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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K
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(Mark one)
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 FOR THE FISCAL YEAR ENDED FEBRUARY 27, 1999
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 COMMISSION FILE NUMBER 1-8546
SYMS CORP
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(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
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (201) 902-9600
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Name of each exchange on
Title of each class which registered
------------------------------ -------------------------
Common Stock, $.05 Par Value New York Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
NONE
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
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]
The aggregate market value of the voting stock of the registrant held by
non-affiliates on April 30, 1999 was $71,144,371 based upon the closing price of
such stock on that date.
As of April 30, 1999 16,662,590 shares of Common Stock were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the registrant's Proxy Statement for the 1999 annual meeting of
stockholders to be filed pursuant to Regulation 14A are incorporated in Part III
hereof by reference.
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<PAGE>
PART I
ITEM 1. BUSINESS
GENERAL
Syms Corp operates a chain of 44 "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 at prices substantially lower than those generally found in department
and specialty stores. Syms directs its merchandising efforts at predominantly
middle-income, fashion-minded and price conscious customers.
Since the first Syms store opened in New York City in 1959, the Company has
expanded to 44 stores and the aggregate amount of selling space in the Syms
stores increased from approximately 2,000 square feet to approximately 1,704,000
square feet. In March 1987, the Company relocated to an approximately 277,000
square foot distribution center and executive headquarters.
The Company maintains its executive offices at Syms Way, Secaucus, New
Jersey 07094, telephone (201) 902-9600. Unless otherwise noted, references to
the "Company" or to "Syms" relate to Syms Corp, its subsidiaries and their
predecessors.
DESCRIPTION OF BUSINESS
The Syms chain of 44 apparel stores offers a broad range of "off-price"
first quality, in-season merchandise consisting primarily of men's tailored
clothing and haberdashery, women's dresses, suits and separates, children's
apparel and men's, women's and children's shoes. Syms stores emphasize better
quality, nationally recognized designer and brand name merchandise at prices
substantially below those generally charged by department and specialty stores.
Syms carries a wide selection of sizes and styles of men's, women's and
children's wear.
Syms operates in a single industry segment and has no foreign operations.
No material part of the Company's consolidated revenues is received from a
single customer or group of customers.
MERCHANDISE
For the year ended February 27, 1999 net sales were generated by the
following categories:
Men's tailored clothes and haberdashery .................... 53%
Women's dresses, suits, separates and accessories .......... 31%
Shoes ...................................................... 8%
Children's wear ............................................ 6%
Luggage, domestics and fragrances .......................... 2%
---
100%
===
Most of the items sold by the Company consist of nationally recognized
fashion name merchandise. Merchandise is displayed by type and size on
conveniently arranged racks or counters. No emphasis is placed on any particular
"label". The stores generally offer minor alterations for an additional charge.
PURCHASING
The Company purchases first-quality, in-season, brand-name merchandise
directly from manufacturers on terms more favorable than those generally
obtained by department and specialty stores. Syms estimates that approximately
200 brand-name manufacturers of apparel are represented in its stores. The
Company does not maintain large out-of-season inventories. However, Syms
occasionally buys certain basic clothing which does not change in style from
year to year at attractive prices for storage until the following season.
Purchasing is performed by a buying staff in conjunction with their General
Merchandise Managers and several other key divisional merchandise managers.
DISTRIBUTION
The Company owns a distribution center, located at Syms Way, Secaucus, New
Jersey. The facility contains approximately 277,000 square feet of warehouse and
distribution space, 34,000 square feet of office space and 29,000 square feet of
store space. The facility is located on an 18.6 acre parcel of land for which
the Company holds a ground lease for a remaining term of 277 years. Most
merchandise is received from manufacturers at the distribution center where it
is inspected, ticketed and allocated to particular stores.
MARKETING
The Company's pricing policy is to affix a ticket to each item displaying
Syms' selling price as well as the price the Company regards as the traditional
full retail price of that item at department or specialty stores. All garments
are sold with the brand-name as affixed by the
1
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manufacturer. Because women's dresses are vulnerable to considerable style
fluctuation, Syms has long utilized a ten-day automatic markdown pricing policy
to promote movement of merchandise. The date of placement on the selling floor
of each women's dress is stamped on the back of the price ticket. The front of
each ticket contains what the Company believes to be the nationally advertised
price, the initial Syms price and three reduced prices. Each reduced price
becomes effective after the passage of ten selling days. Women's dresses
represent approximately 5.1% of net sales. The Company also offers "dividend "
prices consisting of additional price reductions on various types of
merchandise.
Syms has as its tag line "An Educated Consumer is Our Best Customer"(R),
one of the best known in retail advertising. The Company historically has
advertised principally on television and radio. In the Fall of 1994, the Company
revised its strategy and began to enhance its advertising by including print
media as well as direct mail to its Syms credit card customer base.
The Company sells its merchandise for cash, checks, national credit cards,
and its own Syms credit card. Syms sells its own credit card receivables on a
non-recourse basis to a third party for a fee. Merchandise purchased from the
Company may be returned within a reasonable amount of time, within season. The
Company does not offer cash refunds for purchases, but issues credits toward the
Syms charge card or store merchandise credits which may be used toward the
purchase of other merchandise.
TRADEMARKS
"Syms", "An Educated Consumer is Our Best Customer"(R), "Names You Must
Know"(R), and "The More You Know About Clothing, the Better it is for Syms"(R)
have been registered with the United States Patent and Trademark Office.
COMPETITION
The retail apparel business is highly competitive, and the Company accounts
for only a small fraction of the total market for men's, women's and children's
apparel. The Company's stores compete with discount stores, apparel specialty
stores, department stores, manufacturer-owned factory outlet stores and others.
Many of the stores with which the Company competes are units of large national
or regional chains that have substantially greater resources than the Company.
Retailers having substantially greater resources than the Company have indicated
their intention to enter the "off-price" apparel business, and the "off-price"
apparel business itself has become increasingly competitive, especially with
respect to the increased use by manufacturers of their own factory outlets. At
various times of the year, department store chains and specialty shops offer
brand-name merchandise at substantial markdowns.
OPERATIONS AND CONTROL SYSTEMS
The Company has implemented a merchandise control system which tracks
product from its purchase to its ultimate sale in the Company's stores. The
system tracks the product by store in approximately 750 categories. All the
information regarding the product is transmitted daily through telephone lines
to the Company's database at its executive headquarters. Each week the Company's
executives receive detail reports regarding sales and inventory levels in units
and retail dollars on a store by store basis.
Management of the Company visit stores on a regular basis to coordinate
with the store managers, among other things, in the training of employees in
loss prevention methods. Each store has on premises security personnel during
normal hours and a security system after hours.
EMPLOYEES
At February 27, 1999, the Company had 2,511 employees of whom approximately
847 work part time. The Company has collective bargaining agreements with the
Retail, Wholesale and Department Store Union and the United Food and Commercial
Workers Union which expire in the year 2000 and cover 1,828 sales and tailor
employees. The Company believes its relationships with the Unions are good.
Approximately 30 to 100 persons, consisting mostly of sales personnel, are
employed at each Syms store.
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ITEM 2. PROPERTIES
THE STORES
Location
At February 27, 1999 the Company had 44 stores, 22 of which are located in
leased facilities. The following table indicates the locations of the stores and
the approximate selling space of each location. In addition to the selling space
indicated, each store contains between approximately 2,000 to 12,000 square feet
for inspection and ticketing of merchandise and administrative functions.
<TABLE>
<CAPTION>
Leased/ Selling Leased/ Selling
State Location Owned Space State Location Owned Space
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CONNECTICUT NEW YORK/NEW JERSEY
Fairfield Owned 32,000 Trinity Owned 40,000
Hartford Leased 31,000 Park Avenue Leased 39,000
Westbury Owned 72,000
Commack Owned 36,000
Westchester Leased 50,000
FLORIDA Rochester Owned 32,000
Fort Lauderdale Owned 44,000 Buffalo Owned 39,000
Miami Owned 45,000 Paramus Owned 56,000
West Palm Beach Leased 36,000 Woodbridge Leased 32,000
Tampa Owned 38,000 Secaucus (2) Owned 29,000
Kendall Leased 32,000 Cherry Hill Owned 40,000
GEORGIA
Norcross Owned 51,000
Marietta Owned 39,000
NORTH CAROLINA
ILLINOIS Charlotte Leased 30,000
Addison Owned 47,000
Niles Leased 32,000 OHIO
Gurnee Mills Mall Leased 33,000 Highland Heights Leased 36,000
Sharonville Leased 31,000
MARYLAND
Baltimore Leased 43,000 PENNSYLVANIA
Rockville Owned 61,000 King of Prussia Owned 41,000
Franklin Mills Mall Leased 22,000
Monroeville Owned 31,000
MASSACHUSETTS Pittsburgh Leased 40,000
Norwood Leased 36,000
Peabody Leased 39,000
Boston Leased 40,000 RHODE ISLAND
N. Cranston Leased 27,000
MICHIGAN
Southfield Owned 46,000 TEXAS
Troy Leased 37,000 Dallas Owned 42,000
MISSOURI Houston Owned 34,000
St. Louis Leased 33,000 Hurst Owned 38,000
VIRGINIA
Falls Church Leased 39,000
Potomac Mills Mall Leased 33,000
</TABLE>
Syms stores are either "free standing" or located in shopping centers or
indoor malls, and all are surrounded by adequate parking areas, except for the
two New York City stores and one downtown Boston store. Syms stores are usually
located near a major highway or thoroughfare in suburban areas populated by at
least 1,000,000 people and are readily accessible to customers by automobile. In
certain areas where the population is in excess of 2,000,000 people, Syms has
opened more than one store in the same general vicinity.
