Note 4 – Financial Position

As of May 31, 2014 and March 1, 2014, the Company had cash and cash equivalents of $33.6 million and $9.7 million, respectively. At May 31, 2014 and March 1, 2014, the Company had restricted cash of $8.1 million and $5.6 million, respectively. The Company used its cash and cash equivalents primarily for the payment of Allowed Claims in accordance with the terms of the Plan, professional fees related to the Chapter 11 cases, as well as its daily operations.

The Company has estimated claims liabilities recorded in its consolidated financial statements of approximately $60.6 million and $62.1 million at May 31, 2014 and March 1, 2014, respectively. The claims liability includes the Majority Shareholder liability of approximately $7.1 million at May 31, 2014 and March 1, 2014. During the period from the effective date of the Plan through March 2, 2013, the Company’s first fiscal year-end following emergence from Chapter 11, the Company paid approximately $26.2 million to holders of Allowed Claims as defined in and in accordance with the Plan. During the fiscal year ended March 1, 2014, the Company made additional cash payments to holders of Allowed Claims, together with other payments required under the Plan, including to the Majority Shareholder, in an aggregate amount of approximately $33.7 million, as well as an additional $1.4 million through the thirteen weeks ended May 31, 2014 and subsequently $15.7 million more in payments through July 15, 2014. These payments constituted the full distributions payable to holders of the Allowed Syms and Filene’s Class 3 (Convenience Claims) and the holders of Allowed Syms General Unsecured and Filenes General Unsecured (Short-Term) Claims in Syms and Filenes Class 4, respectively, and the Syms Class 5 Union Pension Plan, all as defined in the Plan. As a result of the cash payments made by the Company through July 15, 2014, to the holders of Allowed Syms and Filene’s Class 3 (Convenience Claims) and the holders of Allowed Syms Class 4 General Unsecured Claims, and the Syms Class 5 Union Pension Plan, all as defined in the Plan and as disclosed on the Form 10-K for the fiscal year ended March 1, 2014, under the terms of the Company’s certificate of incorporation, the director designated by the holder of the Series A preferred stock did not acquire control of the sale process of the Company’s remaining unsold “near-term properties,” as defined in the Plan.

The process of reconciling claims is different from the process of actually resolving claims. Accordingly, the above estimates are based primarily on the Company’s identification and reconciliation of the amounts of asserted claims to the Company’s books and records, and not on the negotiation or settlement of specific claims. Because of the large number of claims filed and the ongoing reconciliation and settlement processes, the ultimate amount of allowed claims and the ultimate amount of distributions under the Plan could be materially different from the Company’s current estimates.

The Company believes that it would be able to fund its operations through net cash proceeds from property sales; however, the Plan imposes restrictions on the amount of operating expenses that the Company is allowed to incur and pay from such net cash proceeds. As previously discussed, the Company’s $5 million corporate overhead reserve initially contemplated by the Plan has been depleted, primarily due to greater than expected professional fees, and the Company has obtained the consent of the holder of the Company’s Series A Preferred Stock, who has the sole authority to approve an increase in the operating reserves, to increase the corporate overhead reserve to $11 million, subject to certain limitations and a reduction of up to approximately $0.8 million if certain anticipated expenses are not incurred. Up to $2.5 million of corporate overhead expenses previously paid by the Company from generally available cash will count toward and be reimbursed from the increased corporate overhead reserve following receipt of net cash proceeds from future property sales. In addition, during fiscal 2013, the Company raised $13.0 million, net of $0.5 million in offering costs, from the issuance of stock, which can be used to, among other things, fund overhead and other expenses. The Company believes through the sale of its assets and cash on hand, along with the possibility of additional equity and/or debt financing, it will have the cash necessary to satisfy its required claims distributions and operating activities.