================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
FORM 10-Q
------------------------
[Mark One]
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended November 25, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For The Transition Period From _____________
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 November 25, 1995: 17,694,015
===============================================================================
<PAGE>
------------------------
SYMS CORP & SUBSIDIARIES
------------------------
INDEX PAGE NO.
----- --------
PART I. Financial Information:
Item 1. Financial Statements
Consolidated Condensed Balance Sheets--
December 31, 1994 and November 25, 1995 ................. 1
Consolidated Condensed Statements of Income--
Thirteen Weeks and Thirty-Nine Weeks Ended
November 26, 1994 and November 25, 1995 ................. 2
Consolidated Condensed Statements of Cash Flows--
Thirty-Nine Weeks Ended November 26, 1994 and
November 25, 1995 ....................................... 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 ....................................... 7
Item 1. Legal Proceedings
Item 6. Exhibits and Reports on Form 8-K
<PAGE>
<TABLE>
------------------------
SYMS CORP & SUBSIDIARIES
------------------------
CONSOLIDATED CONDENSED BALANCE SHEETS
- --------------------------------------------------------------------------------
(In Thousands)
<CAPTION>
DECEMBER 31, NOVEMBER 25,
1994 (*) 1995
------------ -----------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and Cash equivalents ......................... $ 706 $ 810
Merchandise inventories (Note 2) .................. 96,807 128,626
Deferred income taxes ............................. 2,476 1,316
Prepaid expenses and other current assets ......... 5,275 5,236
------- -------
TOTAL CURRENT ASSETS ........................... 105,264 135,988
PROPERTY AND EQUIPMENT--Net of accumulated
depreciation and amortization ..................... 135,986 129,163
DEFERRED INCOME TAXES ............................... -- 111
OTHER ASSETS ........................................ 4,135 4,199
------- -------
TOTAL ASSETS ..................................... $245,385 $269,461
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable .................................. $23,399 $ 38,954
Accrued expenses .................................. 7,237 12,692
Obligations to customers .......................... 4,305 4,080
Taxes other than income taxes ..................... 1,345 802
Income taxes payable .............................. 5,882 2,291
Short term borrowings ............................. 2,900 4,625
Current portion of obligations under capital
lease ........................................... 278 326
------ --------
TOTAL CURRENT LIABILITIES .................... 45,346 63,770
------ --------
OBLIGATIONS UNDER CAPITAL LEASE ..................... 1,696 1,395
------ --------
DEFERRED INCOME TAXES ............................... 1,002
------ --------
COMMITMENTS AND CONTINGENT LIABILITIES
SHAREHOLDERS' EQUITY:
Common stock 17,694 shares outstanding on
December 31, 1994 and November 25, 1995,
respectively ..................................... 885 885
Additional paid-in capital ....................... 11,709 11,709
Retained earnings ................................ 184,747 191,702
-------- --------
TOTAL SHAREHOLDERS' EQUITY ................... 197,341 204,296
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ... $245,385 $269,461
======== ========
</TABLE>
* Condensed from Audited Consolidated Financial Statements.
See accompanying notes to Consolidated Condensed Financial Statements.
1
<PAGE>
<TABLE>
------------------------
SYMS CORP & SUBSIDIARIES
------------------------
Consolidated Condensed Statements of Income
- -------------------------------------------------------------------------------------------------------------
(In Thousands , Except Per Share Amount)
<CAPTION>
THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED
NOVEMBER 26, NOVEMBER 25, NOVEMBER 26, NOVEMBER 25,
1994 1995 1994 1995
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Net Sales ....................... $93,787 $93,439 $244,210 $245,506
------- ------- -------- --------
Costs and expenses:
Cost of Sales (Note 2) ........ 63,307 58,862 164,842 159,221
Selling, general and
administrative (Note 3) ..... 19,500 20,523 54,482 57,596
Special charges (Note 4) ...... -- (484) -- 716
Occupancy ..................... 2,982 3,017 9,118 9,343
Depreciation and
amortization ................ 2,236 1,947 6,029 5,813
Interest - net ................ 276 148 732 380
------- ------- -------- --------
88,301 84,013 235,203 233,069
------- ------- -------- --------
Income before provision for
income taxes .................. 5,486 9,426 9,007 12,437
Provision for income taxes ...... 2,249 3,865 3,693 5,099
------- ------- -------- --------
Net income ...................... $ 3,237 $ 5,561 $ 5,314 $ 7,338
======= ======= ======== ========
Net income per share ............ $ .18 $ .31 $ .30 $ .41
======= ======= ======== ========
Weighted average shares
outstanding ................... 17,694 17,694 17,694 17,694
======= ======= ======== ========
</TABLE>
See accompanying notes to Consolidated Condensed Financial Statements.
