<PAGE> 1
Exhibit 99
JO-ANN STORES, INC. SAVINGS PLAN 401(k)
Financial Statements
As of December 31, 1999 and 1998
Together with Report of Independent Public Accountants
<PAGE> 2
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Advisory Committee of Jo-Ann Stores, Inc.
Savings Plan 401(k):
We have audited the accompanying statements of net assets of Jo-Ann Stores, Inc.
Savings Plan 401(k) (the Plan) as of December 31, 1999 and 1998, and the related
statement of changes in net assets for the year ended December 31, 1999, as
listed in the accompanying index. These financial statements and the schedule
referred to below are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements and
schedule based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. 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 the 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, the financial statements referred to above present fairly, in
all material respects, the net assets of the Plan as of December 31, 1999 and
1998, and the changes in its net assets for the year ended December 31, 1999, in
conformity with accounting principles generally accepted in the United States.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets held
for investment purposes (Schedule I) as listed in the accompanying index, is
presented for purposes of additional analysis and is not a required part of the
basic financial statements but is supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. The supplemental schedule
has been subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
Cleveland, Ohio,
May 25, 2000.
<PAGE> 3
JO-ANN STORES, INC. SAVINGS PLAN 401(k)
Index to Financial Statements
December 31, 1999 and 1998
Statements of Net Assets as of December 31, 1999 and 1998
Statement of Changes in Net Assets for the Year Ended December 31, 1999
Notes to Financial Statements
Schedule I--Item 4i--Schedule of Assets Held for Investment Purposes at End of
Year
<PAGE> 4
JO-ANN STORES, INC. SAVINGS PLAN 401(k)
Statements of Net Assets
As of December 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
----------------- -----------------
<S> <C> <C>
ASSETS:
Cash and cash equivalents $ - $ 178,350
Receivables - 102,820
----------------- -----------------
Investments:
Participant directed 32,485,890 28,371,275
Nonparticipant directed-
Company Stock Fund A 2,808,215 3,033,021
Company Stock Fund B 1,706,797 2,554,512
----------------- -----------------
Total investments, at market 37,000,902 33,958,808
Receivables:
Employer contribution - 42,785
Participant contribution - 132,340
----------------- -----------------
Total receivables - 175,125
Total assets 37,000,902 34,415,103
LIABILITIES:
Accrued expenses and other - 53,734
----------------- -----------------
NET ASSETS $37,000,902 $34,361,369
================= =================
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
<PAGE> 5
JO-ANN STORES, INC. SAVINGS PLAN 401(k)
Statement of Changes in Net Assets
For the Year Ended December 31, 1999
<TABLE>
<CAPTION>
Nonparticipant Directed
-------------------------------
Company Company
Participant Stock Stock
Directed Fund A Fund B Total
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INCREASES:
Interest and dividend income $ 427,061 $ 7,475 $ 2,313 $ 436,849
Employer contributions - 1,050,026 64,434 1,114,460
Particpant contributions 3,685,865 - - 3,685,865
Rollover contributions 405,893 - - 405,893
Realized gains on sale of investments 6,102,121 327,951 - 6,430,072
Unrealized gains on investments 1,849,385 98,303 344,863 2,292,551
------------ ------------ ------------ ------------
12,470,325 1,483,755 411,610 14,365,690
------------ ------------ ------------ ------------
DECREASES:
Distributions 2,805,864 374,722 429,958 3,610,544
Administrative expenses 100,787 11,626 (1,823) 110,590
Realized losses on sale of investments - - 26,453 26,453
Unrealized losses on investments 5,681,400 1,407,250 888,862 7,977,512
Other 752 142 164 1,058
------------ ------------ ------------ ------------
8,588,803 1,793,740 1,343,614 11,726,157
------------ ------------ ------------ ------------
NET INCREASE (DECREASE) FOR THE YEAR 3,881,522 (309,985) (932,004) 2,639,533
NET ASSETS, beginning of year 28,604,368 3,118,200 2,638,801 34,361,369
------------ ------------ ------------ ------------
NET ASSETS, end of year $ 32,485,890 $ 2,808,215 $ 1,706,797 $ 37,000,902
============ ============ ============ ============
</TABLE>
The accompanying notes to financial statements are an integral part of this
statement.
