BASIS OF PRESENTATION

12 Months Ended

Mar. 02, 2013

Organization, Consolidation and Presentation Of Financial Statements [Abstract]

BASIS OF PRESENTATION

NOTE 1 – BASIS OF PRESENTATION

Description of Former Business Operations

The Company’s 46 stores offered a broad range of “off-price” first quality, in-season merchandise consisting primarily of women’s dresses, suits, separates and accessories, men’s tailored clothing and haberdashery, children’s apparel, luggage, domestics and fragrances and shoes. The stores emphasized first quality, nationally recognized designer and brand name merchandise at prices substantially below those generally found in department and specialty stores. In addition several stores also carried a selection of fine jewelry.

The Company had no foreign operations. No material part of the Company’s revenues was received from a single customer or group of customers.

Disposition of the Company’s and Filene’s Businesses

Prior to November 2, 2011, all of the Company’s and Filene’s business operations consisted primarily of running retail operations. As the economy worsened, sales continued to erode and, as a result, cash flow suffered and significant operational losses continued to threaten the on-going businesses. Trade vendors tightened and/or ceased credit terms. As a result, the Company and Filene’s projected that, absent additional financing or measures to monetize certain assets, liquidity would cease to exist.

At a meeting held on November 1, 2011, the Company’s Board of Directors determined that it was in the best interests of the Company and its shareholders for it and its subsidiaries to file voluntary petitions for reorganization under Chapter 11 and liquidate the retail operations. On November 2, 2011, the Company and Filene’s filed voluntary petitions for reorganization under Chapter 11 in the Court. On August 30, 2012, the Court entered an order confirming the Plan by which the Company and its subsidiaries would be reorganized, and the Plan became effective on September 14, 2012.

If the Company and Filene’s are able to generate value in excess of what is needed to satisfy all of their obligations under the Plan, the Company currently intends to distribute any such excess to shareholders; the actual amount and timing of future distributions, if any, to shareholders, will depend upon a variety of factors, including, but not limited to, the monetization of real estate assets and the ultimate settlement amounts of the Company’s and Filene’s liabilities and obligations, including lease obligations and actual costs incurred in connection with the Chapter 11 cases. In response to the Chapter 11 filing the Company adopted the liquidation basis of accounting effective on October 30, 2011, which was the beginning of the fiscal month closest to the petition date. Net operating results from October 30 to November 1, 2011 were not material.

The consolidated financial statements for the period ended October 29, 2011 were prepared on the going concern basis of accounting, which contemplated realization of assets and satisfaction of liabilities in the normal course of business. In the opinion of management, the accompanying Statements of Operations and Cash Flows for the period ended October 29, 2011 contain all adjustments, including normal recurring adjustments, necessary to present fairly the shareholders’ equity of the Company as of October 29, 2011.

Liquidation Basis of Accounting

The liquidation basis of accounting is appropriate when the liquidation of a company appears imminent and the net realizable value of its assets is reasonably determinable. Accordingly, the Company implemented the liquidation basis of accounting effective on October 30, 2011. Under this basis of accounting, assets and liabilities are stated at their net realizable value and estimated costs over the anticipated period of liquidation are accrued to the extent reasonably determinable.

The transition from the going concern basis of accounting to the liquidation basis of accounting required management to make significant estimates and judgments. The recording of assets at estimated net realizable value and liabilities at estimated settlement amounts under the liquidation basis of accounting required the Company to record the following adjustments as of October 30, 2011, (in thousands):

Adjust assets and liabilities	Amount
Write up of real estate to estimated net realizable value	$	(78,604	)
Estimated lease settlement costs		51,150
Write down of other fixed assets		35,567
Reversal of existing deferred rent liability		(8,741	)
Write up inventory to net realizable value		(6,063	)
Write down prepaid assets		3,000
Adjust other liquidation costs		(1,365	)
Total	$	(5,056	)

The Company adjusted the real estate assets to reflect the estimated net realizable value of the owned property. This value was estimated, with the input of a third party valuation expert, by assessing several possible sales alternatives and weighting the estimated value realized in each of those alternatives according to management’s best estimate of the likelihood of each alternative being achieved. These alternatives included selling the properties in the short term as vacant, unleased properties and selling the properties within two to three years after having identified and secured new tenants. These sales alternatives produced a possible range of net realizable values between $135.0 million and $185.0 million. The basis for determining this range of estimated net realizable values took into consideration many factors which are difficult to predict, including but not limited to local market conditions, vacancy rates, redevelopment opportunities, investor types/profiles, and anticipated timing of sale transactions. Based on management’s weighting of the likelihood of each alternative being achieved an estimated net realizable value of real estate of $146.8 million was recorded at October 30, 2011. While this amount represents management’s best estimate at the time of finalizing the accompanying statement of net assets, the amount ultimately realized in the sale of the real estate could materially differ from this estimate. However, this estimate should not be construed as a final determination by the Company to liquidate all its owned real estate.

