-----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, C0iue8hwLNMVm8E8GtLqRph3xqQOLcWmLYbouRvWwAMZ/AU2m7CNd1PiCZB0RyVa 30WFzF/mAWi5DK3K/p6ugA== 0000930413-03-002984.txt : 20031010 0000930413-03-002984.hdr.sgml : 20031010 20031010112931 ACCESSION NUMBER: 0000930413-03-002984 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20030830 FILED AS OF DATE: 20031010 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SYMS CORP CENTRAL INDEX KEY: 0000724742 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-FAMILY CLOTHING STORES [5651] IRS NUMBER: 222465228 STATE OF INCORPORATION: NJ FISCAL YEAR END: 0301 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-08546 FILM NUMBER: 03936425 BUSINESS ADDRESS: STREET 1: SYMS WAY CITY: SECAUCUS STATE: NJ ZIP: 07094 BUSINESS PHONE: 2019029600 MAIL ADDRESS: STREET 1: SYMS WAY CITY: SECAUCUS STATE: NJ ZIP: 07094 10-Q 1 c29557_10-q.txt ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (MARK ONE) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 for the quarterly period ended AUGUST 30, 2003 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 NUMBER 1-8546 SYMS CORP (Exact Name of Registrant as Specified in Its Charter) NEW JERSEY 22-2465228 (State or Other Jurisdiction of (I.R.S. Employer Identification No.) Incorporation or Organization) SYMS WAY, SECAUCUS, NEW JERSEY 07094 (Address of Principal Executive Offices) (Zip Code) (201) 902-9600 (Registrant's Telephone Number, Including Area Code) NOT APPLICABLE (Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report) 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 whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act. Yes ___ No _X_ At October 3, 2003, the latest practicable date, there were 15,304,178 shares outstanding of Common Stock, par value $0.05 per share. ================================================================================ ------------------------------ SYMS CORP AND SUBSIDIARIES ------------------------------ INDEX PAGE NO. PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Condensed Consolidated Balance Sheets as of August 30, 2003, March 1, 2003 and August 31, 2002 1 Condensed Consolidated Statements of Operations for the 13 Weeks and 26 Weeks Ended August 30, 2003 and August 31, 2002 2 Condensed Consolidated Statements of Cash Flows for the 26 Weeks Ended August 30, 2003 and August 31, 2002 3 Notes to Condensed Consolidated Financial Statements 4-8 Item 2. Management's Discussion and Analysis of Financial Condition 8-12 and Results of Operations Item 3. Quantitative and Qualitative Disclosures about Market Risk 13 Item 4. Controls and Procedures 13 PART II. OTHER INFORMATION Item 1. Legal Proceedings 13 Item 2. Changes In Securities and Use of Proceeds 13 Item 3. Defaults Upon Senior Securities 13 Item 4. Submission of Matters to a Vote of Security Holders 13 Item 5. Other Information 14 Item 6. Exhibits and Reports on Form 8-K 14 SIGNATURES 15 ------------------------------ SYMS CORP AND SUBSIDIARIES ------------------------------ CONDENSED CONSOLIDATED BALANCE SHEETS - -------------------------------------------------------------------------------- (IN THOUSANDS EXCEPT PER SHARE AMOUNTS) AUGUST 30, MARCH 1, AUGUST 31, 2003 2003 2002 --------- -------- --------- (UNAUDITED) (NOTE) (UNAUDITED) ASSETS Current Assets Cash and cash equivalents $ 19,828 $ 19,197 $ 23,166 Merchandise inventories 87,061 78,151 99,025 Deferred income taxes 4,143 4,143 6,514 Prepaid expenses and other current assets 6,588 6,280 3,946 -------- -------- -------- TOTAL CURRENT ASSETS 117,620 107,771 132,651 -------- -------- -------- PROPERTY AND EQUIPMENT - Net 131,056 135,460 139,806 DEFERRED INCOME TAXES 9,397 9,397 4,392 OTHER ASSETS 12,977 9,845 8,998 -------- -------- -------- TOTAL ASSETS $271,050 $262,473 $285,847 ======== ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 31,506 $ 12,639 $ 35,671 Accrued expenses 9,877 12,099 7,232 Accrued insurance 1,708 2,339 2,667 Obligations to customers 3,250 3,352 3,027 -------- -------- -------- TOTAL CURRENT LIABILITIES 46,341 30,429 48,597 -------- -------- -------- OTHER LONG TERM LIABILITIES 1,881 1,891 2,163 -------- -------- -------- SHAREHOLDERS' EQUITY Preferred stock, par value $100 per share Authorized 1,000 shares; none outstanding -- -- -- Common stock, par value $0.05 per share Authorized 30,000 shares; 15,304 shares outstanding (net of 2,650 treasury shares) on August 30, 2003; 15,435 shares outstanding as of March 1, 2003 (net of 2,513 treasury shares) and 15,621 shares outstanding (net of 2,313 treasury shares) on August 31, 2002 765 772 793 Additional paid-in capital 14,121 14,092 14,007 Treasury stock (22,487) (21,572) (20,147) Retained earnings 230,429 236,861 240,434 -------- -------- -------- TOTAL SHAREHOLDERS' EQUITY 222,828 230,153 235,087 -------- -------- -------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $271,050 $262,473 $285,847 ======== ======== ======== NOTE: The balance sheet at March 1, 2003 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. See Notes to Condensed Consolidated Financial Statements 1 ------------------------------ SYMS CORP AND SUBSIDIARIES ------------------------------ CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - -------------------------------------------------------------------------------- (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
13 WEEKS ENDED 26 WEEKS ENDED -------------- -------------- AUGUST 30, AUGUST 31, AUGUST 30, AUGUST 31, 2003 2002 2003 2002 --------- --------- --------- --------- (Unaudited) (Unaudited) Net sales $ 62,102 $ 65,058 $ 125,636 $ 133,008 Cost of goods sold 39,996 42,079 77,616 80,932 -------- -------- --------- --------- Gross profit 22,106 22,979 48,020 52,076 Expenses: Selling, general and administrative 19,706 19,053 38,875 37,818 Advertising 1,421 2,045 3,801 4,289 Occupancy 4,456 4,650 8,620 9,151 Depreciation and amortization 2,784 2,762 5,407 5,572 Special charge -- 4,000 -- 4,000 -------- -------- --------- --------- Loss from operations (6,261) (9,531) (8,683) (8,754) Other income (68) (355) (178) (809) Interest income (31) (45) (43) (99) -------- -------- --------- --------- Loss before income taxes (6,162) (9,131) (8,462) (7,846) Provision benefit for income taxes (1,479) (2,962) (2,030) (2,384) -------- -------- --------- --------- Net loss $ (4,683) $ (6,169) $ (6,432) $ (5,462) ======== ======== ========= ========= Net loss per share-basic $ (0.30) $ (0.39) $ (0.42) $ (0.35) ======== ======== ========= ========= Weighted average shares outstanding-basic 15,412 15,721 15,412 15,721 ======== ======== ========= ========= Net loss per share-diluted $ (0.30) $ (0.39) $ (0.42) $ (0.35) ======== ======== ========= ========= Weighted average shares outstanding- diluted 15,412 15,721 15,412 15,721 ======== ======== ========= =========
