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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 quarterly period ended MAY 27, 2000
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
Incorporation or Organization) Identification No.)
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 the 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
--- ---
At July 7, 2000 the latest practicable date, there were 15,959,790 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.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets as of
May 27, 2000, February 26, 2000 and May 29, 1999 1
Condensed Consolidated Statements of Income for the
13 Weeks Ended May 27, 2000 and May 29, 1999 2
Condensed Consolidated Statements of Cash Flows for the
13 Weeks Ended May 27, 2000 and May 29, 1999 3
Notes to Condensed Consolidated Financial Statements 4-5
Item 2. Management's Discussion and Analysis of Financial Condition 5-7
and Results of Operations
Item 3. Quantitative and Qualitative Disclosure about Market Risk n/a
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes In Securities and Use of Proceeds
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 8
SIGNATURES 8
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<TABLE>
<CAPTION>
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SYMS CORP AND SUBSIDIARIES
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CONDENSED CONSOLIDATED BALANCE SHEETS
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(IN THOUSANDS)
MAY 27, FEBRUARY 26, MAY 29,
2000 2000 1999
--------- ------------ ---------
(Unaudited) (NOTE) (Unaudited)
<S> <C> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 16,790 $ 9,682 $ 14,697
Merchandise inventories 135,948 116,357 136,932
Deferred income taxes 3,324 3,221 2,947
Prepaid expenses and other current assets 2,483 3,002 2,792
--------- --------- ---------
TOTAL CURRENT ASSETS 158,545 132,262 157,368
PROPERTY AND EQUIPMENT - Net of accumulated 160,928 162,447 157,835
depreciation and amortization
DEFERRED INCOME TAXES 1,135 916 36
OTHER ASSETS 5,207 4,689 5,582
--------- --------- ---------
TOTAL ASSETS $ 325,815 $ 300,314 $ 320,821
========= ========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short Term Borrowings $ -- $ -- $ --
Accounts payable 55,791 27,374 48,321
Accrued expenses & taxes 5,207 7,500 8,066
Accrued insurance 2,900 2,774 1,844
Obligations to customers 2,707 2,733 3,237
Income taxes payable 3,054 4,069 2,256
Current portion of obligations under capital lease -- -- 285
--------- --------- ---------
TOTAL CURRENT LIABILITIES 69,659 44,450 64,009
--------- --------- ---------
OTHER LONG TERM LIABILITIES 2,584 2,436 1,728
--------- --------- ---------
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; 15,960 shares outstanding (net of
1,928 in treasury shares) on May 27, 2000 and
February 26, 2000, and 16,463 shares outstanding
(net of 1,424 treasury shares) on May 29, 1999 798 798 823
Additional paid-in capital 13,752 13,752 13,752
Treasury Stock (17,671) (17,671) (14,650)
Retained earnings 256,693 256,549 255,159
--------- --------- ---------
TOTAL SHAREHOLDERS' EQUITY 253,572 253,428 255,084
--------- --------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 325,815 $ 300,314 $ 320,821
========= ========= =========
</TABLE>
NOTE: The balance sheet at February 26, 2000 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
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(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
13 WEEKS ENDED
----------------------
MAY 27, MAY 29,
2000 1999
-------- --------
(Unaudited)
Net sales $ 81,192 $ 79,771
Cost of goods sold 49,875 47,925
-------- --------
Gross profit 31,317 31,846
Expenses:
Selling, general and administrative 20,097 19,821
Advertising 3,030 3,620
Occupancy 5,265 4,671
Depreciation and amortization 2,869 2,388
-------- --------
Income from operations 56 1,346
Interest income (180) (21)
-------- --------
Income before income taxes 236 1,367
Provision for income taxes 92 533
-------- --------
Net income $ 144 $ 834
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Net income per share-basic $ 0.01 $ 0.05
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Weighted average shares outstanding-basic 15,960 16,722
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Net income per share-diluted $ 0.01 $ 0.05
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Weighted average shares outstanding- diluted 15,960 16,723
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See notes to condensed consolidated financial statements
2
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SYMS CORP AND SUBSIDIARIES
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<TABLE>
<CAPTION>
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
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13 WEEKS ENDED
-----------------------
MAY 27, MAY 29,
2000 1999
-------- ---------
(UNAUDITED)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 144 $ 834