As of November 15, 2011, the Company and Filene’s entered into an agency agreement to liquidate all of their inventory, furniture and fixtures.   The agent guaranteed the debtors’ receipt of 90% of the aggregate cost value of merchandise, subject to certain inventory levels and cost factor adjustments.  In addition, the agent agreed to a furniture and fixture guarantee of $2 million.

As a result of the adoption of the liquidation basis of accounting, the Company recorded the estimated cost for settling the existing leases at a total of $56.6 million, adjusted for the Company’s settlement to terminate its lease at 530 Fifth Avenue, which settlement was approved by the Court on January 6, 2012. This required an accrual of $51.1 million at October 30, 2011, in addition to the lease exit accrual already recorded for the Paramus, NJ and Plano, TX locations of $5.5 million.

The Company and Filene’s reviewed all other remaining operating expenses and contractual commitments such as payroll and related expenses, lease termination costs, professional fees and other outside services to determine their best estimate of costs to be incurred during the liquidation period.

Estimated Costs of Liquidation

Significant estimates and judgment are required to determine the accrued costs of liquidation. The company’s accrued costs expected to be incurred in liquidation and recorded payments made related to the accrued liquidation costs are as follows (in thousands):

	Balance								Balance							Balance
	October 30,		Adjustments						February 25,		Adjustments					March 2,
Estimated Costs of Liquidation	2011		to Reserves			Payments			2012		to Reserves		Payments			2013
Real estate related carrying costs	$	14,267	$	(4,918	)	$	(1,699	)	$	7,650	$	13,763	$	(5,760	)	$	15,653
Professional fees		16,868		7,210			(1,158	)		22,920		13,879		(31,753	)		5,046
Payroll related costs		7,775		2,123			(8,321	)		1,577		4,938		(3,087	)		3,428
Other		3,214		(1,276	)		(1,769	)		169		1,159		(968	)		360
	$	42,124	$	3,139		$	(12,947	)	$	32,316	$	33,739	$	(41,568	)	$	24,487

The assumptions underlying the estimated accrued costs of liquidation of $24.5 million as of March 2, 2013 contemplated all changes in estimates resulting from the Plan.

The Company reviewed all operating expenses and contractual commitments such as payroll and related expenses, lease termination costs, property carrying costs and professional fees to determine the estimated costs to be incurred during the liquidation period. The liquidation period, which was initially anticipated to conclude in August 2012, was amended in Fiscal 2012 after the Company emerged from bankruptcy to conclude in calendar year 2016 based on the timeframe contemplated by the Plan and current business plans. Since then, the liquidation period has been shortened to conclude in July 2015 based on the current belief of the Company that substantially all of its real estate properties are likely to be monetized prior to the end of 2014, with a short period thereafter to conclude the liquidation.

The following discussion explains the adjustments to the costs of liquidation reserves as recorded from the period October 30, 2011 through February 25, 2012:

The reserve for real estate carrying costs decreased by approximately $4.9 million in total, partially due to timing differences of the wind-down period as well as expense reimbursements from the third party liquidator. Utilities, maintenance and real estate expenses were partially offset by the store closure/going out of business sale agreement with Gordon Brothers which resulted in a $2.0 million reduction in the reserve. In addition the extension of the liquidation period resulted in $1.8 million in savings. Outside services for real estate brokerage fees, leasing commissions and legal and selling expenses were also reduced by approximately $1.1 million.

Professional fees during the liquidation period increased by $7.2 million from $16.9 million to $22.9 million. The initial budget reflected an eleven month process to liquidate the entire estate. The Plan reflects expenses relating to the debtors, the unsecured creditors and the equity committee’s advisors, the hiring of a fee examiner and the complexities of litigating the estate.