See Notes to Condensed Consolidated Financial Statements 2 ------------------------------ SYMS CORP AND SUBSIDIARIES ------------------------------ CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - -------------------------------------------------------------------------------- (IN THOUSANDS) 26 WEEKS ENDED -------------- AUGUST 30, AUGUST 31, 2003 2002 --------- --------- (UNAUDITED) CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (6,432) $ (5,462) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 5,407 5,572 Loss on disposal of assets 440 4,033 (Increase) decrease in operating assets: Merchandise inventories (8,910) (12,215) Prepaid expenses and other current assets (308) 2,125 Other assets (3,132) (775) Increase (decrease) of operating liabilities: Accounts payable 18,867 17,772 Accrued expenses (2,853) (2,090) Obligations to customers (102) (36) Other long term liabilities (10) 45 -------- -------- Net cash provided by operating activities 2,967 8,969 -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of Stanley Blacker, Inc. -- (1,906) Expenditures for property and equipment (1,443) (2,225) -------- -------- Net cash used in investing activities (1,443) (4,131) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Exercise of options 22 3 Stock repurchase (915) (1,160) -------- -------- Net cash used in financing activities (893) (907) -------- -------- NET INCREASE IN CASH AND CASH EQUIVALENTS 631 3,681 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 19,197 19,485 -------- -------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 19,828 $ 23,166 ======== ======== SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid during the period for: Stanley Blacker, Inc. acquisition financed through stock issuance $ -- $ 250 ======== ======== See Notes to Condensed Consolidated Financial Statements 3 ------------------------------ SYMS CORP AND SUBSIDIARIES ------------------------------ NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 13 AND 26 WEEKS ENDED AUGUST 30, 2003 AND AUGUST 31, 2002 - -------------------------------------------------------------------------------- (UNAUDITED) .. NOTE 1 - THE COMPANY Syms Corp (the "Company") operates a chain of 40 "off-price" retail stores located throughout the Northeastern and Middle Atlantic regions and in the Midwest, Southeast and Southwest. Each Syms store offers a broad range of first quality, in season merchandise bearing nationally recognized designer or brand-name labels for men, women and children. NOTE 2 - BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the 13 week and 26 week periods ended August 30, 2003 are not necessarily indicative of the results that may be expected for the entire fiscal year ending February 28, 2004. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the fiscal year ended March 1, 2003. NOTE 3 - ACCOUNTING PERIOD The Company's fiscal year ends the Saturday nearest to the end of February. The fiscal year ending February 28, 2004 will be comprised of 52 weeks. The fiscal year ended March 1, 2003 was comprised of 52 weeks. NOTE 4 - MERCHANDISE INVENTORIES Merchandise inventories are stated at the lower of cost (first in, first out) or market, as determined by the retail inventory method. NOTE 5 - BANK CREDIT FACILITIES The Company has an unsecured revolving credit agreement with a bank for a line of credit not to exceed $20,000,000 through October 29, 2003. The Company intends to enter into a new unsecured revolving credit agreement with another bank upon the expiration of the term of the existing credit facility. Interest on individual advances is payable quarterly at 1/2% per annum below the bank's base rate, except that at the time of advance, the Company has the option to select an interest rate based upon one other alternative calculation, with such rate to be fixed for a period not to exceed 90 days. The average daily unused portion is subject to a commitment fee of 3/8 of 1% per annum. As of August 30, 2003, March 1, 2003 and August 31, 2002, respectively, there were no outstanding borrowings under this agreement. The agreement contains financial covenants, with respect to consolidated tangible net worth, as defined, working capital and maximum capital expenditures, including dividends (defined to include cash repurchases of capital stock), as well as other financial ratios. The Company was in compliance with all covenants as of August 30, 2003. In addition, the Company has a separate $10,000,000 credit facility with another bank available for the issuance of letters of credit for the purchase of foreign merchandise. This agreement may be canceled at any time by either party. At August 30, 2003, March 1, 2003 and August 31, 2002, the Company had $3,321,000, $2,755,000 and $6,258,000, respectively, in outstanding letters of credit. 4 ------------------------------ SYMS CORP AND SUBSIDIARIES ------------------------------ NOTE 6 - NET INCOME/(LOSS) PER SHARE In accordance with SFAS 128, basic net income/(loss) per share has been computed based upon the weighted average common shares outstanding. Diluted net income/(loss) per share gives effect to outstanding stock options. Net income/(loss) per share has been computed as follows: 13 WEEKS ENDED 26 WEEKS ENDED ---------------------- ---------------------- AUGUST 30, AUGUST 31, AUGUST 30, AUGUST 31, 2003 2002 2003 2002 --------- --------- --------- --------- BASIC NET LOSS PER SHARE: Net loss ......................... $ (4,683) $ (6,169) $ (6,432) $ (5,462) Average shares outstanding ....... 15,412 15,721 15,412 15,721 Basic net loss per share ......... $ (0.30) $ (0.39) $ (0.42) $ (0.35) DILUTED NET LOSS PER SHARE: Net loss ......................... $ (4,683) $ (6,169) $ (6,432) $ (5,462) Average shares outstanding ....... 15,412 15,721 15,412 15,721 Stock options .................... -- -- -- -- Total average equivalent shares .. 15,412 15,721 15,412 15,721 Diluted net loss per share ....... $ (0.30) $ (0.39) $ (0.42) $ (0.35) In periods with losses, options were excluded from the computation of diluted net income per share because the effect would be anti-dilutive. Options to purchase 920,875 and 1,020,175 shares of common stock at prices ranging from $5.63 to $10.69 per share were outstanding as of August 30, 2003 and August 31, 2002, respectively, but were not included in the computation of diluted net income per share because the exercise price of the options exceed the average market price and would have been anti-dilutive. NOTE 7 - RECENT ACCOUNTING PRONOUNCEMENTS In July 2001, the FASB issued Statement of Financial Accounting Standards No. 141, "BUSINESS COMBINATIONS" ("SFAS 141") AND STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 142, "GOODWILL AND OTHER INTANGIBLE ASSETS" ("SFAS 142"). SFAS 141 eliminates the pooling-of-interests method of accounting for business combinations initiated after June 30, 2001 and modifies the application of the purchase accounting method effective for transactions that are completed after June 30, 2001. SFAS 142 eliminates the requirement to amortize goodwill and intangible assets having indefinite useful lives but requires that they be assessed at least annually for impairment. Intangible assets that have finite lives will continue to be amortized over their useful lives. The adoption of SFAS 141 and 142 did not have a material effect on the Company's financial position or operations. In October 2001, the FASB issued Statement of Financial Accounting Standards 144, "ACCOUNTING FOR THE IMPAIRMENT OR DISPOSAL OF LONG-LIVED ASSETS" ("SFAS 144"). SFAS No. 144 addresses the accounting and reporting for the impairment or disposal of long-lived assets. The statement provides a single accounting model for long-lived assets to be disposed of. New criteria must be met to classify the asset as an asset held-for-sale. This statement also focuses on reporting the effects of a disposal of a segment of business. This statement is effective for fiscal years beginning after December 15, 2001. The Company adopted SFAS 144 as of March 3, 2002, and the adoption did not have a material impact on the Company's financial position or results of operations. 