SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Mar. 02, 2013

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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 are stated at their net realizable value and liabilities are stated at their net settlement amount and estimated costs over the period of liquidation are accrued to the extent reasonably determinable.

a. Accrued Liquidation Costs – Under the liquidation basis of accounting, management is required to make significant estimates and judgments regarding the anticipated costs of liquidation. These estimates are subject to change based upon work required for the claims settlement process, changes in market conditions and changes in the strategy surrounding the sale of properties. The Company reviews, on a quarterly basis, the estimated fair value of its assets and all other remaining operating expenses and contractual commitments such as payroll and related expenses, lease termination costs, professional fees, alternative minimum income taxes and other outside services to determine the estimated costs to be incurred during the liquidation period.

b. Pension Expense – The Company will terminate its pension plans. Under the liquidation basis of accounting, actuarial valuation analyses are prepared annually to determine the fair value, or termination value, of the plans. These valuations and the ultimate liability to settle the plans may result in adjustments driven by changes in assumptions due to market conditions. The liabilities related to these pension plans will be settled at the same payout percentage as all other unsecured creditor claims.

c. Long-Lived Assets – Real estate and other long-lived assets are recorded at estimated net realizable value based on valuations, purchase agreements and/or letters of intent from interested third parties, when available.

d. Income Taxes – To the extent that income taxes, including alternate minimum income taxes, are expected to be incurred as a result of the liquidation of the Company’s properties, such costs are reflected in accrued liquidation costs, as described above. As of March 2, 2013 a total of $0.9 million has been accrued. As part of the process of estimating the amount of income taxes to be incurred during the liquidation period, management has taken into consideration the extent to which net operating loss carry forwards (“NOLs”) are expected to be available to offset the amount of income otherwise taxable on the sale of properties. This involved a process of estimating the extent to which each property had a fair value in excess of its tax basis (a “built in gain”) as of the date of emerging from bankruptcy on September 14, 2012. At that point in time, the Company believes there was a change in control of the Company that imposed a restriction on the extent to which the Company can use prior NOLs, except to the extent of a built in gain that existed as of the date of the change in control.

Since under liquidation basis accounting all future estimated taxes are accrued as of the reporting date net of the benefit expected to be derived from available NOLs, it is not appropriate to record a separate deferred tax asset on the same NOLs. Accordingly, a valuation allowance of approximately $85.1 million was recorded through February 25, 2012. The valuation allowance was reduced by approximately $1.4 million during the fiscal year ended March 2, 2013.

e. Other Assets – The Company had recorded the cash surrender value of officers’ life insurance policies on the statement of net assets as part of prepaid expenses and other assets in the amounts of $1.8 million at February 25, 2012. During the finalizing of the Plan, the former Majority Shareholder agreed to reimburse the Company for an equivalent amount and the $1.8 million was therefore recorded as an offset to the $19.6 million obligation to the former Majority Shareholder as of March 2, 2013 resulting in a net amount due of $17.8 million. Other assets also include trademark license intangibles, with a balance of $0.9 million and security deposits with a balance of $1.7 million as of March 2, 2013.

f. Obligation to Customers - Obligations to customers represented credits issued for returned merchandise as well as gift certificates. When the Company sold a gift certificate to a customer, it was recorded as a liability in the period the sale occurred. When the customer redeemed the gift certificate for the purchase of merchandise, a sale was recorded and the liability reduced. During fiscal 2012, the Company determined that it no longer has a legal liability to these customers and accordingly the amount was derecognized.

Going Concern Basis of Accounting

a. Principal Business – Prior to implementing the liquidation basis of accounting on October 30, 2011, Syms and Filene’s owned and operated a chain of 46 “off-price” retail stores under the “Syms” name (which were owned and operated by the Company) and “Filene’s Basement” name (which were owned and operated by Filene’s, LLC) in stores located in the United States throughout the Northeastern and Middle Atlantic regions and in the Midwest, Southeast and Southwest. During the period prior to October 30, 2011, the Company presented its financial statements under the presumption it would continue as a going concern.

