-----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, Wpbz/LYcZ9KkbndlfKI1j4xgTy9I9aLzeSwP8CiOZxQbFKEaE/Kk9/FSU20nyTtr E/SLuA5EFnvgW6EhFe8dYQ== 0000950110-01-500211.txt : 20010601 0000950110-01-500211.hdr.sgml : 20010601 ACCESSION NUMBER: 0000950110-01-500211 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20010303 FILED AS OF DATE: 20010531 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-K SEC ACT: SEC FILE NUMBER: 001-08546 FILM NUMBER: 1651585 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-K 1 e85266_100k.txt ANNUAL REPORT ================================================================================ 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 MARCH 3, 2001 or [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 COMMISSION FILE NUMBER 1-8546 SYMS CORP ----------------------------------------------------- (Exact name of registrant as specified in its charter) NEW JERSEY NO. 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) Registrant's telephone number, including area code (201) 902-9600 SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: Name of Each Exchange on Title of Each class Which Registered - ---------------------------- ------------------------ Common Stock, $.05 Par Value New York Stock Exchange SECURITIES REGISTERED PURSUANT TO SECTION 12 (g) OF THE ACT: NONE Indicate by check mark whether 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 of the registrant held by non-affiliates on May 14, 2001 was $50,411,667 based upon the closing price of such stock on that date. As of MAY 14, 2001, 15,736,090 shares of Common Stock were outstanding. DOCUMENTS INCORPORATED BY REFERENCE: Portions of the registrant's Proxy Statement for the 2001 annual meeting of stockholders to be filed pursuant to Regulation 14A are incorporated in Part III hereof by reference. ================================================================================ PART I ITEM 1. BUSINESS GENERAL Syms Corp operates a chain of 45 "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 at prices substantially lower than those generally found in department and specialty stores. Syms directs its merchandising efforts at predominantly middle-income, fashion-minded and price conscious customers. Since the first Syms store opened in New York City in 1959, the Company has expanded to 45 stores and the aggregate amount of selling space in Syms stores increased from approximately 2,000 square feet to approximately 1,776,000 square feet. The Company maintains a 277,000 square foot distribution center and executive headquarters in Secaucus, New Jersey. The Company maintains its executive offices at Syms Way, Secaucus, New Jersey 07094, telephone (201) 902-9600. Unless otherwise noted, references to the "Company" or to "Syms" relate to Syms Corp, its subsidiaries and their predecessors. DESCRIPTION OF BUSINESS The Syms chain of 45 apparel stores offers a broad range of "off-price" first quality, in-season merchandise consisting primarily of men's tailored clothing and haberdashery, women's dresses, suits and separates, children's apparel and men's, women's and children's shoes. Syms stores emphasize better quality, nationally recognized designer and brand name merchandise at prices substantially below those generally charged by department and specialty stores. Syms carries a wide selection of sizes and styles of men's, women's and children's wear. Syms operates in a single industry segment and has no foreign operations. No material part of the Company's consolidated revenues is received from a single customer or group of customers. MERCHANDISE For the year ended March 3, 2001, net sales were generated by the following categories: Men's tailored clothes and haberdashery ............. 54% Women's dresses, suits, separates and accessories.... 31% Shoes ............................................... 6% Children's wear ..................................... 7% Luggage, domestics and fragrances ................... 2% --- 100% Most of the items sold by the Company consist of nationally recognized fashion name merchandise. Merchandise is displayed by type and size on conveniently arranged racks or counters. No emphasis is placed on any particular "label". The stores generally offer minor alterations for an additional charge. PURCHASING The Company purchases first-quality, in-season, brand-name merchandise directly from manufacturers on terms more favorable than those generally obtained by department and specialty stores. Syms estimates that approximately 200 brand-name manufacturers of apparel are represented in its stores. The Company does not maintain large out-of-season inventories. However, Syms occasionally buys certain basic clothing which does not change in style from year to year at attractive prices for storage until the following season. Purchasing is performed by a buying staff in conjunction with their General Merchandise Manager and several other key divisional merchandise managers. DISTRIBUTION The Company owns a distribution center, located at Syms Way, Secaucus, New Jersey. The facility contains approximately 277,000 square feet of warehouse and distribution space, 34,000 square feet of office space and 29,000 square feet of store space. The facility is located on an 18.6 acre parcel of land for which the Company holds a ground lease for a remaining term of 275 years. Most merchandise is received from manufacturers at the distribution center where it is inspected, ticketed and allocated to particular stores. 1 MARKETING The Company's pricing policy is to affix a ticket to each item displaying Syms' selling price as well as the price the Company regards as the traditional full retail price of that item at department or specialty stores. All garments are sold with the brand-name as affixed by the manufacturer. Because women's dresses are vulnerable to considerable style fluctuation, Syms has long utilized a ten-day automatic markdown pricing policy to promote movement of merchandise. The date of placement on the selling floor of each women's dress is stamped on the back of the price ticket. The front of each ticket contains what the Company believes to be the nationally advertised price, the initial Syms price and three reduced prices. Each reduced price becomes effective after the passage of ten selling days. Women's dresses represent approximately 4.5 % of net sales. The Company also offers "dividend" prices consisting of additional price reductions on various types of merchandise. Syms has as its tag line "An Educated Consumer is Our Best Customer"(R), one of the best known in retail advertising. The Company advertises principally on television, radio and, more recently, has enhanced its advertising by including print media as well as direct mail to its credit card customer base. The Company sells its merchandise for cash, checks, national credit cards, and its own Syms credit card. Syms sells its own credit card receivables on a non-recourse basis to a third party for a fee. Merchandise purchased from the Company may be returned within a reasonable amount of time, within season. The Company does not offer cash refunds for purchases, but issues credits toward the Syms charge card and other major credit cards or store merchandise credits which may be used toward the purchase of other merchandise. TRADEMARKS "Syms", "An Educated Consumer is Our Best Customer"(R), "Names You Must Know"(R), and "The More You Know About Clothing, the Better it is for Syms"(R) have been registered with the United States Patent and Trademark Office. COMPETITION The retail apparel business is highly competitive, and the Company accounts for only a small fraction of the total market for men's, women's and children's apparel. The Company's stores compete with discount stores, apparel specialty stores, department stores, manufacturer-owned factory outlet stores and others. Many of the stores with which the Company competes are units of large national or regional chains that have substantially greater resources than the Company. Retailers having substantially greater resources than the Company have indicated their intention to enter the "off-price" apparel business, and the "off-price" apparel business itself has become increasingly competitive, especially with respect to the increased use by manufacturers of their own factory outlets. At various times of the year, department store chains and specialty shops offer brand-name merchandise at substantial markdowns. OPERATIONS AND CONTROL SYSTEMS The Company has implemented a merchandise control system which tracks a product from its purchase to its ultimate sale in the Company's stores. The system tracks the product by store in approximately 750 categories. All the information regarding the product is transmitted daily through telephone lines to the Company's database at its executive headquarters. Each week the Company's executives receive detail reports regarding sales and inventory levels in units and retail dollars on a store-by-store basis. Management of the Company visit stores on a regular basis to coordinate with the store managers, among other things, in the training of employees in loss prevention methods. Each store has on premises security personnel during normal hours and a security system after hours. EMPLOYEES At March 3, 2001, the Company had 2,314 employees of whom approximately 720 work part time. The Company has collective bargaining agreements with the Retail, Wholesale and Department Store Union and the United Food and Commercial Workers Union which expire in the year 2003 and cover 1,616 sales and tailor employees. The Company believes its relationships with the unions are good. Approximately 30 to 100 persons, consisting mostly of sales personnel, are employed at each Syms store. 2 ITEM 2. PROPERTIES THE STORES Location At March 3, 2001, the Company had 45 stores, 23 of which are located in leased facilities. The following table indicates the locations of the stores and the approximate selling space of each location. In addition to the selling space indicated, each store contains between approximately 2,000 to 12,000 square feet for inspection and ticketing of merchandise and administrative functions.