5 ------------------------------ SYMS CORP AND SUBSIDIARIES ------------------------------ In April 2002, Statement of Financial Accounting Standards, No. 145, "RESCISSION OF FASB STATEMENTS NO. 4, 44 AND 64, AMENDMENT OF FASB STATEMENT NO. 13, AND TECHNICAL CORRECTIONS" ("SFAS 145") was issued. SFAS 145 rescinds SFAS 4 and 64, which required gains and losses from extinguishment of debt to be classified as extraordinary items. SFAS also rescinds SFAS 44 since the provisions of the Motor Carrier Act of 1980 are complete. SFAS 145 also amends SFAS 13 eliminating inconsistencies in certain sale-leaseback transactions. The provisions of SFAS 145 are effective for fiscal years beginning after May 15, 2002. Any gain or loss on extinguishment of debt that was classified as an extraordinary item in prior periods presented shall be reclassified to interest expense. The adoption of SFAS 145 did not have a material effect on the Company's financial position or results of operations. Statement of Financial Accounting Standards, No. 146, "ACCOUNTING FOR COSTS ASSOCIATED WITH EXIT OR DISPOSAL ACTIVITIES" ("SFAS 146"), was issued in July 2002. SFAS 146 requires companies to recognize costs associated with exit or disposal activities when they are incurred rather than at the date of a commitment to an exit or disposal plan. SFAS 146 supercedes EITF Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (Including Certain Costs Incurred in a Restructuring)." SFAS 146 is to be applied prospectively to exit or disposal activities initiated after December 31, 2002. This pronouncement did not have a material effect on the Company's financial position or results of operations. On December 31, 2002, the FASB issued Statement of Financial Accounting Standards No. 148, "ACCOUNTING FOR STOCK-BASED COMPENSATION -TRANSITION AND DISCLOSURE" ("SFAS 148"). This standard amends SFAS No. 123, to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, SFAS 148 amends the disclosure requirements of SFAS 123 to require more frequent and prominent disclosures in financial statements of the effects of stock-based compensation. The transition guidance and annual disclosure provisions of SFAS 148 are effective for fiscal years ending after December 15, 2002. The interim disclosure provisions are effective for financial reports containing financial statements for interim periods beginning after December 15, 2002. The Company has adopted the disclosure provisions of SFAS 148 as of March 1, 2003, as required. In November 2002, the Financial Accounting Standards Board ("FASB") issued Interpretation No. 45, "GUARANTOR'S ACCOUNTING AND DISCLOSURE REQUIREMENTS FOR GUARANTEES, INCLUDING INDIRECT GUARANTEES OF INDEBTEDNESS OF OTHERS ("FIN 45"). FIN 45 requires the recognition of a liability for certain guarantee obligations issued or modified after December 31, 2002. It also clarifies disclosure requirements to be made by a guarantor for certain guarantees. The disclosure provisions of FIN 45 are effective for fiscal years ending after December 15, 2002. FIN 45 did not have a material impact on the Company's results of operations, financial position or cash flows, and the Company has adopted the disclosure provisions of FIN 45 as of March 1, 2003. On January 17, 2003, the FASB issued Interpretation No. 46, "CONSOLIDATION OF VARIABLE INTEREST ENTITIES" ("FIN 46"). FIN 46 requires certain variable interest entities to be consolidated by the primary beneficiary of the entity if the equity investors in the entity do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. FIN 46 is effective for all new variable interest entities created or acquired after January 31, 2003. For variable interest entities created or acquired prior to February 1, 2003, the provisions of FIN 46 must be applied for the first interim or annual period beginning after June 15, 2003. The adoption of FIN 46 did not have an impact on the Company's results of operations, financial position or cash flows. In February 2003, the Emerging Issues Task Force ("EITF") addressed EITF Statement No. 02-16 ("EITF 02-16"), "ACCOUNTING BY A RESELLER FOR CASH CONSIDERATION RECEIVED FROM A VENDOR." EITF 02-16 provides accounting guidance on how a reseller should characterize consideration given by a vendor and when to recognize and how to measure that consideration in its income statement. EITF 02-16 is effective for all agreements entered into after December 31, 2002. The Company has evaluated the provisions of EITF 02-16 and determined that this statement did not have a material effect on our consolidated financial statements. 6 ------------------------------ SYMS CORP AND SUBSIDIARIES ------------------------------ In April 2003, the FASB issued SFAS 149, "AMENDMENT OF STATEMENT 133 ON DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES" ("SFAS 149"). SFAS 149 amends and clarifies accounting for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities under SFAS 133. The new guidance amends SFAS 133 for decisions made: (a) as part of the Derivatives Implementation Group process that effectively required amendments to SFAS 133, (b) in connection with other Board projects dealing with financial instruments, and (c) regarding implementation issues raised in relation to the application of the definition of a derivative, particularly regarding the meaning of an "underlying" and the characteristics of a derivative that contains financing components. The amendments set forth in SFAS 149 improve financial reporting by requiring that contracts with comparable characteristics be accounted for similarly. SFAS 149 is generally effective for contracts entered into or modified after June 30, 2003 (with a few exceptions) and for hedging relationships designated after June 30, 2003. The guidance is to be applied prospectively. The adoption of SFAS 149 did not have a material impact on the Company's financial position or results of operations. In May 2003, the FASB issued Statement No. 150, "ACCOUNTING FOR CERTAIN FINANCIAL INSTRUMENTS WITH CHARACTERISTICS OF BOTH LIABILITIES AND EQUITY" ("SFAS 150"). SFAS 150 improves the accounting for certain financial instruments that, under previous guidance, issuers could account for as equity. The new Statement requires that those instruments be classified as liabilities in statements of financial position. The Company does not expect the provisions of SFAS 150 to have a material impact on the Company's financial position or results of operations. NOTE 8 - ACCOUNTING FOR STOCK-BASED COMPENSATION The Company complies with Statement of Financial Accounting Standards No. 123, "ACCOUNTING FOR STOCK-BASED COMPENSATION" ("SFAS No. 123"). This statement defines a fair value based method whereby compensation cost is measured at the grant date based on the fair value of the award and is recognized over the service period, which is usually the vesting period. Under SFAS No. 123, companies are encouraged, but are not required, to adopt the fair value method of accounting for employee stock-based transactions. The Company accounts for such transactions under Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, but discloses pro forma net loss as if the Company had applied the SFAS No. 123 method of accounting. Pro forma information, assuming the Company had accounted for its employee stock options granted under the fair value method prescribed by SFAS No. 123, as amended by Financial Accounting Standards Board Statement No. 148, "Accounting for Stock Based Compensation - Transition and Disclosure, an Amendment of FASB Statement No. 123," is presented below. The fair value of each option grant is estimated on the date of each grant using the Black-Scholes option-pricing model. There were no stock options granted in the twenty six weeks ended August 30, 2003 and August 31, 2002, respectively. The fair value generated by the Black-Scholes model may not be indicative of the future benefit, if any, that may be received by the option holder. 