-----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, UCY5NCHC+CkbUnMWAKLWb2KJBrIh545hbolXb0CdiK2e7oVukE5ZCSuLWuiD69XH TxQDNP3x1kLqCc8DMenXwQ== 0000950110-02-000480.txt : 20020709 0000950110-02-000480.hdr.sgml : 20020709 20020709095448 ACCESSION NUMBER: 0000950110-02-000480 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20020601 FILED AS OF DATE: 20020709 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SYMS CORP CENTRAL INDEX KEY: 0000724742 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-FAMILY CLOTHING STORES [5651] IRS NUMBER: 222465228 STATE OF INCORPORATION: NJ FISCAL YEAR END: 0301 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-08546 FILM NUMBER: 02698321 BUSINESS ADDRESS: STREET 1: SYMS WAY CITY: SECAUCUS STATE: NJ ZIP: 07094 BUSINESS PHONE: 2019029600 MAIL ADDRESS: STREET 1: SYMS WAY CITY: SECAUCUS STATE: NJ ZIP: 07094 10-Q 1 e89235_10-q.txt QUARTERLY REPORT ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (MARK ONE) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the quarterly period ended JUNE 1, 2002 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the transition period from ___________ to ____________ COMMISSION FILE NUMBER 1-8546 SYMS CORP ------------------------------------------------------ (Exact Name of Registrant as Specified in Its Charter) NEW JERSEY 22-2465228 ------------------------------- ------------------------------------ (State or Other Jurisdiction of (I.R.S. Employer Identification No.) Incorporation or Organization) SYMS WAY, SECAUCUS, NEW JERSEY 07094 - ---------------------------------------- ---------- (Address of Principal Executive Offices) (Zip Code) (201) 902-9600 ---------------------------------------------------- (Registrant's Telephone Number, Including Area Code) NOT APPLICABLE ----------------------------------------------------- (Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report) Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- At July 8, 2002 the latest practicable date, there were 15,782,278 shares outstanding of Common Stock, par value $0.05 per share. ================================================================================ ---------------------------- SYMS CORP AND SUBSIDIARIES ---------------------------- INDEX ----- PAGE NO. -------- PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Condensed Consolidated Balance Sheets as of June 1, 2002, March 2, 2002 and June 2, 2001 ................... 1 Condensed Consolidated Statements of Operations for the 13 Weeks Ended June 1, 2002 and June 2, 2001 ................... 2 Condensed Consolidated Statements of Cash Flows for the 13 Weeks Ended June 1, 2002 and June 2, 2001 ................... 3 Notes to Condensed Consolidated Financial Statements ........... 4-5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations ...................................... 6-7 Item 3. Quantitative and Qualitative Disclosure about Market Risk ...... n/a PART II. OTHER INFORMATION .............................................. 8 Item 1. Legal Proceedings Item 2. Changes In Securities and Use of Proceeds Item 3. Defaults Upon Senior Securities Item 4. Submission of Matters to a Vote of Security Holders Item 5. Other Information Item 6. Exhibits and Reports on Form 8-K SIGNATURES ............................................................... 8 ---------------------------- SYMS CORP AND SUBSIDIARIES ---------------------------- CONDENSED CONSOLIDATED BALANCE SHEETS - ------------------------------------------------------------------------------------------------------------------------------ (IN THOUSANDS) JUNE 1, MARCH 2, JUNE 2, 2002 2002 2001 (Unaudited) (NOTE) (Unaudited) ----------- --------- ----------- ASSETS CURRENT ASSETS Cash and cash equivalents ............................................. $ 33,264 $ 19,485 $ 23,306 Merchandise inventories ............................................... 94,854 86,810 109,797 Deferred income taxes ................................................. 6,514 6,514 6,472 Prepaid expenses and other current assets ............................. 3,724 6,071 3,599 --------- --------- --------- TOTAL CURRENT ASSETS ................................................ 138,356 118,880 143,174 PROPERTY AND EQUIPMENT - Net ............................................. 145,490 147,186 147,747 DEFERRED INCOME TAXES .................................................... 4,392 2,309 3,170 OTHER ASSETS ............................................................. 8,659 8,119 7,710 --------- --------- --------- TOTAL ASSETS ........................................................ $ 296,897 $ 276,494 $ 301,801 ========= ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable ...................................................... $ 36,188 $ 17,867 $ 41,881 Accrued expenses ...................................................... 10,224 8,845 8,918 Accrued insurance ..................................................... 2,907 3,144 2,977 Obligations to customers .............................................. 3,022 3,063 2,871 --------- --------- --------- TOTAL CURRENT LIABILITIES ........................................... 