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 2,869 2,388
Deferred income taxes (322) 51
Gain on sale of property and equipment (336) (143)
Loss of disposal of assets -- 16
(Increase) decrease in operating assets:
Merchandising inventories (19,591) (7,494)
Prepaid expenses and other current assets 519 961
Other assets (524) (236)
Increase (decrease) in operating liabilities:
Accounts payable 28,417 29,053
Accrued expenses (2,167) (359)
Obligations to customers (26) (214)
Other long term liabilities 148 161
Income taxes (1,015) 26
-------- --------
Net cash provided by operating activities 8,116 25,044
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for property and equipment (1,389) (6,422)
Proceeds from sale of property and equipment 381 143
-------- --------
Net cash used in investing activities (1,008) (6,279)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of obligations under capital lease -- (134)
Revolving line of credit (repayments) borrowings - net -- (2,350)
Stock repurchase -- (4,510)
-------- --------
Net cash used in financing activities -- (6,994)
NET INCREASE IN CASH AND CASH EQUIVALENTS 7,108 11,771
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 9,682 2,926
-------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 16,790 $ 14,697
======== ========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for:
Interest (net of amount capitalized) $ 17 $ 53
======== ========
Income taxes paid (refunds received) $ 1,430 $ 464
======== ========
</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
13 WEEKS ENDED MAY 27, 2000 AND MAY 29, 1999
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(UNAUDITED)
NOTE 1 - THE COMPANY
Syms Corp (the "Company") operates a chain of 48 "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 13 week period ended May 27, 2000 is
not necessarily indicative of the results that may be expected for the entire
fiscal year ending March 3, 2001. 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 February 26,
2000.
NOTE 3 - ACCOUNTING PERIOD
The Company's fiscal year ends the Saturday nearest to the end of February. The
fiscal year ending March 3, 2001 will be comprised of 53 weeks. The fiscal year
ended February 26, 2000 was 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 $30,000,000 through May 4, 2001. 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 3/8 of 1% per annum. As of May 27,
2000, February 26, 2000 and May 29, 1999 there were no outstanding borrowings
under this agreement.
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 $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 May 27, 2000, February 26, 2000 and May 29, 1999 the
Company had $ 5,874,000, $3,265,000 and $5,842,000, respectively, in outstanding
letters of credit.
4
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SYMS CORP AND SUBSIDIARIES
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NOTE 6 - 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.
Net income per share has been computed as follows:
MAY 27, MAY 29,
BASIC NET INCOME PER SHARE 2000 1999
------- -------
Net Income $ 144 $ 834
Average shares outstanding 15,960 16,722
Basic net income per share $ 0.01 $ 0 .05
DILUTED NET INCOME PER SHARE:
Net Income $ 144 $ 834
Average shares outstanding 15,960 16,722
Stock options -- 1
Total average equivalent shares 15,960 16,723
DILUTED NET INCOME PER SHARE $ 0.01 $ 0.05
Options to purchase 1,145,000 (including certain options granted in fiscal year
1999 subject to shareholder approval of an amendment to the Company's Amended
and Restated Incentive Stock Option and Appreciation Plan to increase the number
of shares of common stock for which options may be granted under such plan) and
386,000 shares of common stock at prices ranging from $5.63 to $12.25 per share
were outstanding as of May 27, 2000 and May 29, 1999, 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.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
The Quarterly 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 Quarterly 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, 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.
5
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SYMS CORP AND SUBSIDIARIES
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RESULTS OF OPERATIONS
13 Weeks Ended May 27, 2000 Compared to 13 Weeks Ended May 29, 1999
Net sales of $81,192,000 for the 13 weeks ended May 27, 2000 increased
$1,421,000 (1.8%) as compared to net sales of $79,771,000 for the 13 weeks ended
May 29, 1999. Comparable store sales decreased 1.8% from the 1999 period. The
sales increase in this quarter is largely attributable to the opening of three
new stores.
Gross profit for the 13 weeks ended May 27, 2000 was $31,317,000 (38.6% as a
percentage of net sales), a decrease of $529,000 as compared to $31,846,000
(39.9% as a percentage of net sales) for the fiscal period ended May 29, 1999.
This decrease resulted mainly from higher markdowns in the first quarter of this
year compared to the comparable period a year ago.