13 WEEKS ENDED 26 WEEKS ENDED ------------------- -------------------- 8/30/03 8/31/02 8/30/03 8/31/02 ------- ------- ------- ------- Net income/(loss): ($4,683) ($6,169) ($6,432) ($5,462) Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects ($7) ($14) ($14) ($27) Pro forma net income/(loss) ($4,676) ($6,183) ($6,446) ($5,489) ======== ======== ======== ======== Earnings (loss) per share: Basic, as reported ($.30) ($.39) ($0.42) ($0.35) Basic, pro forma ($.30) ($.39) ($0.42) ($0.35) Diluted, as reported ($.30) ($.39) ($0.42) ($0.35) Diluted, pro forma ($.30) ($.39) ($0.42) ($0.35) 7 ------------------------------ SYMS CORP AND SUBSIDIARIES ------------------------------ This pro forma information may not be representative of the amounts expected in future years as the fair value method of accounting prescribed by SFAS No. 123 has not been applied to options granted prior to fiscal 1996. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS The Quarterly Report (including but not limited to factors discussed below, in the Management's Discussion and Analysis of Financial Condition and Results of Operations," as well as those discussed elsewhere in this Quarterly Report on Form 10-Q) includes forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995) and information relating to the Company that are based on the beliefs of the management of the Company as well as assumptions made by and information currently available to the management of the Company. When used in this Quarterly Report, the words "anticipate," "believe," "estimate," "expect," "intend," "plan," and similar expressions, as they relate to the Company or the management of the Company, identify forward-looking statements. Such statements reflect the current views of the Company with respect to future events, the outcome of which is subject to certain risks, including among others general economic and market conditions, decreased consumer demand for the Company's products, possible disruptions in the Company's computer or telephone systems, possible work stoppages, or increases in labor costs, effects of competition, possible disruptions or delays in the opening of new stores or inability to obtain suitable sites for new stores, higher than anticipated store closings or relocation costs, higher interest rates, unanticipated increases in merchandise or occupancy costs and other factors which may be outside the Company's control. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results or outcomes may vary materially from those described herein as anticipated, believed, estimated, expected, intended or planned. Subsequent written and oral forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by the cautionary statements in this paragraph and elsewhere described in this Quarterly Report and other reports filed with the Securities and Exchange Commission. CRITICAL ACCOUNTING POLICIES AND ESTIMATE The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the appropriate application of certain accounting policies, many of which require us to make estimates and assumptions about future events and their impact on amounts reported in the financial statements and related notes. Since future events and their impact cannot be determined with certainty, the actual results will inevitably differ from our estimates. Such differences could be material to the consolidated financial statements. The Company believes application of accounting policies, and the estimates inherently required by the policies, are reasonable. These accounting policies and estimates are constantly reevaluated, and adjustments are made when facts and circumstances dictate a change. Historically, the Company has found the application of accounting policies to be appropriate, and actual results have not differed materially from those determined using necessary estimates. The Company's accounting policies are more fully described in Note 1 to the Consolidated Financial Statements, located in the Annual Report on Form 10-K for the year ended March 1, 2003. The Company has identified certain critical accounting policies that are described below. MERCHANDISE INVENTORY - Inventories are valued at lower of cost or market using the retail first-in, first-out ("FIFO") inventory method. Under the retail inventory method ("RIM"), the valuation of inventories at cost and the resulting gross margins are calculated by applying a calculated cost to retail ratio to the retail value of inventories. RIM is an averaging method that has been widely used in the retail industry due to its practicality. Additionally, it is recognized that the use of RIM will result in valuing inventories at the lower of cost or market if markdowns are currently taken as a reduction of the retail value of inventories. Inherent in the RIM calculation are certain significant management judgments and estimates including, among 8 ------------------------------ SYMS CORP AND SUBSIDIARIES ------------------------------ others, merchandise markon, markups, and markdowns, which significantly impact the ending inventory valuation at cost as well as resulting gross margins. Management believes that the Company's RIM and application of FIFO provides an inventory valuation which reasonably approximates cost using a first-in, first-out assumption and results in a carrying value at the lower of cost or market. If actual market conditions are less favorable than those projected by management, additional markdowns may be required. LONG-LIVED ASSETS - In evaluation of the fair value and future benefits of long-lived assets, the Company performs analyses of the anticipated undiscounted future net cash flows of the related long-lived assets. If the carrying value of the related asset exceeds the undiscounted cash flows, the Company reduces the carrying value to its fair value, which is generally calculated using discounted cash flows. Various factors including future sales growth and profit margins are included in this analysis. To the extent these future projections or our strategies change, the conclusion regarding impairment may differ from the Company's current estimates. DEFERRED TAX VALUATION ALLOWANCE - The Company records a valuation allowance to reduce its deferred tax assets to the amount that is more likely than not to be realized. The Company has considered future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for the valuation allowance. If the Company were to determine that it would be able to realize its deferred tax assets in the future in excess of its net recorded amount, an adjustment to the deferred tax asset would increase income in the period such determination was made. Likewise, should the Company determine that it would not be able to realize all or part of our net deferred tax asset in the future, an adjustment to the deferred tax asset would be charged to income in the period such determination was made. RESULTS OF OPERATIONS 13 WEEKS AND 26 WEEKS ENDED AUGUST 30, 2003 COMPARED TO 13 AND 26 WEEKS ENDED AUGUST 31, 2002 Net sales for the 13 weeks ended August 30, 2003 were $62,102,000, a decrease of $2,956,000 (4.5%), as compared to net sales of $65,058,000 for the 13 weeks ended August 31, 2002. For the 26 weeks ended August 30, 2003, net sales decreased $7,372,000 (5.5%) to $125,636,000 