52,341 32,919 56,647 OTHER LONG TERM LIABILITIES .............................................. 2,140 2,118 2,156 --------- --------- --------- 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; 15,782 shares outstanding (net of 2,152 in treasury shares) on June 1, 2002, 15,737 shares outstanding as of March 2, 2002 (net of 2,152 treasury shares) and 15,737 shares outstanding (net of 2,152 treasury shares) on June 2, 2001 ........................ 793 787 787 Additional paid-in capital ............................................ 14,007 13,760 13,759 Treasury Stock ........................................................ (18,987) (18,987) (18,987) Retained earnings ..................................................... 246,603 245,897 247,439 --------- --------- --------- TOTAL SHAREHOLDERS' EQUITY .......................................... 242,416 241,457 242,998 --------- --------- --------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY .......................... $ 296,897 $ 276,494 $ 301,801 ========= ========= =========
NOTE: The balance sheet at March 2, 2002 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. See Notes to Condensed Consolidated Financial Statements 1 ---------------------------- SYMS CORP AND SUBSIDIARIES ---------------------------- CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - -------------------------------------------------------------------------------- (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 13 WEEKS ENDED ------------------------- JUNE 1, JUNE 2, 2002 2001 -------- -------- (Unaudited) Net sales ...................................... $ 67,950 $ 71,554 Cost of goods sold ............................. 38,853 42,084 -------- -------- Gross profit ................................... 29,097 29,470 Expenses: Selling, general and administrative ............ 18,765 20,501 Advertising .................................... 2,244 2,647 Occupancy ...................................... 4,501 4,740 Depreciation and amortization .................. 2,810 2,947 Other income ................................... (454) -- -------- -------- Income (loss) from operations .................. 1,231 (1,365) Interest income ................................ (54) (92) -------- -------- Income (loss) before income taxes .............. 1,285 (1,273) Provision (benefit) for income taxes ........... 578 (496) -------- -------- Net income (loss) .............................. $ 707 $ (777) ======== ======== Net income (loss) per share-basic .............. $ 0.04 $ (0.05) ======== ======== Weighted average shares outstanding-basic ...... 15,754 15,751 ======== ======== Net income (loss) per share-diluted ............ $ 0.04 $ (0.05) ======== ======== Weighted average shares outstanding-diluted .... 15,754 15,751 ======== ======== See Notes to Condensed Consolidated Financial Statements 2 ---------------------------- SYMS CORP AND SUBSIDIARIES ---------------------------- CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - -------------------------------------------------------------------------------- (IN THOUSANDS) 13 WEEKS ENDED ------------------- JUNE 1, JUNE 2, 2002 2001 ------- ------- (Unaudited) CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) ..................................... $ 707 $ (777) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization ......................... 2,810 2,947 Deferred income taxes ................................. -- (466) (Gain)/loss of disposal of assets ..................... (94) 11 (Increase) decrease in operating assets: Merchandising inventories ........................... (8,044) (10,611) Prepaid expenses and other current assets ........... 2,451 639 Other assets ........................................ (540) (1,526) Increase (decrease) in operating liabilities: Accounts payable .................................... 18,321 25,428 Accrued expenses .................................... 1,069 696 Other long term liabilities ......................... 22 (253) ------- ------- Net cash provided by operating activities ......... 16,702 16,088 ------- ------- CASH FLOWS FROM INVESTING ACTIVITIES: Stanley Blacker, Inc. acquisition ..................... (1,906) -- Expenditures for property and equipment ............... (1,020) (107) ------- ------- Net cash used in investing activities ............. (2,926) (107) CASH FLOWS FROM FINANCING ACTIVITIES: Exercise of options/Issuance of stock ................. 3 7 Stock repurchase ...................................... -- (167) ------- ------- Net cash used in financing activities ............. 3 (160) ------- ------- NET INCREASE IN CASH AND CASH EQUIVALENTS ............... 13,779 15,821 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD .......... 19,485 7,485 ------- ------- CASH AND CASH EQUIVALENTS, END OF PERIOD ................ $33,264 $23,306 ======= ======= SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid during the period for: Interest (net of amount capitalized) ................ $ -- $ 271 ======= ======= Income taxes paid (refunds received) ................ $ -- $ 43 ======= ======= Stanley Blacker, Inc. acquisition financed through stock ..................................... $ 250 $ -- ======= ======= See Notes to Condensed Consolidated Financial Statements 3 ---------------------------- SYMS CORP AND SUBSIDIARIES ---------------------------- NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 13 WEEKS ENDED JUNE 1, 2002 AND JUNE 2, 2001 - -------------------------------------------------------------------------------- (UNAUDITED) NOTE 1 - THE COMPANY Syms Corp (the "Company") operates a chain of 42 "off-price" retail stores located throughout the Northeastern and Middle Atlantic regions and in the Midwest, Southeast and Southwest. Each Syms store offers a broad range of first quality, in season merchandise bearing nationally recognized designer or brand-name labels for men, women and children. NOTE 2 - BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the 13-week period ended June 1, 2002 is not necessarily indicative of the results that may be expected for the entire fiscal year ending March 1, 2003. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the fiscal year ended March 2, 2002. NOTE 3 - ACCOUNTING PERIOD The Company's fiscal year ends the Saturday nearest to the end of February. The fiscal year ending March 2, 2002 was comprised of 52 weeks. The fiscal year ended March 1, 2003 will be comprised of 52 weeks. NOTE 4 - MERCHANDISE INVENTORIES Merchandise inventories are stated at the lower of cost (first in, first out) or market, as determined by the retail inventory method. NOTE 5 - BANK CREDIT FACILITIES The Company has an unsecured revolving credit agreement with a bank for a line of credit not to exceed $20,000,000 through May 3, 2003. Interest on individual advances is payable quarterly at 1/2% per annum below the bank's base rate, except that at the time of advance, the Company has the option to select an interest rate based upon one other alternative calculation, with such rate to be fixed for a period not to exceed 90 days. The average daily unused portion is subject to a commitment fee of 3/8 of 1% per annum. As of June 1, 2002, March 2, 2002 and June 2, 2001 there were no outstanding borrowings under this agreement. The agreement contains financial covenants, with respect to consolidated tangible net worth, as defined, working capital and maximum capital expenditures, including dividends (defined to include cash repurchases of capital stock), as well as other financial ratios. The Company was in compliance with all covenants as of June 1, 2002. 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 June 1, 2002, March 2, 2002 and June 2, 2001 the Company had $4,523,000, $4,564,000 and $5,215,000 respectively, in outstanding letters of credit. 4 ---------------------------- SYMS CORP AND SUBSIDIARIES ---------------------------- NOTE 6 - NET INCOME PER SHARE In accordance with SFAS 128, basic net income 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 has been computed as follows: JUNE 1, JUNE 2, 2002 2001 -------- -------- Basic net income per share Net income (loss) ................... $ 707 $ (777) Average shares outstanding .......... 15,754 15,751 Basic net income (loss) per share ... $ 0.04 $ (0.05) Diluted net income per share: Net income (loss) ................... $ 707 $ (777) Average shares outstanding .......... 15,754 15,751 Stock options ....................... -- -- Total average equivalent shares ..... 15,754 15,751 Diluted net income per share ........ $ 0.04 $ (0.05) In periods with losses, options were excluded from the computation of diluted net income per share because the effect would be anti-dilutive. Options to purchase 1,060,000 and 1,077,000 shares of common stock at prices ranging from $5.63 to $11.50 per share were outstanding as of June 1, 2002 and June 2, 2001, 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 7 - SPECIAL CHARGES During the third quarter of fiscal 2000, the Company recorded a store closing cost of $12,935,000 relating to a plan to close five stores and an additional lease commitment cost associated with a previously closed store. As of June 1, 2002, the amount remaining in the closed store accrual recorded in the third quarter of fiscal 2000 is $307,000, primarily relating to severance and lease obligations, which will be paid out periodically through January, 2004. The total restructuring accrual at June 1, 2002 of $307,000 is included within accrued expenses. NOTE 8 - STANLEY BLACKER, INC. ACQUISITION On January 10, 2002, an independent committee of the Board of Directors was established to review the potential acquisition of Stanley Blacker, Inc., a corporation owned by The Sy Syms Revocable Living Trust. This committee obtained an independent appraisal as to the fair market value of the business enterprise of Stanley Blacker, Inc., and on April 18, 2002, the Board of Directors approved the acquisition based on the independent committee's recommendation to acquire the assets of Stanley Blacker, Inc. The assets of Stanley Blacker, Inc. consisted substantially of trademarks and trade names licensed to third party manufacturers of clothing and accessories. The acquisition of such assets was consummated on May 1, 2002, for a purchase price consisting of $250,000 paid in cash, $250,000 paid by the issuance of 44,138 shares of the Company's common stock and the balance by taking of the assets subject to a note payable to Fleet National Bank in the principal amount of $1,655,000 together with interest thereon of approximately $11,355, which note was paid in full by the Company. The Company's financial statements include the results of operations of Stanley Blacker, Inc. from the date of acquisition. 