LEASED/ SELLING LEASED/ SELLING STATE LOCATION OWNED SPACE STATE LOCATION OWNED SPACE ----- -------- ------ ----- ----- -------- ------ ----- CONNECTICUT NEW YORK/NEW JERSEY Fairfield Owned 32,000 Park Avenue Leased 45,000 Hartford Leased 31,000 Trinity Owned 40,000 Westbury Owned 72,000 Commack Owned 36,000 FLORIDA Westchester Leased 50,000 Fort Lauderdale Owned 44,000 Rochester Owned 32,000 Miami Owned 45,000 Buffalo Owned 39,000 West Palm Beach Leased 36,000 Paramus Owned 56,000 Tampa Owned 38,000 Woodbridge Leased 32,000 Kendall Leased 32,000 Secaucus Owned 29,000 GEORGIA Cherry Hill Owned 55,000 Norcross Owned 41,000 Lawrenceville Leased 54,000 Marietta Owned 39,000 NORTH CAROLINA ILLINOIS Charlotte Leased 30,000 Addison Owned 47,000 Niles Leased 32,000 OHIO Chicago Leased 39,000 Highland Heights Leased 36,000 Sharonville Leased 31,000 MARYLAND Baltimore Leased 43,000 PENNSYLVANIA Rockville Owned 61,000 King of Prussia Owned 41,000 Towson Leased 41,000 Franklin Mills Mall Leased 22,000 MASSACHUSETTS Monroeville Owned 31,000 Norwood Leased 36,000 Pittsburgh Leased 40,000 Peabody Leased 39,000 RHODE ISLAND N. Cranston Leased 27,000 MICHIGAN Southfield Owned 46,000 TEXAS Troy Leased 37,000 Dallas Owned 42,000 MISSOURI Houston Owned 34,000 St. Louis Leased 33,000 Hurst Owned 38,000 VIRGINIA Falls Church Leased 39,000 Potomac Mills Mall Leased 33,000
3 Syms stores are either "free standing" or located in shopping centers or indoor malls, and all are surrounded by adequate parking areas, except for the two New York City stores and the one downtown Chicago store. Syms stores are usually located near a major highway or thoroughfare in suburban areas populated by at least 1,000,000 people and are readily accessible to customers by automobile. In certain areas where the population is in excess of 2,000,000 people, Syms has opened more than one store in the same general vicinity. Lease Terms Twenty-two of the Company's 45 stores are currently leased from unrelated parties, and the Elmsford, New York store is leased from Sy Syms, the Chairman of Syms Corp. The following table summarizes lease expirations and any renewal options:
Number of Number of Calendar Leases Leases with Range in Years of Periods Expiring (1) Renewal Options Option Periods (2) ------- ------------ --------------- ------------------- 2001 3 0 0 2002 4 1 4 2003 0 0 0 2004 1 1 0 2005 5 4 5 2006 and thereafter 12 8 2.5 - 5
(1) Westchester - month to month basis. (2) Depending on the applicable option, the minimum rent due during the renewal option periods may be based upon a formula contained in the existing lease or negotiations between the parties. Store leases provide for a base rental of between approximately $4.30 and $18.23 per square foot. In addition, under the "net" terms of all of the leases, the Company must also pay maintenance expenses, real estate taxes and other charges. Four of the Company's stores have a percentage of sales rental as well as a fixed minimum rent. Rental payments for Syms' leased stores aggregated $11,131,585 for the year ended March 3, 2001, of which $600,000 was paid to Sy Syms as fixed rent. Store Openings/Closings No new stores were opened this year. Two stores were closed this year. The store located in downtown Boston was closed on October 29, 2000, and the store located in Gurnee Mills mall in Chicago, IL, was closed on January 13, 2001. ITEM 3. LEGAL PROCEEDINGS The Company is a party to routine litigation incident to its business. Management of the Company believes, based upon its assessment of the actions and claims outstanding against the Company, and after discussion with counsel, that there are no legal proceedings that will have a material adverse effect on the financial condition or results of operations of the Company. Some of the lawsuits to which the Company is a party are covered by insurance and are being defended by the Company's insurance carriers. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS There were no matters submitted to a vote of security holders during the fourth quarter of the fiscal year covered by this Annual Report. 4 PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS MARKET INFORMATION The following table sets forth for the period indicated the high and low sales prices for the Company's common stock as reported by the New York Stock Exchange using the trading symbol SYM. HIGH LOW ------ ------ 2000 Quarter ended March 3, 2001 $5.85 $4.437 Quarter ended November 25, 2000 6.125 3.687 Quarter ended August 26, 2000 4.625 3.375 Quarter ended May 27, 2000 4.375 3.312 1999 Quarter ended February 26, 2000 $6.188 $4.313 Quarter ended November 27, 1999 8.875 5.125 Quarter ended August 28, 1999 8.188 7.438 Quarter ended May 29, 1999 8.375 7.375 HOLDERS As of May 1, 2001 there were 142 record holders of the Company's Common Stock. The Company believes that there were in excess of 1,492 beneficial owners of the Company's Common Stock as of that date. DIVIDENDS The Board of Directors of the Company did not declare dividends in the fiscal years ended March 3, 2001 and February 26, 2000. Payment of dividends is within the discretion of the Company's Board of Directors and depends upon various factors including the earnings, capital requirements and financial condition of the Company (see Note 4 to notes to consolidated financial statements regarding covenants in the Company's revolving credit agreement). The Company intends generally to retain earnings, if any, to fund development and growth of its business. The Company does not plan on paying dividends in the near term. 5 ITEM 6. SELECTED FINANCIAL DATA The selected financial data presented below has been derived from the Company's audited Consolidated Financial Statements for the fiscal years ended March 3, 2001, February 26, 2000, February 27, 1999, February 28, 1998 and March 1, 1997. The selected financial data presented below should be read in conjunction with such Financial Statements and notes thereto.
FISCAL YEAR ENDED ------------------------------------------------------------------------- MARCH 3, FEBRUARY 26, FEBRUARY 27, FEBRUARY 28, MARCH 1, 2001 2000 1999 1998 1997 --------- --------- --------- --------- --------- (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) INCOME STATEMENT DATA: Net sales ........................... $ 342,316 $ 341,570 $ 343,858 $ 352,959 $ 346,792 Net income (loss) ................... (8,333) 2,224 17,449 23,036 19,065 Net income (loss) per share - basic . (0.52) 0.14 1.00 1.30 1.08 Net income (loss) per share - diluted (0.52) 0.14 1.00 1.29 1.08 Cash dividends per share ............ -- -- -- -- -- BALANCE SHEET DATA: Working capital ..................... $ 86,638 $ 87,812 $ 101,592 $ 99,728 $ 78,228 Total assets ........................ 276,867 300,314 298,742 294,192 284,018 Capitalized leases .................. -- -- -- 419 900 Other long term liabilities ......... 2,409 2,436 1,567 964 633 Shareholders' equity ................ 243,935 253,428 258,760 250,870 226,434
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS This Annual Report 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 Annual 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 therein 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. 6 RESULTS OF OPERATIONS The following discussion compares the fiscal years ended March 3, 2001, February 26, 2000 and February 27, 1999. The fiscal year ended March 3, 2001 was comprised of 53 weeks. The fiscal years ended February 26, 2000 and February 27, 1999 were each comprised of 52 weeks. Fiscal Year Ended March 3, 2001 (Fiscal 2000) Compared to Fiscal Year Ended February 26, 2000 (Fiscal 1999) Net sales for the fiscal year ended March 3, 2001, were $342,316,000, an increase of $746,000 (.2%) as compared to net sales of $341,570,000 for the fiscal year ended February 26, 2000. Comparable store sales for the fiscal year ended March 3, 2001 declined .5%. The Company estimates that the extra week in the fiscal year ended March 3, 2001 added approximately $4,013,000 in net sales compared to the previous year. The closing of the Boston store on October 29, 2000 accounted for approximately a $2,000,000 decline in sales. Gross profit for the fiscal year ended March 3, 2001 was $126,887,000, a decrease of $1,838,000 (37.1% as a percentage of net sales) as compared to $128,725,000 (37.7% as a percentage of net sales). This decrease is largely due to higher markdowns taken in the third quarter of approximately $2,600,000 to cover an increased amount of aged merchandise and inventory for closed stores, which was partially offset by an improved shrinkage performance. Selling, general and administrative (SG&A) expense was $84,810,000 (24.8% as a percentage of net sales) for the fiscal year ended March 3, 2001 as compared to $83,592,000 (24.5% as a percentage of net sales) for the fiscal year ended February 26, 2000. This increase in SG&A expenses of $1,218,000 is largely attributable to the opening of three new stores in fiscal 1999, which were not open for the entire fiscal year in 1999. Advertising expense for the fiscal year ended March 3, 2001 was $10,122,000 (3.0% as a percentage of net sales) as compared to $10,210,000 (3.0% as a percentage of net sales) for the fiscal year ended February 26, 2000. Occupancy costs were $21,366,000 (6.2% as a percentage of net sales) for the fiscal year ended March 3, 2001 as compared to $20,688,000 (6.1% as a percentage of net sales) for the fiscal year ended February 26, 2000. This increase is largely attributable to the expense of new stores opened in fiscal 1999 which were not opened for the entire fiscal year 1999. Depreciation and amortization amounted to $11,468,000 (3.4% as a percentage of net sales) for the fiscal year ended March 3, 2001, as compared to $10,580,000 (3.1% as a percentage of net sales) for the fiscal year ended February 26, 2000. This increase is attributable to the addition of new stores opened in fiscal 1999 and the acquisition of new MIS systems and equipment. During the third quarter, the Company recorded a store closing charge of $12.9 million relating to a plan to close five stores, including its store in Boston, Massachusetts (which closed on October 29, 2000), and an additional lease commitment associated with a previously closed store. The action was taken by the Company to enhance competitiveness, reduce expenses and to improve efficiencies. The net loss before income taxes was $13,661,000 for the fiscal year ended March 3, 2001 as compared to a net profit before income taxes of $3,645,000 for the fiscal year ended February 26, 2000. This variance is largely attributable to the recording of a store closing charge in the third quarter 2000 for the closing of certain stores. For the fiscal year ended March 3, 2001, the effective income tax rate was 39.0% which was the same as the fiscal year ended February 26, 2000. Fiscal Year Ended February 26, 2000 (Fiscal 1999) Compared to February 27, 1999 (Fiscal 1998) Net sales for the fiscal year ended February 26, 2000, were $341,570,000 a decrease of $2,288,000 (or .7%) as compared to net sales of $343,858,000 for the fiscal year ended February 27, 1999. Comparable store sales for the fiscal year ended February 26, 2000 declined 5.9%. This sales decline continues to be impacted by increased price competition and increased promotional activity from other retailers. Gross profit for the fiscal year ended February 26, 2000 was $128,725,000, a decrease of $7,175,000 (37.7 % as a percentage of net sales) as compared to $135,900,000 (39.5% as a percentage of net sales) for the fiscal year ended February 27, 1999. This decrease is largely due to the decline in sales and higher markdowns which was partially offset by an improved shrinkage performance. 