 stores, offset in part by proceeds from property disposals. In fiscal 1999, net cash used in investing activities approximated $5.2 million and included capital expenditures on eight more new stores than in fiscal 2000. Financing activities used net cash of $4.9 million and $5.9 million in fiscal 2001 and fiscal 2000, respectively, and provided net cash of $6.3 million in fiscal 1999. Financing activities primarily relate to fluctuations in the borrowing levels under the Company's revolving credit agreements which have an aggregate borrowing capacity of $40.0 million. Financing activities for the last three fiscal years included $4.1 million, $3.6 million and $2.2 million, respectively, used for the repurchase of approximately 564,600, 403,800 and 220,600 shares of the Company's common stock. The Company has the right at the end of May 2003 to convert the revolving credit agreements into four year term loans. At the end of fiscal 2001, the Company had $32.4 million available for use under its bank revolving lines of credit. OTHER MATTERS Historically, inflation has not significantly affected the Company's gross margins. When necessary, the Company has generally been able to pass through price increases as the cost of merchandise has increased. Interest Rate Risk The Company's bank revolving credit lines and Industrial Development Bonds bear interest at variable rates which expose the Company to risk from interest rate fluctuations. If interest rates were to increase or decrease by 10%, the effect on net income and cash flows would not be material. Page 4 STATEMENTS OF INCOME (in thousands, except per share data)
Fiscal Year Ended ------------------------------------------------------------ February 3, January 29, January 30, 2001 2000 1999 ---------------- --------------- --------------- Net sales............................................... $ 167,913 $ 162,792 $ 154,446 Cost of sales........................................... 84,830 84,361 80,806 ---------------- --------------- --------------- Gross profit............................................ 83,083 78,431 73,640 Other costs and expenses: Selling, general and administrative................ 71,753 66,977 61,561 Interest........................................... 869 1,068 772 Depreciation and amortization...................... 3,239 3,071 2,757 Other income, net.................................. (86) (585) (298) ---------------- --------------- --------------- Income before income taxes.............................. 7,308 7,900 8,848 Provision for income taxes.............................. 2,777 3,001 3,362 ---------------- --------------- --------------- Net income.............................................. $ 4,531 $ 4,899 $ 5,486 ================ =============== =============== Earnings per common share: Basic.............................................. $ 1.04 $ 1.04 $ 1.09 ================ =============== =============== Diluted............................................ $ 1.04 $ 1.04 $ 1.07 ================ =============== =============== Weighted average common shares outstanding - basic................................................... 4,373 4,719 5,040 Dilutive effect of stock options........................ 2 10 79 ---------------- --------------- --------------- Weighted average common shares outstanding - including dilutive potential common shares.............. 4,375 4,729 5,119 ================ =============== ===============
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (in thousands)
Common Stock Capital in Notes Receivable --------------------- Excess of Stock Purchase Loan Retained Shares Amount Par Value Plan Earnings Total ------ ------ --------- ------------------ -------- ----- Balance - January 31, 1998 ............. 5,014 $ 2,507 $ 7,232 $ (1,315) $ 41,097 $49,521 Net income ........................... 5,486 5,486 Repurchase of common stock............ (221) (110) (2,076) (2,186) Issuances of common stock............. 5 2 78 80 Exercise stock options................ 76 38 585 623 Reduction of notes receivable......... 193 193 -------- -------- --------- ---------- -------- ------- Balance - January 30, 1999 ............. 4,874 2,437 5,819 (1,122) 46,583 53,717 Net income............................ 4,899 4,899 Repurchase of common stock............ (404) (202) (3,356) (3,558) Issuances of common stock............. 10 5 75 80 Issuances of common stock under the Stock Purchase Loan Plan....... 176 88 1,412 1,500 Notes receivable - stock purchase..... (1,500) (1,500) Reduction of notes receivable......... 165 165 -------- -------- --------- ---------- -------- ------- Balance - January 29, 2000 ............. 4,656 2,328 3,950 (2,457) 51,482 55,303 Net income............................ 4,531 4,531 Repurchase of common stock............ (565) (282) (3,802) (4,084) Issuances of common stock............. 8 4 56 60 Issuances of common stock under the Stock Purchase Loan Plan....... 10 4 62 66 Notes receivable - stock purchase..... (67) (67) Reduction of notes receivable......... 57 57 -------- -------- --------- ---------- -------- ------- Balance - February 3, 2001 ............. 4,109 $ 2,054 $ 266 $ (2,467) $ 56,013 $55,866 ======== ======== ========= ========== ======== =======