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Lease Terms
Twenty-one of the Company's 44 stores are currently leased from unrelated
parties, and the Elmsford, New York store is leased from Sy Syms, the Chairman
of Syms Corp. The following table summarizes lease expirations and any renewal
options:
Number of Number of
Calendar Leases Expirng Leases with Range in Years of
Periods Expiring Renewal Options Option Periods
- -------- -------------- --------------- -----------------
(1)
1999 1 -- --
2000 4 1 5
2001 0 0 0
2002 2 1 4
2003 0 0 0
2004 and thereafter 18 13 2-5
---- --
25(2) 15
- -----------
(1) Depending on the applicable option, the minimum rent due during the renewal
option periods may be based upon a formula contained in the existing lease
or negotiations between the parties.
(2) Includes lease obligations for stores not yet opened.
Store leases provide for a base rental of between approximately $4.30 and $34.06
per square foot. In addition, under the "net" terms of all of the leases, the
Company must also pay maintenance expenses, real estate taxes and other charges.
Four of the Company's stores have a percentage of sales rental as well as a
fixed minimum rent. Rental payments for Syms' leased stores aggregated
$8,315,000 for the year ended February 27, 1999, of which $600,000 was paid to
Sy Syms as fixed rent.
Store Openings/Closings
Three new stores opened this year. The Kendall, Florida store opened June
11, 1998 (32,000 square feet of selling space), the Troy, Michigan store opened
September 10, 1998 (37,000 square feet of selling space), and the Boston,
Massachusetts store opened November 19, 1998 (40,000 square feet of selling
space).
ITEM 3. LEGAL PROCEEDINGS
The Company is a party to routine litigation incident to its business.
Management of the Company believes, based upon its assessment of the actions and
claims outstanding against the Company, and after discussion with counsel, that
there are no legal proceedings that will have a material adverse effect on the
financial condition or results of operations of the Company. Some of the
lawsuits to which the Company is a party are covered by insurance and are being
defended by the Company's insurance carriers.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the
fourth quarter of the fiscal year covered by this Annual Report.
4
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
MARKET INFORMATION
The following table sets forth for the period indicated the high and low
sales prices for the Company's common stock as reported by the New York Stock
Exchange using the trading symbol SYM.
HIGH LOW
---- ---
1998 Quarter ended February 27, 1999 $ 9 - 3/4 $ 7 - 1/2
Quarter ended November 28, 1998 13 -11/16 9 - 3/8
Quarter ended August 29, 1998 14 -13/16 12 - 1/4
Quarter ended May 30, 1998 15 - 7/8 13 - 5/8
1997 Quarter ended February 28, 1998 $14 - 1/4 $11 - 5/8
Quarter ended November 29, 1997 14 -15/16 11 - 1/4
Quarter ended August 30, 1997 14 9 - 3/8
Quarter ended June 1, 1997 10 - 1/8 9
HOLDERS
As of April 30, 1999 there were 167 record holders of the Company's Common
Stock. The Company believes that there were in excess of 1,500 beneficial owners
of the Company's Common Stock as of that date.
DIVIDENDS
The Board of Directors of the Company did not declare dividends, in the
fiscal years ended February 27, 1999 and February 28, 1998. Payment of dividends
is within the discretion of the Company's Board of Directors and depends upon
various factors including the earnings, capital requirements and financial
condition of the Company (see Note 4 to notes to consolidated financial
statements regarding covenants in the Company's revolving credit agreement). The
Company intends generally to retain earnings, if any, to fund development and
growth of its business. The Company does not plan on paying dividends in the
near term. The Company has also announced that its Board of Directors has
authorized the repurchase of up to 15% of its outstanding shares of Common Stock
at prevailing market prices during the current and following fiscal year ended
February 26, 2000.
ITEM 6. SELECTED FINANCIAL DATA
The selected financial information presented below has been derived from
the Company's audited Consolidated Financial Statements for the fiscal years
ended February 27, 1999, February 28, 1998, March 1, 1997, March 2, 1996 and
December 31, 1994, and the two months ended February 25, 1995, except that the
balance sheet at February 25, 1995 and February 26, 1994 is unaudited. The
selected financial information presented below should be read in conjunction
with such financial statements and notes thereto.
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<TABLE>
<CAPTION>
Fiscal Year Ended Two Months Ended (A)
------------------------------------------------------------- -----------------------
February February March 1, March 2, December February February
27, 1999 28, 1998 1997 1996 31, 1994 25, 1995 26, 1994
--------- --------- --------- --------- --------- --------- ---------
(In thousands, except per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales ............................ $ 343,858 $ 352,959 $ 346,792 $ 334,750 $ 326,651 $ 46,632 $ 41,642
========= ========= ========= ========= ========= ========= =========
Net income ........................... $ 17,449 $ 23,036 $ 19,065 $ 10,411 $ 8,491 $ (383) $ 50
========= ========= ========= ========= ========= ========= =========
Net income per share - basic ......... $ 1.00 $ 1.30 $ 1.08 $ 0.59 $ 0.48 $ (0.02) $ --
========= ========= ========= ========= ========= ========= =========
Net income per share - diluted ....... $ 1.00 $ 1.29 $ 1.08 $ 0.59 $ 0.48 $ (0.02) $ --
========= ========= ========= ========= ========= ========= =========
Cash Dividends Per Share ............. $ -- $ -- $ -- -- $ 0.10 $ -- $ --
========= ========= ========= ========= ========= ========= =========
BALANCE SHEET DATA:
Working Capital ........................ $ 101,592 $ 99,728 $ 78,228 $ 75,521 $ 59,918 $ 60,703 $ 52,539
Total Assets ........................... 298,742 294,192 284,018 260,144 245,385 255,612 238,203
Capitalized Leases ..................... -- 419 900 1,304 1,696 1,645 1,931
Other Long Term Liabilities ............ 1,567 964 633 237 -- -- --
Shareholders' equity ................... $ 258,760 $ 250,870 $ 226,434 $ 207,369 $ 197,341 $ 196,958 $ 190,655
</TABLE>
- ---------
(A) UNAUDITED
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
The Annual Report includes forward-looking statements (as such term is defined
in the Private Securities Litigation Reform Act of 1995) and information
relating to the Company that are based on the beliefs of the management of the
Company as well as assumptions made by and information currently available to
the management of the Company. When used in this Annual Report, the words
"anticipate," "believe," "estimate," "expect," "intend," "plan," and similar
expressions, as they relate to the Company or the management of the Company,
identify forward-looking statements. Such statements reflect the current views
of the Company with respect to future events, the outcome of which is subject to
certain risks, including among others general economic and market conditions,
decreased consumer demand for the Company's products, possible disruptions in
the Company's computer or telephone systems, increased or unanticipated costs or
effects associated with year 2000 compliance by the Company or its service or
supply providers, possible work stoppages, or increases in labor costs, effects
of competition, possible disruptions or delays in the opening of new stores or
inability to obtain suitable sites for new stores, higher than anticipated store
closings or relocation costs, higher interest rates, unanticipated increases in
merchandise or occupancy costs and other factors which may be outside the
Company's control. Should one or more of these risks or uncertainties
materialize, or should underlying assumptions prove incorrect, actual results or
outcomes may vary materially from those described therein as anticipated,
believed, estimated, expected, intended or planned. Subsequent written and oral
forward-looking statements attributable to the Company or persons acting on its
behalf are expressly qualified in their entirety by the cautionary statements in
this paragraph.
RESULTS OF OPERATIONS
The following discussion compares the fiscal years ended February 27, 1999,
February 28, 1998 and March 1, 1997. The fiscal years ended February 27, 1999,
February 28, 1998 and March 1, 1997 were each comprised of 52 weeks.
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Fiscal Year Ended February 27, 1999 Compared to Fiscal Year Ended
February 28, 1998
Net sales for the fiscal year ended February 27, 1999, were $343,858,000, a
decrease of $9,101,000 (or 2.6%) as compared to net sales of $352,959,000 for
the fiscal year ended February 28, 1998. Comparable store sales for the fiscal
year ended February 27, 1999 declined 6.3%. This sales decline can be largely
attributable to increased promotional activity and price competition from other
retailers.
Gross profit for the fiscal year ended February 27, 1999 was $135,900,000,
a decrease of $6,438,000 (39.5% as a percentage of net sales) as compared to
$142,338,000 (40.3% as a percentage of net sales) for the fiscal year ended
February 28, 1998. This decrease is largely due to the decline in sales and
higher markdowns which was partially offset by an improved shrinkage
performance.