as compared to net sales of $133,008,000 for the 26 weeks ended August 31, 2002. Comparable store sales decreased 1.6% for the 13 weeks ended August 30, 2003 and decreased 2.7% for the 26 weeks ended August 30, 2003, as compared to the comparable periods in the prior fiscal year. The sales decrease in the 13 week and 26 week periods is largely attributable to the closing of the Pittsburgh, PA and Chicago, IL stores (sales of closed stores amounted to $2,075,000 for the 13 weeks and $4,083,000 for the 26 weeks ended during the same period in the prior fiscal year). Our "Bash" sales promotion, which took place in August 2003, had two less selling days in this fiscal year, accounting for approximately $1,300,000 of the sales decline. Gross profit for the 13 weeks ended August 30, 2003 was $22,106,000 (35.6% as a percentage of net sales), a decrease of $873,000 as compared to $22,979,000 (35.3% as a percentage of net sales) for the 13 weeks ended August 31, 2002. Gross profit for the 26 weeks ended August 30, 2003 was $48,020,000 (38.2% as a percentage of net sales), a decrease of $4,056,000 as compared to $52,076,000 (39.2% as a percentage of net sales) for the 26 weeks ended August 31, 2002. The decrease in gross margin dollars in the 13 and 26 week periods is largely due to lower sales and higher markdowns on merchandise sold compared to the same periods in the prior fiscal year. Selling, general and administrative expense increased $653,000 to $19,706,000 (31.7% as a percentage of net sales) for the 13 weeks ended August 30, 2003 as compared to $19,053,000 (29.3% as a percentage of net sales) for the 13 weeks ended August 31, 2002. Selling, general and administrative expense increased $1,057,000 to $38,875,000 (30.9% as a percentage of net sales) for the 26 weeks ended August 30, 2003 as compared to $37,818,000 (28.4% as a percentage of net sales) for the 26 weeks ended August 31, 2002. The increased expenditures in the existing stores for the 26 week period ended August 30, 2003 is largely due to higher medical insurance costs, pension costs and maintenance and repair costs. 9 ------------------------------ SYMS CORP AND SUBSIDIARIES ------------------------------ Advertising expense for the 13 weeks ended August 30, 2003 was $1,421,000 (2.3% as a percentage of net sales) as compared to $2,045,000 (3.1% as a percentage of net sales) in the 13 week period ended August 31, 2002. Advertising expense for the 26 weeks ended August 30, 2003 was $3,801,000 (3.0% as a percentage of net sales) as compared to $4,289,000 (3.2% as a percentage of net sales) in the 26 weeks ended August 31, 2002. Occupancy costs were $4,456,000 (7.2% as a percentage of net sales) for the 13 weeks ended August 30, 2003 as compared to $4,650,000 (7.2% as a percentage of net sales) for the 13 weeks ended August 31, 2002. Occupancy costs were $8,620,000 (6.9% as a percentage of net sales) for the 26 weeks ended August 30, 2003 as compared to $9,151,000 (6.9% as a percentage of net sales) for the period ended August 31, 2002. The closing of two stores during the same periods in the prior fiscal years (Pittsburgh, PA and Chicago, IL) accounted for this reduction in the 13 and 26 week periods. Depreciation and amortization was $2,784,000 (4.5% as a percentage of net sales) for the 13 weeks ended August 30, 2003 as compared to $2,762,000 (4.3% as a percentage of net sales) for the 13 weeks ended August 31, 2002. Depreciation and amortization for the 26 weeks ended August 30, 2003 was $5,407,000 (4.3% as a percentage of net sales) as compared to $5,572,000 (4.2% as a percentage of net sales) for the 26 weeks ended August 31, 2002. The results for the second quarter ended August 31, 2002 reflect a $4,000,000 charge (write off of capital assets) resulting from the previously announced closing of our downtown Chicago store. This action was taken by the Company to cut losses being incurred at the store because ongoing construction at or near the premises, expected to continue for several years, rendered the store "unusable" for a retailer. The loss before income taxes for the 13 weeks ended August 30, 2003 was $6,162,000, a decrease of $2,969,000 as compared to a loss of $9,131,000 for the 13 weeks ended August 31, 2002. The loss before income taxes for the 26 weeks ended August 30, 2003 was $8,462,000 as compared to a loss before income taxes of $7,846,000 for the 26 weeks ended August 31, 2002. This increase in loss resulted largely from lower sales and higher markdowns on merchandise sold which was offset by the $4,000,000 special charge last year. For the 26 week period ended August 30, 2003, the effective income tax rate was 24.0%, as compared to 30.0% for the comparable period a year ago. The reduction in the effective income tax rate is due to the non-deductibility of officer's life insurance premiums. LIQUIDITY AND CAPITAL RESOURCES Working capital as of August 30, 2003 was $71,279,000, a decrease of $12,775,000 as compared to $84,054,000 as of August 31, 2002. The ratio of current assets to current liabilities was 2.54 to 1 as of August 30, 2003 as compared to 2.73 to 1 as of August 31, 2002. The decrease in working capital results mainly from a reduction in merchandise inventory. Net cash provided by operating activities totaled $2,967,000 for the 26 weeks ended August 30, 2003, as compared to $8,969,000 for the 26 weeks ended August 31, 2002. In the 26 weeks ended August 30, 2003, net cash provided by operating activities was largely impacted by an increased loss and decreased loss on disposal of assets. Net cash used in investing activities was $1,443,000 for the 26 weeks ended August 30, 2003, as compared to $4,131,000 for the 26 weeks ended August 31, 2002. Expenditures for property and equipment were $1,443,000 and $2,225,000 for the 26 weeks ended August 30, 2003 and August 31, 2002, respectively. Net cash used in financing activities was $893,000 for the 26 weeks ended August 30, 2003, as compared to $907,000 for the 26 weeks ended August 31, 2002. 10 ------------------------------ SYMS CORP AND SUBSIDIARIES ------------------------------ The Company has an unsecured revolving credit agreement with a bank for a line of credit not to exceed $20,000,000 through October 29, 2003. The Company intends to enter into a new unsecured revolving credit agreement with another bank upon the expiration of the term of the existing credit facility. Except for funds provided from this credit agreement, the Company has satisfied its operating and capital expenditure requirements from internally generated funds. As of August 30, 2003 and August 31, 2002, there were no outstanding borrowings under the revolving credit agreement. The Company has planned capital expenditures of approximately $5,000,000 for the fiscal year ending February 28, 2004. Through the 26 week period ended August 30, 2003, the Company has incurred $1,443,000 of capital expenditures. On June 7, 2002, the Company's Board of Directors authorized the repurchase of up to 20% of its outstanding shares of common stock (not to exceed 3,200,000 shares) at prevailing market prices through June 7, 2004. During the 13 week period ended August 30, 2003, the Company purchased 136,900 shares of common stock, which represented 1.0% of its outstanding shares, at a total cost of $921,160. Management believes that existing cash, internally generated funds, trade credit and funds available from the revolving credit agreement will be sufficient for working capital and capital expenditure requirements for the fiscal year ending February 28, 