<PAGE> 6
JO-ANN STORES, INC. SAVINGS PLAN 401(k)
Notes to Financial Statements
December 31, 1999 and 1998
1. SUMMARY OF PLAN:
----------------
The original Jo-Ann Stores, Inc. Savings Plan 401(k) (the Plan), formally known
as the Jo-Ann Stores, Inc. Employees' Savings and Profit Sharing Plan, was
adopted as of September 1, 1974, and has been amended on occasion in order to,
among other things, maintain compliance with the requirements of the Employee
Retirement Income Security Act of 1974 (ERISA). Effective July 1, 1998,
employees of the former House of Fabrics, Inc., which was acquired by Jo-Ann
Stores, Inc., (the Company) during 1998, are able to participate in the Plan. On
March 1, 1999, the Company replaced Key Trust Company of Ohio, N.A., as trustee
and administer of the Plan with Institutional Trust Company, a subsidiary of
Invesco Retirement Plan Services. The principal provisions of the Plan are as
follows:
Eligibility
-----------
All active employees of the Company and its wholly owned subsidiaries that have
adopted the Plan, who have completed at least 1,000 hours of service and are not
members of a recognized collective bargaining organization, are eligible to
participate in the Plan.
Deferred Income Contributions
-----------------------------
Plan participants may elect to defer from 1% to 15% of their compensation,
subject to an annual limitation under the IRC, and such amounts will be
contributed to the Plan by the Company as deferred income contributions.
Employer Matching Contributions
-------------------------------
The Company will contribute to the Plan, subject to the forfeiture provision
outlined below, an adjustable percentage of the deferred income contributions
made by participants (up to a 4% employee deferred compensation contribution),
as well as such additional amounts as the Board of Directors may determine.
These contributions are allocated among participants after completing one year
of service, in proportion to the deferred income contributions made on their
behalf for such period and credited to their separate accounts.
The Company's matching contribution can range from 0% to 100% and can be
modified prior to the beginning of a month by the Company. For the 1999 and 1998
Plan years, the Company's matching contribution was 50% of the first 4%
contributed by participants. All Company matching contributions are in the form
of common stock of the Company and are invested in the Company Stock Fund A and
Company Stock Fund B.
<PAGE> 7
JO-ANN STORES, INC. SAVINGS PLAN (401(k))
Notes to Financial Statements
December 31, 1999 and 1998
Page 2
Company contributions are funded only to the extent that they exceed cumulative
forfeitures of participants terminated from the Plan. Such forfeitures amounted
to $90,021 in 1999.
Investment of Employee Contributions
------------------------------------
Under the Plan, each participant selects the manner in which deferred income
contributions to their account are to be invested. With each of the investment
accounts there is risk of loss, although the degree varies by the nature of the
investment. None of the accounts provide for any guarantee against loss.
Participants should refer to the Plan document for a more complete description
of the Plan's investment options. Contributions are invested in 1% increments,
up to 100%, in any one of the following investment options:
a. IRT 500 Index Fund - Investments are made in a portfolio of stocks
attempting to match the Standard & Poor's 500 index with a rate of
return that may fluctuate substantially.
b. AIM Blue Chip Fund - Investments are made in common stocks of domestic,
foreign and multi-national companies believed to have long-term growth
potential.
c. IRT Stable Value Fund - Investments are made in investment contracts
issued by insurance companies and banks providing for stability of
principal and attractive rates of interest.
d. One Group Bond Fund - Investments are made in investment-grade debt
securities issued by corporations and obligations of the U.S.