Selling, general and administrative (SG&A) expense was $73,886,000 (21.5%
as a percentage of net sales) for the fiscal year ended February 27, 1999 as
compared to $71,020,000 (20.1% as a percentage of net sales) for the fiscal year
ended February 28, 1998. This increase in SG&A expenses of approximately
$2,866,000 resulted from the opening of three new stores (Kendall, FL, Troy, MI
and Boston, MA). The SG&A expenses of these new stores amounted to $4,012,000
for the fiscal year ended February 27, 1999.
Advertising expense for the fiscal year ended February 27, 1999 was
$7,581,000 (2.2% as a percentage of net sales) as compared to $8,097,000 (2.3%
as a percentage of net sales) for the fiscal year ended February 28, 1998. This
decrease of $516,000 in advertising expense resulted from expense savings
achieved through opportunistic media buying as well as other cost controls.
Occupancy costs were $16,717,000 (4.9% as a percentage of net sales) for
the fiscal year ended February 27, 1999 as compared to $15,300,000 (4.3% as a
percentage of net sales) for the fiscal year ended February 28, 1998. This
increase is largely attributable to the addition of three new stores for the
fiscal year ended February 27, 1999.
Depreciation and amortization amounted to $8,541,000 (2.5% as a percentage
of net sales) for the fiscal year ended February 27, 1999 as compared to
$8,627,000 (2.4% as a percentage of net sales) for the fiscal year ended
February 28, 1998. This decrease resulted mainly from certain assets becoming
fully depreciated and was somewhat offset by the addition of three new stores.
Income before income taxes was $29,082,000 (a decrease of $9,964,000, or
25.5%) for the fiscal year ended February 27, 1999, as compared to $39,046,000
for the fiscal year ended February 28, 1998. This decrease resulted mostly from
the decline in sales and higher SG&A expenses attributable to the opening of
three new stores.
For the fiscal year ended February 27, 1999 the effective income tax rate
was 40.0% as compared to 41.0% for the fiscal year ended February 28, 1998. In
the fiscal year ended February 28, 1998, the effective tax rate was affected by
the addition of tax reserves pertaining to certain states.
Fiscal Year Ended February 28, 1998 Compared to March 1, 1997
For the year ended February 28, 1998, net sales were $352,959,000, an
increase of $6,167,000 or 1.8% as compared to net sales of $346,792,000 for the
fiscal year ended March 1, 1997. This increase is largely attributable to an
increase in the number of stores in year ended February 28, 1998. Comparable
store sales for the fiscal year ended February 28, 1998 declined 2.5%.
Gross Profit for the fiscal year ended February 28, 1998 was $142,338,000,
an increase of $8,659,000 (6.5%) as compared to $133,679,000 for the fiscal year
ended March 1, 1997. This increase is largely attributable to the increased net
sales of $6,167,000 and the Company's gross profits as a percent of total sales
increasing from 38.5% last year to 40.3% this year. The 1.8% improvement in
gross profit resulted primarily from increased levels of opportunistic and
in-season purchases which created better values for the Company's customers.
Selling, general and administrative (SG&A) expense was $71,020,000 (20.1%
as a percentage of net sales) for the fiscal year ended February 28, 1998 versus
$71,028,000 (20.5% as a percentage of net sales) for last year. The improvement
in SG&A expenses this fiscal year is due to a continued effort by management to
control store and corporate operational expenses particularly in general
liability and workmen's compensation insurance.
Advertising expense for the fiscal year ended February 28, 1998 was
$8,097,000 compared to $6,626,000 for the fiscal year ended March 1, 1997. This
increase of $1,471,000 resulted from a continued effort to expand the Company's
advertising effort through radio and direct mail advertising. In addition, the
Company advertised its semi-annual sale event ("Bash") in the newspaper and
radio for the first time.
Occupancy costs were $15,300,000 (4.3% as a percentage of net sales) for
the fiscal year ended February 28, 1998 compared to $14,215,000 (4.1% as a
percentage of net sales) last year. This increase is largely attributable to the
addition of the Park Avenue store in New York City.
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Depreciation and amortization amounted to $8,627,000 (2.4% as a percentage
of net sales) for this year compared to $7,971,000 (2.3% as a percentage of net
sales) for the year ended March 1, 1997. This increase resulted principally from
the addition of the Park Avenue store in New York City.
Income before income taxes was $39,046,000 (an increase of $5,304,000 or
15.7%) for the fiscal year ended February 28, 1998, compared to $33,742,000 for
the prior year. This increase for the most part is the result of improved gross
profit margins.
For the fiscal year ended February 28, 1998 the effective income tax rate
was 41.0% compared to 43.5% in the prior year. The effective tax rate for the
fiscal year ended March 1, 1997 was adversely affected by the addition of tax
reserves pertaining to certain states.
LIQUIDITY AND CAPITAL RESOURCES
Working capital at February 27, 1999 was $101,592,000, an increase of
$1,864,000 from February 28, 1998 and the ratio of current assets to current
liabilities increased to 3.67 to 1 as compared to 3.41 to 1 at February 28,
1998.
Net cash provided by operating activities totaled $21,962,000 for the
fiscal year ended February 27, 1999 and increased by $5,301,000 as compared to
$16,661,000 for the fiscal year ended February 28, 1998. The major reasons for
the increase in cash provided by operating activities was attributed to lower
decreases in operating liabilities versus last year and lower increases in
inventory levels compared to a year ago offset by lower net income.
Net cash provided by operating activities totaled $16,661,000 for the
fiscal year ended February 28, 1998 as compared to $15,573,000 for the fiscal
year ended March 1, 1997. Net income in this period was $23,036,000 as compared
to $19,065,000 the previous year, an increase of $3,971,000. In the fiscal year
ended February 28, 1998, merchandise inventories increased $4,488,000 and
accounts payable decreased $6,737,000.
Net cash used in investing activities was $15,186,000 for the fiscal year
ended February 27, 1999 as compared to $12,210,000 for the fiscal year ended
February 28, 1998 and $21,644,000 for the fiscal year ended March 1, 1997.
Purchases of property and equipment totaled $16,250,000, $12,273,000 and
$21,709,000 for the fiscal years ended February 27, 1999, February 28, 1998 and
March 1, 1997, respectively.
Net cash used in financing activities was $7,690,000 for the fiscal year
ended February 27, 1999 as compared to $3,955,000 for the fiscal year ended
February 28, 1998. For the fiscal year ended March 1, 1997 net cash provided by
financing activities was $4,611,000.
The Company, has a revolving credit agreement with a bank for a line of
credit not to exceed $40,000,000 through December 1, 2000. At December 1, 2000
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,
2004. Except for funds provided from this credit agreement, the Company has
satisfied its operating and capital expenditure requirements, including those
for the operation and expansion of stores, from internally generated funds. For
the fiscal year ended February 27, 1999, under the revolving credit agreement,
the borrowings peaked at $ 31,650,000 and the average amount of borrowings was
$6,768,000 with a weighted average interest rate of 6.10%. For the fiscal year
ended February 28, 1998, the average amount of borrowings under the revolving
agreement was $4,982,000 with a weighted average interest rate of 6.22%. For the
fiscal year ended March 1, 1997, the average amount of borrowing under the
revolving credit agreement, was $4,122,000 with a weighted average interest rate
of 5.97%.
The Company has planned capital expenditures of approximately $14,200,000
for the fiscal year ending February 26, 2000, which includes plans to open three
new stores and the purchase of new MIS systems. The Company has also announced
that its Board of Directors has authorized the repurchase of up to 15% of its
outstanding shares of common stock at prevailing market prices through the
fiscal year ended February 26, 2000. As of April 1, 1999, the Company has
purchased 1,225,100 shares which represented 7.4% of its outstanding shares at a
total cost of $13,056,099.
Management believes that existing cash, internally generated funds, trade
credit and funds available from the revolving credit agreement will be
sufficient for working capital, capital expenditure and stock repurchase program
requirements for the fiscal year ending February 26, 2000.
YEAR 2000 COMPLIANCE
The Company has commenced a comprehensive program consisting of
identifying, assessing and, if necessary, upgrading and/or replacing its systems
and equipment that may be vulnerable to year 2000 problems. This process is
already underway. The Company has
8
<PAGE>
developed a plan to test its entire system for year 2000 compliance. The Company
believes that it will have completed all of its necessary upgrades and/or
replacements and the testing of its systems by October 1999.
The Company has begun the process of communicating with those Companies
where their systems interface with the Company's systems or may otherwise impact
the operations of the Company to determine if they have appropriate plans to
remedy year 2000 issues. There can be no assurance, however, that the systems of
other companies on which the Company's processes rely will be timely converted,
or that a failure to successfully convert by another company, or a conversion
that is incompatible with the Company's systems, would not have an impact on the
Company's operations.
Management currently estimates that the cost, in connection with bringing
its own systems and equipment into compliance, was less than $50,000 for the
fifty-two weeks ended February 27, 1999 and does not expect the additional cost
to exceed $600,000. Although the Company is not aware of any material
operational issues or costs associated with preparing its internal systems for
the year 2000, there can be no assurance that there will be a delay in, or
increased costs associated with, the implementation of the necessary systems and
changes to address the year 2000.