See Notes to Financial Statements. Page 5 BALANCE SHEETS (in thousands, except per share amounts)
February 3, January 29, 2001 2000 --------- -------- ASSETS Current assets: Cash............................................................. $ 439 $ 619 Accounts receivable.............................................. 255 420 Merchandise inventories.......................................... 52,031 51,538 Other current assets............................................. 2,896 2,740 --------- -------- Total current assets.......................................... 55,621 55,317 Property and equipment, net.......................................... 18,522 19,607 Other assets ........................................................ 5,805 4,904 --------- -------- $ 79,948 $ 79,828 ========= ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current maturities of long-term debt ........................... $ 180 $ 180 Accounts payable ................................................ 6,691 7,534 Accrued compensation and related items........................... 2,131 1,054 Current and deferred income taxes ............................... 694 962 Other current liabilities........................................ 2,156 1,917 --------- -------- Total current liabilities..................................... 11,852 11,647 Long-term debt....................................................... 9,050 9,839 Other long-term liabilities.......................................... 1,485 1,393 Deferred income taxes................................................ 1,695 1,646 Commitments Shareholders' equity: Preferred stock, $1 par value; authorized shares, 500; issued and outstanding shares, none......................... Common stock, $.50 par value; authorized shares, 10,000; issued and outstanding shares, 4,109 (2001) and 4,656 (2000)....................................................... 2,054 2,328 Capital in excess of par value................................... 266 3,950 Notes receivable -- Stock Purchase Loan Plan .................... (2,467) (2,457) Retained earnings................................................ 56,013 51,482 --------- -------- 55,866 55,303 --------- -------- $ 79,948 $ 79,828 ========= ========
See Notes to Financial Statements. Page 6 STATEMENTS OF CASH FLOWS Increase (Decrease) in Cash (in thousands)
Fiscal Year Ended -------------------------------------------------------- February 3, January 29, January 30, 2001 2000 1999 --------------- --------------- ---------------- Cash flows from operating activities: Net income................................................... $ 4,531 $ 4,899 $ 5,486 Adjustments to reconcile net income to net cash provided by (used for) operating activities: Depreciation and amortization........................... 3,653 3,494 3,196 Loss (gain) on property dispositions, net............... 220 (349) 160 Other................................................... 92 83 87 Changes in assets and liabilities: Accounts receivable.................................. 165 442 (308) Merchandise inventories ............................. (493) (759) (6,883) Other current assets................................. (156) 546 (116) Other assets......................................... (901) (795) (709) Accounts payable and accrued expenses................ 589 1,035 (2,273) Current and deferred income taxes.................... (219) 365 232 -------- -------- ------- Net cash provided by (used for) operating activities 7,481 8,961 (1,128) -------- -------- ------- Cash flows from investing activities: Capital expenditures......................................... (2,795) (4,324) (5,250) Proceeds from property dispositions.......................... 7 1,285 14 -------- -------- ------- Net cash used for investing activities....................... (2,788) (3,039) (5,236) -------- -------- ------- Cash flows from financing activities: Net (paydowns) borrowings under revolving bank lines of credit.......................................... (609) (2,178) 8,297 Repurchase of common stock................................... (4,084) (3,558) (2,186) Reduction of long-term debt.................................. (180) (180) (180) Proceeds from exercise of stock options...................... 242 Principal paid on notes receivable--Stock Purchase Loan Plan............................................... 66 145 -------- -------- ------- Net cash (used for) provided by financing activities (4,873) (5,850) 6,318 -------- -------- ------- Net (decrease) increase in cash................................. (180) 72 (46) Cash at beginning of period..................................... 619 547 593 -------- -------- ------- Cash at end of period........................................... $ 439 $ 619 $ 547 ======== ======= ======= Supplemental disclosure of cash flow information: Cash paid during the year for interest....................... $ 880 $ 1,064 $ 759 Cash paid during the year for income taxes................... 2,996 2,639 3,158 Non-cash financing activity--notes receivable................. 67 1,500 See Notes to Financial Statements.
