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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 Period Ended MAY 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For The Transition Period From_____________ to _____________
COMMISSION FILE NUMBER 1-8546
SYMS CORP
(Exact name of registrant as specified in its charter)
NEW JERSEY 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)
(201) 902-9600
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name, former address and former fiscal year,
if changed since last report)
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 periods 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 [ ]
At July 3, 1997, the latest practicable date, there were 17,694,015 shares
outstanding of Common Stock, par value $0.05 per share.
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SYMS CORP AND SUBSIDIARIES
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INDEX
PAGE NO.
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets as of
May 31, 1997, March 1, 1997 and June 1, 1996 1
Condensed Consolidated Statements of Income for the
Thirteen Weeks Ended May 31, 1997 and June 1, 1996 2
Condensed Consolidated Statements of Cash Flows for the
Thirteen Weeks Ended May 31, 1997 and June 1, 1996 3
Notes to Condensed Consolidated 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 2. Changes In Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES 7
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SYMS CORP AND SUBSIDIARIES
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CONDENSED CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------------
(IN THOUSANDS)
<TABLE>
<CAPTION>
May 31, March 1, June 1,
1997 1997 1996
-------- -------- --------
(Unaudited) (NOTE) (Unaudited)
<S> <C> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 6,757 $ 3,344 $ 10,496
Merchandise inventories 137,288 122,540 124,485
Deferred income taxes 8,163 6,639 5,860
Prepaid expenses and other current assets 3,321 1,756 4,398
-------- -------- --------
TOTAL CURRENT ASSETS 155,529 134,279 145,239
PROPERTY AND EQUIPMENT - Net of accumulated
depreciation and amortization 141,852 142,741 129,682
DEFERRED INCOME TAXES 313 197 697
OTHER ASSETS 5,606 6,801 4,581
-------- -------- --------
$303,300 $284,018 $280,199
======== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 48,184 $ 28,723 $ 45,017
Accrued expenses 9,845 11,055 11,009
Obligations to customers 5,076 5,085 4,374
Income taxes payable 7,160 5,833 6,211
Short term borrowings - 4,950 -
Current portion of obligations under capital lease 422 405 355
-------- -------- --------
TOTAL CURRENT LIABILITIES 70,687 56,051 66,966
-------- -------- --------
OBLIGATIONS UNDER CAPITAL LEASE 787 900 1,210
-------- -------- --------
DEFERRED INCOME TAXES - - 842
-------- -------- --------
OTHER LONG TERM LIABILITIES 717 633 431
-------- -------- --------
COMMITMENTS
SHAREHOLDERS' EQUITY
Preferred stock, par value $100 per share - authorized 1,000 shares;
none outstanding - - -
Common stock, par value $0.05 per share - authorized 30,000
shares; 17,694 outstanding as of May 31, 1997, March 1, 1997 and
June 1, 1996 885 885 885
Additional paid-in capital 11,709 11,709 11,709
Retained earnings 218,515 213,840 198,156
-------- -------- --------
TOTAL SHAREHOLDERS' EQUITY 231,109 226,434 210,750
-------- -------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $303,300 $284,018 $280,199
======== ======== ========
</TABLE>
NOTE: The balance sheet at March 1, 1997 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.