A potential source of risk includes, but is not limited to, the inability
of principal suppliers to be year 2000 compliant, which could result in delays
in product deliveries from such suppliers.
The Company currently does not have a contingency plan in place to cover
any unforeseen problems encountered that relate to the year 2000.
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.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Company's consolidated financial statements are filed together with
this Annual Report. See index to Consolidated Financial Statements in Item 14.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not Applicable
9
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The directors and executive officers of the Company are as follows :
Name Age Title
---- --- -----
Sy Syms (1)(2) .................. 73 Chairman of the Board and
Director of the Company
Marcy Syms (1)(2) ............... 48 Chief Executive Officer/President
and Director of the Company
Antone F. Moreira................ 62 Vice President, Treasurer and
Chief Financial Officer and
Director of the Company
Harvey A. Weinberg (3)(4)........ 61 Director of the Company
Wilbur L. Ross, Jr. (3)(4)....... 61 Director of the Company
David A. Messer (3)(4) .......... 37 Director of the Company
Philip G. Barach (4) ............ 69 Director of the Company
Ronald Zindman .................. 49 Executive Vice President - General
Merchandise Manager
Allen Brailsford ................ 55 Vice President - Operations
Myra Butensky ................... 40 Vice President - Divisional
Merchandise Manager
Men's Tailored Clothing
Jules D. Cohn ................... 52 Vice President - MIS
Douglas C. Meyer ................ 46 Vice President - Marketing,
Advertising and Sales
Promotion
Isabelle Regan .................. 44 Vice President - Divisional
Merchandise Manager Women's
John Tyzbir ..................... 45 Vice President - Human Resources
- ----------
(1) Member of the Executive Committee of the Company.
(2) Sy Syms is the father of Marcy Syms.
(3) Member of the Stock Option - Compensation Committee of the Company.
(4) Member of the Audit Committee of the Company.
The members of the Company's Board of Directors hold office until the next
annual meeting of shareholders and until their successors are duly elected and
qualified. Executive officers are elected annually by the Board of Directors of
the Company and serve at the pleasure of the Board. Marcy Syms is the daughter
of Sy Syms. There are no other family relationships between any directors or
executive officers of the Company. None of the organizations with which these
persons were previously associated is a parent, subsidiary or other affiliate of
the Company except as otherwise set forth.
SY SYMS has been Chairman of the Board, Chief Executive Officer and a
Director of the Company and/or its predecessors since 1959. Mr. Syms was Chief
Operating Officer of the Company from 1983 to 1984. Mr. Syms has been a Director
of Israel Discount Bank of New York since December 1991. On January 22, 1998, Sy
Syms relinquished his position as Chief Executive Officer to Marcy Syms. Since
that date Mr. Syms has been Chairman of the Board.
MARCY SYMS has been President and a Director of the Company since 1983 and
Chief Operating Officer of the Company since 1984. On January 22, 1998, Marcy
Syms was named Chief Executive Officer/President.
ANTONE F. MOREIRA has been Vice President, Chief Financial Officer and
Treasurer of Syms Corp. since May 1997. From 1996 to May 1997, Mr. Moreira was a
financial consultant with Equitable Assurance Society, a financial services
organization. From 1990 to 1995, Mr. Moreira was Executive Vice President and
Chief Financial Officer of Stuarts Department Stores, Inc., a regional discount
department store chain operating in New England. Mr. Moreira has been a Director
of the Company since May 1997.
10
<PAGE>
HARVEY A. WEINBERG has been a consultant since April 1994. From April 1992
to April 1994, he was President and Chief Executive Officer of HSSI, Inc., a
retailer of men's and women's apparel. From 1987 to September 1990, he was Chief
Executive Officer and Vice Chairman of the Board of Directors of Hartmarx
Corporation and from 1990 to September 1992, he served as Chairman of the Board
of Hartmarx Corporation. He is a trustee of Glimcher Realty Trust, a real estate
investment trust. He has been a Director of the Company since December 1992.
WILBUR L. ROSS, JR. has been a Managing Director of Rothschild Inc. since
1976. He is also a member of the Board of Directors of Mego Corp. He has been a
Director of the Company since 1983. Effective March 15, 1999, Mr. Ross resigned
as Director of the Company.
DAVID A. MESSER has been President of Sempra Energy Trading, a subsidiary
of American International Group, Inc. (NYSE: AIG), since January 1994. Prior to
January 1994, Mr. Messer was a Senior Vice President of AIG Trading Corporation,
(now know as Sempra Energy Trading), where he has been employed since March
1990. He has been a Director of the Company since July 1996.
PHILIP G. BARACH has been a consultant since March 1993. From 1968 to March
1993, he was Chairman of the Board, President and Chief Executive Officer of the
United States Shoe Corp., a manufacturer and retailer of footwear, apparel and
eyewear. He is a member of the Board of Directors of Bernard Chaus, Inc., a
manufacturer of women's apparel, Glimcher Realty Trust, a real estate investment
trust, R.G. Barry Corp., a manufacturer of foldable slippers and heat/cold
preservation products and Union Central Insurance Co., a life insurance company.
He has been a Director of the Company since July 1996.
RONALD ZINDMAN has been Executive Vice President - General Merchandise
Manager since March 1997. He was Vice President, General Merchandise Manager,
Ladies, Mens and Haberdashery from July 1994 to March 1997. Previously, Mr.
Zindman was Vice President - General Merchandise Manager Ladies from March 1993
to July 1994 and a buyer of men's and women's merchandise from March 1990 to
March 1993.
ALLEN BRAILSFORD has been Vice President - Operations since January 1993.
From March 1992 to January 1993, Mr. Brailsford was Director of Operations, and
from March 1985 to March 1992, he was Director of Distribution.
MYRA BUTENSKY has been Vice President - Divisional Merchandise Manager,
Men's Tailored Clothing since January 1999. From May 1998 to January 1999, Ms.
Butensky was Divisional Merchandise Manager, Ladies. Prior to joining the
Company in 1991, Ms. Butensky was a buyer with Popular Trading Club, Inc.
JULES COHN has been Vice President - MIS since March 1999. He joined the
Company as Director of MIS in August 1998. From May 1995 to March 1998, Mr. Cohn
was Vice President of MIS at Party City Corporation. From May 1992 to August
1995, Mr. Cohn was Director of MIS at Barneys New York.
DOUGLAS C. MEYER has been Vice President - Marketing, Advertising and Sales
Promotion since July 1994. Mr. Meyer was Vice President, Marketing and Creative
Services for Loehmann's, Inc. from 1987 to 1994.
ISABELLE REGAN has been Vice President - Divisional Merchandise Manager,
Ladies since March 1993. She has held various positions at the Company since
1972, including buyer of women's apparel.
JOHN TYZBIR has been Vice President - Human Resources since April 1999.
From January 1995 to October 1997, Mr. Tyzbir was Director of Human Resources of
Zallie Supermarkets Corp. From June 1991 to January 1995, Mr. Tyzbir was
Director of Human Resources and Planning of Carson Pirie Scott Inc.
During 1994, HSSI, Inc., of which Mr. Weinberg was President, Chief
Executive Officer and a Director, filed a voluntary petition for relief under
Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy
Court for the Northern District of Illinois, Eastern Division.
ITEM 11. EXECUTIVE COMPENSATION
In accordance with General Instruction G(3) of the General Instructions to
Form 10-K, the information called for by Item 11 is omitted from this Annual
Report and is incorporated by reference to the definitive Proxy Statement to be
filed by the Company pursuant to Regulation 14A of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended, which the
Company will file not later than 120 days after February 27, 1999, the end of
the fiscal year covered by this Annual Report.
11
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
In accordance with General Instruction G(3) of the General Instructions to
Form 10-K, the information called for by Item 12 is omitted from this Annual
Report and is incorporated by reference to the definitive Proxy Statement to be
filed by the Company pursuant to Regulation 14A of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended, which the
Company will file not later than 120 days after February 27, 1999, the end of
the fiscal year covered by this Annual Report.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In accordance with General Instruction G(3) of the General Instructions to
Form 10-K, the information called for by Item 13 is omitted from this Annual
Report and is incorporated by reference to the definitive Proxy Statement to be
filed by the Company pursuant to Regulation 14A of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended, which the
Company will file not later than 120 days after February 27, 1999, the end of
the fiscal year covered by this Annual Report.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
PAGE NUMBER
-----------
(a) (1) Financial Statements:
Report of Independent Public Accountants............ F-1
Consolidated Balance Sheets ........................ F-2
Consolidated Statements of Income .................. F-3
Consolidated Statements of Shareholders' Equity .... F-4
Consolidated Statements of Cash Flow ............... F-5
Notes to Consolidated Financial Statements ......... F-6 - F-17
All schedules are omitted because they are not applicable, or not required,
or because the required information is included in the consolidated financial
statements or notes thereto.