Page 7 NOTES TO FINANCIAL STATEMENTS Note 1 - Summary of Significant Accounting Policies: PRINCIPAL BUSINESS S&K Famous Brands, Inc.(the Company) operates in one segment, the retail sale of menswear, including tailored clothing, furnishings, sportswear and accessories. The Company's fiscal year is the 52- or 53-week period which ends on the Saturday closest to January 31. Fiscal year ended February 3, 2001 (fiscal 2001) was a 53-week period; January 29, 2000 (fiscal 2000) and January 30, 1999 (fiscal 1999) were 52-week periods. USE OF ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and that affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. MERCHANDISE INVENTORIES Inventories are valued at the lower of average cost or market. PROPERTY AND EQUIPMENT Property and equipment are stated at cost. Depreciation for financial reporting purposes is computed using both straight line and accelerated methods over the estimated service lives which are between 25 and 40 years for buildings and between three and seven years for fixtures and equipment. Leasehold improvements are generally amortized over an eight year period. The Company annually evaluates long-lived assets for any impairment. This evaluation has not resulted in adjustments to the Company's results of operations or financial position. Repair and maintenance expenditures are charged to expense as incurred. Upon retirement or sale of an asset, its cost and related accumulated depreciation are written off and any gain or loss is recognized. OTHER ASSETS Other assets consists primarily of cash surrender value related to various life insurance policies aggregating $5.5 million and $4.8 million in fiscal 2001 and 2000, respectively. REVENUE RECOGNITION The Company recognizes revenue at the "point of sale". ADVERTISING COSTS Advertising costs are expensed in the period in which the advertisement initially runs. Advertising expense of $14.8 million, $13.1 million and $12.6 million, respectively, was included in selling, general and administrative expenses in each of the last three fiscal years. Deferred advertising costs related to future programs included in the balance sheets were less than $100,000 in each year. EARNINGS PER SHARE The computation of basic earnings per share is based on the weighted average number of common shares outstanding during each period. Diluted earnings per share includes the dilutive effect of stock options. Options which were anti-dilutive of 592,400, 525,000, and 51,500 shares were not included in computing diluted earnings per share for fiscal 2001, 2000 and 1999, respectively. Note 2 - Merchandise Inventories: Inventories are costed using an average cost method, under which the Company tracks inventory costs for approximately 100 inventory categories which are used to classify its inventory. The Company capitalizes certain buying, holding and distribution costs to inventory which at the end of the last three fiscal years were approximately $2.8 million, $2.6 million and $2.5 million, respectively. Buying, holding and distribution costs charged to cost of sales in each of the fiscal years were approximately $3.9 million, $3.8 million and $3.7 million, respectively. Page 8 Note 3 - Property and Equipment: Property and equipment consists of the following (in thousands):
February 3, January 29, 2001 2000 ------------------- ----------------- Land............................................................. $ 1,232 $ 1,232 Buildings........................................................ 5,368 5,366 Furniture, fixtures and equipment................................ 15,359 14,754 Leasehold improvements........................................... 16,789 16,718 ----------------- ---------------- 38,748 38,070 Less - accumulated depreciation and amortization................. 20,226 18,463 ----------------- ---------------- $ 18,522 $ 19,607 ================= ================ Depreciation and amortization expense of approximately $400,000 was included in cost of sales for each of the last three fiscal years. Note 4 - Long-Term Debt: Long-term debt consists of (in thousands): February 3, January 29, 2001 2000 ------------------- ---------------- Industrial Development Revenue Bond; $45 of principal plus interest at 65% of prime, due quarterly to January 1, 2010, secured by land and corporate headquarters.................... $ 1,620 $ 1,800 Bank revolving lines of credit................................... 7,610 8,219 ----------------- ---------------- 9,230 10,019 Less - current maturities........................................ 180 180 ----------------- ---------------- $ 9,050 $ 9,839 ================= ================