2
<PAGE>
<TABLE>
------------------------
SYMS CORP & SUBSIDIARIES
------------------------
<CAPTION>
Consolidated Condensed Statements of Cash Flows
- -------------------------------------------------------------------------------------------
(In Thousands)
THIRTY-NINE WEEKS ENDED
NOVEMBER 26, 1994 NOVEMBER 25, 1995
----------------- -----------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by operating activities ................ $ 3,614 $ 435
-------- -------
CASH FLOWS USED IN INVESTING ACTIVITIES:
Expenditures for property and equipment .................. (11,728) (2,540)
Proceeds from sale of property and equipment ............. 163 93
-------- -------
Net cash used in investing activities .................... (11,565) (2,447)
-------- -------
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES:
Short term borrowings .................................... 11,900 2,575
Payment of dividends ..................................... (2,654) --
Repayments of obligations under capital lease ........... (175) (210)
-------- -------
Net cash provided by financing activities ................ 9,071 2,365
-------- -------
NET INCREASE IN CASH AND CASH EQUIVALENTS .................. 1,120 353
CASH AND CASH EQUIVALENTS, beginning of year .............. 2,817 457
-------- -------
CASH AND CASH EQUIVALENTS, end of period ................... $ 3,937 $ 810
======== =======
</TABLE>
See accompanying notes to Consolidated Condensed Financial Statements.
3
<PAGE>
------------------------
SYMS CORP & SUBSIDIARIES
------------------------
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
NOVEMBER 26, 1994 AND NOVEMBER 25, 1995 (UNAUDITED)
- -------------------------------------------------------------------------------
Note 1 - Syms Corp & Subsidiaries ("the Company") has changed its fiscal year
end to the Saturday closest to the end of February. This report
reflects the thirteen and thirty-nine weeks ended November 25, 1995
for the fiscal year ending March 2, 1996 and the comparable period for
the thirteen and thirty-nine weeks ended November 26, 1994.
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 November 26, 1994 and November 25, 1995 and
the results of operations and cash flows for the thirteen and
thirty-nine week periods ending November 26, 1994 and November 25,
1995.
These consolidated condensed financial statements should 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
December 31, 1994. Because of the seasonal nature of the Company's
business, the results of it's operations for the thirty-nine week
period ended November 25, 1995 is not necessarily indicative of the
results for a full year.
Note 2 - Inventory at November 26, 1994 was computed using a gross profit
margin estimated by management. Commencing January 1, 1995, the Company
implemented a retail stock ledger which enabled it to determine its
interim inventory and gross margin based upon the retail method of
accounting.
Note 3 - On August 30, 1995, the Company announced that shareholders holding
a majority of the outstanding common stock of the Company had initiated
a plan to take the Company private. Certain shareholders (including Sy
Syms, Marcy Syms Merns and Stephen Merns) had agreed in principle to
acquire 100% ownership in the Company through a merger with an entity
that they would form. The company announced on October 13, 1995 that
the plans to take the Company private had been abandoned.
Note 4 - Special charges consist of the following:
Thirteen Weeks Thirty-Nine Weeks
-------------- -----------------
Store close down costs: ($484,000) $716,000
========= ========
Special charges relating to store close down costs which had been
recorded in the two month transition period ended February 25, 1995
have been subsequently adjusted. The Company's experience with the real
estate market in Cincinnati has led the Company to reevaluate its prior
decision, and open the store in February 1996, operating in a reduced
expense structure.