Government and its agencies or instrumentalities, as well as foreign
debt, dependent upon the prevailing interest rates.
e. Invesco Dynamics Fund - Investments are made in stocks of domestic and
international companies with market capitalizations ranging between
$800 million and $3 billion.
f. Janus Worldwide Fund - Investments are made in common stocks of foreign
issuers, seeking long-term growth of capital in a manner consistent
with the preservation of capital.
g. IRT Intermediate Return Fund - Investments are made in a conservative
combination of stable value, bond and equity funds, seeking a high
total return through current income and capital appreciation.
<PAGE> 8
JO-ANN STORES, INC. SAVINGS PLAN (401(k))
Notes to Financial Statements
December 31, 1999 and 1998
Page 3
h. IRT Growth and Income Fund - Investments are made in a moderately
aggressive combination of stable value, bond and equity funds, seeking
a high total return through current income and capital appreciation.
i. IRT Maximum Appreciation Fund - Investments are made in an aggressive
combination of stable value, bond and equity funds, seeking a high
total return through current income and capital appreciation.
j. Company Stock Fund A -- Investments are made in Jo-Ann Stores, Inc.
Class A common stock.
k. Company Stock Fund B -- Investments are made in Jo-Ann Stores, Inc.
Class B common stock.
Participants may change their investment election with respect to future
contributions on a daily basis.
PAYSOP Contributions
--------------------
Prior to February 1, 1987, the Company made PAYSOP contributions to the Stock
Ownership Fund for each year in an amount equal to the tax credit available
under Section 44G of the IRC. This tax credit was eliminated by the Tax Reform
Act of 1986 and, therefore, the Company no longer makes PAYSOP contributions.
Distributions of the PAYSOP account balances to terminated participants are made
in shares of Company common stock unless otherwise specified by the participant.
Vesting Requirements
--------------------
Participants' deferred income contributions, together with earnings thereon,
vest immediately. All other Company contributions, plus earnings thereon, vest
over a four-year period based on years of service, as defined by the Plan
agreement. A participant's entire interest in the Plan becomes fully vested upon
his death while employed, attainment of age 65 or permanent and total
disability.
Benefit Payments
----------------
Upon termination of service, a participant may elect to receive either a
lump-sum amount or an installment payment equal to the vested portion of his or
her account, as defined by the Plan.
Prior to termination of employment or age 59 1/2 , contributions may only be
withdrawn in the event of financial hardship as defined by the Internal Revenue
Code.
<PAGE> 9
JO-ANN STORES, INC. SAVINGS PLAN (401(k))
Notes to Financial Statements
December 31, 1999 and 1998
Page 4
Participant Loans
-----------------
Participants may borrow against their vested balances pursuant to the loan
provision of the Plan. The maximum loan amount available to a participant is
fifty percent of their vested account balance not to exceed $50,000. The maximum
term of a loan is five years. Participant loans are repaid through payroll
deductions with interest charged at the prime rate plus one percent. During
1999, interest rates ranged from 8.75% to 9.50%.
Trustee's Fees and Other Expenses
---------------------------------
Generally, costs incident to the purchase and sale of securities, such as
brokerage commissions and stock transfer taxes, are paid by the respective
funds. Other costs and expenses incurred in administering the Plan, including
fees of the trustee are generally paid by the Plan.
Termination
-----------
Although it has not expressed any intent to do so, the Company, with the
approval of the Board of Directors, has the right to discontinue its
contributions at any time and to terminate the Plan, subject to the provisions
of ERISA. In the event of Plan termination, participants will become 100% vested
in their accounts.
2. SIGNIFICANT ACCOUNTING POLICIES:
--------------------------------
Basis of Accounting
-------------------
The accompanying financial statements are prepared on the accrual basis of
accounting.
Valuation of Investments
------------------------
The assets included in the Statements of Net Assets are stated at their market
values as of December 31, 1999 and 1998. Schedule I summarizes the Plan's
investments held at December 31, 1999.
Estimates
---------
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States 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.
<PAGE> 10
JO-ANN STORES, INC. SAVINGS PLAN (401(K))
Notes to Financial Statements
December 31, 1999 and 1998
Page 5
Adoption of Statement of Position 99-3
--------------------------------------
The Accounting Standards Executive Committee issued Statement of Position 99-3,
"Accounting for and Reporting of Certain Defined Contribution Plan Investments
and Other Disclosure Matters" (SOP 99-3), which eliminates the requirement for a
defined contribution plan to disclose participant-directed investment programs.