The Company has available an aggregate of $40.0 million from two banks under its unsecured, long-term bank revolving lines of credit. Interest is payable monthly at a rate equal to the lower of the 30-day Federal Funds Rate plus three quarters of one percent or the banks' prime interest rates (6.1% at February 3, 2001). The Company's financing agreements contain certain restrictive covenants, none of which is presently significant to the Company. At the Company's option, any outstanding balance at May 31, 2003 is convertible to four-year term loans at the banks' prime interest rates and is payable in monthly or quarterly installments. At February 3, 2001, maturities of long-term debt, exclusive of the bank revolving lines of credit, were $180,000 for each of the next five fiscal years. Note 5 - Profit Sharing and Other Benefit Programs: The Company maintains a noncontributory profit sharing plan for all employees who meet age and service requirements. Contributions to the plan are determined annually by the Board of Directors and were $120,000 in each of the last three fiscal years. Additionally, the profit sharing plan includes a qualified salary reduction plan under Section 401(k) of the Internal Revenue Code. Eligible participants in the Company's 401(k) Plan can elect to invest 1% to 15% of their pre-tax earnings. The Company's contribution to the 401(k) Plan is at the discretion of the Board of Directors, who authorized contributions of the Company's common stock in the amount of $80,000 in each of the last three fiscal years. Included in Other assets, the Company has receivables from certain officers in each of the last three fiscal years in the amount of $291,000, $416,000 and $489,000, respectively, relating to premiums paid under split dollar life insurance policies. Page 9 The Company has unfunded deferred compensation agreements with certain officers which provide a fixed level of retirement benefits to be paid based on age and years of service. Deferred compensation expense is being accrued over the vesting period using a discount rate of 8% and approximated $120,000, $111,000 and $89,000, respectively, in each of the last three fiscal years. Note 6 - Stock Incentive and Stock Purchase Loan Plans: The Company's stock incentive plan provides for the granting of up to 400,000 common shares to key management employees. Options to purchase the Company's stock are granted at no less than the market value at the date of grant, are exercisable after one to five years and expire after eight to ten years. The Company applies the intrinsic value based method of accounting prescribed by Accounting Principles Board Opinion No. 25, in accounting for its stock options. Accordingly, the Company has not recognized any related compensation expense in its Statements of Income. Changes in options under the plan for the three years ended February 3, 2001 were as follows:
Weighted Average Weighted Average Options Exercise Price Exercisable Exercise Price --------------- -------------------- ------------------ -------------------- Outstanding - January 31, 1998 508,134 $ 9.71 405,723 $ 9.81 Granted............................. 70,000 11.94 Exercised........................... (108,631) 7.03 Surrendered......................... (9,667) 19.66 --------------- Outstanding - January 30, 1999 459,836 10.48 341,613 10.30 Granted............................. 94,200 8.41 --------------- Outstanding - January 29, 2000 554,036 10.13 379,725 10.32 Granted............................. 79,300 7.38 Exercised........................... (4,000) 6.19 Surrendered......................... (11,900) 10.56 --------------- Outstanding - February 3, 2001 617,436 9.79 421,496 10.28 =============== Additional information regarding stock options outstanding at February 3, 2001 follows: Weighted Range of Average Weighted Weighted Exercise Outstanding Exercise Average Remaining Exercisable Average Prices Options Price Contractual Life Options Exercise Price - - ------------------------ ----------------- -------------- ---------------------- ------------------ --------------- $6.00 - $7.69........ 175,300 $ 7.31 4.2 years 96,000 $ 7.25 $8.31 - $9.63........ 323,336 8.83 3.8 years 247,976 8.96 $11.94.............. 68,800 11.94 5.6 years 27,520 11.94 $21.75............... 50,000 21.75 0.6 years 50,000 21.75 ----------------- ------------------ $6.00 - $21.75....... 617,436 421,496 ================= ==================