4
<PAGE>
------------------------
SYMS CORP & SUBSIDIARIES
------------------------
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
- -------------------------------------------------------------------------------
RESULTS OF OPERATIONS
NET SALES
Net sales for the thirteen weeks ended November 25, 1995 decreased by $348,000
(less than 1%) when compared with the thirteen weeks ended November 26, 1994.
Comparable store net sales increased by $731,000 (less than 1%) when compared
with the same period last year. Net sales for the thirty-nine weeks ended
November 25, 1995 increased by $1,296,000 (less than 1%) when compared with the
thirty-nine weeks ended November 26, 1994. Comparable store net sales for the
thirty-nine weeks ended November 25, 1995 decreased by $69,000 (less than 1%)
when compared with the same period last year.
GROSS MARGIN
The gross margin for the thirteen and thirty-nine weeks ended November 25, 1995
was 37.0% and 35.2% respectively compared with 32.5% for the prior periods. The
prior periods' gross margin was estimated by management. Commencing January 1,
1995, the Company implemented a retail stock ledger which enabled it to
determine its interim inventory and gross margin based upon the retail method of
accounting.
SELLING, GENERAL AND ADMINISTRATIVE
As a percentage of net sales, selling, general and administrative expenses
(excluding occupancy, depreciation and amortization, and interest - net
expenses) were 22.0% for the thirteen weeks ended November 25, 1995 compared
with 20.8% for the thirteen weeks ended November 26, 1994. For the thirty-nine
weeks ended November 25, 1995 the percentage to net sales was 23.5% compared
with 22.3% for the same period last year. The increase in operating, general and
administrative expense is partly attributable to higher payroll and advertising
costs.
In addition, costs of approximately $600,000 that were associated with the
transaction discussed in Note 3 have been recorded in selling, general &
administrative expenses in the thirteen weeks ended November 25, 1995.
The Company previously decided not to open a store for which it had entered into
a lease commitment in Cincinnati, Ohio, but rather sublet the store. Subsequent
experience with the real estate market in Cincinnati has led the Company to
conclude, in November 1995, that the property would not be subleased in a
reasonable time frame and at an acceptable rate. The Company has, therefore,
decided to open the store in February 1996, operating in a reduced expense
structure. The thirteen weeks ended November 25, 1995 reflects a pretax
adjustment of ($484,000) to special charges for the estimated non-recoverable
lease expense previously reserved in the two month transition period ended
February 25, 1995 in the amount of $738,000. The current period's earnings for
the thirty-nine weeks also reflect a pretax charge of $1,200,000 associated with
the close down of a store previously reported.
OCCUPANCY
As a percentage of net sales, occupancy expenses for the thirteen weeks ended
November 25, 1995 and November 26, 1994 were 3.2%. For the thirty-nine weeks
ended November 25, 1995, occupancy expenses were 3.8% compared with 3.7% in the
prior period.
INCOME BEFORE PROVISION FOR INCOME TAXES
Income before the provision for income taxes was $9,426,000 or 10.1% of net
sales for the thirteen weeks ended November 25, 1995 compared with $5,486,000 or
5.9% of net sales in the prior period. Income before the provision for income
taxes was $12,437,000 or 5.1% for the thirty-nine weeks ended November 25, 1995
compared with $9,007,000 or 3.7% of net sales in the prior period.
5
<PAGE>
------------------------
SYMS CORP & SUBSIDIARIES
------------------------
NET INCOME
Net income after the provision for income taxes was $5,561,000 or 6.0% and
$7,338,000 or 3.0% of net sales for the thirteen and thirty-nine weeks ended
November 25, 1995, respectively, compared with $3,237,000 or 3.4% of net sales
and $5,314,000 or 2.2% of net sales for the prior period's thirteen and
thirty-nine weeks, respectively.
PROVISION FOR INCOME TAXES
Provision for income taxes, as a percentage of income before provision for
income taxes was 41% for the period ended November 25, 1995
LIQUIDITY AND CAPITAL RESOURCES
Working capital at November 25, 1995 was $72,218,000.
