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SYMS CORP AND SUBSIDIARIES
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
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Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
FOR THE THIRTEEN WEEKS ENDED JULY 2, 1994 COMMISSION FILE NUMBER 1-8564
SYMS CORP
(Exact name of registrant as specified in its charter)
NEW JERSEY No. 22-2465228
(State or other jurisdiction of (I.R.S. employer identification no.)
incorporation or organization)
SYMS WAY, SECAUCUS, NEW JERSEY 07094
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (201) 902-9600
Indicate by check mark whether registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes _X_ No ___
The number of shares of the Registrant's Common Stock, par value $.05
outstanding at August 5, 1994: 17,694,015
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SYMS CORP AND SUBSIDIARIES
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INDEX
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PAGE NO.
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PART I. Financial Information:
Item 1. Financial Statements
Consolidated Condensed Balance Sheets -
July 3, 1993, July 2, 1994 and January 1, 1994. 1
Consolidated Condensed Statements of Income -
Thirteen and Twenty-six Weeks Ended July 3, 1993
and July 2, 1994. 2
Consolidated Condensed Statements of Cash Flows -
Thirteen and Twenty-six Weeks Ended July 3, 1993
and July 2, 1994. 3
Notes to Consolidated Condensed Financial Statements. 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. 5-6
PART II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders 7
Item 6. Exhibits and Reports on Form 8-K 7
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SYMS CORP AND SUBSIDIARIES
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Consolidated Condensed Balance Sheets
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(In Thousands Except Share Amounts)
<TABLE>
<CAPTION>
JULY 3, JULY 2, JANUARY 1,
1993 1994 1994
(UNAUDITED) (UNAUDITED) ( * )
----------- ----------- ----------
<S> <C> <C> <C>
ASSETS
Current Assets
Cash and Cash equivalents $ 2,176 $ 4,017 $ 1,347
Marketable securities 6,850 --- ---
Merchandise inventories (note 2) 86,360 96,812 79,418
Prepaid expenses and other current assets 2,174 4,332 4,857
Deferred income taxes 1,296 1,620 1,406
-------- -------- --------
TOTAL CURRENT ASSETS 98,856 106,781 87,028
Property and equipment, net of accumulated
depreciation and amortization 121,035 136,272 130,279
Other assets 3,265 3,864 3,845
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TOTAL ASSETS $223,156 $246,917 $221,152
======== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Short-Term Borrowings $ --- $ 10,495 $ ---
Current portion of obligations under
capital lease 215 188 234
Accounts payable 25,031 30,694 14,864
Accrued expenses and taxes other than
income taxes 4,635 4,912 4,418
Dividend payable --- 885 ---
Obligations to customers 3,057 3,113 3,500
Income taxes 2,184 2,887 4,141
------- ------- --------
TOTAL CURRENT LIABILITIES 35,122 53,174 27,157
------- ------- --------
Obligations under capital lease 2,097 1,909 1,974
------- ------- --------
Deferred income taxes 1,485 1,006 1,416
------- ------- --------
Shareholders' equity
Preferred stock - par value, $100 per share;
authorized 1,000,000 shares; none issued
Common stock - par value, $.05 per share;
authorized 30,000,000 shares; issued
and outstanding 17,690,215 shares
- July 3, 1993; 17,692,015 shares
- January 1, 1994 and 17,694,015 shares
- July 2, 1994 885 885 885
Additional paid-in capital 11,677 11,709 11,695
Retained earnings 171,890 178,234 178,025
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TOTAL SHAREHOLDERS' EQUITY 184,452 190,828 190,605
-------- -------- --------
TOTAL LIABILITIES AND
SHAREHOLDERS EQUITY $223,156 $246,917 $221,152
======== ======== ========
<FN>
* Condensed from Audited Consolidated Financial Statements.
</FN>
</TABLE>
See accompanying notes to Consolidated Condensed Financial Statements.
1
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SYMS CORP AND SUBSIDIARIES
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Consolidated Condensed Statements of Income
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(In Thousands , Except Per Share Amount)
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED
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JULY 3, 1993 JULY 2, 1994 JULY 3, 1993 JULY 2, 1994
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net Sales $79,347 $80,015 $146,222 $148,657
------- ------- -------- --------
Costs and expenses:
Cost of Sales 53,955 53,667 99,431 100,343
Operating, general & administrative 16,969 18,477 32,293 35,349
Occupancy 2,163 2,956 4,371 5,622
Depreciation and amortization 1,804 1,930 3,651 3,714
Interest - net (173) 207 (152) 274
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74,718 77,237 139,594 145,302
-------- ------- -------- --------
Income before provision for income
taxes 4,629 2,778 6,628 3,355
Provision for income taxes 1,881 1,124 2,801 1,376
------- ------- -------- --------
Net income $ 2,748 $ 1,654 $ 3,827 $ 1,979
======= ======= ======== ========
Earnings per share $ .16 $ .09 $ .22 $ .11
======= ======= ======== ========
Weighted average shares outstanding 17,690 17,693 17,690 17,693
======= ======= ======== ========
Cash dividend per share $ --- $ .10 $ --- $ .10
======= ======= ======== ========
</TABLE>
See accompanying notes to Consolidated Condensed Financial Statements.