See notes to condensed consolidated financial statements
1
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SYMS CORP AND SUBSIDIARIES
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CONDENSED CONSOLIDATED STATEMENTS OF INCOME
- --------------------------------------------------------------------------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Thirteen Weeks Ended
--------------------------------
May 31, June l,
1997 1996
------- -------
(Unaudited)
Net sales $85,650 $83,377
Cost of goods sold 5l,477 52,921
------- -------
Gross profit 34,173 30,456
Expenses:
Selling, general and administrative 17,392 17,024
Advertising 2,835 2,409
Occupancy 3,796 3,175
Depreciation and amortization 2,150 1,881
Provision for special charges -- --
------- -------
Income from operations 8,000 5,967
Interest (income) expense - net 75 (17)
------- -------
Income before income taxes 7,925 5,984
Provision for income taxes 3,250 2,603
------- -------
Net income $ 4,675 $ 3,381
======= =======
Net income per share $ 0.26 $ 0.19
======= =======
Weighted average shares outstanding 17,694 17,694
======= =======
See notes to condensed consolidated financial statements
2
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SYMS CORP AND SUBSIDIARIES
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------
(IN THOUSANDS)
<TABLE>
<CAPTION>
Thirteen Weeks Ended
----------------------
May 31, June l,
1997 1996
-------- --------
(Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 4,675 $ 3,381
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 2,150 1,881
Deferred income taxes (1,640) (252)
(Gain) on sale of property and equipment (4) (25)
Loss on disposal of assets - 244
(Increase) decrease in operating assets:
Merchandising Inventories (14,748) (11,531)
Prepaid expenses and other current assets (1,565) (877)
Other assets 1,186 (172)
Increase (decrease) in operating liabilities:
Accounts payable 19,461 14,117
Accrued expenses (1,210) 1,091
Obligations to customers (9) (116)
Other long term liabilities 84 194
Income taxes 1,327 384
-------- --------
Net cash provided by operating activities 9,707 8,319
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for property and equipment (1,255) (2,579)
Proceeds from sale of property and equipment 7 31
-------- --------
Net cash (used in) investing activities (1,248) (2,548)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of obligations under capital lease (96) (79)
Revolving line of credit borrowings - net (4,950) -
-------- --------
Net cash (used in) provided by financing activities (5,046) (79)
-------- --------
NET INCREASE IN CASH AND CASH EQUIVALENTS 3,413 5,692
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 3,344 4,804
-------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 6,757 $ 10,496
======== ========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for:
Interest (net of amount capitalized) $ 59 $ 23
======== ========
Income taxes paid (refunds received) - net $ 3,563 $ 2,476
======== ========
</TABLE>
See notes to condensed consolidated financial statements
3
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SYMS CORP AND SUBSIDIARIES
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THIRTEEN WEEKS ENDED MAY 31, 1997 AND JUNE 1, 1996
- --------------------------------------------------------------------------------
(UNAUDITED)
NOTE 1 - THE COMPANY
Syms Corp (the "Company") operates a chain of forty "off-price" retail stores
located throughout the Northeastern and Middle Atlantic regions and in the
Midwest, Southeast and Southwest. Each Syms store offers a broad range of first
quality, in season merchandise bearing nationally recognized designer or
brand-name labels for men, women and children.
NOTE 2 - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the thirteen week period ended May 31, 1997
is not necessarily indicative of the results that may be expected for the entire
fiscal year ending February 28, 1998. For further information, refer to the
consolidated financial statements and footnotes thereto included in the
Company's annual report on Form 10-K for the fiscal year ended March 1, 1997.
NOTE 3 - ACCOUNTING PERIOD
The Company's fiscal year ends the Saturday nearest to the end of February. The
fiscal year ending February 28, 1998 will be comprised of 52 weeks. The fiscal
year ended March 1, 1997 was also comprised of 52 weeks.
NOTE 4 - MERCHANDISE INVENTORIES
Merchandise inventories are stated at the lower of cost (first in, first out) or
market, as determined by the retail inventory method.
NOTE 5 - BANK CREDIT FACILITIES
The Company has an unsecured revolving credit agreement with a bank for a line
of credit not to exceed $40,000,000 through December 1, 1997. Interest on
individual advances is payable quarterly at 1 1/2% per annum below the bank's
base rate, except that at the time of advance, the Company has the option to
select an interest rate based upon one of two other alternative calculations,
with such rate to be fixed for a period not to exceed 90 days. The average daily
unused portion is subject to a commitment fee of 1/8 of 1% per annum. As of May
31, 1997 and June 1, 1996 there were no outstanding borrowings under this
agreement. At March 1, 1997 there was $4,950,000 in outstanding borrowings.