5 ---------------------------- SYMS CORP AND SUBSIDIARIES ---------------------------- Purchase Price: - --------------- Cash ........................................... $1,905,000 Stock .......................................... 250,000 Purchase price ................................. 2,155,000 Preliminary Allocation of Purchase Price - ---------------------------------------- Receivables .................................... $ 104,000 Deferred Tax Assets ............................ 2,083,000 Payables ....................................... 32,000 The following unaudited consolidated pro forma results of operations of the Stanley Blacker, Inc. for the 13 weeks ended June 1, 2002 and June 2, 2001 give effect to the Stanley Blacker, Inc. acquisition as if it occurred at the beginning of the period presented (in thousands, except per share amounts): Thirteen Weeks Ended ---------------------------- June 1, 2002 June 2, 2001 ------------ ------------ Revenues ........................................ $ 176 $ 206 Income (loss) before income taxes ............... 128 (88) Net Income (loss) ............................... 73 (149) Net Income (loss) per diluted common share ...... $0.00 (0.01) NOTE 9 - OTHER INCOME Other income was recorded by the Company amounting to approximately $450,000 resulting from restitution on an employee theft and partial insurance recovery related to business interruption at the Trinity store. NOTE 10 - RECENTLY ISSUED ACCOUNTING STANDARDS In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." SFAS No. 144 addresses the accounting and reporting for the impairment or disposal of long-lived assets. The statement provides a single accounting model for long-lived assets to be disposed of. New criteria must be met to classify the asset as an asset held-for-sale. This statement also focuses on reporting the effects of a disposal of a segment of a business. This statement is effective for fiscal years beginning after December 15, 2001. The Company has determined that the adoption of SFAS No. 144 will not have a material impact on the Company's financial position or results of operations. NOTE 11 - NEW ACCOUNTING STANDARDS In April 2002, SFAS No. 145, "Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections" ("SFAS 145") was issued. SFAS 145 rescinds SFAS 4 and 64, which required gains and losses from extinguishment of debt to be classified as extraordinary items. SFAS also rescinds SFAS 44 since the provisions of the Motor Carrier Act of 1980 are complete. SFAS 145 also amends SFAS 13 eliminating inconsistencies in certain sale-leaseback transactions. The provisions of SFAS 145 are effective for fiscal years beginning after May 15, 2002. Any gain or loss on extinguishment of debt that was classified as an extraordinary item in prior periods presented shall be reclassified. The Company does not expect that the adoption of SFAS 145 will have a material effect on the Company's financial position or results of operations. 6 ---------------------------- SYMS CORP AND SUBSIDIARIES ---------------------------- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - -------------------------------------------------------------------------------- SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS The Quarterly Report (including but not limited to factors discussed below, in the Management's Discussion and Analysis of Financial Condition and Results of Operations," as well as those discussed elsewhere in this Quarterly Report on Form 10-Q) includes forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995) and information relating to the Company that are based on the beliefs of the management of the Company as well as assumptions made by and information currently available to the management of the Company. When used in this Quarterly Report, the words "anticipate," "believe," "estimate," "expect," "intend," "plan," and similar expressions, as they relate to the Company or the management of the Company, identify forward-looking statements. Such statements reflect the current views of the Company with respect to future events, the outcome of which is subject to certain risks, including among others general economic and market conditions, decreased consumer demand for the Company's products, possible disruptions in the Company's computer or telephone systems, possible work stoppages, or increases in labor costs, effects of competition, possible disruptions or delays in the opening of new stores or inability to obtain suitable sites for new stores, higher than anticipated store closings or relocation costs, higher interest rates, unanticipated increases in merchandise or occupancy costs and other factors which may be outside the Company's control. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results or outcomes may vary materially from those described 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 and elsewhere described in this Quarterly Report and other reports filed with the Securities and Exchange Commission. CRITICAL ACCOUNTING POLICIES AND ESTIMATE The preparation of financial statements in conformity with generally accepted accounting principles requires the appropriate application of certain accounting policies, many of which require us to make estimates and assumptions about future events and their impact on amounts reported in the financial statements and related notes. Since future events and their impact cannot be determined with certainty, the actual results will inevitably differ from our estimates. Such differences could be material to the consolidated financial statements. The Company believes application of accounting policies, and the estimates inherently required by the policies, are reasonable. These accounting policies and estimates are constantly reevaluated, and adjustments are made when facts and circumstances dictate a change. Historically, the Company has found the application of accounting policies to be appropriate, and actual results have not differed materially from those determined using necessary estimates. The Company's accounting policies are more fully described in Note 1 to the Consolidated Financial Statements, located in the Annual Report for the year ended March 2, 2002. The Company has identified certain critical accounting policies that are described below. MERCHANDISE INVENTORY - Inventories are valued at lower of cost or market using the retail first-in, first-out ("FIFO") inventory method. Under the retail inventory method ("RIM"), the valuation of inventories at cost and the resulting gross margins are calculated by applying a calculated cost to retail ratio to the retail value of inventories. RIM is an averaging method that has been widely used in the retail industry due to its practicality. Additionally, it is recognized that the use of RIM will result in valuing inventories at the lower of cost or market if markdowns are currently taken as a reduction of the retail value of inventories. Inherent in the RIM calculation are certain significant management judgments and estimates including, among others, merchandise markon, markups, and markdowns, which significantly impact the ending inventory 7 ---------------------------- SYMS CORP AND SUBSIDIARIES ---------------------------- valuation at cost as well as resulting gross margins. Management believes that the Company's RIM and application of FIFO provides an inventory valuation which reasonably approximates cost using a first-in, first-out assumption and results in carrying value at the lower of cost or market. If actual market conditions are less favorable than those projected by management, additional markdowns may be required. LONG-LIVED ASSET - In evaluation of the fair value and future benefits of long-lived assets, the Company performs analyses of the anticipated undiscounted future net cash flows of the related long-lived assets. If the carrying value of the related asset exceeds the undiscounted cash flows, the Company reduces the carrying value to its fair value, which is generally calculated using discounted cash flows. Various factors including future sales growth and profit margins are included in this analysis. To the extent these future projections or our strategies change, the conclusion regarding impairment may differ from the Company's current estimates. DEFERRED TAX VALUATION ALLOWANCE - The Company records a valuation allowance to reduce its deferred tax assets to the amount that is more likely than not to be realized. The Company has considered future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for the valuation allowance, if the Company were to determine that it would be able to realize its deferred tax assets in the future in excess of its net recorded amount, an adjustment to the deferred tax asset would increase income in the period such determination was made. Likewise, should the Company determine that it would not be able to realize all or part of our net deferred tax asset in the future, an adjustment to the deferred tax asset would be charged to income in the period such determination was made. RESULTS OF OPERATIONS 13 Weeks Ended June 1, 2002 Compared to 13 Weeks Ended June 2, 2001 Net sales of $67,950,000 for the 13 weeks ended June 1, 2002 decreased $3,604,000 (5.0%) as compared to net sales of $71,554,000 for the 13 weeks ended June 2, 2001. The closing of the Franklin Mills, PA, Potomac, VA and Sharonville, OH stores amounted to approximately $2,191,000 of the decrease in the first quarter of 2002. Comparable store sales decreased 2.2% from the comparable 13 week period in fiscal 2001. The Trinity store, located near the World Trade