(a)(3) List of Exhibits:
The following exhibits which are marked with an asterisk are filed as part
of this Annual Report and the other exhibits set forth below are incorporated by
reference (utilizing the same exhibit numbers, except as stated otherwise below)
from (i) the Company's Registration Statement on Form S-1 under the Securities
Act of 1933 (Registration No. 2-85554) filed August 2, 1983 and declared
effective September 23, 1983 or (ii) where indicated, the Company's reports on
Form 8-K, Form 10-Q or Form 10-K or the Company's Proxy Statement (Commission
File No. 1-8564). Management contracts or compensatory plans or arrangements
required to be filed as exhibits are identified by a (+).
3.1 Certificate of Incorporation of Syms Corp, as amended
3.2 By-laws of Syms Corp
4.1 Specimen Certificate of Common stock
4.3 $5,600,000 New Jersey Economic Development Authority Revenue Bond
Agreement dated December 1, 1981
4.4 Amendments to the New Jersey Economic Development Authority Revenue
Bond Agreement
4.4a First Amendment dated April 14, 1982
4.4b Second Amendment dated May 17, 1982
4.4c Third Amendment dated June
27, 1983
4.4d Fourth Amendment dated July 14, 1983
4.5 Mortgage & Note dated December 11, 1981 between Syms Inc.
and New Jersey Economic Development Authority
10.3 Elmsford (White Plains), New York Leased Premises
10.3a Lease, June 21, 1977
10.3b Lease Modification, December 28, 1978
12
<PAGE>
10.3c Lease Modification, July 26, 1983
10.3d Consent, July 29, 1983
10.3e Parking Area Lease No. 1, July 29, 1969
10.3f Parking Area Sublease No.1, November 29, 1974
10.3g Parking Area Lease No. 2, June 23, 1969
10.3h Parking Area Sublease No. 2, November 29, 1974
10.3i Assignment and Assumption, July 29, 1983
10.4 Ground Lease at One Emerson Lane, Township of Secaucus, Hudson County,
New Jersey Assignment and Assumption of Ground Lease, dated May 8,
1986, to Registrant (exhibit 28.1 to 8-K Report dated May 1986)
10.21+ Syms Corp 1983 Incentive Stock Option and Appreciation Plan as Amended
and Restated (Exhibit A to Company's Proxy Statement for the 1993
Annual Meeting of Shareholders)
10.29 Credit Card Program Agreement dated as of March 12, 1987 and as amended
as of March 16, 1987 between General Electric Credit Card Corporation
and Registrant (10-K Report for fiscal year ended December 31, 1987)
10.32 Revolving Credit Agreement dated as of December 1, 1993 between Syms
Corp and Summit Bank (successor to United Jersey Bank) (8-K Report
dated December 7, 1993)
10.33 Form of Indemnification Agreement between Registrant and Directors and
Executive Officers of the Registrant (10-K Report for fiscal year ended
March 2, 1996)
10.34 Credit Plan Agreement dated December 11, 1995 between Citicorp Retail
Services, Inc. and Registrant (10-K Report for fiscal year ended March
2, 1996)
10.35+ Employment Agreement dated November 1, 1996 between Syms Corp and
Ronald Zindman (10-K Report for fiscal year ended March 1, 1997)
10.36+ Stock Option Certificate for Ronald Zindman (10-K Report for fiscal
year ended March 1, 1997)
10.37 Promissory note and mortgage from Syms Corp to Marcy Syms (10-K Report
for fiscal year ended March 1, 1997)
10.38 First Amendment to Revolving Credit Agreement, dated as of November 24,
1997, between Syms Corp and Summit Bank. (10K report for fiscal year
ended February 28, 1998)
21* List of Subsidiaries of the Company
23* Consent of Deloitte & Touche LLP
27* Financial Data Schedule
(b) Reports on Form 8-K:
During the quarter ended February 27, 1999 no reports on Form 8-K were
filed.
13
<PAGE>
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this Annual Report to be
signed on its behalf by the undersigned, thereunto duly authorized.
SYMS CORP
By:
----------------------------------
Marcy Syms
Chief Executive Officer/President
Date: May 11, 1999
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Annual Report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
- --------- ----- ----
/s/ SY SYMS
- --------------------------- Chairman of the Board May 11, 1999
Sy Syms and Director
/s/ MARCY SYMS
- --------------------------- Chief Executive Officer/President May 11, 1999
Marcy Syms and Director
(Principal executive officer)
/s/ ANTONE F. MOREIRA
- --------------------------- Vice President, Treasurer and
Antone F. Moreira Chief Financial Officer and
Director May 11, 1999
(Principal financial and
accounting officer)
/s/ HARVEY A. WEINBERG
- --------------------------- Director May 11, 1999
Harvey A. Weinberg
/s/ DAVID A. MESSER
- --------------------------- Director May 11, 1999
David A. Messer
/s/ PHILIP G. BARACH
- --------------------------- Director May 11, 1999
Philip G. Barach
14
<PAGE>
DELOITTE & TOUCHE LLP Deloitte & Touche LLP Telephone:(212) 436-2000
[Logo] Two World Financial Center Facsimile:(212) 436-5000
New York, New York 10281-1414
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- ----------------------------------------
To the Shareholders and Board of Directors of Syms Corp
Secaucus, New Jersey
We have audited the accompanying consolidated balance sheets of Syms Corp and
its subsidiaries as of February 27, 1999 and February 28, 1998, and the related
consolidated statements of income, shareholders, equity and cash flows for each
of the three fiscal years ended February 27, 1999, February 28, 1998 and March
1, 1997. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on those financial
statements based on our audits.
We conducted our auditS in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated 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, such consolidated financial statements present fairly, in all
material respects, the financial position of Syms Corp and subsidiaries as of
February 27, 1999, February 28, 1998 and March 1, 1997 and the results of their
operations and their cash flows for each of the three fiscal years ended
February 27, 1999, February 28, 1998 and March 1, 1997 in conformity with
generally accepted accounting principles.
DELOITTE & TOUCHE LLP
April 6, 1999
- -----------------
DELOITTE & TOUCHE
TOHMATSU
- -----------------
F-1
<PAGE>
SYMS CORP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------------
(In thousands)
February 27, February 28,
1999 1998
-------- --------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ...................... $ 2,926 $ 3,840
Merchandise inventories ........................ 129,438 127,028
Deferred income taxes .......................... 3,462 5,614
Prepaid expenses and other current assets ...... 3,753 4,621
-------- --------
Total current assets ...................... 139,579 141,103
PROPERTY AND EQUIPMENT - NET ..................... 153,810 146,378
OTHER ASSETS ..................................... 5,353 6,711
-------- --------
TOTAL ASSETS ..................................... $298,742 $294,192
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short term borrowings .......................... $ 2,350 $ --
Accounts payable ............................... 19,268 21,986
Accrued expenses and taxes ..................... 7,719 7,773
Accrued insurance .............................. 2,550 3,952
Obligations to customers ....................... 3,451 4,508
Income taxes payable ........................... 2,230 2,675
Current portion of obligations
under capital lease ........................... 419 481
-------- --------
Total current liabilities ................. 37,987 41,375
OBLIGATIONS UNDER CAPITAL LEASE .................. -- 419
DEFERRED INCOME TAXES ............................ 428 564
OTHER LONG TERM LIABILITIES ...................... 1,567 964
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 17,024 shares outstanding
as of February 27, 1999 (net of 864 treasury
shares) and 17,849 shares outstanding as of
February 28, 1998 .............................. 851 892
Additional paid-in capital ..................... 3,584 13,102
Retained earnings .............................. 254,325 236,876
-------- --------
Total shareholders' equity ................ 258,760 250,870
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ....... $298,742 $294,192
======== ========
See notes to consolidated financial statements
F-2
<PAGE>
<TABLE>
<CAPTION>
SYMS CORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
- ------------------------------------------------------------------------------------------
(In thousands, except per share amounts)
Fiscal Year Ended
------------------------------------
February 27, February 28, March 1,
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
NET SALES ......................................... $343,858 $352,959 $346,792
Cost of goods sold ................................ 207,958 210,621 213,113
-------- -------- --------
Gross profit ...................................... 135,900 142,338 133,679
EXPENSES
Selling, general and administrative ............... 73,886 71,020 71,028
Advertising ....................................... 7,581 8,097 6,626
Occupancy ......................................... 16,717 15,300 14,215
Depreciation and amortization ..................... 8,541 8,627 7,971
-------- -------- --------
Income from operations ............................ 29,175 39,294 33,839
Interest expense (income) - net ................... 93 248 97
-------- -------- --------
Income before income taxes ........................ 29,082 39,046 33,742
Provision for income taxes ........................ 11,633 16,010 14,677
-------- -------- --------
NET INCOME ........................................ $ 17,449 $ 23,036 $ 19,065
======== ======== ========
Net Income Per Share - basic ...................... $ 1.00 $ 1.30 $ 1.08
======== ======== ========
Weighted Average Shares Outstanding - basic ....... 17,474 17,770 17,694
======== ======== ========
Net Income Per Share - diluted .................... $ 1.00 $ 1.29 $ 1.08
======== ======== ========
Weighted Average Shares Outstanding - diluted ..... 17,536 17,841 17,705