The agreement contains financial covenants, with respect to consolidated
tangible net worth, as defined, working capital and maximum capital
expenditures, including dividends, as well as other financial ratios.
In addition, the Company has a separate $10,000,000 credit facility with another
bank available for the issuance of letters of credit for the purchase of
merchandise. This agreement may be cancelled at any time by either party. At May
31, 1997, March 1, 1997 and June 1, 1996 the Company had $6,299,294, $6,094,000
and $3,879,000, respectively, in outstanding letters of credit.
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
Thirteen Weeks Ended May 31, 1997 Compared to Thirteen Weeks Ended June 1, 1996
Net sales of $85,650,000 for the thirteen weeks ended May 31, 1997 increased
$2,273,000 (2.7%) as compared to net sales of $83,377,000 for the thirteen weeks
ended June 1, 1996. Two new stores were included in the first quarter ended May
31, 1997. Comparable store sales decreased 3.4% from the 1996 period.
Gross profit for the thirteen weeks ended May 31, 1997 was $34,173,000, an
increase of $3,717,000 (12.2%) as compared to $30,456,000 for the fiscal period
ended June 1, 1996. This increase resulted mainly from increased net sales of
$2,273,000 and the Company's gross margin increasing to 39.9% from 36.5%. The
3.4% improvement in gross margin resulted primarily from increased levels of
opportunistic and in-season purchases which created better values for the
Company's customers and lower markdowns.
Selling, general and administrative expense increased $368,000 to $17,392,000
(20.3% as a percentage of net sales) for the thirteen weeks ended May 31, 1997
as compared to $17,024,000 (20.4% as a percentage of net sales) for the thirteen
weeks ended June 1, 1996. This increase resulted for the most part from costs
associated with the two additional stores this year, somewhat offset by a
continued effort by management to control expenses as a percent to sales.
Advertising expense for the thirteen weeks ended May 31, 1997 increased to
$2,835,000, as compared to $2,409,000 in the thirteen week period ended June 1,
1996, resulting from a continued commitment to expand the Company's advertising
effort and an increase in TV advertising in single store markets.
Occupancy costs were $3,796,000 (4.4% as a percentage of net sales) for the
thirteen week period ended May 31, 1997, compared to $3,175,000 (3.8% as a
percentage of net sales) for the period ended June 1, 1996. These increased
costs resulted from occupancy expenses relating to the two additional stores.
Depreciation and amortization amounted to $2,150,000, an increase of $269,000 as
compared to $1,881,000 for the thirteen weeks ended June 1, 1996, due primarily
to the amortization of leasehold improvements for the new stores and
depreciation on the 40,000 square foot addition to the Secaucus distribution
center.
Income before income taxes for the thirteen weeks ended May 31, 1997 of
$7,925,000 increased $1,941,000 (32.4%) as compared to $5,984,000 for the
thirteen weeks ended June 1, 1996. As discussed above, the increase in income
before income taxes reflects for the most part higher gross profit, offset
somewhat by increased selling, general and administrative,advertising and
occupancy expense.
For the thirteen week period ended May 31, 1997 the effective income tax rate
was 41.0% as compared to 43.5% last year. Last year's rate anticipated possible
increases in state income taxes as a result of ongoing litigation in certain
jurisdictions.
5
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SYMS CORP AND SUBSIDIARIES
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LIQUIDITY AND CAPITAL RESOURCES
Working capital at May 31, 1997 was $84,842,000, an increase of $6,569,000 from
$78,273,000 as of June 1, 1996, and the ratio of current assets to current
liabilities improved to 2.20 to 1 as compared to 2.17 to 1 at June 1, 1996.
Net cash provided by operating activities totaled $9,707,000 for the thirteen
weeks ended May 31, 1997, an increase of $1,388,000 as compared to $8,319,000
for the thirteen weeks ended June 1, 1996. Net income for 1997 amounted to
$4,675,000 compared to $3,381,000 in 1996, an increase of $1,294,000. In the
thirteen week period ended May 31, 1997, cash provided from operating activities
was mainly used to increase inventory by $14,748,000, offset by an increase in
accounts payable of $19,461,000.