2004. IMPACT OF INFLATION AND CHANGING PRICES Although the Company cannot accurately determine the precise effect of inflation on its operations, it does not believe inflation has had a material effect on sales or results of operations. RECENT ACCOUNTING PRONOUNCEMENTS In July 2001, the FASB issued Statement of Financial Accounting Standards No. 141, "BUSINESS COMBINATIONS" ("SFAS 141") AND STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 142, "GOODWILL AND OTHER INTANGIBLE ASSETS" ("SFAS 142"). SFAS 141 eliminates the pooling-of-interests method of accounting for business combinations initiated after June 30, 2001 and modifies the application of the purchase accounting method effective for transactions that are completed after June 30, 2001. SFAS 142 eliminates the requirement to amortize goodwill and intangible assets having indefinite useful lives but requires that they be assessed at least annually for impairment. Intangible assets that have finite lives will continue to be amortized over their useful lives. The adoption of SFAS 141 and 142 did not have a material effect on the Company's financial position or operations. In October 2001, the FASB issued Statement of Financial Accounting Standards 144, "ACCOUNTING FOR THE IMPAIRMENT OR DISPOSAL OF LONG-LIVED ASSETS" ("SFAS 144"). SFAS No. 144 addresses the accounting and reporting for the impairment or disposal of long-lived assets. The statement provides a single accounting model for long-lived assets to be disposed of. New criteria must be met to classify the asset as an asset held-for-sale. This statement also focuses on reporting the effects of a disposal of a segment of business. This statement is effective for fiscal years beginning after December 15, 2001. The Company adopted SFAS 144 as of March 3, 2002, and the adoption did not have a material impact on the Company's financial position or results of operations. In April 2002, Statement of Financial Accounting Standards, No. 145, "RESCISSION OF FASB STATEMENTS NO. 4, 44 AND 64, AMENDMENT OF FASB STATEMENT NO. 13, AND TECHNICAL CORRECTIONS" ("SFAS 145") was issued. SFAS 145 rescinds SFAS 4 and 64, which required gains and losses from extinguishment of debt to be classified as extraordinary items. SFAS also rescinds SFAS 44 since the provisions of the Motor Carrier Act of 1980 are complete. SFAS 145 also amends SFAS 13 eliminating inconsistencies in certain sale-leaseback transactions. The provisions of SFAS 145 are effective for fiscal years beginning after May 15, 2002. Any gain or loss on extinguishment of debt that was classified as an extraordinary item in prior periods presented shall be reclassified to interest expense. The adoption of SFAS 145 did not have a material effect on the Company's financial position or results of operations. Statement of Financial Accounting Standards, No. 146, "ACCOUNTING FOR COSTS ASSOCIATED WITH EXIT OR DISPOSAL ACTIVITIES" ("SFAS 146"), was issued in July 2002. SFAS 146 requires companies to recognize costs associated with exit or disposal activities when they are incurred rather than at the date of a commitment to an exit or disposal plan. 11 ------------------------------ SYMS CORP AND SUBSIDIARIES ------------------------------ SFAS 146 supercedes EITF Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (Including Certain Costs Incurred in a Restructuring)." SFAS 146 is to be applied prospectively to exit or disposal activities initiated after December 31, 2002. This pronouncement did not have a material effect on the Company's financial position or results of operations. On December 31, 2002, the FASB issued Statement of Financial Accounting Standards No. 148, "ACCOUNTING FOR STOCK-BASED COMPENSATION -TRANSITION AND DISCLOSURE" ("SFAS 148"). This standard amends SFAS No. 123, to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, SFAS 148 amends the disclosure requirements of SFAS 123 to require more frequent and prominent disclosures in financial statements of the effects of stock-based compensation. The transition guidance and annual disclosure provisions of SFAS 148 are effective for fiscal years ending after December 15, 2002. The interim disclosure provisions are effective for financial reports containing financial statements for interim periods beginning after December 15, 2002. The Company has adopted the disclosure provisions of SFAS 148 as of March 1, 2003, as required. In November 2002, the Financial Accounting Standards Board ("FASB") issued Interpretation No. 45, "GUARANTOR'S ACCOUNTING AND DISCLOSURE REQUIREMENTS FOR GUARANTEES, INCLUDING INDIRECT GUARANTEES OF INDEBTEDNESS OF OTHERS ("FIN 45"). FIN 45 requires the recognition of a liability for certain guarantee obligations issued or modified after December 31, 2002. It also clarifies disclosure requirements to be made by a guarantor for certain guarantees. The disclosure provisions of FIN 45 are effective for fiscal years ending after December 15, 2002. FIN 45 did not have a material impact on the Company's results of operations, financial position or cash flows, and the Company has adopted the disclosure provisions of FIN 45 as of March 1, 2003. On January 17, 2003, the FASB issued Interpretation No. 46, "CONSOLIDATION OF VARIABLE INTEREST ENTITIES" ("FIN 46"). FIN 46 requires certain variable interest entities to be consolidated by the primary beneficiary of the entity if the equity investors in the entity do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. FIN 46 is effective for all new variable interest entities created or acquired after January 31, 2003. For variable interest entities created or acquired prior to February 1, 2003, the provisions of FIN 46 must be applied for the first interim or annual period beginning after June 15, 2003. The adoption of FIN 46 did not have an impact on the Company's results of operations, financial position or cash flows. In February 2003, the Emerging Issues Task Force ("EITF") addressed EITF Statement No. 02-16 ("EITF 02-16"), "ACCOUNTING BY A RESELLER FOR CASH CONSIDERATION RECEIVED FROM A VENDOR." EITF 02-16 provides accounting guidance on how a reseller should characterize consideration given by a vendor and when to recognize and how to measure that consideration in its income statement. EITF 02-16 is effective for all agreements entered into after December 31, 2002. The Company has evaluated the provisions of EITF 02-16 and determined that this statement did not have a material effect on our consolidated financial statements. In April 2003, the FASB issued SFAS 149, "AMENDMENT OF STATEMENT 133 ON DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES" ("SFAS 149"). SFAS 149 amends and clarifies accounting for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities under SFAS 133. The new guidance amends SFAS 133 for decisions made: (a) as part of the Derivatives Implementation Group process that effectively required amendments to SFAS 133, (b) in connection with other Board projects dealing with financial instruments, and (c) regarding implementation issues raised in relation to the application of the definition of a derivative, particularly regarding the meaning of an "underlying" and the characteristics of a derivative that contains financing components. The amendments set forth in SFAS 149 improve financial reporting by requiring that contracts with comparable characteristics be accounted for similarly. SFAS 149 is generally effective for contracts entered into or modified after June 30, 2003 (with a few exceptions) and for hedging relationships designated after June 30, 2003. The guidance is to be applied prospectively. The adoption of SFAS 149 did not have a material impact on the Company's financial position or results of operations. In May 2003, the FASB issued Statement No. 150, "ACCOUNTING FOR CERTAIN FINANCIAL INSTRUMENTS WITH CHARACTERISTICS OF BOTH LIABILITIES AND EQUITY" ("SFAS 150"). SFAS 150 improves the accounting for certain financial instruments that, under previous guidance, issuers could account for as equity. The new Statement requires that those instruments be classified as liabilities in statements of financial position. The 12 ------------------------------ SYMS CORP AND SUBSIDIARIES ------------------------------ Company does not expect the provisions of SFAS 150 to have a material impact on the Company's financial position or results of operations. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company's operations are not currently subject to material market risks for interest rates, foreign currency rates or other market price risks. ITEM 4. DISCLOSURE CONTROLS AND PROCEDURES Based on the evaluation of the Company's disclosure controls and procedures as of the end of the period covered by this quarterly report, each of Marcy Syms, the Chief Executive Officer of the Company, and Antone F. Moreira, the Chief Financial Officer of the Company, have concluded that the Company's disclosure controls and procedures are effective in ensuring that information required to be disclosed by the Company in the reports that it files or submits under the Securities and Exchange Act of 1934, as amended, is recorded, processed, summarized and reported, within the time period specified by the Securities and Exchange Commission's rules and forms. Notwithstanding the foregoing, a control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that it will detect or uncover failures within the Company to disclose material information otherwise required to be set forth in the Company's periodic reports. Internal Control Over Financial Reporting There have not been any changes in the Company's internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect the Company's internal control over financial reporting. PART II. OTHER INFORMATION Item 1. LEGAL PROCEEDINGS - None Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS - None Item 3. DEFAULTS UPON SENIOR SECURITIES - None Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS At the annual meeting of shareholders held on July 17, 2003, the Company's shareholders holding a majority of the shares of the Common Stock outstanding as of the close of business on June 13, 2003, voted to approve each of the three proposals included in the Company's proxy statement as follows: To elect six directors to hold office for one year or until their respective successors are duly elected and qualified. FOR WITHHELD Sy Syms 11,167,408 3,302,470 Marcy Syms 11,167,408 3,302,470 Antone F. Moreira 11,167,408 3,302,470 Harvey A. Weinberg 13,217,028 1,252,850 David A. Messer 13,217,028 1,252,850 Wilbur L. Ross, Jr. 13,217,028 1,252,850 13 ------------------------------ SYMS CORP AND SUBSIDIARIES ------------------------------ To ratify the appointment of BDO Seidman, LLP as independent accountants of the Company for the fiscal year ending February 28, 2004: For: 14,369,677 Against: 97,051 Abstain: 3,150 To approve an amendment to the Syms Corp Amended and Restated Incentive Stock Option and Appreciation Plan extending the term of the Plan from July 28, 2003 to July 28, 2013: For: 7,880,791 Against: 2,822,897 Abstain: 26,101 Item 5. OTHER INFORMATION - None Item 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits filed with this Form 10-Q Exhibit 10.48 Amendment to Syms Corp Amended and Restated Incentive Stock Option and Appreciation Plan Exhibit 10.49 Seventh Amendment to Revolving Credit Agreement and Second Amendment to Promissory Note, dated as of July 23, 2003, between Syms Corp and Fleet National Bank Exhibit 31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Exhibit 31.2 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Exhibit 32.1 Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Exhibit 32.2 Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (b) Reports on Form 8-K On June 26, 2003, the Company furnished a Report on Form 8-K pursuant to Items 7 and 9 of such form regarding its results of operations for the fiscal quarter ended May 31, 2003. 14 ------------------------------ SYMS CORP AND SUBSIDIARIES ------------------------------ SIGNATURES ---------- Pursuant to the requirements 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. SYMS CORP DATE: OCTOBER 10, 2003 BY /s/ Marcy Syms ----------------------- MARCY SYMS CHIEF EXECUTIVE OFFICER DATE: OCTOBER 10, 2003 BY /s/ Antone F. Moreira ----------------------- ANTONE F. MOREIRA VICE PRESIDENT, CHIEF FINANCIAL OFFICER (Principal Financial and Accounting Officer) 15 EX-10.48 3 c29557_ex10-48.txt Exhibit 10.48 SYMS CORP AMENDMENT TO THE AMENDED AND RESTATED INCENTIVE STOCK OPTION AND APPRECIATION PLAN The first sentences of each of Sections 3 and 15 of the Amended and Restated Incentive Stock Option and Appreciation Plan, as amended (the "Plan"), of Syms Corp, a New Jersey corporation (the "Corporation"), adopted by the Board, in March 1986, and approved by the stockholders, in May 1986, as further amended by the Board in November 1987, as further amended in May 1993 upon approval of both the Board and the stockholders, as further amended in July 2000 upon approval of both the Board and the stockholders, as further amended in July 2003 upon approval of both the Board and the stockholders, is hereby deleted in its entirety and the following substituted in lieu thereof: 3. TERMS OF THE PLAN. Subject to the provisions of Sections 15 and 17, the Plan shall commence effective as of July 29, 1983, and options and/or stock appreciation rights granted under the Plan must be granted no later than July 28, 2013. 15. TERMINATION AND AMENDMENT OF THE PLAN. Unless sooner terminated, as hereinafter provided, this Plan shall terminate on July 28, 2013, and no options or stock appreciation rights shall be granted hereunder after that date. EX-10.49 4 c29557_ex10-49.txt Exhibit 10.49 SEVENTH AMENDMENT TO REVOLVING CREDIT AGREEMENT AND SECOND AMENDMENT TO PROMISSORY NOTE This AMENDMENT is dated as of the 23rd day of July, 2003 and is by and between FLEET NATIONAL BANK having an office at 750 Walnut Avenue, Cranford, New Jersey 07016 (the "Bank"), and SYMS CORP., a New Jersey corporation having an address at One Syms Way, Secaucus, New Jersey 07094 (the "Borrower"). WITNESSETH: WHEREAS, the Borrower and the Bank have entered into a Revolving Credit Agreement dated as of December 1, 1993, as amended by that certain First Amendment to Revolving Credit Agreement dated as of November 24, 1997, as further amended by that certain Second Amendment to Revolving Credit Agreement dated as of May 27, 2000, as further amended by that certain Third Amendment to Revolving Credit Agreement dated as of November 25, 2000, as further amended by that certain Fourth Amendment to Revolving Credit Agreement dated as of May 4, 2001, as further amended by that certain Fifth Amendment to Revolving Credit Agreement dated as of May 3, 2002, and as further amended by that certain Sixth Amendment to Revolving Credit Agreement and First Amendment to Promissory Note dated as of August 19, 2002 (as amended, the "Credit Agreement"); and WHEREAS, in connection with the Credit Agreement, the Borrower executed a replacement promissory note in favor of the Bank dated May 3, 2002 in the face amount of $20,000,000 (the "Note"); and WHEREAS, the Borrower has requested that the Bank amend, and the Bank has agreed to amend certain provisions of the Agreement and to amend the maturity of the Note. NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto do hereby agree as follows: 1. DEFINITIONS. Except as otherwise defined herein, terms defined in the Credit Agreement shall have the same meaning when used herein. 