7 Selling, general and administrative (SG&A) expense was $83,592,000 (24.5% as a percentage of net sales) for the fiscal year ended February 26, 2000 as compared to $73,886,000 (21.5% as a percentage of net sales) for the fiscal year ended February 27, 1999. This increase in SG&A expenses of approximately $9,706,000 is largely attributable to the opening of new stores. The SG&A expenses of these new stores amounted to $6,303,000 for the fiscal year ended February 26, 2000. Advertising expense for the fiscal year ended February 26, 2000 was $10,210,000 (3.0% as a percentage of net sales) as compared to $7,581,000 (2.2% as a percentage of net sales) for the fiscal year ended February 27, 1999. The increase of $2,629,000 resulted from increased TV advertising in the first half of this year and increased number of direct mail customers in fiscal 1999 as compared to fiscal 1998 resulting from a management decision to spend more advertising dollars in an effort to improve sales performance. Occupancy costs were $20,688,000 (6.1% as a percentage of net sales) for the fiscal year ended February 26, 2000 as compared to $16,717,000 (4.9% as a percentage of net sales) for the fiscal year ended February 27, 1999. This increase is largely attributable to the expense of new stores for the fiscal year ended February 26, 2000. Depreciation and amortization amounted to $10,580,000 (3.1% as a percentage of net sales) for the fiscal year ended February 26, 2000 as compared to $8,541,000 (2.5% as a percentage of net sales) for the fiscal year ended February 27, 1999. This increase is attributable to the addition of new stores and the acquisition of new MIS systems and equipment. Income before income taxes was $3,645,000 (a decrease of $25,437,000, or 87.5%) for the fiscal year ended February 26, 2000, as compared to $29,082,000 for the fiscal year ended February 27, 1999. This decrease resulted mostly from the decline in sales, gross margin and higher SG&A expenses largely attributable to the opening of three new stores. For the fiscal year ended February 26, 2000 the effective income tax rate was 39.0% as compared to 40.0% for the fiscal year ended February 27, 1999. In the fiscal year ended February 27, 1999, the effective tax rate was affected by the addition of tax reserves pertaining to certain states. LIQUIDITY AND CAPITAL RESOURCES Working capital at March 3, 2001 was $86,638,000, a decrease of $1,719,000 from February 26, 2000, and the ratio of current assets to current liabilities increased to 3.84 to 1 as compared to 2.98 to 1 at February 26, 2000. Net cash provided by operating activities totaled $4,654,000 for the fiscal year ended March 3, 2001 as compared to $36,132,000 for the fiscal year ended February 26, 2000. The major reasons for the decrease in cash provided by operating activities was attributed to a loss in the fiscal year and lower accounts payable. Net cash used in investing activities was $5,691,000 for the fiscal year ended March 3, 2001 as compared to $19,051,000 for the fiscal year ended February 26, 2000. Purchases of property and equipment totaled $6,073,000 and $19,203,000 for the fiscal years ended March 3, 2001 and February 26, 2000, respectively. Net cash used in financing activities was $1,160,000 for the fiscal year ended March 3, 2001 as compared to $10,325,000 for the fiscal year ended February 26, 2000 and $7,690,000 for the fiscal year ended February 27, 1999. The Company has a revolving credit agreement with a bank for a line of credit not to exceed $30,000,000 through May 3, 2002. Except for funds provided from this revolving credit agreement, the Company has satisfied its operating and capital expenditure requirements, including those for the operation and expansion of stores, from internally generated funds. For the fiscal year ended March 3, 2001, under the revolving credit agreement, the borrowings peaked at $6,850,000 and the average amount of borrowings was $488,000 with a weighted average interest rate of 8.00%. For the fiscal year ended February 26, 2000, the average amount of borrowings under the revolving credit agreement was $888,000 with a weighted average interest rate of 6.33%. 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 merchandise. This agreement may be canceled at any time by either party. At March 3, 2001 and at February 26, 2000, the Company had $2,592,704 and $3,264,965 respectively, in outstanding letters of credit. 8 The Company has planned capital expenditures of approximately $5,000,000 for the fiscal year ending March 2, 2002. The Company's Board of Directors had authorized the repurchase of up to 15% of its outstanding shares of common stock at prevailing market prices through October 12, 2001. During the year ended March 3, 2001, the Company has purchased 200,000 shares which represented 1.3% of its outstanding shares at a total cost of $1,160,000. 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 March 2, 2002. 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. NEW ACCOUNTING PRONOUNCEMENTS In June 1998, Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133") was issued. In June 2000, Statement of Financial Accounting Standards No. 138, "Accounting for Certain Derivative Instruments and Hedging Activities, an Amendment of FASB Statement No. 133" ("SFAS 138") was issued. SFAS 133 and SFAS 138 address the accounting for derivative instruments, including certain derivative instruments embedded in other contracts, and hedging activities. The Company is required to adopt SFAS 133 and SFAS 138 in the first quarter of 2001. The Company anticipates that the adoption of SFAS 133 and SFAS 138 as of March 4, 2001 will not have a material effect on its financial position or results of operations. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The Company's consolidated financial statements are filed together with this Annual Report. See index to Consolidated Financial Statements in Item 14. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not Applicable 9 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The directors and executive officers of the Company are as follows:
NAME AGE TITLE ---- --- ----- Sy Syms (1)(2).............. 75 Chairman of the Board and Director of the Company Marcy Syms (1)(2)........... 50 Chief Executive Officer/President and Director of the Company Antone F. Moreira .......... 64 Vice President, Treasurer and Chief Financial Officer and Director of the Company Harvey A. Weinberg (3)(4)... 63 Director of the Company David A. Messer (3)(4)...... 39 Director of the Company Wilbur L. Ross, Jr (3)(4)... 63 Director of the Company Ronald Zindman.............. 51 Executive Vice President - General Merchandise Manager Allen Brailsford............ 57 Executive Vice President - Operations Myra Butensky............... 42 Vice President - Divisional Merchandise Manager Men's Tailored Clothing James Donato................ 45 Vice President - Operations Elyse Marks................. 48 Vice President - Information Services John Tyzbir................. 47 Vice President - Human Resources
(1) Member of the Executive Committee of the Company. (2) Sy Syms is the father of Marcy Syms. (3) Member of the Stock Option - Compensation Committee of the Company. (4) Member of the Audit Committee of the Company. The members of the Company's Board of Directors hold office until the next annual meeting of shareholders and until their successors are duly elected and qualified. Executive officers are elected annually by the Board of Directors of the Company and serve at the pleasure of the Board. Marcy Syms is the daughter of Sy Syms. There are no other family relationships between any directors or executive officers of the Company. None of the organizations with which these persons were previously associated is a parent, subsidiary or other affiliate of the Company except as otherwise set forth. 10 SY SYMS has been Chairman of the Board, Chief Executive Officer and a Director of the Company and/or its predecessors since 1959. Mr. Syms was Chief Operating Officer of the Company from 1983 to 1984. Mr. Syms has been a Director of Israel Discount Bank of New York since December 1991. On January 22, 1998, Sy Syms relinquished his position as Chief Executive Officer to Marcy Syms. Since that date Mr. Syms has been Chairman of the Board. MARCY SYMS has been President and a Director of the Company since 1983 and Chief Operating Officer of the Company since 1984. On January 22, 1998, Marcy Syms was named Chief Executive Officer/President. ANTONE F. MOREIRA has been Vice President, Chief Financial Officer and Treasurer of Syms Corp since May 1997. From 1996 to May 1997, Mr. Moreira was a financial consultant with Equitable Assurance Society, a financial services organization. From 1990 to 1995, Mr. Moreira was Executive Vice President and Chief Financial Officer of Stuarts Department Stores, Inc., a regional discount department store chain operating in New England. Mr. Moreira has been a Director of the Company since May 1997. HARVEY A. WEINBERG has been a consultant since April 1994. From April 1992 to April 1994, he was President and Chief Executive Officer of HSSI, Inc., a retailer of men's and women's apparel. From 1987 to September 1990, he was Chief Executive Officer and Vice Chairman of the Board of Directors of Hartmarx Corporation and from 1990 to September 1992, he served as Chairman of the Board of Hartmarx Corporation. He is a trustee of Glimcher Realty Trust, a real estate investment trust. He has been a Director of the Company since December 1992. DAVID A. MESSER has been President of Sempra Energy Trading, a subsidiary of Sempra Energy, Inc. (NYSE: SRE), since January 1998. Prior to January 1998, Mr. Messer was President of AIG Trading Corporation, where he had been employed since March 1990. He has been a Director of the Company since July 1996. WILBUR L. ROSS, JR. has been a principal of W.L. Ross & Company LLC since 2000. Prior to 2000, Mr. Ross was Managing Director of Rothchild, Inc. from 1976 to 1999. He was a Director of the Company from 1983 through March 1999 and was reappointed Director in October 2000. RONALD ZINDMAN has been Executive Vice President - General Merchandise Manager since March 1997. He was Vice President, General Merchandise Manager, Ladies, Mens and Haberdashery from July 1994 to March 1997. Previously, Mr. Zindman was Vice President - General Merchandise Manager Ladies from March 1993 to July 1994 and a buyer of men's and women's merchandise from March 1990 to March 1993. ALLEN BRAILSFORD has been Executive Vice President since April 2001. Mr. Brailsford was Vice President of Operations from March 1992 to March 2001, and from March 1985 to March 1992, he was Director of Distribution. MYRA BUTENSKY has been Vice President - Divisional Merchandise Manager, Men's Tailored Clothing since January 1999. From May 1998 to January 1999, Ms. Butensky was Divisional Merchandise Manager, Ladies. From June 1991 to April 1998, Ms. Butensky was a ladies buyer. Prior to joining the Company in 1991, Ms. Butensky was a buyer with Popular Trading Club, Inc, and also spent 10 years with Macy's in a number of buying positions. JAMES DONATO has been Vice President of Operations since April 2001. From November 1997 to March 2001 he was Director of Store Planning. Prior to November 1997, Mr. Donato was in store management as a District Manager and Store Manager of the Company. ELYSE MARKS has been Vice President of MIS since April 2001. From November 1999 to March 2001 Ms. Marks was Director of MIS. Prior to November 1999, Ms. Marks was manager of MIS and store systems. From 1983 to 1987, she was also in store management for the Company. JOHN TYZBIR has been Vice President - Human Resources since April 1999. From January 1995 to October 1997, Mr. Tyzbir was Director of Human Resources of Zallie Supermarkets Corp. From June 1991 to January 1995, Mr. Tyzbir was Director of Human Resources and Planning of Carson Pirie Scott Inc. 11 ITEM 11. EXECUTIVE COMPENSATION In accordance with General Instruction G(3) of the General Instructions to Form 10-K, the information called for by Item 11 is omitted from this Annual Report and is incorporated by reference to the definitive Proxy Statement to be filed by the Company pursuant to Regulation 14A of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended, which the Company will file not later than 120 days after March 3, 2001, the end of the fiscal year covered by this Annual Report. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT In accordance with General Instruction G(3) of the General Instructions to Form 10-K, the information called for by Item 12 is omitted from this Annual Report and is incorporated by reference to the definitive Proxy Statement to be filed by the Company pursuant to Regulation 14A of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended, which the Company will file not later than 120 days after March 3, 2001, the end of the fiscal year covered by this Annual Report. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS In accordance with General Instruction G(3) of the General Instructions to Form 10-K, the information called for by Item 13 is omitted from this Annual Report and is incorporated by reference to the definitive Proxy Statement to be filed by the Company pursuant to Regulation 14A of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended, which the Company will file not later than 120 days after March 3, 2001, the end of the fiscal year covered by this Annual Report. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K PAGE NUMBER ----------- (a)(1) Financial Statements: Independent Auditors' Report.................................... F-1 Consolidated Balance Sheets .................................... F-2 Consolidated Statements of Operations .......................... F-3 Consolidated Statements of Shareholders' Equity ................ F-4 Consolidated Statements of Cash Flows .......................... F-5 Notes to Consolidated Financial Statements ..................... F-6 All schedules are omitted because they are not applicable, or not required, or because the required information is included in the consolidated financial statements or notes thereto. (a)(3) List of Exhibits: The following exhibits which are marked with an asterisk are filed as part of this Annual Report and the other exhibits set forth below are incorporated by reference (utilizing the same exhibit numbers, except as stated otherwise below) from (i) the Company's Registration Statement on Form S-1 under the Securities Act of 1933 (Registration No. 2-85554) filed August 2, 1983 and declared effective September 23, 1983 or (ii) where indicated, the Company's reports on Form 8-K, Form 10-Q or Form 10-K or the Company's Proxy Statement (Commission File No. 1-8564). Management contracts or compensatory plans or arrangements required to be filed as exhibits are identified by a (+). 3.1 Certificate of Incorporation of Syms Corp, as amended 3.2 By-laws of Syms Corp 4.1 Specimen Certificate of Common stock 4.3 $5,600,000 New Jersey Economic Development Authority Revenue Bond Agreement dated December 1, 1981 4.4 Amendments to the New Jersey Economic Development Authority Revenue Bond Agreement 4.4a First Amendment dated April 14, 1982 4.4b Second Amendment dated May 17, 1982 4.4c Third Amendment dated June 27, 1983 4.4d Fourth Amendment dated July 14, 1983 4.5 Mortgage & Note dated December 11, 1981 between Syms Inc. and New Jersey Economic Development Authority 12 10.3 Elmsford (White Plains), New York Leased Premises 10.3a Lease, June 21, 1977 10.3b Lease Modification, December 28, 1978 10.3c Lease Modification, July 26, 1983 10.3d Consent, July 29, 1983 10.3e Parking Area Lease No. 1, July 29, 1969 10.3f Parking Area Sublease No. 1, November 29, 1974 10.3g Parking Area Lease No. 2, June 23, 1969 10.3h Parking Area Sublease No. 2, November 29, 1974 10.3i Assignment and Assumption, July 29, 1983 10.4 Ground Lease at One Emerson Lane, Township of Secaucus, Hudson County, New Jersey Assignment and Assumption of Ground Lease, dated May 8, 1986, to Registrant (exhibit 28.1 to 8-K Report dated May 1986) 10.21+ Syms Corp 1983 Incentive Stock Option and Appreciation Plan as Amended and Restated (Exhibit A to Company's Proxy Statement for the 1993 Annual Meeting of Shareholders) 10.29 Credit Card Program Agreement dated as of March 12, 1987 and as amended as of March 16, 1987 between General Electric Credit Card Corporation and Registrant (10-K Report for fiscal year ended December 31, 1987) 10.32 Revolving Credit Agreement dated as of December 1, 1993 between Syms Corp and Summit Bank (successor to United Jersey Bank) (8-K Report dated December 7, 1993) 10.33 Form of Indemnification Agreement between Registrant and Directors and Executive Officers of the Registrant (10-K Report for fiscal year ended March 2, 1996) 10.34 Credit Plan Agreement dated December 11, 1995 between Citicorp Retail Services, Inc. and Registrant (10-K Report for fiscal year ended March 2, 1996) 10.35+ Employment Agreement dated November 1, 1996 between Syms Corp and Ronald Zindman (10-K Report for fiscal year ended March 1, 1997) 10.36+ Stock Option Certificate for Ronald Zindman (10-K Report for fiscal year ended March 1, 1997) 10.37 Promissory note and mortgage from Syms Corp to Marcy Syms (10-K Report for fiscal year ended March 1, 1997) 10.38 First Amendment to Revolving Credit Agreement, dated as of November 24, 1997, between Syms Corp and Summit Bank. (10-K Report for fiscal year ended February 28, 1998) 10.39 Credit Program Agreement, dated January 27, 2000 between Syms Corp and Conseco Finance Corp (10-K report for fiscal year ended February 26, 2000) 10.40 Second Amendment to Revolving Credit Agreement, dated as of May 27, 2000, between Syms Corp and Fleet National Bank (successor to Summit Bank) (10-Q Report for quarter ended May 27, 2000) 10.41+ Amendment to the Amended and Restated Incentive Stock Option and Appreciation (10-Q Report for quarter ended November 25, 2000.) 10.42* Third Amendment to Revolving Credit Agreement, dated as November 24, 2000, between Syms Corp and Fleet National Bank (successor to Summit Bank) 10.43* Fourth Amendment to Revolving Credit Agreement, dated as of May 4, 2001, between Syms Corp and Fleet National Bank. 10.44* Promissory note and mortgage from Syms Corp to Marcy Syms dated April 1, 2001 21* List of Subsidiaries of the Company 23* Consent of Deloitte & Touche LLP (b) Reports on Form 8-K: During the quarter ended March 3, 2001 no reports on Form 8-K were filed. 13 SIGNATURE Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized. SYMS CORP By: /s/ MARCY SYMS --------------------------------------- Marcy Syms Chief Executive Officer/President Date: May 31, 2001 Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. SIGNATURE TITLE DATE - --------- ----- ---- /s/ SY SYMS Chairman of the Board May 31, 2001 - ------------------------ and Director Sy Syms /s/ MARCY SYMS Chief Executive Officer/President May 31, 2001 - ------------------------ and Director Marcy Syms (Principal executive officer) /s/ ANTONE F. MOREIRA Vice President, Treasurer and May 31, 2001 - ------------------------ Chief Financial Officer and Director Antone F. Moreira (Principal financial and accounting officer) /s/ HARVEY A. WEINBERG Director May 31, 2001 - ------------------------ Harvey A. Weinberg /s/ DAVID A. MESSER Director May 31, 2001 - ------------------------ David A. Messer /s/ WILBUR L. ROSS, JR. Director May 31, 2001 - ------------------------ Wilbur L. Ross, Jr. 14 INDEPENDENT AUDITORS' REPORT To the Board of Directors and Shareholders Syms Corp Secaucus, New Jersey We have audited the accompanying consolidated balance sheets of Syms Corp and Subsidiaries as of March 3, 2001 and February 26, 2000, and the related consolidated statements of operations, shareholders' equity, and cash flows for each of the three years ended March 3, 2001. 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 in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing he accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Syms Corp and Subsidiaries as of March 3, 2001 and February 26, 2000 and the results of their operations and their cash flows for each of the three years in the period ended March 3, 2001, in conformity with accounting principles generally accepted in the United States of America. April 19, 2001 F-1 SYMS CORP AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS - -------------------------------------------------------------------------------- (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
MARCH 3, FEBRUARY 26, 2001 2000 --------- ------------ ASSETS CURRENT ASSETS: Cash and cash equivalents $ 7,485 $ 9,682 Merchandise inventories 99,186 116,357 Deferred income taxes 6,252 3,221 Prepaid expenses and other current assets 4,238 3,002 --------- --------- Total current assets 117,161 132,262 PROPERTY AND EQUIPMENT - NET 150,587 162,447 DEFERRED INCOME TAXES 2,924 916 OTHER ASSETS 6,195 4,689 --------- --------- TOTAL ASSETS $ 276,867 $ 300,314 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 16,453 $ 27,374 Accrued expenses 8,347 11,569 Accrued insurance 2,813 2,774 Obligations to customers 2,910 2,733 --------- --------- Total current liabilities 30,523 44,450 OTHER LONG TERM LIABILITIES 2,409 2,436 COMMITMENTS (Note 7) -- -- 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; 15,760 shares outstanding as of March 3, 2001 (net of 2,128 treasury shares) and 15,960 shares outstanding as of February 26, 2000 (net of 1,928 treasury shares) 788 798 Additional paid-in capital 13,752 13,752 Treasury stock (18,821) (17,671) Retained earnings 248,216 256,549 --------- --------- Total shareholders' equity 243,935 253,428 --------- --------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 276,867 $ 300,314 ========= =========
See notes to consolidated financial statements. F-2 SYMS CORP AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS - -------------------------------------------------------------------------------- (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