The initial payroll and related liquidation expenses included in the accrued costs of liquidation increased by $2.1 million for the period October 30, 2011 through February 25, 2012. This increase was principally attributed to higher than anticipated payroll expense and related benefits in the first four months of the liquidation period, partially offset by reduced costs due to winding down earlier than anticipated.

Other liquidation expenses include general operating expense of the corporate facility as well as information technology and communication expenses related to the corporate facility. These liquidation costs were estimated at $1.6 million and were reduced to $0.3 million resulting in a savings of $1.3 million to the estate.

The following discussion explain the adjustments to the costs of liquidation reserves as recorded during the fiscal year ended March 2, 2013:

Adjustments to increase the reserve for real estate carrying costs of approximately $13.8 million were recorded during the fiscal year ended March 2, 2013. The adjustments were mainly the result of increasing the estimated expenses to reflect a liquidation period concluding in July 2015. The estimates assume that eight of the Company’s properties will be sold or monetized by October 2013, another four of its properties will be sold or monetized by October 2014, and the Trinity Place Property will be sold by the end of 2014.

Adjustments to increase the reserve for professional fees of approximately $13.9 million were recorded during the fiscal year ended March 2, 2013. The majority of the increase reflects the costs of professionals as a result of extending the expected liquidation period to conclude in July 2015. This also reflects increased costs due to the complexities of litigating the estate as well as the unplanned hiring of a fee examiner during the pre-emergence time period.

Adjustments to increase the reserve for payroll and related liquidation expenses of approximately $4.9 million were recorded during the fiscal year ended March 2, 2013 primarily as a result of extending the expected liquidation period to conclude in July 2015.

Adjustments To Fair Value of Assets and Liabilities

The following table summarizes adjustments to the fair value of assets and liabilities under the liquidation basis of accounting during the eighteen week period ended February 25, 2012 and the fiscal year ended March 2, 2013 (in thousands):

Adjustments of Assets and Liabilities to Net Realizable Value	October 30, 2011 through February 25, 2012			February 26, 2012 through March 2, 2013
Adjust real estate to estimated net realizable value	$	(7,189	)	$	16,688
Adjust other assets to estimated net realizable value		18			(2,891	)
Adjust estimated lease settlement costs to net realizable value		3,064			11,922
Adjust liability to restore properties		(5,184	)		311
Adjust obligation to former majority shareholder		-			(19,566	)
Adjust obligation to customers		-			4,601
Adjust pension liability		(11,970	)		1,860
Adjust write up of inventory to net realizable value		2,314			-
Adjust other liquidation costs		(4,619	)		-
Adjust other claims to net realizable value		-			(572	)
	$	(23,566	)	$	12,353

The following discussion explains the adjustments to the fair value of assets and liabilities under the liquidation basis of accounting as recorded from October 30, 2011 through February 25, 2012:

Real Estate - The net realizable value of real estate assets was adjusted downward in aggregate by $7.2 million to reflect the then current collective belief of the Company and third party real estate experts. The basis for determining the estimated net realizable values took into consideration many factors which are difficult to predict, including but not limited to local market conditions, vacancy rates, redevelopment opportunities, investor types/profiles, and anticipated timing of sale transactions. Based on management’s weighting of the likelihood of each alternative being achieved an estimated net realizable value of real estate of $139.6 million was recorded. While this amount represented management’s best estimate at the time of finalizing the accompanying statement of net assets for the fiscal year ended February 25, 2012, the amount ultimately realized in the sale of the real estate could materially differ from this estimate.

Lease Settlement Costs - Lease settlement costs decreased by $3.1 million primarily driven by a decrease of $5.4 million for the Broadway location as this lease was assumed by DSW, partially offset by an increase in the lease liability claim at the Union Square location of $3.1 million.

Liability to Restore Properties - It was estimated that adjustments of $5.2 million would be required to restore certain properties to a salable condition: for the Trinity Place Property approximately $2.0 million for renovations and repairs to ensure the property has been brought back to a landmark status, $1.9 million for repairs at the Broadway location, an additional $1.0 million for the Park Avenue location for elevator and escalator repairs, and $0.3 million for the Houston location roof repair.

Pension - The Company had a defined Pension Plan for all employees other than those covered under the Collective Bargaining Agreement through December 31, 2006. The Pension Plan was frozen effective December 31, 2006. As of February 25, 2012, the Company accrued $7.9 million which represents the estimated cost to make the plan whole and subsequently terminate the plan under a standard termination. The Company had contemplated other courses of action, including a distress termination, whereby the Pension Benefit Guarantee Corporation (“PBGC”) takes over the plan. However the estimated total cost associated with a distress termination was approximately $15 million. As a result of the cost savings associated with the standard termination approach, the Company had elected a standard termination and reflected the total estimated cost accordingly.