FAS No. 123 requires the Company to make certain proforma disclosures as if the fair value based method of accounting had been applied to its stock option grants. The fair value of these options was estimated at the date of grant using the Black - Scholes option pricing model with the following weighted-average assumptions for fiscal 2001, 2000 and 1999, respectively: risk free interest rates of 5.7%, 5.8% and 5.0%; expected volatility of 36.9%, 35.9% and 42.0%; expected life of 5 in each year. This pricing model resulted in a fair value per option of $3.08, $3.48 and $5.25, for fiscal 2001, 2000 and 1999, respectively. Page 10 Had compensation cost been determined including the weighted average fair-value of options granted in fiscal years 2001, 2000 and 1999 (which all ratably vests over five years), the Company's proforma net income (and basic earnings per share) would be $4.4 million ($1.01) in fiscal 2001, $4.8 million ($1.01) in fiscal 2000 and $5.4 million ($1.07) in fiscal 1999. Proforma disclosures are not likely to be representative of the effect on net income in future periods. Under the Company's Stock Purchase Loan Plan, the Company has full recourse loans with eighteen officers approximating $2.8 million, gross of amounts accrued for principal forgiveness. Approximately $67,000 and $1.5 million in loans originated during fiscal 2001 and fiscal 2000, when 9,368 and 175,812 additional shares, respectively, were purchased by Company officers. The Plan annually provides for reduction of a portion of interest payable on the loans based on meeting certain operating targets, as well as the opportunity for the officer to receive a reduction of a portion of the principal balance of the loan if the officer remains an employee of the Company for seven years and maintains ownership of the stock. Compensation expense related to this program was $55,000, $100,000 and $79,000 for the last three fiscal years, respectively. At the end of fiscal 2001, the Company has accrued interest receivable from these officers in the amount of $281,000. Note 7 - Provision for Income Taxes: Significant components of the Company's deferred income tax liabilities (assets) are as follows (in thousands):
Fiscal Year Ended -------------------------------------------------- 2001 2000 1999 -------------- ------------- --------------- Deferred tax liabilities: Depreciation ............................ $ 2,459 $ 2,347 $ 2,163 Other items ............................ 234 290 396 -------------- ------------- --------------- Total deferred tax liabilities .... 2,693 2,637 2,559 Deferred tax assets, primarily compensation related ..................................... (871) (814) (728) -------------- ------------- --------------- Net deferred tax liabilities ................ $ 1,822 $ 1,823 $ 1,831 ============== ============= =============== The provision for income taxes consists of (in thousands): Fiscal Year Ended -------------------------------------------------- 2001 2000 1999 -------------- ------------- --------------- Current: Federal ................................ $ 2,225 $ 2,464 $ 2,551 State .................................. 553 545 620 -------------- ------------- --------------- 2,778 3,009 3,171 Deferred ................................... (1) (8) 191 -------------- ------------- --------------- $ 2,777 $ 3,001 $ 3,362 ============== ============= ===============
The effective income tax rates consist of (in thousands):
Fiscal Year Ended ----------------------------------------------------- 2001 2000 1999 ---------------- -------------- -------------- Income taxes at federal $ 2,485 $ 2,686 $ 3,008 statutory rate (34%) ...................... State income taxes, net of federal benefit .................... 365 360 374 Other - net ................................. (73) (45) (20) ---------------- -------------- -------------- $ 2,777 $ 3,001 $ 3,362 ================ ============== ============== Effective income tax rate ................... 38.0% 38.0% 38.0% ================ ============== ==============