As required by SOP 99-3, the Plan adopted SOP 99-3 for the 1999 financial
statements and reclassified certain amounts in the 1998 financial statements to
eliminate the participant-directed fund investment program disclosures.
3. TAX STATUS:
-----------
The Internal Revenue Service has determined and informed the Company, by letter
dated February 20, 1997, that the Plan complies with applicable sections of the
IRC. The Company currently believes that the Plan is in compliance with the
applicable sections of the IRC.
4. INFORMATION CERTIFIED BY TRUSTEES:
----------------------------------
The former trustee, Key Trust Company of Ohio, N.A., and the current trustee,
Institutional Trust Company, a subsidiary of Invesco Retirement Plan Services,
maintains records of investment transactions and participant accounts and
determines the valuation of the investment portfolio of each fund. Information
with respect to (1) investments included in the Statements of Net Assets and the
Schedule of Assets Held for Investment Purposes (Schedule I), and (2) all items
included in the Statement of Changes in Net Assets has been certified by the
trustees as being complete and accurate.
5. INVESTMENTS:
------------
The following investments of the Plan exceed 5% of the Plan's net assets
available for benefits at December 31, 1999 and 1998.
<TABLE>
<CAPTION>
1999 1998
------------------ --------------------
<S> <C> <C>
One Group Bond Fund $2,015,409 $ -
AIM Blue Chip Fund 8,561,131 -
IRT Stable Value Fund 5,492,718 -
IRT 500 Index Fund 10,247,982 -
Victory Stock Index Fund - 9,036,163
Fidelity Magellan Fund - 6,529,524
EB Magic Fund - 5,175,669
Victory Intermediate Income Fund - 2,101,177
Jo-Ann Stores, Inc. Class A common stock 5,771,933 6,990,860
Jo-Ann Stores, Inc. Class B common stock 2,607,069 4,029,296
</TABLE>
<PAGE> 11
JO-ANN STORES, INC. SAVINGS PLAN (401(k))
Notes to Financial Statements
December 31, 1999 and 1998
Page 6
6. PARTY-IN-INTEREST TRANSACTIONS:
-------------------------------
During the years ended December 31, 1999 and 1998, there were no prohibited
transactions with a party-in-interest, as defined by ERISA.
<PAGE> 12
JO-ANN STORES, INC. SAVINGS PLAN (401(k))
Notes to Financial Statements
December 31, 1999 and 1998
Page 7
Schedule I
JO-ANN STORES, INC. SAVINGS PLAN 401(k)
Item 4i--Schedule of Assets Held for Investment Purposes
At End of Year
Employer Identification Number: 34-0720629
Plan Number: 001
<TABLE>
<CAPTION>
Description Cost Market Value
------------------------------------------------------------------------ ----------------- -----------------
<S> <C> <C>
One Group Bond Fund $2,098,710 $2,015,409
AIM Blue Chip Fund 6,911,523 8,561,131
*INVESCO Dynamics Fund 481,105 630,593
*IRT Stable Value Fund 5,492,718 5,492,718
*IRT 500 Index Fund 8,622,889 10,247,982
*IRT Intermediate Return Fund 155,845 163,001
*IRT Growth and Income Fund 198,830 219,075
*IRT Maximum Appreciation Fund 111,263 129,558
Janus Worldwide Fund 406,173 566,031
Jo-Ann Stores, Inc. Class A common stock 7,156,658 5,771,933
Jo-Ann Stores, Inc. Class B common stock 3,067,052 2,607,069
*Loan Fund, interest rates varying from 8.75% to 9.5% 596,402 596,402
----------------- -----------------
$35,299,168 $37,000,902
================= =================
</TABLE>
*Represents a party-in-interest
The accompanying notes to financial statements are an integral part of this
schedule.