Selling, general and administrative expense increased $276,000 to $20,097,000
(24.8% as a percentage of net sales) for the 13 weeks ended May 27, 2000 as
compared to $19,821,000 (24.8% as a percentage of net sales) for the 13 weeks
ended May 29, 1999. Approximately $1,374,000 of the $20,097,000 relates to the
SG&A expense in connection with three new stores located in Towson, MD, Chicago,
IL and Lawrenceville, NJ.
Advertising expense for the 13 weeks ended May 27, 2000 decreased to $3,030,000,
(3.7% as a percentage of net sales) as compared to $3,620,000 (4.5% as a
percentage of net sales) in the 13 weeks ended May 29, 1999. Advertising
expenses were lower than last year as a result of a reduction in the radio and
TV advertising.
Occupancy costs were $5,265,000 (6.5% as a percentage of net sales) for the 13
week period ended May 27, 2000, compared to $4,671,000 (5.9% as a percentage of
net sales) for the period ended May 29, 1999. The occupancy expenses of the
three new stores which amounted to approximately $569,000 accounts for the major
portion of this increase.
Depreciation and amortization amounted to $2,869,000 (3.5% as a percentage of
net sales), an increase of $481,000 as compared to $2,388,000 (3.0% as a
percentage of net sales ) for the 13 weeks ended May 29, 1999. This increase is
largely attributable to the addition of three new stores.
Income before income taxes for the 13 weeks ended May 27, 2000 was $236,000, a
decrease of $1,131,000 as compared to $1,367,000 for the 13 weeks ended May 29,
1999. This decrease in profit resulted from lower gross profit and increased
expenses.
For the 13 week period ended May 27, 2000 the effective income tax rate was 39%,
the same as the comparable period a year ago.
LIQUIDITY AND CAPITAL RESOURCES
Working capital as of May 27, 2000 was $88,886,000, a decrease of $4,473,000
compared to $93,359,000 as of May 29, 1999. The ratio of current assets to
current liabilities was 2.28 to 1 as compared to 2.46 to 1 as of May 29, 1999.
Net cash provided by operating activities totaled $8,116,000 for the 13 weeks
ended May 27, 2000, a decrease of $16,928,000 as compared to $25,044,000 for the
13 weeks ended May 29, 1999. In the 13 week period ended May 27, 2000, cash
provided by operating activities was largely impacted by the increased
merchandise inventories and decreased profit during this period compared to the
comparable period a year ago.
6
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SYMS CORP AND SUBSIDIARIES
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Net cash used in investing activities was $1,008,000 for the 13 weeks ended May
27, 2000, and $6,279,000 in 1999. Expenditures for property and equipment
totaled $1,389,000 and $6,422,000 for the 13 weeks ended May 27, 2000 and May
29, 1999, respectively.
Net cash used in financing activities was 0 for the 13 weeks ended May 27, 2000
and $6,994,000 for the 13 weeks ended May 29, 1999.
The Company has a revolving credit agreement with a bank for a line of credit
not to exceed $30,000,000 through May 4, 2001. 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 27, 2000 and May 29, 1999
there were no outstanding borrowings under the revolving credit agreement.
The Company has planned capital expenditures of approximately $5,000,000 for the
fiscal year ending March 3, 2001. Through the 13 week period ended May 27, 2000
the Company has incurred $1,389,000 of capital expenditures.
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
March 3, 2001.
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.
RECENT ACCOUNTING PRONOUNCEMENTS
In December 1999 the staff of the SEC issued Staff Accounting Bulletin 101
("SAB101") on revenue recognition, the implementation of which was subsequently
delayed. The Company is currently evaluating the impact of SAB101.
7
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SYMS CORP AND SUBSIDIARIES
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PART II. OTHER INFORMATION
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Item 1. LEGAL PROCEEDINGS - None
Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS - 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 10 - Second Amendment to the Revolving Credit Agreement dated
as of May 27, 2000, between Syms Corp and Summit Bank
(b) Exhibit 27 - Financial Data Schedule
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SYMS CORP
DATE: JULY 10, 2000 BY /s/MARCY SYMS
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Marcy Syms
CHIEF EXECUTIVE OFFICER
DATE: JULY 10, 2000 BY /s/ANTONE F. MOREIRA
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Antone F. Moreira
VICE PRESIDENT, CHIEF FINANCIAL
OFFICER
(Principal Financial and Accounting
Officer)
8