Each Syms store offered a broad range of first quality, in-season merchandise bearing nationally recognized designer or brand-name labels for men, women and children at prices substantially lower than those generally found in department and specialty stores.

On June 18, 2009, the Company’s wholly-owned subsidiary, SYL, LLC (which became Filene’s Basement, LLC) acquired certain real property leases, inventory, equipment and other assets of Filene’s Basement Inc., a retail clothing chain, pursuant to an auction conducted in accordance with § 363 of the Bankruptcy Code. As a result, Filene’s, LLC owned and operated 21 Filene’s Basement stores located in the Northeastern, Middle Atlantic, Midwest and Southeast regions. Filene’s Basement also offered a broad range of first quality brand name and designer clothing for men, women and children. After the acquisition of Filene’s Basement Inc., Syms owned and operated five co-branded Syms/Filene’s Basement stores. Syms and Filene’s, LLC operated in a single operating segment – the “off-price” retail stores segment.

b. Principles of Consolidation - The financial statements include the accounts of the Company and Filene’s Basement, its wholly-owned subsidiary. All intercompany accounts and transactions have been eliminated in consolidation.

c. Accounting Period – Fiscal 2012 ended on March 2, 2013, fiscal 2011 ended on February 25, 2012 and fiscal 2010 ended on February 26, 2011. The Company’s fiscal year is a 52-week or 53-week period ending on the Saturday on or nearest to February 28. The fiscal year ended March 2, 2013 was a 53 week year while the fiscal years ended February 25, 2012 and February 26, 2011 were comprised of 52 weeks.

d. Reclassifications – Certain reclassifications have been applied to prior year amounts to conform to current year presentation.

e. Cash and Cash Equivalents - Cash and cash equivalents include securities with original maturities of three months or less.

f. Concentrations of Credit Risk – The Company’s financial instruments that are exposed to concentrations of credit risk consisted primarily of cash. The Company had substantially all of its cash in banks. Such cash balances at times exceed federally-insured limits. The Company has not experienced any losses in such accounts.

g. Receivables – Receivables consisted of third party credit and debit card receivables and other miscellaneous items.

h. Merchandise Inventories - Merchandise inventories were stated at the lower of cost or market on a first-in, first-out (FIFO) basis, as determined by the retail inventory method.

For a brief period, from October 4, 2009 through October 2, 2010, the Syms stores utilized a different method, the moving weighted average cost method. As part of the integration plan for the Company, the Syms stores converted their merchandise systems over to that used by Filene’s, effective October 3, 2010 and thus reverted back to the retail inventory method. The change in the method of recording Syms inventory in the third quarter of fiscal 2009 and in the third quarter of fiscal 2010 did not have a material impact on reported results of operations.

The Company maintained a reserve for inventory obsolescence, which is a reduction to merchandise inventories. During fiscal 2010 the Company increased its reserve for inventory obsolescence by $6.2 million as it determined that it had not adequately cleared out old-season merchandise.

i. Real Estate, Including Air Rights – Owned real estate was stated at the historical cost basis. Depreciation and amortization was 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
Computer software	3 years

The Company’s policy was to amortize leasehold improvements over the original lease term and not include any renewal terms. The Company’s policy was to capitalize costs incurred during the application-development stage for software acquired and further customized by outside vendors for the Company’s use.

j. Impairment of Long-Lived Assets – The Company had periodically reviewed long-lived assets for impairment whenever changes in circumstances indicated that the carrying amount of the assets may not be fully recoverable.

The Company considered relevant cash flow, management’s strategic plans, significant decreases in the market value of the asset and other available information in assessing whether the carrying value of the assets could be recovered. When such events occured, the Company compared the carrying amount of the assets to the undiscounted expected future cash flows from the use and eventual disposition of the asset. If this comparison indicated an impairment, the carrying amount would then be compared to the estimated fair value of the long-lived asset. An impairment loss would be measured as the amount by which the carrying value of the long-lived asset exceeded its estimated fair value.

k. Deferred Income Taxes - Deferred income taxes reflected the future tax consequences of differences between the tax basis of assets and liabilities and their financial reporting amounts at year end. A net valuation allowance of approximately $46.5 million was recorded during the thirty-five week period ended October 29, 2011.

l. 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.