FISCAL YEAR ENDED --------------------------------------- MARCH 3, FEBRUARY 26, FEBRUARY 27, 2001 2000 1999 --------- --------- ------------ NET SALES $ 342,316 $ 341,570 $ 343,858 Cost of goods sold 215,429 212,845 207,958 --------- --------- --------- Gross profit 126,887 128,725 135,900 EXPENSES Selling, general and administrative 84,810 83,592 73,886 Advertising 10,122 10,210 7,581 Occupancy 21,366 20,688 16,717 Depreciation and amortization 11,468 10,580 8,541 Special charges 12,935 0 0 --------- --------- --------- Income (loss) from operations (13,814) 3,655 29,175 Interest expense (income) - net (153) 10 93 --------- --------- --------- Income (loss) before income taxes (13,661) 3,645 29,082 Provision (benefit) for income taxes (5,328) 1,421 11,633 --------- --------- --------- NET INCOME (LOSS) $ (8,333) $ 2,224 $ 17,449 ========= ========= ========= Net Income (loss) Per Share -- basic $ (0.52) $ 0.14 $ 1.00 ========= ========= ========= Weighted Average Shares Outstanding -- basic 15,950 16,351 17,474 ========= ========= ========= Net Income (loss) Per Share -- diluted $ (0.52) $ 0.14 $ 1.00 ========= ========= ========= Weighted Average Shares Outstanding -- diluted 15,950 16,362 17,536 ========= ========= =========
See notes to consolidated financial statements. F-3 SYMS CORP AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - -------------------------------------------------------------------------------- (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
ADDITIONAL PREFERRED STOCK COMMON STOCK PAID-IN TREASURY RETAINED SHARES AMOUNT SHARES AMOUNT CAPITAL STOCK EARNINGS TOTAL ------ ------ ------ ------ --------- --------- --------- --------- BALANCE AS OF -- $ -- 17,849 $ 892 $ 13,102 $ -- $ 236,876 $ 250,870 FEBRUARY 28, 1998 Exercise of stock options -- -- 39 2 650 -- -- 652 Stock buyback -- -- (864) (43) (10,168) (10,211) Net income -- -- -- -- -- -- 17,449 17,449 ------ ------ ------ ------ --------- --------- --------- --------- BALANCE AS OF FEBRUARY 27, 1999 -- -- 17,024 851 13,752 (10,168) 254,325 258,760 Stock buyback -- -- (1,064) (53) -- (7,503) -- (7,556) Net income -- -- -- -- -- -- 2,224 2,224 ------ ------ ------ ------ --------- --------- --------- --------- BALANCE AS OF FEBRUARY 26, 2000 -- -- 15,960 798 13,752 (17,671) 256,549 253,428 Stock buyback -- -- (200) (10) -- (1,150) -- (1,160) Net loss -- -- -- -- -- -- (8,333) (8,333) ------ ------ ------ ------ --------- --------- --------- --------- BALANCE AS OF MARCH 3, 2001 -- $ -- 15,760 $ 788 $ 13,752 $ (18,821) $ 248,216 $ 243,935 ====== ====== ====== ====== ========= ========= ========= =========
See notes to consolidated financial statements. F-4 SYMS CORP AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS - -------------------------------------------------------------------------------- (IN THOUSANDS)
FISCAL YEAR ENDED -------------------------------------- MARCH 3, FEBRUARY 26, FEBRUARY 27, 2001 2000 1999 -------- ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ (8,333) $ 2,224 $ 17,449 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 11,468 10,580 8,541 Deferred income taxes (5,039) (1,103) 2,016 Gain on sale of property and equipment (337) (139) (748) Non-cash impairment charge 6,473 -- (Increase) decrease in operating assets: Merchandising inventories 17,171 13,081 (2,410) Prepaid expenses and other current assets (1,236) 751 868 Other assets (1,559) 637 1,319 Increase (decrease) in operating liabilities: Accounts payable (10,921) 8,106 (2,718) Accrued expenses (3,183) 1,844 (1,901) Obligations to customers 177 (718) (1,057) Other long term liabilities (27) 869 603 -------- -------- -------- Net cash provided by operating activities 4,654 36,132 21,962 -------- -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment (6,073) (19,203) (16,250) Proceeds from sale of property and equipment 382 152 1,064 -------- -------- -------- Net cash used in investing activities (5,691) (19,051) (15,186) -------- -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Purchase of treasury shares (1,160) (7,556) (10,168) Repayments of obligations under capital lease -- (419) (481) Revolving line of credit (repayments) borrowings -- (2,350) 2,350 Exercise of options -- -- 609 -------- -------- -------- Net cash used in financing activities (1,160) (10,325) (7,690) -------- -------- -------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (2,197) 6,756 (914) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 9,682 2,926 3,840 -------- -------- -------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 7,485 $ 9,682 $ 2,926 ======== ======== ======== SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid during the period for: Interest (net of amount capitalized) $ 311 $ 191 $ 389 ======== ======== ======== Income taxes paid, net of refunds $ 1,827 $ 694 $ 7,507 ======== ======== ========
See notes to consolidated financial statements. F-5 SYMS CORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FISCAL YEARS ENDED MARCH 3, 2001, FEBRUARY 26, 2000 AND FEBRUARY 27, 1999 - -------------------------------------------------------------------------------- NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES a. Principal Business - Syms Corp and subsidiaries (the "Company") operates a chain of 45 "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. b. Principles of Consolidation - The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. c. Accounting Period - The fiscal year ended March 3, 2001 was comprised of 53 weeks and fiscal years ended February 26, 2000 and February 27, 1999 were comprised of 52 weeks. d. Cash and Cash Equivalents- Syms Corp considers credit card receivables and all short-term investments with an original maturity of three months or less as cash equivalents. e. Merchandise Inventories - Merchandise inventories are stated at the lower of cost or market on a first-in first- out (FIFO) basis, as determined by the retail inventory method. f. Property and Equipment - Property and equipment are stated at cost. Depreciation and amortization are principally determined by the straight-line method over the following estimated useful lives: Buildings and improvements 15 - 39 years Machinery and equipment 4 - 7 years Furniture and fixtures 7-10 years Leasehold improvements Lesser of life of the asset or life of lease g. Income Taxes - Deferred income taxes reflect the future tax consequences of differences between the tax basis of assets and liabilities and their financial reporting amounts at year end. h. Obligation to Customers - Obligations to customers represent credits issued for returned merchandise as well as gift certificates. i. 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 disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. j. Reclassification - Certain items in prior years in specific captions of the accompanying consolidated financial statements and notes to consolidated financial statements have been reclassified for comparative purposes. k. Revenue Recognition - The Company recognizes revenue at the "point of sale". Allowance for sales returns is recorded as a component of net sales in the period in which the related sales are recorded. F-6 l. Comprehensive Income - Comprehensive income is equivalent to the Company's net income for fiscal years 2000, 1999 and 1998. m. Segment Reporting - Statement of Financial Accounting Standards (SFAS) No. 131, "Disclosures about Segments of an Enterprise and Related Information" establishes standards for reporting information about a company's operating segments. It also establishes standards for related disclosures about products and services, geographic areas and major customers. The Company operates in a single operating segment - the operation of retail off-price stores. Revenues from external customers are derived from merchandise sales. The Company's merchandise sales mix by product category for the last three fiscal years was as follows:
Fiscal Year -------------------------- 2000 1999 1998 ---- ---- ---- Men's tailored clothes and haberdashery 54% 54% 53% Women's dresses, suits, separates and accessories 31% 30% 31% Shoes 6% 7% 8% Children's wear 7% 7% 6% Luggage, domestics and fragrances 2% 2% 2% ---- ---- ---- 100% 100% 100%
The Company does not rely on any major customers as a source of revenue. n. Computer Software Costs - In March 1998, the American Institute of Certified Public Accountants issued Statement of Position ("SOP") 98-1, "Accounting for the Costs of Computer Software Developed or Obtained for Internal Use." SOP 98-1 requires capitalization of costs of software developed or purchased for internal use. The Company adoption of the SOP for 1999 which resulted in the capitalization of software development costs of approximately $4,428,000. The after tax effect on net income in 1999 was approximately $2,399,000 or $.15 per diluted share. There were no significant costs in 1998 that would have impacted net income in 1998 if the Company adopted the SOP earlier. o. In June 1998, Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133") was issued. In June 2000, Statement of Financial Accounting Standards No. 138, "Accounting for Certain Derivative Instruments and Hedging Activities, an Amendment of FASB Statement No. 133" ("SFAS 138") was issued. SFAS 133 and SFAS 138 address the accounting for derivative instruments, including certain derivative instruments embedded in other contracts, and hedging activities. The Company is required to adopt SFAS 133 and SFAS 138 in the first quarter of 2001. The Company anticipates that the adoption of SFAS 133 and SFAS 138 as of March 4, 2001 will not have a material effect on its financial position or results of operations. F-7 NOTE 2 - PROPERTY AND EQUIPMENT Property and equipment consists of: MARCH 3, FEBRUARY 26, 2001 2000 --------- --------- (IN THOUSANDS) Land $ 40,584 $ 40,628 Buildings and building improvements 115,788 115,205 Leasehold and leasehold improvements 44,793 51,318 Machinery and equipment 30,077 28,193 Furniture and fixtures 21,480 20,487 Capital lease -- 3,763 Construction in progress 1,248 392 --------- --------- 253,970 259,986 Less accumulated depreciation and amortization 103,383 97,539 --------- --------- $ 150,587 $ 162,447 ========= ========= NOTE 3 - INCOME TAXES The provision (benefit) for income taxes is as follows: FISCAL YEAR ENDED ------------------------------------------ MARCH 3, FEBRUARY 26, FEBRUARY 27, 2001 2000 1999 ------- -------- -------- (IN THOUSANDS) Current Federal $ -- $ 2,366 $ 8,009 State (289) 158 1,608 ------- -------- -------- (289) 2,524 9,617 ------- -------- -------- Deferred Federal (4,047) (190) 1,622 State (992) (913) 394 ------- -------- -------- (5,039) (1,103) 2,016 ------- -------- -------- $(5,328) $ 1,421 $ 11,633 ======= ======== ======== F-8 The following is a reconciliation of income taxes computed at the U.S. Federal statutory rate to the provision for income taxes: FISCAL YEAR ENDED ---------------------------------------- MARCH 3, FEBRUARY 26, FEBRUARY 27, 2001 2000 1999 ------- ----------- ------------ Statutory Federal income tax rate (35.0%) 35.0% 35.0% State taxes, net of Federal income tax benefits (8.1%) (10.3) 4.4 Officers' life insurance 4.1% 14.3 0.6 ------ ----- ---- Effective income tax rate (39.0%) 39.0% 40.0% ====== ===== ==== The composition of the Company's deferred tax assets and liabilities is as follows:
FISCAL YEAR ENDED ----------------------------- MARCH 3, FEBRUARY 26, 2001 2000 ------- ------- (IN THOUSANDS) Deferred tax assets: Capitalization of inventory costs $ 1,266 $ 1,414 Accounts receivable 76 81 Net operating losses 4,559 583 Other 3,888 3,041 ------- ------- Total deferred tax assets 9,789 5,119 Deferred tax liability: Depreciation method and different estimated lives (536) (915) Other (77) (67) ------- ------- Total deferred tax liabilities (613) (982) ------- ------- Net $ 9,176 $ 4,137 ======= ======= Current deferred tax asset $ 6,252 $ 3,221 Long term deferred tax asset (net of non-current deferred tax liability) 2,924 916 ------- ------- Net $ 9,176 $ 4,137 ======= =======
At March 3, 2001 the Company had a federal net operating loss of approximately $9,000,000 that expires in 2021. F-9 NOTE 4 - BANK CREDIT FACILITIES The Company has an unsecured revolving credit agreement with a bank for a line of credit not to exceed $30,000,000 through May 3, 2002. Interest on individual advances is payable quarterly at 1 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 of two other alternative calculations, 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. There were no outstanding borrowings against this agreement at the end of the fiscal years March 3, 2001 and February 26, 2000. 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 not in compliance with certain financial covenants during the year ended March 3, 2001 and received a waiver for such non-compliance. Management expects to be in compliance through 2001. Because compliance is based on managements' estimates and actual results can differ from these estimates, compliance through 2001 cannot be assured. The Company believes the assumptions used are appropriate. Total interest charges incurred for the years ended March 3, 2001, February 26, 2000 and February 27, 1999, including amounts related to capital leases, were $319,000, $577,000, and $607,000, respectively, of which $14,000, $40,000, and $147,000 were capitalized in fiscal 2000, 1999 and 1998, respectively, in connection with the construction of new facilities. 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 merchandise. This agreement may be canceled at any time by either party. At March 3, 2001 and at February 26, 2000 the Company had $2,592,704 and $3,264,965, respectively, in outstanding letters of credit. NOTE 5 - STORE CLOSING COSTS During the third quarter, the Company recorded a store closing cost of $12.9 million relating to a plan to close five stores, including its Boston, Massachusetts store (which closed October 29, 2000), and an additional lease commitment cost associated with a previously closed store. The action was taken by the Company to enhance competitiveness, reduce expenses and to improve efficiencies. The company anticipates other stores will close in the next twelve months. The charges and related remaining accruals consist of the following (in thousands): Amount remaining Charges at March 3, 2001 -------- ---------------- Store closing costs: Lease commitments $ 6,033 $ 1,077 Impairment of property & equipment (non cash) 6,417 -- Severance and other employee benefits 160 14 Other 325 342 -------- ------- $ 12,935 $ 1,429 ======== ======= Lease commitment costs, including a termination charge, were incurred for contractual obligations that existed on two stores. An impairment charge was recorded where management's estimates indicated that projected operations yielded cumulative operating losses before depreciation and amortization, on both an undiscounted and discounted basis. The Company did not believe it could improve the profitability and expected cash flows to continue to be negative. The amount of impairment was measured on the basis of projected discounted operating income using a discount rate F-10 indicative of the Company's average cost of funds, before the effects of depreciation and amortization. As a result of this elevation, the Company determined that the fixed assets could not be recovered. The costs incurred included the write-off of leasehold improvements and furniture and fixtures to their net realizable value. NOTE 6 - FAIR VALUE DISCLOSURES The estimated fair values of financial instruments which are presented herein have been determined by the Company using available market information and appropriate valuation methodologies. However, considerable judgment is required in interpreting market data to develop estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of amounts the Company could realize in a current market exchange. The fair value of the Company's cash and cash equivalents, accounts receivable and accounts payable approximates their carrying values at March 3, 2001 and February 26, 2000 due to the short-term maturities of these instruments. NOTE 7 - PENSION AND PROFIT SHARING PLANS a. PENSION PLAN - The Company has a defined benefit pension plan for all employees other than those covered under collective bargaining agreements. The benefits are based on years of service and the employee's highest average pay during any five consecutive years within the ten-year period prior to retirement. Pension plan costs are funded annually. Contributions are intended to provide not only for benefits attributed to service to date, but also for those expected to be earned in the future. The following information on the Company's pension plan is provided:
MARCH 3, FEBRUARY 26, FEBRUARY 27, 2001 2000 1999 ------- ------------ ------------ (IN THOUSANDS) CHANGE IN BENEFIT OBLIGATION: Net benefit obligation at beginning of year $ 5,195 $ 5,586 $ 4,890 Service cost 510 437 477 Interest cost 385 356 334 Actuarial (gain) loss 183 (879) 162 Gross benefits paid (244) (305) (277) ------- ------- ------- Net benefit obligation at end of year $ 6,029 $ 5,195 $ 5,586 ======= ======= ======= CHANGE IN PLAN ASSETS: Fair value of plan assets at beginning of year $ 5,684 $ 5,137 $ 4,655 Employer contributions 345 249 203 Gross benefits paid (244) (305) (277) Actual return on plan assets 29 603 556 ------- ------- ------- Fair value of plan assets at end of year $ 5,814 $ 5,684 $ 5,137 ======= ======= ======= Funded status at end of year $ (214) $ 489 (449) Unrecognized net actuarial (gain) (199) (860) 170 Unrecognized transition amount (25) (51) (76) ------- ------- ------- Accrued benefit costs $ (438) $ (422) $ (355) ======= ======= =======
F-11 Pension expenses includes the following components: FISCAL YEAR ENDED ---------------------------------------- MARCH 3, FEBRUARY 26, FEBRUARY 27, 2001 2000 1999 -------- ------------ ------------ (IN THOUSANDS) COMPONENTS OF NET PERIODIC BENEFIT COST: Service cost $510 $437 $477 Interest cost 385 356 334 Return on Assets (29) (603) (556) Amortization of actuarial loss (504) 125 132 ---- ---- ---- Net periodic benefit cost $362 $315 $387 ==== ==== ==== WEIGHTED-AVERAGE ASSUMPTIONS USED: Discount rate 7.25% 7.75% 6.75% Rate of compensation increase 4.50% 4.50% 4.50% The expected long-term rate of return on plan assets was 8.5% during each of the years ended March 3, 2001 and February 26, 2000. b. PROFIT-SHARING AND 401(k) PLAN - The Company has a profit-sharing plan and 401(k) plan for all employees other than those covered under collective bargaining agreements. In 1995, the Company established a defined contribution savings plan 401(k) for substantially all of its eligible employees. Employees may contribute a percentage of their salary to the plan subject to statutory limits. The Company has not made any matching contributions to this plan during the fiscal year ended March 3, 2001. However, profit-sharing contributions were made in the amounts of $18,900 for year ended February 26, 2000, $180,000 for the year ended February 27, 1999 and $222,000 for the year ended February 28, 1998. NOTE 8 - COMMITMENTS a. LEASES - The Company has various operating leases for its retail stores, with terms expiring between 2001 and 2018. Under most lease agreements, the Company pays real estate taxes, maintenance and other operating expenses. Certain store leases also provide for additional contingent rentals based upon a percentage of sales in excess of certain minimum amounts. F-12 Future minimum lease payments at March 3, 2001 are as follows: OPERATING LEASES ------------ 2001 $ 10,606,643 2002 9,171,710 2003 8,599,835 2004 8,283,200 2005 8,084,892 2006 and thereafter 35,717,729 ------------ Total minimum payments $ 80,464,009 ============ Rent expense for operating leases are as follows: FISCAL YEAR ENDED ----------------------------------------------- MARCH 3, FEBRUARY 26, FEBRUARY 27, 2001 2000 1999 -------- ------- ------ (IN THOUSANDS) Minimum rentals due $ 11,131 $10,477 $7,608 Escalation rentals accrued 516 868 584 Contingent rentals 15 16 26 Sublease rentals (528) (512) (875) -------- ------- ------ $ 11,134 $10,849 $7,343 ======== ======= ====== b. EMPLOYMENT AGREEMENT - The Company has an employment agreement with its General Merchandising Manager, expiring 2009, pursuant to which annual compensation of approximately $350,000 is required. In addition, that employee is entitled to additional compensation upon occurrence of certain events. c. LEGAL PROCEEDINGS - The Company is a party to routine litigation incident to its business. Management of the Company believes, based upon its assessment of the actions and claims outstanding against the Company, and after discussion with counsel, that there are no legal proceedings that will have a material adverse effect on the financial condition or results of operations of the Company. Some of the lawsuits to which the Company is a party are covered by insurance and are being defended by the Company's insurance carriers. NOTE 9 - PREFERRED STOCK The Company is authorized to issue up to 1,000,000 shares of preferred stock, in one or more series of preferred stock. The Board of Directors is authorized to establish the number of shares to be included in each such series, and to fix the designation, relative rights, preferences, qualifications and limitations of the shares of each such series. F-13 NOTE 10 - STOCK OPTION PLAN The Company's Stock Option Plan allows for the granting of incentive stock options, as defined in Section 422A of the Internal Revenue Code of 1986 (as amended), non-qualified stock options or stock appreciation rights. The plan requires that incentive stock options be granted at an exercise price not less than the fair market value of the common shares on the date the option is granted. The exercise price of the option for holders of more than 10% of the voting rights of the Company must be not less than 110% of the fair market value of the common shares on the date of grant. Non-qualified options and stock appreciation rights may be granted at any exercise price. The Company has reserved 1,500,000 shares of common stock for issuance thereunder. No option or stock appreciation rights may be granted under the stock option plan after July 2003. The maximum exercise period for any option or stock appreciation right under the plan is ten years from the date the option is granted (five years for any optionee who holds more than 10% of the voting rights of the Company). SFAS No. 123 encourages (but does not require) compensation expense to be measured based on the fair value of the equity instrument awarded. In accordance with APB No. 25, no compensation cost has been recognized in the Consolidated Statements of Operations for the Company's stock option plans. If compensation cost for the Company's stock option plans had been determined in accordance with the fair value method prescribed by SFAS No. 123, the Company's pro forma net income (loss) and earnings per share would be as follows: 2000 1999 1998 -------- ------- ------- Net Income (loss) (in thousands) ($8,892) $ 1,893 $17,320 Net Income (loss) per share - basic ($.56) $ 0.12 $ 1.00 Net Income (loss) per share - diluted ($.56) $ 0.12 $ 1.00 This pro forma information may not be representative of the amounts to be 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 1996. The fair value of each option grant is estimated on the date of each grant using the Black-Scholes option-pricing model with the following weighted average assumptions used for grants in 1999 and 1998: risk-free interest rate of 6.47% and 4.75% expected life 5 and 10 years, expected volatility of 35.38% and 31.33% and dividend yield 0%. There were no stock options granted in 2000. 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. F-14 STOCK option transactions are summarized below:
FISCAL YEAR ENDED (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) ----------------------------------------------------------------------------- MARCH 3, 2001 FEBRUARY 26, 2000 FEBRUARY 27, 1999 --------------------- ------------------ ------------------- WEIGHTED WEIGHTED WEIGHTED FISCAL AVERAGE FISCAL AVERAGE FISCAL AVERAGE 2000 EXERCISE 1999 EXERCISE 1998 EXERCISE FIXED OPTIONS SHARES PRICE SHARES PRICE SHARES PRICE ------ -------- ------ -------- ------ -------- Outstanding beginning of year 1,184 $7.33 493 $10.01 347 $ 9.75 Granted -- -- 724 5.63 200 10.69 Exercised -- -- -- -- (38) 10.70 Cancelled (78) 8.64 (33) 9.98 (16) 11.07 ----- ----- ----- ------ ---- ------ Outstanding, end of period 1,106 $7.24 1,184 $ 7.33 493 $10.01 ===== ===== ===== ====== ==== ====== Options exerciseable at year end 672 $8.19 550 $ 9.02 430 $10.30 Weighted-average fair value of options granted during the year -- $2.36 $ 3.74
The following table summarizes information about stock options outstanding at March 3, 2001: OPTIONS OUTSTANDING OPTIONS EXERCISABLE ------------------------------------------------------ ------------------- WEIGHTED-AVERAGE NUMBER REMAINING NUMBER RANGE OF OUTSTANDING AT CONTRACTURAL EXERCISABLE AT EXERCISE PRICES MARCH 3, 2001 LIFE (YEARS) MARCH 3, 2001 --------------- -------------- ---------------- -------------- $5.625 681,725 8.7 272,690 8.00 87,500 5.5 62,500 8.50 25,100 1.6 25,100 9.625 18,500 0.1 18,500 9.75 50,000 2.3 50,000 9.88 25,000 6.2 25,000 10.625 5,650 2.1 5,650 10.6875 200,000 7.6 200,000 11.50 12,500 1.1 12,500 F-15 NOTE 11 - NET INCOME PER SHARE In accordance with SFAS 128, basic net income (loss) per share has been computed based upon the weighted average common shares outstanding. Diluted net income per share gives effect to outstanding stock options. Net income per share have been computed as follows: FISCAL 2000 FISCAL 1999 FISCAL 1998 ----------- ----------- ----------- BASIC NET INCOME PER SHARE: Net Income (loss) ($ 8,333) $ 2,224 $ 17,449 Average shares outstanding 15,950 16,351 17,474 Basic net income (loss) per share ($0.52) $ 0.14 $ 1.00 DILUTED NET INCOME PER SHARE: Net Income (loss) ($ 8,333) $ 2,224 $ 17,449 Average shares outstanding 15,950 16,351 17,474 Stock options 0 11 62 -------- -------- -------- Total average equivalent shares 15,950 16,362 17,536 Diluted net income (loss) per share ($0.52) $ .14 $ 1.00 Options to purchase 1,106,000, 367,000 and 396,000 shares of common stock at prices ranging from $5.625 to $12.250 per share were outstanding in 2000, 1999 and 1998, 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 antidilutive. NOTE 12 - RELATED PARTY TRANSACTIONS Included in the Statements of Operations are the following expenses relating to a real estate capital lease with an officer (this lease expired November 30, 1999). During the fiscal year ended March 3, 2001, the Company paid to Sy Syms $600,000 in fixed rent. MARCH 3, FEBRUARY 26, FEBRUARY 27, 2001 2000 1999 ------- ------------ ------------ (IN THOUSANDS) Depreciation -- $ 100 $ 161 Interest -- 31 119 F-16 The balance sheet includes the following items relating to this agreement: MARCH 3, 2001 FEBRUARY 26, 2000 ------------- ----------------- (IN THOUSANDS) Assets under Capital Lease -- $ 3,763 Accumulated Depreciation -- (3,756) Capital Lease Obligation -- -- On April 2, 2001, the Company loaned the Marcy Syms Revocable Trust $800,000. The loan is evidenced by the Trust's ten-year Note which is guaranteed by Ms. Syms and is secured by a first priority mortgage on the real estate which Ms. Syms owns in Westchester County. The Note bears interest at the rate of 5.43% per annum (the then applicable federal long-term rate) payable annually. NOTE 13 - UNAUDITED SELECTED QUARTERLY FINANCIAL DATA QUARTER ---------------------------------------- FIRST SECOND THIRD FOURTH -------- ------ -------- --------- (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) YEAR ENDED MARCH 3, 2001 Net sales $ 81,192 $ 74,621 $ 94,309 $ 92,194 Gross profit 31,317 26,725 33,417 35,428 Net income (loss) 144 (2,976) (7,699) 2,198 Net income (loss) per share - basic 0.01 (0.19) (0.48) 0.14 Net income (loss) per share - diluted 0.01 (0.19) (0.48) 0.14 QUARTER ---------------------------------------- FIRST SECOND THIRD FOURTH -------- ------ -------- --------- (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) YEAR ENDED FEBRUARY 26, 2000 Net sales $ 79,771 $ 72,794 $ 95,628 $ 93,377 Gross profit 31,846 23,926 36,776 36,177 Net income (loss) 834 (3,525) 2,796 2,119 Net income (loss) per share - basic 0.05 (0.21) 0.17 0.13 Net income (loss) per share - diluted 0.05 (0.21) 0.17 0.13 F-17 EX-10.42 2 e85266_ex10-42.txt THIRD AMENDMENT TO REVOLVING CREDIT AGREEMENT Exhibit 10.42 THIRD AMENDMENT TO REVOLVING CREDIT AGREEMENT This THIRD AMENDMENT is dated as of the 25th day of November, 2000 and is by and between SUMMIT 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"). W I T N E S S E T H: - - - - - - - - - - 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 amended, the "Credit Agreement"); and WHEREAS, the Borrower and the Bank have agreed to amend certain terms of the Credit Agreement as more fully described herein. 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 of Credit Agreement. The Credit Agreement is hereby amended as follows (all Section references are to the corresponding Sections of the Credit Agreement): 2.1 Section 6.11 is amended to read as follows: "EBITDA. The Borrower's Consolidated EBITDA, determined on a trailing four-quarters basis, shall not be less than (a) $12,500,000 as at the fiscal quarter ending May 27, 2000, (b) $14,500,000 as at the fiscal quarter ending August 26, 2000, and (c) $11,000,000 as at the fiscal quarters ending November 25, 2000 and March 3, 2001." 3. Waiver. The Bank hereby waives as of November 25, 2000, on a one-time basis, the Borrower's compliance with the EBITDA covenant set forth in Section 6.11 of the Credit Agreement for the Borrower's fiscal quarter ended November 25, 2000. 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) After giving effect to the waiver described in Paragraph 3 hereof and the amendment to the Credit Agreement described in Paragraph 2 hereof, 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 assets 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 therefor, the Borrower hereby authorizes the Bank to charge the Borrower's account for the amount of such fees and expenses. 2 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. SUMMIT BANK By: /s/ CHRISTOPHER P KLECZKOWSKI ----------------------------- Christopher P. Kleczkowski Senior Vice President SYMS CORP. Attest: /s/ KIRK R. ONEY By: /s/ ANTONE F. MOREIRA - -------------------------- ------------------------------ Name: Antone F. Moreira Title: VP & CFO 3 EX-10.43 3 e85266_ex10-43.txt FOURTH AMENDMENT TO REVOLVING CREDIT AGREEMENT Exhibit 10.43 FOURTH AMENDMENT TO REVOLVING CREDIT AGREEMENT This FOURTH AMENDMENT is dated as of the 4th day of May, 2001 and is by and between FLEET NATIONAL BANK (successor by merger to Summit 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"). W I T N E S S E T H: - - - - - - - - - - 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, and as further amended by that certain Third Amendment to Revolving Credit Agreement dated as of November 25, 2000 (as amended, the "Credit Agreement"); and WHEREAS, the Borrower and the Bank have agreed to amend certain terms of the Credit Agreement as more fully described herein. 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 of Credit Agreement. The Credit Agreement is hereby amended as follows (all Section references are to the corresponding Sections of the Credit Agreement): 2.1 The definition of "Bank" which appears in Section 1.1 is amended to read as follows: "Bank" shall mean Fleet National Bank, a national banking association, and its successors and assigns. 2.2 The definition of "Consolidated EBIT" which appears in Section 1.1 is amended to read as follows: "Consolidated EBIT" shall mean for any period, the Consolidated Net Income of the Borrower and its Consolidated Subsidiaries, as determined in accordance with GAAP, adjusted by adding thereto (i) payments under leases, (ii) Consolidated Interest Expense and (iii) provision for income taxes. Consolidated EBIT shall be determined without giving effect to any non-cash losses from extraordinary items or non-recurring items, including the sale of assets, other than inventory sold in the ordinary course of business. 2.3 The definition of "Consolidated EBITDA" which appears in Section 1.1 is amended to read as follows: "Consolidated EBITDAR" shall mean for any period, Consolidated EBIT, adjusted by adding thereto (i) the amount of all amortization of intangibles and depreciation that were deducted in arriving at Consolidated EBIT for such period and (ii) to the extend deducted in determining Consolidated Net Income, Consolidated Rental Payments for such period. 2.4 The definition of "Maturity Date" which appears in Section 1.1 is amended to read as follows: "Maturity Date" shall mean May 3, 2002. 