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As filed with the Securities and Exchange Commission on March 30, 2000
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 11-K
/X/ ANNUAL REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
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Commission File No: 1-6695
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JO-ANN STORES, INC.
ASSOCIATE STOCK OWNERSHIP PLAN
(Full title of the plan and the address of the plan,
if different from that of the issuer named below)
Jo-Ann Stores, Inc.
5555 Darrow Road
Hudson, OH 44236
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(Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office)
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Advisory Committee, the administrator of the Jo-Ann Stores, Inc. Associate Stock
Ownership Plan, has duly caused this annual report to be signed on its behalf by
the undersigned hereunto duly authorized.
March 30, 2000
Jo-Ann Stores, Inc.
Associate Stock Ownership Plan
/s/ Brian Carney
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Brian Carney
Executive Vice President and Chief Financial Officer and
Secretary of Advisory Committee
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JO-ANN STORES, INC.
ASSOCIATE STOCK OWNERSHIP PLAN
EXHIBIT INDEX
Official
Exhibit No. Description
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23 Consent of Independent Public Accountants
Jo-Ann Stores, Inc.
99 Associate Stock Ownership Plan
Financial Statements
As of December 31, 1999
Together With Report of
Independent Public Accountants
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EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
report dated March 23, 2000 included in this Form 11-K, into the Company's
previously filed registration Statement on Form S-8 (No. 33-72445).
ARTHUR ANDERSEN LLP
Cleveland, Ohio,
March 30, 2000.
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EXHIBIT 99
JO-ANN STORES, INC.
ASSOCIATE STOCK OWNERSHIP PLAN
Financial Statements
As of December 31, 1999
Together With Report of Independent Public Accountants
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Advisory Committee of Jo-Ann Stores, Inc. and Participants
of the Jo-Ann Stores, Inc. Associate Stock Ownership Plan:
We have audited the accompanying statement of financial condition of the Jo-Ann
Stores, Inc. Associate Stock Ownership Plan (the Plan) as of December 31, 1999,
and the related statement of operations and changes in participants' equity for
the period ended December 31, 1999. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit 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 audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial condition of the Plan as of December 31,
1999, and the changes in its financial condition for the period ended December
31, 1999, in conformity with accounting principles generally accepted in the
United States.
ARTHUR ANDERSEN LLP
Cleveland, Ohio,
March 23, 2000.
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JO-ANN STORES, INC.
ASSOCIATE STOCK OWNERSHIP PLAN
Statement of Financial Condition
As of December 31, 1999
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Receivable from employer $586,911
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Total assets $586,911
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LIABILITIES:
Liability to participants for future Stock purchases $584,596
Amounts due to former participants 2,315
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Total liabilities $586,911
========
</TABLE>
The accompanying notes to financial statements are an integral part of this
statement.
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JO-ANN STORES, INC.
ASSOCIATE STOCK OWNERSHIP PLAN
Statement of Operations and Changes in Participants' Equity
For the Period Ended December 31, 1999
<TABLE>
<S> <C>
Participant contributions $1,269,788
Employer contributions 112,028
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Total additions 1,381,816
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Stock purchases 746,853
Contributions reserved for future Stock purchases 584,596
Participant withdrawals 50,367
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Total deductions 1,381,816
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Net additions $ --
==========
</TABLE>
The accompanying notes to financial statements are an integral part of this
statement.
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JO-ANN STORES, INC.
ASSOCIATE STOCK OWNERSHIP PLAN
Notes to Financial Statements
December 31, 1999
1. DESCRIPTION OF THE PLAN:
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The Jo-Ann Stores, Inc. Associate Stock Ownership Plan (the Plan), represents
rules adopted April 1, 1999 as part of the Company's 1998 Incentive Compensation
Plan (the Incentive Plan). The 1998 Incentive Compensation Plan is administered
by the Compensation Committee of the Board of Directors (Committee) of Jo-Ann
Stores, Inc. (the Company). Participants should refer to the Plan document for a
more complete description of the Plan's provisions.
General
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The Plan is an employee stock purchase plan that allows participants to acquire
a proprietary interest in Jo-Ann Stores, Inc. Class A Common Stock (Stock)
through payroll deductions. Payroll deductions for the purpose of purchasing
Stock are accumulated during two six-month periods, April 1 to September 30 and
October 1 to March 31 (Accumulation Periods). At the end of each Accumulation
Period, the participants' accumulated payroll deductions are used to purchase
shares, or fractional shares, of Stock. The shares are purchased for an amount
equal to 85% of the lesser of (1) the closing price of a share of Stock on the
first trading day of the Accumulation Period or (2) the closing price of a share
of Stock on the last trading day of the Accumulation Period (Purchase Price).