2
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SYMS CORP AND SUBSIDIARIES
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Consolidated Condensed Statements of Cash Flows
(In Thousands)
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<TABLE>
<CAPTION>
TWENTY-SIX WEEKS ENDED
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JULY 3, 1993 JULY 2, 1994
(UNAUDITED) (UNAUDITED)
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 3,827 $ 1,979
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 3,651 3,714
Deferred income taxes (505) (624)
Changes in assets and liabilities:
Merchandise inventories (18,628) (17,394)
Prepaid expenses and other current assets 2,002 525
Other assets (102) (19)
Accounts payable 19,426 15,830
Obligations to customers (353) (387)
Accrued expenses and taxes other than
income taxes 378 494
Income tax payable (3,700) (1,254)
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TOTAL ADJUSTMENTS 2,169 885
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Net cash provided by operating activities 5,996 2,864
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CASH FLOWS USED IN INVESTING ACTIVITIES:
Purchase of marketable securities (1,550) ---
Expenditures for fixed assets (4,469) (9,707)
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Net cash used in investing activities: (6,019) (9,707)
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CASH FLOWS USED IN FINANCING ACTIVITIES:
Proceeds from short-term borrowings --- 10,495
Payment of dividend --- (885)
Exercise stock options --- 14
Repayments of obligations under capital lease (94) (111)
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Net cash (used) provided in financing activities: (94) 9,513
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NET DECREASE IN CASH AND
CASH EQUIVALENTS (117) 2,670
CASH AND CASH EQUIVALENTS, beginning of period 2,293 1,347
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CASH AND CASH EQUIVALENTS, end of period $ 2,176 $ 4,017
====== =======
2,176 4,017
</TABLE>
See accompanying notes to Consolidated Condensed Financial Statements.
3
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SYMS CORP AND SUBSIDIARIES
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Notes to Consolidated Condensed Financial Statements
July 3, 1993 and July 2, 1994 (Unaudited)
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Note 1- In the opinion of the Company, the accompanying unaudited consolidated
condensed financial statements contain all adjustments (consisting of
only normal recurring adjustments) necessary to present fairly the
financial position as of July 3, 1993 and July 2, 1994 and the results
of operations and cash flows for the thirteen and twenty-six week
periods ended July 3, 1993 and July 2, 1994.
While the Company believes that the disclosures presented are adequate
to make the information not misleading, it is suggested that these
consolidated condensed financial statements be read in conjunction
with the consolidated financial statements and notes included in the
Company's Annual Report on Form 10-K for the year ended January 1,
1994.
Because of the seasonal nature of the Company's business, the results
of the operations for the thirteen and twenty-six week periods ended
July 2, 1994 is not necessarily indicative of the results for the full
year.
Note 2- Inventories at July 3, 1993 and July 2, 1994 have been computed using
a gross profit margin estimated by management.
Note 3- The Company adopted Statement of Financial Accounting Standards (SFAS)
No. 109, "Accounting for Income Taxes", effective January 3, 1993. The
cumulative effect of adopting SFAS No. 109 on the Company's financial
statements was not material.
4
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SYMS CORP AND SUBSIDIARIES
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Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
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RESULTS OF OPERATIONS
Net sales for the thirteen weeks ended July 2, 1994 increased by $668,000 or .8%
when compared with the thirteen weeks ended July 3, 1993. Comparable store net
sales decreased by 13.2%; this was offset by an increase of 14.0% attributable
to five new stores which opened in the fourth quarter of 1993 and four new
stores in 1994. Net sales for the twenty-six weeks ended July 2, 1994 increased
by $2,435,000 or 1.7% when compared with the twenty-six weeks ended July 3,
1993. This increase is attributable to a decrease in comparable store net sales
of 9.6%, offset by an increase of 11.3% attributable to five new stores which
opened in 1993 and four new stores which opened in 1994.
During the thirteen weeks ended July 2, 1994, the company increased its
estimated gross margin for the twenty-six weeks then ended to 32.5% from 32.0%.
In 1993, the estimated gross margin was 32.0%.
As a percentage of net sales, operating, general and administrative expenses
(excluding occupancy, depreciation and amortization) were 23.1% for the thirteen
weeks and 23.8% for the twenty-six weeks ended July 2, 1994 and 21.4% for the
thirteen weeks and 22.1% for the twenty-six weeks ended July 3, 1993. The
increase in operating, general and administrative expenses as a percentage of
net sales is attributable to a decrease in comparable store net sales and
additional operating costs associated with the five new stores opened in 1993
and four new stores in 1994.