2.5 The following new definitions are hereby added to Section 1.1: "Consolidated Fixed Charge Coverage Ratio" for any period shall mean the ratio of Consolidated EBITDAR to Consolidated Fixed Charges for such period. "Consolidated Fixed Charges" for any period shall mean the sum of (i) Consolidated Interest Expense for such period, (ii) the amount of all cash Dividends which were paid on the capital stock of the Borrower and its subsidiaries during such period (other than Dividends paid by a subsidiary of the Borrower to the Borrower or another subsidiary of the Borrower), (iii) the amount of all expenditures for such period which were applied to the repair or maintenance of fixed assets, (iv) the amount of all income taxes paid or payable for such period, (v) the scheduled principal amount of all amortization payments on all Indebtedness for money borrowed of the Borrower and its subsidiaries for such period (as determined on the first day of the respective period) and (vi) the amount of all payments under leases. "Consolidated Rental Payments" shall mean for any period all rental payments paid in cash by Borrower and its Consolidated Subsidiaries in respect of operating leases, as determined in accordance with GAAP. 2.6 Section 6.11 is amended by deleting the Minimum EBITDA covenant which appears therein and inserting the following covenant in its place: 2 6.11 Consolidated Fixed Charge Coverage Ratio. The Borrower will not permit the Consolidated Fixed Charge Coverage Ratio for any period of four consecutive fiscal quarters (taken as one accounting period) to be less than 1.2 to 1.0. 2.7 Section 6.12 is amended to read as follows: 6.12 Capital Expenditures. The Borrower shall not permit the sum of Capital Expenditures plus Dividends to exceed $10,000,000 for the fiscal year ending March 3, 2002. 2.8 Section 6.21 is amended to read as follows: 6.21 Payment of Revolving Credit Note. Upon at least thirty (30) days prior written notice to the Bank, the Borrower shall, at any time from May 4, 2001 through and including April 2, 2002 (the exact date to be selected by the Borrower), pay to the Bank the entire outstanding principal amount of the Revolving Credit Note as of such date selected (the "Clean Down Date"), together with all accrued interest thereon. Commencing on the Clean Down Date and continuing for a period of thirty (30) consecutive days thereafter, the Borrower shall not be permitted to request, and the Bank shall not be obligated to make, any Advances hereunder. The failure by the Borrower to reduce the outstanding principal balance of the Revolving Credit Note to zero on the Clean Down Date shall constitute an Event of Default hereunder. 3. Substitute Note. Concurrently herewith, the Borrower shall execute and deliver to the Bank a third substitute revolving credit note (the "Substitute Note") which shall supersede, and be in substitution for, the second substitute revolving credit note dated as of May 27, 2000 (the "Prior Note") executed and delivered by the Borrower to the Bank. It is expressly agreed that the execution and delivery of such Substitute Note shall not evidence or represent a refinancing, repayment, accord and satisfaction or novation of the indebtedness evidenced by the Prior Note. As soon as practicable following its receipt of the Substitute Note, the Bank will return the Prior Note to the Borrower for cancellation. 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). 3 (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 assets 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 expense s, 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 therefor, 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. 4 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 (successor by merger to Summit Bank) By: /s/ WILLIAM DINICOLA ------------------------------ Name: William DiNicola Title: Senior Vice President SYMS CORP. Attest: /s/ KIRK R. ONEY By: /s/ ANTONE F. MOREIRA - ------------------------ ------------------------------- Name: Antone F. Moreira Title: 5 EX-10.44 4 e85266_ex10-44.txt PROMISSORY NOTE AND MORTGAGE FROM SYMS CORP Exhibit 10.44 Promissory note and mortgage from Syms Corp to Marcy Syms dated April 1, 2001 PROMISSORY NOTE $800,000 New York, New York April 1, 2001 FOR VALUE RECEIVED, the undersigned, MARCY SYMS MERNS, as Trustee under the Marcy Merns Revocable Trust dated January 12, 1990 (hereinafter referred to as "Maker"), having an address at 205 West 57th Street, New York, New York 10019, hereby unconditionally PROMISES TO PAY to the order of SYMS CORP, a New Jersey corporation (hereinafter collectively referred to as "Payee"), having an address at Syms Way, Secaucus, New Jersey 07094 or at such other place as the holder of this Note may designate from time to time in writing, in lawful money of the United States of America and in immediately available funds, the principal amount of up to EIGHT HUNDRED THOUSAND AND 00/100 DOLLARS ($800,000) as hereinafter provided. The principal sum of this Note shall be payable in accordance with the following provisions: Interest on the outstanding principal sum shall accrue from and including the date hereof at the rate of 5.43% per annum and shall be payable on each April 1st hereafter and until the 10th anniversary thereof (the "Maturity Date"), at which time the entire outstanding principal sum and all accrued and unpaid interest shall be due and payable. Notwithstanding the foregoing, this Note may be prepaid in whole or in part, without penalty or premium, at any time prior to the Maturity Date. This Note shall be secured by a first mortgage lien on the premises (and any improvements made thereto) known as 14 Twin Ponds Lane, Bedford Hills, New York 10507 (the "Premises") granted by Maker in favor of Payee (the "Mortgage"). A default under the Mortgage shall be deemed a default under this Note. This Note has been executed, delivered and accepted in New York, New York and shall be interpreted, governed by, and construed in accordance with the internal laws of the State of New York, without regard to New York choice of law principals. /s/ MARCY SYMS MERNS ----------------------- Marcy Syms Merns, as Trustee The undersigned, as the beneficiary of the Marcy Syms Merns Revocable Trust dated January 12, 1990, hereby guarantees the prompt payment and performance of all obligations, covenants and duties owing by the Maker to Payee of any kind or nature, present or future, pursuant to this Note, due or to become due, now existing or hereafter arising, and any amendments, extensions, renewals or increases and all costs and expense of Payee incurred in the documentation, negotiation, modification enforcement, collection or otherwise in connection with any of the foregoing, including but not limited to reasonable attorneys' fees and expenses. /s/ MARCY SYMS MERNS ----------------------- Marcy Syms Merns, THIS MORTGAGE, made as of 1st day of April, two thousand and one BETWEEN Marcy Syms Merns, as Trustee under the Marcy Merns Revocable Trust dated January 12, 1990, having an address at 205 West 57th Street, New York, New York 10019 HEREIN REFERRED TO AS THE MORTGAGOR, AND Syms Corp., a New Jersey corporation, having an address at Syms Way, Secaucus, New Jersey 07094 HEREIN REFERRED TO AS THE MORTGAGEE, WITNESSETH, that to secure the payment of an indebtedness in the sum of Eight Hundred Thousand ($800,000) DOLLARS, lawful money of the United States, to be paid on the 1st day of April 2011 with interest thereon to be computed from 1st day of April 2001, AT THE RATE OF 5.43 per centum per annum, and to be paid annually on April 1 of each year through the maturity date according to a certain bond, note or obligation bearing even date herewith, the mortgagor hereby mortgages to the mortgagee ALL that certain real property described on Schedule "A" attached hereto and made a part hereof. AND the mortgagor covenants with the mortgagee as follows: 1. That the mortgagor will pay the indebtedness as hereinbefore provided. 2. That the mortgagor will keep the buildings on the premises insured against loss by fire for the benefit of the mortgagee; that he will assign and deliver the policies to the mortgagee; and that he will reimburse the mortgagee for any premiums paid for insurance made by the mortgagee on the mortgagor's default in so insuring the buildings or in so assigning and delivering the policies. 3. That no building on the premises shall be removed or demolished without the consent of the mortgagee. 4. That the whole of said principal sum and interest shall become due at the option of the mortgagee: after default in the payment of any installment of principal or of interest for twenty days; or after default in the payment of any tax, water rate, sewer rent or assessment for thirty days after notice and demand; or after default after notice and demand either in assigning and delivering the policies insuring the buildings against loss by fire or in reimbursing the mortgagee for premiums paid on such insurance, as hereinbefore provided; or after default upon request in furnishing a statement of the amount due on the mortgage and whether any offsets or defenses exist against the mortgage debt, as hereinafter provided. 5. That the holder of this mortgage, in any action to foreclose it, shall be entitled to the appointment of a receiver. 6. That the mortgagor will pay all taxes, assessments, sewer rents or water rates, and in default thereof, the mortgagee may pay the same. 7. That the mortgagor within six days upon request in person or within fifteen days upon request by mail will furnish a written statement duly acknowledged of the amount due on this mortgage and whether any offsets or defenses exist against the mortgage debt. 8. The notice and demand or request may be in writing and may be served in person or by mail. 9. That the mortgagor warrants the title to the premises. 10. That the mortgagor will, in compliance with Section 13 of the Lien Law, receive the advances secured hereby and will hold the right to receive such advances as a trust fund to be applied first for the purpose of paying the cost of the improvement and will apply the same first to the payment of the cost of the improvement before using any part of the total of the same for any other purpose. This mortgage may not be changed orally. IN WITNESS WHEREOF, this mortgage has been duly executed by the mortgagor. /s/ MARCY SYMS MERNS -------------------------------------------- Marcy Syms Merns, as Trustee under the Marcy Merns Revocable Trust dated January 12, 1990 STATE OF NEW JERSEY, COUNTY OF HUDSON On the 2nd day of April 2001, before me came to me known, who, being by me duly sworn, did depose and say that he resides at in ; that he is the of the corporation described in and which executed, the foregoing instrument; that he knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by order of the Board of said corporation; and that he signed his name thereto by like order. STATE OF NEW YORK, COUNTY OF On the day of in the year 2001, before me, the undersigned personally appeared, Marcy Syms Merns, personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that she executed the same in her capacity, and that by her signature on the instrument, the individual or the person upon behalf of which the individual acted, executed the instrument. /s/ RICHARD A. TEREO ------------------------------ Signature and Office of Individual taking acknowledgment RICHARD A. TEREO NOTARY PUBLIC OF NEW JERSEY MY COMMISSION EXPIRES MARCH 6, 2006 EX-23 5 e85266_ex23.txt INDEPENDENT AUDITORS' CONSENT EXHIBIT 23 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in Registration Statement No. 333-44254 on Form S-8 of our report dated April 19, 2001, appearing in this Annual Report on Form 10-K of Syms Corp and subsidiaries for the fiscal year ended March 3, 2001. Parsippany, New Jersey May 24, 2001 -----END PRIVACY-ENHANCED MESSAGE-----