======== ======== ========
</TABLE>
See notes to consolidated financial statements
F-3
<PAGE>
<TABLE>
<CAPTION>
SYMS CORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
- ----------------------------------------------------------------------------------------------------------------------
(In thousands, except per share amounts)
Preferred Stock, Common Stock,
1,000 Shares; 30,000 Shares;
$100 Par Value $0.05 Par Value Additiona1
--------------- --------------- Paid-in Retained
Shares Amount Shares Amount Capital Earnings Total
------ ------ ------ ------ ------- -------- -----
<S> <C> <C> <C> <C> <C> <C>
BALANCE AS OF MARCH 2, 1996 -- -- 17,694 $ 885 $ 11,709 $ 194,775 $ 207,369
Net Income ................ -- -- -- -- -- $ 19,065 $ 19,065
BALANCE AS OF MARCH 1, 1997 -- -- 17,694 $ 885 $ 11,709 $ 213,840 $ 226,434
Exercise of stock options . -- -- 155 7 1,393 -- 1,400
Net income ................ -- -- -- -- -- 23,036 23,036
--------- --------- --------- --------- --------- -------- ---------
BALANCE AS OF
FEBRUARY 28, 1998 .... -- -- 17,849 $ 892 $ 13,102 $ 236,876 $ 250,870
Exercise of stock options . -- -- 39 2 650 -- 652
Stock buyback ............. -- -- (864) (43) (10,168) -- (10,211)
Net Income ................ -- -- -- -- -- 17,449 17,449
--------- --------- --------- --------- --------- -------- ---------
BALANCE AS OF
FEBRUARY 27, 1999 .... -- -- 17,024 $ 851 $ 3,584 $ 254,325 $ 258,760
========= ========= ========= ========== ========== ========= =========
</TABLE>
See notes to consolidated financial statements
F-4
<PAGE>
<TABLE>
<CAPTION>
SYMS CORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
- ------------------------------------------------------------------------------------------------------------------
(In thousands)
Fiscal Year Ended
----------------------------------------
February 27, February 28, March 1,
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ............................................................ $ 17,449 $ 23,036 $ 19,065
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization ......................................... 8,541 8,627 7,971
Deferred income taxes ................................................. 2,016 1,786 (1,870)
Gain on sale of property and equipment ................................ (748) (58) (52)
Loss on disposal of assets ............................................ -- 50 244
(Increase) decrease in operating assets:
Merchandising inventories .......................................... (2,410) (4,488) (9,586)
Prepaid expenses and other current assets .......................... 868 (2,865) 1,765
Other assets ....................................................... 1,319 44 (2,417)
Increase (decrease) in operating liabilities:
Accounts payable .................................................... (2,718) (6,737) (2,177)
Accrued expenses .................................................... (1,456) 670 1,137
Obligations to customers ............................................ (1,057) (577) 595
Other long term liabilities ......................................... 603 331 396
Income taxes ........................................................ (445) (3,158) 502
------- ------ ------
Net cash provided by operating activities ................... 21,962 16,661 15,573
------- ------ ------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment .................................... (16,250) (12,273) (21,709)
Proceeds from sale of property and equipment .......................... 1,064 63 65
------- ------ ------
Net cash used in investing activities ....................... (15,186) (12,210) (21,644)
------- ------ ------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of obligations under capital lease ......................... (481) (405) (339)
Revolving line of credit (repayments) borrowings ...................... 2,350 (4,950) 4,950
Exercise of options ................................................... 609 1,400 --
Purchase of treasury shares ........................................... (10,168) -- --
------- ------ ------
Net cash (used in) provided by financing activities ......... (7,690) (3,955) 4,611
------- ------ ------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS .................. (914) 496 (1,460)
CASH AND CASH EQUIVALENTS. BEGINNING OF PERIOD ........................ 3,840 3,344 4,804
------- ------ ------
CASH AND CASH EQUIVALENTS, END OF PERIOD .............................. $ 2,926 $ 3,840 $ 3,344
======== ======== ========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for:
Interest (net of amount capitalized) ............................... $ 389 $ 397 $ 291
======== ======== ========
Income taxes paid (refunds received) - net $ 7,507 $ 19,364 $ 16,041
======== ======== ========
</TABLE>
See notes to consolidated financial statatements
F-5
<PAGE>
SYMS CORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FISCAL YEARS ENDED FEBRUARY 27, 1999, FEBRUARY 28, 1998 AND MARCH 1, 1997
- --------------------------------------------------------------------------------
NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Principal Business - Syms Corp and subsidiaries (the "Company") operates a
chain of forty-four "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.
b. Principles of Consolidation - The consolidated financial statements include
the accounts of the Company and its wholly-owned subsidiaries. All
significant intercompany accounts and transactions have been eliminated.
c. Accounting Period - The fiscal years ended February 27, 1999, February 28,
1998 and March 1, 1997 were comprised of 52 weeks.
d. Cash and Cash Equivalents- Syms Corp considers credit card receivables and
all short-term investments with a maturity of three months or less as cash
equivalents.
e. Merchandise Inventories - Merchandise inventories are stated at the lower
of cost or market on a first-in first-out (FIFO) basis, as determined by
the retail inventory method.
f. Property and Equipment - Property and equipment are stated at cost.
Depreciation and amortization are principally determined by the
straight-line method over the following estimated useful lives:
Buildings and improvements . 15 - 39 years
Machinery and equipment .... 4 - 7 years
Furniture and fixtures ..... 10 years
Leasehold improvements ..... Lesser of life of the asset or life of lease
Facilities' leases (Note 7) having the substance of financing transactions
have been capitalized. The related lease obligations have been included as
obligations under capital lease. The leased assets are being amortized as
described above.
g. Income Taxes - Deferred income taxes reflect the future tax consequences of
differences between the tax basis of assets and liabilities and their
financial reporting amounts at year end.
h. Pre-opening Costs - Store pre-opening costs are expensed in the fiscal year
they are incurred.
i. Obligation to Customers - Obligations to customers represent credits issued
for returned merchandise as well as gift certificates. The Company's policy
is to allow customers to exchange credits issued for other merchandise or
credit to the Syms charge card.
j. Use of Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles 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.
k. Reclassification - Certain items in prior years in specific captions of the
accompanying consolidated financial
F-6
<PAGE>
statements and notes to consolidated financial statements have been
reclassified for comparative purposes.
l. Revenue Recognition - The Company recognizes revenue at the point of sale.
m. Comprehensive Income - In March 1998, the Company adopted the provisions of
Statement of Financial Accounting Standards No. 130. "Reporting
Comprehensive," which is required for years beginning December 15, 1997.
Comprehensive income is equivalent to the Company's net income for fiscal
years 1998, 1997 and 1996.
n. Employee Benefit Plans - In March 1998, the Company adopted the provisions
of SFAS No. 132, "Employers' Disclosures about Pensions and other
Postretirement Benefits," which is an amendment of SFAS No. 87, No. 88 and
No. 106. SFAS No. 132 revises employers' disclosures related to pension and
other postretirement plans by requiring, among other things,
standardization of disclosures among such plans as well as additional
information on the changes in benefit obligations and fair values of plan
assets. It also eliminates certain other disclosures no longer deemed
useful. SFAS No. 132 is effective for financial periods beginning after
December 15, 1997, and will have no effect on the Company's financial
position or results of operations as it does not change the measurement or
recognition criteria for such plans.
o. Segment Reporting - In March 1998, the Company adopted the provisions of
SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
information," SFAS No. 131 is effective for fiscal years beginning after
December 15, 1997, and establishes standards for reporting information
about a company's operating segments. It also establishes standards for
related disclosures about products and services, geographic areas and major
customers. The Company operates in a single operating segment - the
operation of retail off-price stores. Revenues from external customers are
derived from merchandise sales. The Company's merchandise sales mix by
product category for the last three fiscal years was as follows:
Fiscal Year
------------------------
1998 1997 1996
---- ---- ----
Men's tailored clothes and haberdashery ..... 53% 54% 54%
Women's dresses, suits, separates
and accessories ........................... 31% 31% 31%
Shoes ....................................... 8% 8% 7%
Children's wear ............................. 6% 5% 6%
Luggage, domestics and fragrances ........... 2% 2% 2%
--- --- ---
100% 100% 100%
=== === ===
The Company does not rely on any major customers as a source of revenue.