Operating, general and administrative expenses for the thirteen weeks ended July
2, 1994 increased by $1,508,000 or 8.9% from the thirteen weeks ended July 3,
1993. Comparable store operating, general and administrative expenses decreased
by $1,412,000 or 8.3%. This decrease was offset by $2,920,000 of expenses
related to the five stores opened in 1993 and four stores in 1994. Operating,
general and administrative expenses for the twenty-six weeks ended July 2, 1994
increased by $3,056,000 or 9.5% from the twenty-six weeks ended July 3, 1993.
Comparable store operating, general and administrative expenses decreased by
$1,487,000 or 4.6%. This decrease was offset by $4,543,000 of expenses related
to the five stores opened in 1993 and four store in 1994.
As a percentage of net sales, occupancy expenses were 3.7% for the thirteen
weeks and 3.8% for the twenty-six weeks ended July 2, 1994 and 2.7% for the
thirteen weeks and 3.0% for the twenty-six weeks ended July 3, 1993. The
increase in occupancy expenses as a percentage of net sales can be attributed to
a decrease in comparable store net sales and the additional occupancy expenses
associated with the five new stores opened in 1993 and four stores opened in
1994.
Interest - net for the twenty-six weeks ended July 2, 1994 resulted in interest
expense of $274,000 as compared to interest income of $152,000 in the comparable
prior period. The change was the result of additional borrowings and a decrease
in capitalized interest.
Income before provision for income taxes was 3.5% for the thirteen weeks and
2.3% for the twenty-six weeks ended July 2, 1994 and 5.8% for the thirteen weeks
and 4.5% for the twenty-six weeks ended July 2, 1993. The decrease in income
before provision for income taxes as percentage of net sales from the preceding
period resulted principally from a decrease in comparable store net sales.
Provision for income taxes, as a percent of income before provision for income
taxes, decreased from 42.3% in 1993 to 41.0% in 1994 principally as a result of
decreases in certain non-tax deductible expenses.
5
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SYMS CORP AND SUBSIDIARIES
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LIQUIDITY AND CAPITAL RESOURCES
Working capital decreased to $53,607,000 at July 2, 1994 from $63,734,000 at
July 3, 1993.
Net cash provided by operating activities totaled $2,864,000 in the 1994 period
compared to $5,996,000 in the 1993 period. Net income for the twenty-six weeks
ended July 2, 1994 amounted to $1,979,000 compared to $3,827,000 in the
preceding period, a decrease of $1,848,000. The $17,394,000 increase in
merchandise inventories and the $15,830,000 increase in accounts payable are
primarily due to the addition of five new stores opened during 1993 and four new
stores opened in 1994.
Net cash used in investing activities was $9,707,000 in the 1994 period compared
to $6,019,000 in the 1993 period. The increase is primarily due to capital
expenditures for fixed assets related to the four stores opened in 1994.
Net cash provided by financing activities was $9,513,000 in the 1994 period and
net cash used in financing activities was $94,000 in the 1993 period. The
increase in financing activities was related to additional borrowings for
capital expenditures and merchandise inventories.
The Company declared a cash dividend of five cents per share to shareholders of
record on July 1, 1994 and payable on August 1, 1994.
During the twenty-six week period ended July 2, 1994 the Company opened four
stores and plans to open two more stores in 1994. The capital expenditures
historically required to open a Syms store vary based upon whether the Company
leases or purchases the location. The average cost to open a leased location
is approximately $1,100,000 and $4,700,000 for a purchased location. These
costs can vary significantly based upon geographical location, amount of
tenant required improvements and total store square footage. The company has
planned capital expenditures of approximately $14,700,000 for the fiscal year
ended December 31, 1994.
Management believes that existing reserves, internally generated funds and funds
available from the revolving credit agreement will be sufficient for future
working capital and capital expenditure requirements, for new and existing
stores.
6
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SYMS CORP AND SUBSIDIARIES
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Part II - Other Information
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Item 4. Submission of Matters to a Vote of Security Holders
(a) The 1994 Annual Meeting of Stockholders of the
Company was held on May 13, 1994.
(b) The following five persons were elected as directors
at the meeting pursuant to the following vote:
For Withhold
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Sy Syms 16,572,405 11,360
Marcy Syms 16,572,405 11,360
Art Weber 16,572,405 11,360
Wilbur Ross, Jr. 16,572,405 11,360
Harvey Weinberg 16,571,905 11,860
In the approval of the appointment of Deloitte & Touche as the
independent auditors of the company, the vote was as follows:
For: 16,569,030
Against: 10,225
Abstain: 4,510
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
NONE
(b) REPORTS ON FORM 8-K
NONE
SIGNATURES
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Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SYMS CORP
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/s/ ARTHUR WEBER
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CHIEF FINANCIAL OFFICER
August 5, 1994
7