Center, closed for a period of 18 days following September 11, 2001 and suffered a sales decline of $666,000 or 19% compared to the 13 week period a year ago. Gross profit for the 13 weeks ended June 1, 2002 was $29,097,000 (42.8% as a percentage of net sales), a decrease of $373,000 as compared to $29,470,000 (41.2% as a percentage of net sales) for the fiscal period ended June 2, 2001. Although such gross profit percentage improved from 41.2% to 42.8%, the decline in overall gross profit is largely attributable to the decline in the Company's net sales. The gross profit percentage improved due to less markdowns on merchandise sold. Selling, general and administrative expense decreased $1,736,000 to $18,765,000 (27.6% as a percentage of net sales) for the 13 weeks ended June 1, 2002. The expenses of the closed stores (Sharonville, OH, Franklin Mills, PA and Potomac, VA) amounted to approximately $700,000 and the remainder of the decline results from greater expense efficiencies in the existing stores. Advertising expense for the 13 weeks ended June 1, 2002 decreased to $2,244,000 (3.3% as a percentage of net sales) as compared to $2,647,000 (3.7% as a percentage of net sales) for the 13 weeks ended June 2, 2001. Occupancy costs were $4,501,000 (6.6% as a percentage of net sales) for the 13 week period ended June 1, 2002, as compared to $4,740,000 (6.6% as a percentage of net sales) for the 13 weeks ended June 2, 2001. The occupancy expenses for the current period reflect the closing of the Sharonville, OH, Franklin Mills, PA and Potomac, VA stores. 8 ---------------------------- SYMS CORP AND SUBSIDIARIES ---------------------------- Depreciation and amortization amounted to $2,810,000 (4.1% as a percentage of net sales), a decrease of $137,000 as compared to $2,947,000 (4.1% as a percentage of net sales) for the 13 weeks ended June 2, 2001. Other income was recorded by the Company amounting to approximately $450,000 resulting from restitution on an employee theft and partial insurance recovery related to business interruption. Net income before income taxes for the 13 weeks ended June 1, 2002 was $1,285,000 as compared to net loss before income taxes of $1,273,000 for the 13 weeks ended May 27, 2000. For the 13 week period ended June 1, 2002 the effective income tax rate was 45%, compared to 39% for the period ended June 2, 2001. LIQUIDITY AND CAPITAL RESOURCES Working capital as of June 1, 2002 was $86,015,000, a decrease of $512,000 compared to $86,527,000 as of June 2, 2001. The ratio of current assets to current liabilities was 2.64 to 1 as compared to 2.53 to 1 as of May 27, 2000. Net cash provided by operating activities totaled $16,702,000 for the 13 weeks ended June 1, 2002, an increase of $614,000 as compared to $16,088,000 for the 13 weeks ended June 2, 2001. Net cash used in investing activities was $2,926,000 for the 13 weeks ended June 1,2002, and $107,000 for the 13 weeks ended June 2, 2001. Expenditures for property and equipment totaled $1,020,000 and $107,000 for the 13 weeks ended June 1, 2002 and June 2, 2001, respectively. Net cash provided by financing activities was $3,000 for the 13 weeks ended June 1, 2002 and $160,000 was used in financing activities for the 13 weeks ended June 2, 2001. The Company has a revolving credit agreement with a bank for a line of credit not to exceed $20,000,000 through May 3, 2003. Except for funds provided from this credit agreement, the Company has satisfied its operating and capital expenditure requirements needs. As of June 1, 2002 and June 2, 2001 there were no outstanding borrowings under the revolving credit agreement. The Company has planned capital expenditures of approximately $5,000,000 for the fiscal year ending March 1, 2003. Through the 13 week period ended June 1, 2002 the Company has incurred $1,020,000 of capital expenditures. On June 7, 2002, the Company's Board of Directors authorized the repurchase of up to 20% of its outstanding shares of common stock (not to exceed 3,200,000 shares) at prevailing market prices through June 7, 2004. No purchases of stock were made during the quarter ended June 1, 2002. 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 1, 2003. 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. 9 ---------------------------- SYMS CORP AND SUBSIDIARIES ---------------------------- PART II. OTHER INFORMATION - -------------------------------------------------------------------------------- Item 1. LEGAL PROCEEDINGS - None Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS - None Item 3. DEFAULTS UPON SENIOR SECURITIES - None Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - None Item 5. OTHER INFORMATION - None Item 6. EXHIBITS AND REPORTS ON FORM 8-K - None SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. SYMS CORP DATE: JULY 9, 2002 BY // MARCY SYMS ----------------------------- MARCY SYMS CHIEF EXECUTIVE OFFICER DATE: JULY 9, 2002 BY // ANTONE F. MOREIRA ------------------------------ ANTONE F. MOREIRA VICE PRESIDENT, CHIEF FINANCIAL OFFICER (Principal Financial and Accounting Officer) 10 -----END PRIVACY-ENHANCED MESSAGE-----