Subject to limitations set forth in the Incentive Plan, the maximum number of
shares which may be purchased under the Plan for any fiscal year of the Company
is 1,000,000 shares. Shares purchased under the Plan may be authorized and
unissued shares, treasury shares, outstanding shares reacquired in private
transactions or open market purchases, or any combination of any of the
foregoing, as determined by the Committee. At December 31, 1999, the
participants had purchased 60,049 shares of Stock since the Plan's inception at
a discounted price of $10.57.
The Plan is neither qualified under Section 401(a) of the Internal Revenue Code
(IRC) of 1986, as amended, nor subject to any of the provisions of the Employee
Retirement Income Security Act of 1974, as amended (ERISA).
Eligibility
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All employees, except temporary and seasonal employees, as defined by the Plan
document, are eligible to participate in the Plan. Eligible employees may only
enroll in the Plan at the beginning of an Accumulation Period. Employees who are
directors or officers of the Company may participate in the Plan only in
accordance with the requirements of Rule 16b-3 under the Securities Exchange Act
of 1934.
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Stock Purchases
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On the last trading day of each Accumulation Period, the amount of each
participant's accumulated payroll deductions is applied towards the purchase of
shares of Stock. The number of shares purchased is determined by dividing the
participant's total contribution by the per share Purchase Price applicable for
that Accumulation Period. Purchased shares of Stock are then issued by the
Company and transferred to a brokerage account outside of the Plan in the name
of the participant. Participants are required to hold shares for a minimum
period of six months following their purchase. This amount includes participant
contributions from the October 1 to March 31 Accumulation Period.
Participant Contributions
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Participants may elect to defer 1% to 15% of their "Covered Compensation" (as
defined in the Plan) on an after-tax basis for the purchase of Stock with a
maximum purchase of the lesser of 4,000 shares or $25,000 worth of Stock at
fair market value per calendar year. Participants may only change their
deduction percentages at the beginning of an Accumulation Period, but may cease
making contributions at any time. No interest accrues or is paid on
participants' accumulated payroll deductions. Once made, the Company may use
the payroll deductions for any corporate purpose, and the Company has no
obligation to segregate employees' payroll deductions from any other funds of
the Company or to hold funds representing the same pending the application
thereof to the purchase of shares at the end of each Accumulation Period in
accordance with the Plan.
Employer Contributions
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The 15% discount from market value granted to Plan participants on the purchase
of Stock at the end of each Accumulation Period represents the Company's
non-cash contribution to the Plan. These non-cash contributions amounted to
$112,028 for the period ended December 31, 1999.
Participant Withdrawals
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Plan participants may withdraw from the Plan at any time by properly notifying
the Company. A participant's accumulated payroll deductions prior to withdrawal
from the Plan will continue to be applied toward the purchase of shares of Stock
on the last trading day of the Accumulation Period, or may be refunded in full
to the employee at the time of withdrawal from the Plan.
Participants who terminate their employment relationship with the Company are
not eligible to continue in the Plan. All payroll deductions accumulated during
the Accumulation Period through the date of such cessation of employment will be
refunded to the employee or, in the event of the employee's death, to his or her
estate.
Plan Termination
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Although it has not expressed any intent to do so, the Company has the right
under the Plan to terminate the Plan at any time. Upon termination of the Plan,
all payroll deductions not used to purchase Stock would be refunded to Plan
participants.
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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
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Basis of Accounting
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The accompanying financial statements are prepared on the accrual basis of
accounting.
Administrative Expenses
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The Company bears all costs in connection with the Plan, including
administrative fees and all fees associated with the issuance of Stock.
Administrative expenses related to the Plan amounted to $14,487 for the period
ended December 31, 1999.
Estimates
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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 additions and deductions during the
reporting period. Since actual results could differ from those estimates,
management revises its estimates and assumptions as better or new information
becomes available.
3. INCOME TAX STATUS:
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The Plan fulfills the requirements of an "employee stock purchase plan" as
defined in Section 423 of the IRC. As such, the Plan is not required to file
income tax returns or pay income taxes. Under Section 423, a participating
employee will recognize no income, and the Company will be entitled to no
deduction, for federal income tax purposes when an employee enrolls in the Plan
or when a participant purchases shares of Stock under the Plan.