2. AMENDMENT TO CREDIT AGREEMENT. The Credit Agreement is hereby amended as follows: (a) The definition of "Maturity Date" which appears in Section 1.1 is amended to read as follows: " `Maturity Date' shall mean October 29, 2003". 3. AMENDMENT TO NOTE. The maturity date of the Note is amended by replacing the date "May 2, 2003" the first time it appears with the date "October 29, 2003." 4. REPRESENTATIONS AND WARRANTIES. In order to induce the Bank to enter into this Agreement and amend the Credit Agreement as provided herein, the Borrower hereby represents and warrants to the Bank that: (a) All of the representations and warranties of the Borrower set forth in the Credit Agreement are true, complete and correct in all material respects on and as of the date hereof with the same force and effect as if made on and as of the date hereof and as if set forth at length herein (except that representations and warranties which are expressly stated to be as of a certain date are true, complete and correct in all material respects as of such certain date). (b) No Default or Event of Default presently exists and is continuing on and as of the date hereof. (c) Since the date of the Borrower's most recent financial statements delivered to the Bank, no material adverse change has occurred in the business, assets, liabilities, financial condition or results of operations of the Borrower, and no event has occurred or failed to occur which has had, or reasonably may be expected to have, a material adverse effect on the business, assets, liabilities, financial condition or results of operations of the Borrower. (d) The Borrower has full power and authority to execute, deliver and perform any action or step which may be necessary to carry out the terms of this Agreement and all other agreements, documents and instruments executed and delivered by the Borrower to the Bank concurrently herewith or in connection herewith (collectively, the "Amendment Documents"); each Amendment Document to which the Borrower is a party has been duly executed and delivered by the Borrower and is the legal, valid and binding obligation of the. Borrower enforceable in accordance with its terms, subject to any applicable bankruptcy, insolvency, general equity principles or other similar laws affecting the enforcement of creditor's rights generally. (e) The execution, delivery and performance of the Amendment Documents will not (i) violate any provision of any existing law, statute, rule, regulation or ordinance (ii) conflict with, result in a breach of or constitute a default under (a) any order, judgment, award or decree of any court, governmental authority, bureau or agency, or (b) any mortgage, indenture, lease, contract or other agreement or undertaking to which the Borrower is a party or by which the Borrower or any of its properties or asset~ may be bound, or (iii) result in the creation or imposition of any lien or other encumbrance upon or with respect to any property or asset now owned or hereafter acquired by the Borrower. (f) Except for such filing as may be required under the Securities Exchange Act of 1934, as amended, which filing (if required) shall be made by the Borrower as and when required, no consent, license, permit, approval or authorization of, exemption by, notice to, report to, or registration, filing or declaration with any person is required in connection with the execution, delivery, performance or validity of the Amendment Documents or the transactions contemplated thereby. 5. BANK COSTS. The Borrower agrees to reimburse the Bank for all reasonable costs and expenses, including reasonable counsel fees and disbursements, incurred by the Bank in connection with the Amendment Documents and the transactions contemplated therein. If such amounts are not paid within ten days of the Bank's request therefore, the Borrower hereby authorizes the Bank to charge the Borrower's account for the amount of such fees and expenses. 6. NO CHANGE. Except as expressly set forth herein, all of the terms and provisions of the Credit Agreement shall continue in full force and effect and are hereby ratified and confirmed in all respects. 7. COUNTERPARTS. This Agreement may be executed by the parties hereto in separate counterparts and all such counterparts taken together shall constitute one and the same instrument. 8. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of New Jersey. IN WITNESS WHEREOF, the Borrower and the Bank have executed this Agreement as of the date above written. FLEET NATIONAL BANK By: /s/ Michael J. Lessig --------------------- Name: Michael J. Lessig Title: AVP SYMS CORP. Attest: /s/ Ray Siconolfi ----------------- Ray Siconolfi By: /s/ Antone F. Moreira --------------------- Name: Antone F. Moreira Title: VP & CFO EX-31.1 5 c29557_ex31-1.txt Exhibit 31.1 I, Marcy Syms, Chief Executive Officer of Syms Corp, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Syms Corp; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b. evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c. disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: October 10, 2003 By: /s/ Marcy Syms ----------------------- Marcy Syms Chief Executive Officer Syms Corp EX-31.2 6 c29557_ex31-2.txt Exhibit 31.2 I, Antone F. Moreira, Chief Financial Officer of Syms Corp, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Syms Corp; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b. evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c. disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: October 10, 2003 By: /s/ Antone F. Moreira ----------------------- Antone F. Moreira Chief Financial Officer Syms Corp EX-32.1 7 c29557_ex32-1.txt Exhibit 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the quarterly report of Syms Corp (the "Company") on Form 10-Q for the period ended August 30, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Marcy Syms, Chief Executive Officer of the Company, certify, to the best of my knowledge, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. - --------------------------------------- ---------------------------------------- /s/ Marcy Syms -------------- Marcy Syms Chief Executive Officer Syms Corp October 10, 2003 - --------------------------------------- ---------------------------------------- A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. EX-32.2 8 c29557_ex32-2.txt Exhibit 32.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the quarterly report of Syms Corp (the "Company") on Form 10-Q for the period ended August 30, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Antone F. Moreira, Chief Financial Officer of the Company, certify, to the best of my knowledge, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. - --------------------------------------- ---------------------------------------- /s/ Antone F. Moreira --------------------- Antone F. Moreira Chief Financial Officer Syms Corp October 10, 2003 - --------------------------------------- ---------------------------------------- A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. -----END PRIVACY-ENHANCED MESSAGE-----