F-7
<PAGE>
NOTE 2 -- PROPERTY AND EQUIPMENT
Property and equipment consists of:
February 27, February 28,
1999 1998
-------- --------
(In thousands)
Land ........................................... $ 40,628 $ 40,961
Buildings and building improvements ............ 114,668 114,178
Leasehold and leasehold improvements ........... 40,782 31,743
Machinery and equipment ........................ 20,793 17,327
Furniture and fixtures ......................... 17,560 15,972
Capital lease .................................. 3,763 3,763
Construction in progress ....................... 2,747 1,135
-------- --------
240,941 225,079
Less accumulated depreciation and amortization.. 87,131 78,701
-------- --------
$153,810 $146,378
======== ========
NOTE 3 -- INCOME TAXES
The provision for income taxes is as follows:
Fiscal Year Ended
-----------------------------------------
February 27, February 28, March 1,
1999 1998 1997
------- ------- -------
(In thousands)
Current:
Federal ............. $ 8,009 $12,343 $13,799
State ............... 1,608 1,881 2,748
------- ------- -------
9,617 14,224 16,547
------- ------- -------
Deferred:
Federal ............. 1,622 1,490 (1,560)
State ............... 394 296 (310)
------- ------- -------
2,016 1,786 (1,870)
------- ------- -------
$11,633 $16,010 $14,677
======= ======= =======
F-8
<PAGE>
The following is a reconciliation of income taxes computed at the U.S. Federal
statutory rate to the provision for income taxes:
Fiscal Year Ended
----------------------------------
February 27, February 28, March 1,
1999 1998 1997
----------- ------------ --------
Statutory Federal income tax rate ....... 35.0% 35.0% 35.0%
State taxes, net of Federal income
tax benefits .......................... 4.4 5.8 8.4
Officers' life insurance ................ 0.6 0.2 0.1
---- ---- ----
Effective income tax rate ............... 40.0% 41.0% 43.5%
==== ==== ====
The composition of the Company's deferred tax assets and liabilities is as
follows:
Fiscal Year
-------------------------
February 27, February 28,
1999 1998
------- -------
(In thousands)
Deferred tax assets:
Capitalization of inventory costs ................. $ 1,629 $ 3,274
Accounts receivable ............................... 87 106
Other ............................................. 2,822 3,514
------- -------
Total deferred tax assets ......................... 4,538 6,894
Deferred tax liability:
Depreciation method and different estimated lives . (1,446) (1,371)
Other ............................................. (58) (473)
------- -------
Total deferred tax liabilities .................... (1,504) (1,844)
======= =======
Net ............................................... $ 3,034 $ 5,050
======= =======
Classified in balance sheet as follows:
Current deferred tax asset ........................ $ 3,462 $ 5,614
Long term deferred tax liability (net of
non-current deferred tax asset) ................ (428) (564)
Long term deferred tax asset (net of
noncurrent deferred tax liability) ............. -- --
------- -------
Net ............................................... $ 3,034 $ 5,050
======= =======
F-9
<PAGE>
NOTE 4 -- 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, 2000. 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. There were
no outstanding borrowings against this agreement for the fiscal years ended
February 27, 1999 and February 28, 1998.
The agreement contains financial covenants, with respect to consolidated
tangible net worth, as defined, working capital and maximum capital
expenditures, including dividends, (defined to include cash repurchases of
capital stock), as well as other financial ratios.
Total interest charges incurred for the years ended February 27, 1999, February
28, 1998 and March 1, 1997, including amounts related to capital leases, were
$607,000, $617,000, and $586,000, respectively, of which $147,000, $160,000, and
$152,000 were capitalized in fiscal 1998, 1997 and 1996, respectively, in
connection with the purchase and construction of new facilities.
In addition, the Company has a separate $20,000,000 credit facility with another
bank available for the issuance of letters of credit for the purchase of
merchandise and short-term borrowings. This agreement may be canceled at any
time by either party. At February 27, 1999 and at February 28, 1998, the Company
had $3,352,000 and $6,023,000, respectively, in outstanding letters of credit,
and had borrowings of $2,350,000 and $0, respectively.
NOTE 5 - FAIR VALUE DISCLOSURES
The estimated fair values of financial instruments which are presented herein
have been determined by the Company using available market information and
appropriate valuation methodologies. However, considerable judgment is required
in interpreting market data to develop estimates of fair value. Accordingly, the
estimates presented herein are not necessarily indicative of amounts the Company
could realize in a current market exchange.
The fair value of the Company's cash and cash equivalents, accounts receivable
and short-term borrowings approximates their carrying values at February 27,
1999 and February 28, 1998 due to the short-term maturities of these
instruments.
F-10
<PAGE>
NOTE 6 -- PENSION AND PROFIT SHARING PLANS
a. PENSION PLAN - The Company has a defined benefit pension plan for all
employees other than those covered under collective bargaining agreements.
The benefits are based on years of service and the employee's highest
average pay during any five consecutive years within the ten-year period
prior to retirement. Pension plan costs are funded annually. Contributions
are intended to provide not only for benefits attributed to service to
date, but also for those expected to be earned in the future.
The following information on the Company's pension plan is provided:
February 27, February 28,
1999 1998
------- -------
(In thousands)
CHANGE IN BENEFIT OBLIGATION:
Net benefit obligation at beginning of year ..... $ 4,890 $ 4,180
Service cost .................................... 477 384
Interest cost ................................... 334 303
Plan participants' contributions ................ -- --
Actuarial (gain) loss ........................... 162 225
Gross benefits paid ............................. (277) (202)
------- -------
Net benefit obligation at end of year ........... 5,586 4,890
======= =======
CHANGE IN PLAN ASSETS:
Fair value of plan assets at beginning of year .. 4,655 3,869
Employer contributions .......................... 203 433
Plan participants' contributions ................ -- --
Gross benefits paid ............................. (277) (202)
Actual return on plan assets .................... 556 555
------- -------
Fair value of plan assets at end of year ........ 5,137 4,655
======= =======
Funded status at end of year .................... (449) (235)
Unrecognized net actuarial (gain) loss .......... 170 164
Unrecognized transition amount .................. (76) (101)
------- -------
Accrued benefit costs ........................... (355) (172)
======= =======
F-11
<PAGE>
Pension expenses includes the following components:
Fiscal Year Ended
--------------------------
February 27, February 28,
1999 1998
------------ ------------
(In thousands)
COMPONENTS OF NET PERIODIC BENEFIT COST:
Service cost ............................... $ 477 $ 384
Interest cost .............................. 334 303
Return on Assets ........................... (556) (555)
Amortization of actuarial (gain) loss ...... 132 182
----- -----
Net periodic benefit cost .................. 387 314
===== =====
WEIGHTED-AVERAGE ASSUMPTIONS USED:
Discount rate .............................. 6.75% 7.00%
Rate of compensation increase .............. 4.50% 4.50%
The expected long-term rate of return on plan assets was 8.5% during each
of the years ended February 27, 1999 and February 28, 1998.
b. PROFIT-SHARING AND 401(k) PLAN - The Company has a profit-sharing plan and
401(k) plan for all employees other than those covered under collective
bargaining agreements. In 1995, the Company established a defined
contribution savings plan 401(k) for substantially all of its eligible
employees. Employees may contribute a percentage of their salary to the
plan subject to statutory limits. The Company has not made any matching
contributions to this plan, however, profit-sharing contributions were made
in the amounts of $180,000 for year ended February 27, 1999, $222,000 for
the year ended February 28, 1998 and $200,000 for the year ended March 1,
1997.
F-12
<PAGE>
NOTE 7 -- COMMITMENTS
a. LEASES - The Company has various operating leases and one capital lease for
its retail stores, with terms expiring between 1999 and 2019. Under most
lease agreements, the Company pays real estate taxes, maintenance and other
operating expenses. Certain store leases also provide for additional
contingent rentals based upon a percentage of sales in excess of certain
minimum amounts.
Future minimum lease payments at February 27, 1999 are as follows:
Capital Lease Operating
Real Estate Leases
------------- ---------
(In thousands)
1999 ................................................ $450 $ 10,431
2000 ................................................ - 10,681
2001 ................................................ - 10,032
2002 ................................................ - 9,815
2003 ................................................ - 9,635
2004 and thereafter ................................. - 72,955
--------
Total minimum payments .............................. $450 $123,549
========
Less amount representing interest ................... 31
----
Present value of net minimum lease payments ......... 419
----
Less current maturities ............................. 419
----
$ 0
====
Payments under the real estate capital lease, which expires in 1999, are payable
to the Company's principal shareholder. Rental payments were $600,000 during
each of the years ended February 27, 1999, February 28, 1998, and March 1, 1997.
Rent expense for operating leases are as follows:
Fiscal Year Ended
-----------------------------------------
February 27, February 28, March 1,
1999 1998 1997
----------- ------------ --------
(In thousands)
Minimum rentals ................... $ 7,608 $ 7,011 $ 5,832
Escalation rentals ................ 584 331 413
Contingent rentals ................ 26 32 36
Sublease rentals .................. (875) (867) (743)
------- ------- -------
$ 7,343 $ 6,507 $ 5,538
======= ======= =======
F-13
<PAGE>
b. EMPLOYMENT AGREEMENT - At March 1, 1997 the Company had an employment
agreement with its General Merchandising Manager, expiring 2009, pursuant
to which annual compensation of approximately $300,000 is required. In
addition, that employee is entitled to additional compensation upon
occurrence of certain events.
c. LEGAL PROCEEDINGS - The Company is a party to routine litigation incident
to its business. Management of the Company believes, based upon its
assessment of the actions and claims outstanding against the Company, and
after discussion with counsel, that there are no legal proceedings that
will have a material adverse effect on the financial condition or results
of operations of the Company. Some of the lawsuits to which the Company is
a party are covered by insurance and are being defended by the Company's
insurance carriers.
d. LETTER OF CREDIT - The Company has guaranteed a letter of credit on behalf
of a third party totaling approximately $150,000, which expires on April
30, 1999.
NOTE 8 -- PREFERRED STOCK
The Company is authorized to issue up to 1,000,000 shares of preferred stock, in
one or more series of preferred stock. The Board of Directors is authorized to
establish the number of shares to be included in each such series, and to fix
the designation, relative rights, preferences, qualifications and limitations of
the shares of each such series.