Net cash provided by operating activities totaled $435,000 in the 1995 period
compared with $3,614,000 in the 1994 period. In addition, merchandise
inventories increased $31,819,000 to $128,626,000 at November 25, 1995 from
$96,807,000 at December 31, 1994 due to the investment in merchandise
inventories to take advantage of favorable purchase opportunities and lower than
anticipated sales for the thirteen weeks ended November 25, 1995. Accounts
payable and short-term borrowings on a combined basis increased $17,280,000 to
$43,579,000 at November 25, 1995 from $26,299,000 at December 31, 1994 as a
result of the above discussed increase in merchandise inventories.
Net cash used in investing activities was $2,447,000 in the 1995 period compared
to $11,565,000 in the 1994 period. In the current period the Company invested
cash for a store renovation in Pittsburgh and for a new store located in
Cleveland, compared to the opening of five locations in the prior period.
Net cash provided by financing activities was $2,365,000 in the 1995 period
compared with $9,071,000 in the 1994 period due primarily to less borrowings
utilized in the current period and the payment of a dividend in the prior
period.
Although it is not committed, the Company has planned capital expenditures of
approximately $5,000,000 to $10,000,000 in 1995 compared with $14,591,000 in the
year ended December 31, 1994 and $17,508,000 in the year ended January 1, 1994.
Management believes that existing resources, internally generated funds and
funds available from its revolving credit agreement will be sufficient for
future working capital and capital expenditure requirements, resulting in an
increase in those expenses from the prior comparable period.
6
<PAGE>
------------------------
SYMS CORP & SUBSIDIARIES
------------------------
PART II - OTHER INFORMATION
- --------------------------------------------------------------------------------
Item 1. LEGAL PROCEEDINGS
The legal proceedings disclosed in the Company's Form 10-Q for the
quarterly period ended August 26, 1995 were dismissed in October 1995
and November 1995 after the Company announced that the plan to take
the Company private had been abandoned.
Item 5. OTHER INFORMATION
On August 30, 1995, the Company announced that shareholders
holding a majority of the outstanding common stock of the Company
had initiated a plan to take the Company private. Certain shareholders
(including Sy Syms, Marcy Syms Merns and Stephen Merns) had agreed in
principle to acquire 100% ownership in the Company through a merger
with an entity that they would form. In the proposed merger,
shareholders whose shares would have been retired would have received
a cash price of approximately $8.75 per share. Upon consummation of
the merger, the Company's common stock would no longer have been
publicly held. The Company announced on October 13, 1995 that the
plans to take the Company private had been abandoned.
The Company had been in the process of negotiating a bridge financing
with United Jersey Bank for purposes of the above described
transaction. As a result of such financing, the Company's leverage
and debt service would have increased significantly. These
negotiations have since been terminated.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
Exhibit 27 - Financial Data Schedule
SIGNATURES
----------
Pursuant to the requirements of the Securities 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
---------
/s/ MARCY SYMS MERNS
------------------------------------------
Marcy Syms Merns
President
/s/ KIRK R. ONEY
------------------------------------------
Kirk R. Oney
Accounting Manager
(Acting Principal Financial &
Accounting Officer)
7
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-02-1996
<PERIOD-END> NOV-25-1995
<CASH> 810
<SECURITIES> 0
<RECEIVABLES> 4,524
<ALLOWANCES> 0
<INVENTORY> 128,626
<CURRENT-ASSETS> 135,988
<PP&E> 191,728
<DEPRECIATION> 62,565
<TOTAL-ASSETS> 269,461
<CURRENT-LIABILITIES> 63,770
<BONDS> 1,395
<COMMON> 885
0
0
<OTHER-SE> 203,411
<TOTAL-LIABILITY-AND-EQUITY> 269,461
<SALES> 245,506
<TOTAL-REVENUES> 245,506
<CGS> 159,221
<TOTAL-COSTS> 159,221
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 533
<INCOME-PRETAX> 12,437
<INCOME-TAX> 5,099
<INCOME-CONTINUING> 7,338
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,338
<EPS-PRIMARY> .41
<EPS-DILUTED> .41
</TABLE>