Note 8 - Commitments: The Company leases all of its stores under varying terms and arrangements which generally provide renewal options and contingent rentals based on a percentage of gross sales. Total rent expense under the leases approximated $13.4 million, $12.6 million and $11.1 million in each of the last three years, respectively. The future minimum payments under operating leases as of the end of fiscal 2001 aggregate $42.9 million and are payable as follows: fiscal 2002 - $13.2 million, fiscal 2003 - $9.8 million, fiscal 2004 - $7.2 million, fiscal 2005 - $4.4 million and fiscal 2006 - $3.0 million and $5.3 million thereafter. The Company leases a property from an immediate family member of an officer of the Company, who is also a shareholder. Rent expense included approximately $144,000, $141,000 and $138,000 in fiscal 2001, 2000 and 1999, respectively, paid to this party. The Company is also obligated under this lease agreement to pay minimum rentals approximating $147,000 through fiscal 2002. Additionally, prior to January 2001, the Company had leased a property from an officer of the Company, who is also a shareholder and incurred rent expense of approximately $49,000, $47,000 and $47,000, respectively, in each of the last three years. Note 9 - Nonrecurring Items: During fiscal 2000, other income, net, included $665,000 ($412,000 after tax or $.09 per diluted share) related to a gain on the sale of real estate. During fiscal 1999, other income, net, included $266,000 ($165,000 after tax or $.03 per diluted share), related to income from an insurance claim. Page 11 SELECTED QUARTERLY DATA (unaudited) Summarized quarterly data for fiscal 2001 and 2000 are as follows (in thousands, except per share data):
Fiscal 2001 April 29 July 29 October 28 February 3 ----------- ------------ ------------- ----------------- ----------------- Net sales ................................... $ 41,350 $ 36,834 $ 37,235 $ 52,494 Gross profit ............................... 20,729 17,826 18,731 25,797 Net income ................................. 1,429 133 324 2,645 Earnings per share--basic*.................... .31 .03 .08 .64 Earnings per share--diluted*.................. .31 .03 .08 .64 Common share prices: High..................................... 7.73 7.94 8.25 7.50 Low...................................... 6.00 6.44 6.50 6.50 Fiscal 2000 May 1 July 31 October 30 January 29 ----------- ------------ ------------- ----------------- ------------------ Net sales ................................... $ 39,799 $ 35,667 $ 37,195 $ 50,131 Gross profit ............................... 19,287 16,834 18,309 24,001 Net income ................................. 1,425 373 323 2,778 Earnings per share--basic*.................... .30 .08 .07 .60 Earnings per share--diluted*.................. .30 .08 .07 .60 Common share prices: High..................................... 10.22 10.00 9.00 8.25 Low...................................... 8.25 8.63 6.50 5.63
* Note: Earnings per share does not add to total for year due to rounding. S&K Famous Brands, Inc. common shares are traded on The Nasdaq Stock Market under the symbol SKFB. As of February 3, 2001, there were approximately 1,650 holders of S&K common stock, including approximately 230 holders of record. The number of record holders does not reflect the number of beneficial owners of the Company's common stock for whom shares are held by Cede & Co., certain brokerage firms and others. The Company has not declared cash dividends and anticipates that for the foreseeable future it will continue to follow its present policy of retaining earnings in order to finance the expansion and development of its business. Page 12 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Shareholders S&K Famous Brands, Inc. In our opinion, the accompanying balance sheets and the related statements of income, of changes in shareholders' equity and of cash flows present fairly, in all material respects, the financial position of S&K Famous Brands, Inc. (the "Company") at February 3, 2001 and January 29, 2000, and the results of its operations and its cash flows for each of the three fiscal years in the period ended February 3, 2001, in conformity with accounting principles generally accepted in the United States of America. 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 audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which 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, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP Richmond, Virginia March 16, 2001 Page 12 EX-23 4 0004.txt CONSENT OF INDEPENDENT ACCOUNTANTS CONSENT OF INDEPENDENT ACCOUNTANTS ---------------------------------- We hereby consent to the incorporation by reference in the Registration Statements on Forms S-8 (Nos. 2-93013, 33-23918, 33-72270, 33-58703 and 333- 37324) of S&K Famous Brands, Inc. of our report dated March 16, 2001 relating to the financial statements, which appears in the 2000 Annual Report to Shareholders which is incorporated in this Annual Report on Form 10-K. PRICEWATERHOUSECOOPERS LLP Richmond, Virginia April 12, 2001 -----END PRIVACY-ENHANCED MESSAGE-----