NOTE 9 -- STOCK OPTION PLAN
The Company's Stock Option Plan allows for the granting of incentive stock
options, as defined in Section 422A of the Internal Revenue Code of 1986 (as
amended), non-qualified stock options or stock appreciation rights. The plan
requires that incentive stock options be granted at an exercise price not less
than the fair market value of the common shares on the date the option is
granted. The exercise price of the option for holders of more than 10% of the
voting rights of the Company must be not less than 110% of the fair market value
of the common shares on the date of grant. Non-qualified options and stock
appreciation rights may be granted at any exercise price. The Company has
reserved 1,000,000 shares of common stock for issuance thereunder.
No option or stock appreciation rights may be granted under the stock option
plan after July 2003. The maximum exercise period for any option or stock
appreciation right under the plan is ten years from the date the option is
granted (five years for any optionee who holds more than 10% of the voting
rights of the Company).
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" ("SFAS No. 123"), was effective for the Company for fiscal 1996.
SFAS No. 123 encourages (but does not require) compensation expense to be
measured based on the fair value of the equity instrument awarded. In accordance
with APB No. 25, no compensation cost has been recognized in the Consolidated
Statements of Income for the Company's stock option plans. If compensation cost
for the Company's stock option plans had been determined in accordance with the
fair value method prescribed by SFAS No. 123, the Company's pro forma net income
and earnings per share would be as follows:
1998 1997 1996
------- ------- -------
Net Income (in thousands) ........ $17,320 $22,971 $19,042
Net Income per share - basic ..... 1.00 1.29 1.08
Net Income per share - diluted.... 1.00 1.29 1.08
This pro forma information may not be representative of the amounts to be
expected in future years as the fair value method of accounting prescribed by
SFAS No. 123 has not been applied to options granted prior to 1996.
F-14
<PAGE>
The fair value of each option grant is estimated on the date of each grant using
the Black-Scholes option-pricing model with the following weighted average
assumptions used for grants in 1998 and 1997: risk-free interest rate of 4.75%
and 5.5%, expected life 5 and 10 years, expected volatility of 29.81% and
26.24%, and dividend yield 0%. The fair value generated by the Black-Scholes
model may not be indicative of the future benefit, if any, that may be received
by the option holder.
Stock option transactions are summarized below:
<TABLE>
<CAPTION>
Fiscal Year Ended
(In thousands, except per share amounts)
----------------------------------------------------------------------
February 27, 1999 February 28, 1998 March 1, 1997
------------------- ------------------ -------------------
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
FIXED OPTIONS Shares Price Shares Price Shares Price
------ --------- ------ -------- ------ --------
<S> <C> <C> <C> <C> <C> <C>
Outstanding
beginning of year .............. 347 $9.75 490 $ 9.52 426 $ 9.94
Granted ........................ 200 10.69 25 9.88 100 8.00
Exercised ...................... (38) 10.70 (155) 9.03 -- --
Cancelled ...................... (16) 11.07 (13) 9.96 (36) 10.27
--- ------ --- ------ --- ------
Outstanding, end of period .......... 493 $10.01 347 $ 9.75 490 $ 9.52
=== ====== === ====== === ======
Options exerciseable at year end .... 430 $10.30 282 $10.15 360 $ 9.83
Weighted-average fair value of
options granted during the year ... $ 3.74 $ 3.84 $ 4.99
</TABLE>
The following table summarizes information about stock options outstanding at
February 27, 1999:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
- ------------------------------------------------------------------------- ---------------------------------
Weighted-Average
Number Remaining Weighted- Number Weighted-
Range of Outstanding At Contractural Average Exercisable At Average
Exercise Prices February 27, 1999 Life (years) Exercise Price February 27, 1999 Exercise Price
- ---------------- ----------------- ---------------- -------------- ----------------- --------------
<S> <C> <C> <C> <C> <C>
$7.125 - $12.250 492,600 6.6 $10.01 430,100 $10.30
</TABLE>
NOTE 10 -- NET INCOME PER SHARE
In accordance with SFAS 128, basic net income per share has been computed
based upon the weighted average common shares outstanding. Diluted net income
per share gives effect to outstanding stock options.
F-15
<PAGE>
Net income per share have been computed as follows:
Fiscal 1998 Fiscal 1997 Fiscal 1996
----------- ----------- -----------
BASIC NET INCOME PER SHARE:
Net Income .......................... $17,449 $23,036 $19,065
Average shares outstanding .......... 17,474 17,770 17,694
Basic net income per share .......... $ 1.00 $ 1.30 $ 1.08
DILUTED NET INCOME PER SHARE:
Net Income .......................... $17,449 $23,036 $19,065
Average shares outstanding .......... 17,474 17,770 17,694
Stock options ....................... 62 71 11
Total average equivalent shares ..... 17,536 17,841 17,705
Diluted net income per share ........ $ 1.00 $ 1.29 $ 1.08
Options to purchase 396,000, 0, and 236,000 shares of common stock at prices
ranging from $7.125 to $12.250 per share were outstanding in 1998, 1997 and
1996, respectively, but were not included in the computation of diluted net
income per share because the exercise price of the options exceed the average
market price and would have been antidilutive.
NOTE 11 -- RELATED PARTY TRANSACTIONS
The Company has entered into a capital lease with an officer. Included in the
Statement of Income are the following expense relating to this agreement:
February 27, February 28, March 1,
1999 1998 1997
------------ ------------ --------
(in thousands)
Depreciation ............ $161 $156 $238
Interest ................ 119 195 261
The balance sheet includes the following items relating to this agreement:
February 27, 1999 February 28, 1998
----------------- -----------------
(in thousands)
Assets under Capital Lease ..... $3,763 $3,763
Accumulated Depreciation ....... (3,656) (3,495)
Capital Lease Obligation ....... 419 900
On November 22, 1996 the Company loaned the Marcy Syms Revocable Trust $500,000
toward the purchase of a house for Ms. Syms in Westchester County, New York. The
loan is evidenced by the Trust's note, which is guaranteed by Ms. Syms, and is
secured by a first priority mortgage on the real estate purchased. The note
bears interest at the rate of 6.6% per annum (the then Federal Mid-Term Rate)
payable annually, and the principal of the note is due November 22, 2001. This
loan was paid in full during the fiscal year ended February 27, 1999.
F-16
<PAGE>
NOTE 12 -- UNAUDITED SELECTED QUARTERLY FINANCIAL DATA
<TABLE>
<CAPTION>
Quarter
-------
First Second Third Fourth
----- ------ ----- ------
(In thousands, except per share amounts)
YEAR ENDED FEBRUARY 27, 1999
<S> <C> <C> <C> <C>
Net sales .................................................................. $83,612 $73,649 $95,533 $91,064
Gross profit ............................................................... $33,720 $27,870 $38,852 $35,458
Net income ................................................................. $ 5,309 $ 1,175 $ 6,323 $ 4,642
Net income per share -- basic .............................................. $ 0.30 $ 0.07 $ 0.36 $ 0.27
Net income per share -- diluted ............................................ $ 0.30 $ 0.07 $ 0.36 $ 0.27
<CAPTION>
Quarter
-------
First Second Third Fourth
----- ------ ----- ------
(In thousands, except per share amounts)
YEAR ENDED FEBRUARY 28, 1998
<S> <C> <C> <C> <C>
Net sales .................................................................. $85,650 $78,589 $97,867 $90,853
Gross profit ............................................................... $34,173 $30,271 $42,043 $35,851
Net income ................................................................. $ 4,675 $ 2,821 $ 9,021 $ 6,519
Net income per share -- basic .............................................. $ 0.26 $ 0.16 $ 0.51 $ 0.37
Net income per share -- diluted ............................................ $ 0.26 $ 0.16 $ 0.51 $ 0.36
</TABLE>
F-17
INDEPENDENT AUDITOR'S CONSENT
- ------------------------------
We consent to the incorporation by reference in this registration Statement of
Syms Corp on Form S-8 of our report dated April 6, 1999, appearing in this
Annual Report on Form 10-K of Syms Corp and subsidiaries for the fiscal year
ended February 27, 1999.
DELOITTE & TOUCHE LLP
April 6, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> FEB-27-1999
<PERIOD-END> FEB-27-1999
<CASH> 2,926
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 129,438
<CURRENT-ASSETS> 139,579
<PP&E> 240,941
<DEPRECIATION> 87,131
<TOTAL-ASSETS> 298,742
<CURRENT-LIABILITIES> 37,987
<BONDS> 0
0
0
<COMMON> 851
<OTHER-SE> 257,909
<TOTAL-LIABILITY-AND-EQUITY> 298,742
<SALES> 343,858
<TOTAL-REVENUES> 343,858
<CGS> 207,958
<TOTAL-COSTS> 207,958
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 93
<INCOME-PRETAX> 29,082
<INCOME-TAX> 11,633
<INCOME-CONTINUING> 17,449
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 17,449
<EPS-PRIMARY> 1.00
<EPS-DILUTED> 1.00
</TABLE>