Certain employees covered by collective bargaining agreements participated in a multi-employee pension plan in accordance with the Multi Employer Pension Plan Amendment Act of 1980 (MPPAA). Syms ceased to have an obligation to contribute to these plans in 2012. Under the law, the Company had effected a complete withdrawal from the funds, within the meaning of Section 4203(a) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). Consequently, the Company was subject to the payment of a withdrawal liability to these pension funds. The additional costs had been estimated at approximately $6.4 million for the multi-employee pension plans that is reflected in the adjustments to assets and liabilities to net realizable value. The withdrawal liability is only an estimate at this time and may or may not result in higher costs when the actuarial valuation for the most recent plan year (2012) is completed.

The combined adjustments for the single employer pension liability of $5.5 million and the multi-employee pension plans of $6.4 million resulted in a pension liability adjustment of $12.0 million.

Other Liquidation Assets - Expenses related to the wind-down of the Company have increased by $4.6 million, primarily due to increases in professional fee estimates offset in part by a reduction in real estate carrying costs.

The following discussion explains the adjustments to the fair value of assets and liabilities under the liquidation basis of accounting as recorded during the fiscal year ended March 2, 2013:

Real Estate - The net realizable value of real estate assets was adjusted upward in the aggregate by approximately $16.7 million to reflect $15.1 million of revised estimates of management utilizing information obtained from third party real estate experts as of March 2, 2013 as well as $1.6 million in the net incremental sales price of three properties that were sold during fiscal 2012. Based on management’s assessment of available information, an estimated net realizable value of $142.6 million has been recorded as of March 2, 2013. See Note 3 - Real Estate for a discussion on valuation methodology.

Other Assets – Other assets have decreased by approximately $2.9 million due mainly to the netting out of assets with corresponding claim liabilities.

Lease Settlement Costs – Lease settlement costs have decreased by $11.9 million due to adjustments from 22 locations. These reductions were mainly the result of the Plan which stipulated that the long-term Filene’s, LLC general unsecured creditors with allowed claims are entitled to a recovery of only 75% on their claims.

Liability to Restore Properties – The Houston, Texas property was sold in November 2012 and the previously recorded liability to repair the roof was assumed by the acquirer of the property, thus the Company reversed the liability upon the consummation of the sale.

Obligation to Former Majority Shareholder – This represents the recording of the settlement with the former Majority Shareholder during fiscal 2012 in accordance with the terms of the Plan. On September 14, 2012, immediately following the effectiveness of the Plan, the former Majority Shareholder sold all of its 7,857,794 shares of common stock to Syms at $2.49 per share. Payment for the shares will be made to the former Majority Shareholder in accordance with the Plan as Trinity’s real estate assets are monetized. As further discussed in Note 2, $1.8 million due from the Majority Shareholder was reclassified from other assets resulting in a net obligation to the former Majority Shareholder of approximately $17.8 million as of March 2, 2013.

Obligation to Customers – Obligations to customers represented credits issued for returned merchandise as well as gift certificates. The Company has determined that it no longer has a legal liability to the customers and accordingly the amount of $4.6 million has been derecognized.

Other Claims – This amount mainly represents a decrease in various claims pursuant to the final Plan document and further review by the Company of the validity of the claims made against the Company.

Financial Position

The Company believes that cash provided from the monetization of its real estate and intellectual property assets should provide sufficient liquidity to fund day-to-day costs. However, if the Company is unable to monetize its assets in a reasonable period of time, as outlined in the Plan, or if the Company receives substantially less than anticipated, the Company’s ability to settle its obligations in full would be in doubt, and alternative financing could be required. Also, the Plan imposes strict budgets on the operations of the Company’s business, and not all proceeds from asset sales can be used to fund operations.

Whether there will be any excess cash proceeds generated by the monetization of the Company’s assets is subject to a number of material risks and uncertainties. If there are any excess cash proceeds, they will be used by the Company in the manner determined by the Board of Directors. It is the current intention of the Board of Directors to distribute any such excess to shareholders, but there can be no assurance that there will be any excess cash proceeds, or that if there are, that they will be distributed to shareholders.