Significant estimates included inventory provisions, sales returns, self-insurance accruals, deferred tax valuation allowances, any estimated impairment and the useful lives of long-lived assets. Actual results may have differed from those estimates.

m. Revenue Recognition – The Company recognized revenue at the “point of sale”. Allowance for sales returns was recorded as a component of net sales in the period in which the related sales were recorded.

n. Comprehensive Loss – Comprehensive loss was $76.0 million and $32.8 million for the thirty-five week period ended October 29, 2011 and fiscal year ended February 26, 2011, respectively.

o. Segment Reporting - ASC 280, “Segment Reporting” 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 operated in a single reporting segment - the operation of “off-price” retail stores. Revenues from external customers were derived from merchandise sales.

The Company’s merchandise sales mix by product category for the thirty-five week period ended October 29, 2011 and fiscal year ended February 26, 2011 was as follows:

	Thirty-Five			Fiscal Year
	Weeks Ended			Ended
	October 29, 2011			February 26, 2011
Women's dresses, suits, separatges and accessories		47	%		46	%
Men's tailored clothes and haberdashery		37	%		38	%
Children's apparel		5	%		5	%
Luggage, domestics and fragrances		5	%		6	%
Shoes		6	%		5	%
Total		100	%		100	%

p. Gross Profit - The Company’s gross profit excluded the cost of its distribution network. For the thirty-five weeks ended October 29, 2011 and the fiscal year ended February 26, 2011, the amounts incurred for the Company’s distribution network that were classified in selling, general and administrative expenses and occupancy costs were $9.5 million and $19.0 million, respectively.

q. Computer Software Costs – The Company capitalized the cost of software developed or purchased for internal use.

r. Advertising Costs – Advertising and sales promotion costs were expensed at the time the advertising occured. Advertising and sales promotion costs were $2.5 million and $7.0 million for the thirty-five weeks ended October 29, 2011 and the fiscal year ended February 26, 2011, respectively. The Company did not receive any allowances or credits from vendors in connection with the purchase or promotion of the vendor’s product, such as cooperative advertising and other considerations.

s. Occupancy Costs – Occupancy expenses for the thirty-five weeks ended October 29, 2011 and the fiscal year ended February 26, 2011 were reduced by net rental income of $1.4 million and $2.3 million, respectively, from real estate holdings incidental to the Company’s retail operations.

t. Accounting for Stock-Based Compensation – The Company accounted for stock-based compensation costs in accordance with ASC 718, “Stock Compensation”. Consistent with ASC 718, share-based compensation cost is measured at grant date, based on the estimated fair value of the award, and was recognized as expense over the requisite service period.

The fair value of each option award was estimated on the date of grant using a Black-Scholes option valuation model. Expected volatility was based on the historical volatility of the price of the Company’s stock. The risk-free interest rate was based on U.S. Treasury issues with a term equal to the expected life of the option. The Company used historical data to estimate expected dividend yield, expected life and forfeiture rates. There were no options granted during fiscal 2012 or fiscal 2011, and all options previously issued were fully vested.

u. New Accounting Standard – In April 2013, the FASB issued Accounting Standards Update No. 2013-07, Liquidation Basis of Accounting, which amended the FASB Accounting Standards Codification and provides guidance as to when an entity should apply the liquidation basis of accounting. In addition, the guidance provides principles for the recognition and measurement of assets and liabilities and requirements for financial statements prepared using the liquidation basis of accounting. The provisions are effective for annual periods beginning after December 15, 2013 and interim periods therein. Early adoption is permitted. The Company does not expect the adoption of these provisions will have a material impact on its financial statements.