Net cash used in investing activities was $1,248,000 for the thirteen weeks
ended May 31, 1997, and $2,548,000 in 1996. Expenditures for property and
equipment totaled $1,255,000 and $2,579,000 for the thirteen weeks ended May 31,
1997 and June 1, 1996, respectively.
Net cash used in financing activities was $5,046,000 for the thirteen weeks
ended May 31, 1997 and $79,000 for the thirteen weeks ended June 1, 1996. The
$5,046,000 was mainly the result of the paydown of the $4,950,000 of short term
borrowings from the year ended March 1, 1997.
The Company has a revolving credit agreement with a bank for a line of credit
not to exceed $40,000,000 through December 1, 1997. At December 1, 1997 the
Company has the option to reduce this commitment to zero or convert the
revolving credit agreement to a term loan with a maturity date of December 1,
2000. Except for funds provided from this credit agreement, the Company has
satisfied its operating and capital expenditure requirements, including those
for the opening and expansion of stores, from internally generated funds as of
May 31, 1997 and June 1, 1996 there were no outstanding borrowings under the
revolving credit agreement.
The Company has planned capital expenditures of approximately $12,000,000 for
the fiscal year ending February 28, 1998, which includes plans to open two new
stores, and to relocate one store from a leased location to a Company built
store. Through the thirteen week period ended May 31, 1997 the Company has
incurred $1,255,000 of capital expenditures relating to the start of
construction of the owned store being built to replace the leased store, as well
as leasehold improvements for existing stores.
Management believes that existing cash, internally generated funds, trade credit
and funds available from the revolving credit agreement will be sufficient for
working capital and capital expenditure requirements for the fiscal year ending
February 28, 1998.
RECENT ACCOUNT PRONOUNCEMENTS
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, "Earnings per Share" ("SFAS No. 128"),
which is effective for the Company for the year ended February 28, 1998. SFAS
No. 128 simplifies the standards for computing earnings per share previously
found in Accounting Principles Board Opinion No. 15 and establishes new
standards for computing and presenting earnings per share. Application of SFAS
No. 18 is not expected to have a significant effect on the Company's earnings
per share.
IMPACT OF INFLATION AND CHANGING PRICES
Although the Company cannot accurately determine the precise effect of inflation
on its operations, it does not believe inflation has had a material effect on
sales or results of operations.
6
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SYMS CORP AND SUBSIDIARIES
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PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS - None
Item 2. CHANGES IN SECURITIES - None
Item 3. DEFAULTS UPON SENIOR SECURITIES - None
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - None
Item 5. OTHER INFORMATION - None
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K - During the quarter ended May 31, 1997
no reports on Form 8-K were filed.
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
DATE: JULY 7, 1997 BY /s/ SY SYMS
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SY SYMS
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
BY /s/ ANTONE F. MOREIRA
------------------------------------
ANTONE F. MOREIRA
VICE PRESIDENT, CHIEF FINANCIAL
OFFICER AND TREASURER
(Principal Financial and Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-28-1998
<PERIOD-END> MAY-31-1997
<CASH> 6,757
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 137,288
<CURRENT-ASSETS> 155,529
<PP&E> 215,806
<DEPRECIATION> 73,954
<TOTAL-ASSETS> 303,300
<CURRENT-LIABILITIES> 70,687
<BONDS> 787
0
0
<COMMON> 885
<OTHER-SE> 230,224
<TOTAL-LIABILITY-AND-EQUITY> 303,300
<SALES> 85,650
<TOTAL-REVENUES> 85,650
<CGS> 51,477
<TOTAL-COSTS> 51,477
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 75
<INCOME-PRETAX> 7,925
<INCOME-TAX> 3,250
<INCOME-CONTINUING> 4,675
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,675
<EPS-PRIMARY> .26
<EPS-DILUTED> .26
</TABLE>
