================================================================================ UNITED STATES 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 29, 2004 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the transition period from_____________ to _____________ COMMISSION FILE NUMBER 1-8546 SYMS CORP (Exact Name of Registrant as Specified in Its Charter) NEW JERSEY 22-2465228 (State or Other Jurisdiction of (I.R.S. Employer Identification No.) Incorporation or Organization) SYMS WAY, SECAUCUS, NEW JERSEY 07094 (Address of Principal Executive Offices) (Zip Code) (201) 902-9600 (Registrant's Telephone Number, Including Area Code) NOT APPLICABLE (Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report) Indicate by check mark whether 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 --- --- Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes No X --- --- At July 1, 2004 the latest practicable date, there were 15,115,553 shares outstanding of Common Stock, par value $0.05 per share. ================================================================================
---------------------------- SYMS CORP AND SUBSIDIARIES ---------------------------- INDEX ----- PAGE NO. -------- PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Condensed Consolidated Balance Sheets as of May 29, 2004, February 28, 2004 and May 31, 2003 1 Condensed Consolidated Statements of Operations for the 13 Weeks Ended May 29, 2004 and May 31, 2003 2 Condensed Consolidated Statements of Cash Flows for the 13 Weeks Ended May 29, 2004 and May 31, 2003 3 Notes to Condensed Consolidated Financial Statements 4-6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7-10 Item 3. Quantitative and Qualitative Disclosures about Market Risk 10 Item 4. Controls and Procedures 10 PART II. OTHER INFORMATION 11-12 Item 1. Legal Proceedings Item 2. Changes In Securities, Use of Proceeds and Issuer Purchases of Equity Securities Item 3. Defaults Upon Senior Securities Item 4. Submission of Matters to a Vote of Security Holders Item 5. Other Information Item 6. Exhibits and Reports on Form 8-K SIGNATURES 13
---------------------------- SYMS CORP AND SUBSIDIARIES ---------------------------- CONDENSED CONSOLIDATED BALANCE SHEETS - -------------------------------------------------------------------------------- (IN THOUSANDS) <TABLE> <CAPTION> MAY 29, FEBRUARY 28, MAY 31, 2004 2004 2003 ------------ ------------- ------------ (Unaudited) (NOTE) (Unaudited) <S> <C> <C> <C> ASSETS CURRENT ASSETS Cash and cash equivalents $ 32,370 $ 21,386 $ 30,434 Merchandise inventories 83,458 69,226 88,277 Deferred income taxes 3,627 3,627 4,143 Assets held for sale 4,451 4,495 - Prepaid expenses and other current assets 7,607 6,173 5,133 ---------- ---------- ---------- TOTAL CURRENT ASSETS 131,513 104,907 127,987 PROPERTY AND EQUIPMENT - Net 121,971 123,757 133,312 DEFERRED INCOME TAXES 11,094 11,094 9,397 OTHER ASSETS 14,845 13,980 11,637 ---------- ---------- ---------- TOTAL ASSETS $ 279,423 $ 253,738 $ 282,333 ========== ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 40,140 $ 16,154 $ 35,647 Accrued expenses 9,798 7,714 11,219 Accrued insurance 933 1,264 1,835 Obligations to customers 3,516 3,570 3,317 ---------- ---------- ---------- TOTAL CURRENT LIABILITIES 54,387 28,702 52,018 OTHER LONG TERM LIABILITIES 1,852 1,862 1,886 ---------- ---------- ---------- COMMITMENTS AND CONTINGENCIES 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; 15,100 shares outstanding (net of 2,895 in treasury shares) on May 29, 2004, 15,092 shares outstanding as of February 28, 2004 (net of 2,879 treasury shares) and 15,440 shares outstanding (net of 2,513 treasury shares) on May 31, 2003 755 755 772 Additional paid-in capital 14,370 14,239 14,117 Treasury stock (24,118) (23,993) (21,572) Retained earnings 232,177 232,173 235,112 ---------- ---------- ---------- TOTAL SHAREHOLDERS' EQUITY 223,184 223,174 228,429 ---------- ---------- ---------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 279,423 $ 253,738 $ 282,333 ========== ========== ========== </TABLE> NOTE: The balance sheet at February 28, 2004 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
---------------------------- SYMS CORP AND SUBSIDIARIES ---------------------------- CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - -------------------------------------------------------------------------------- (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) <TABLE> <CAPTION> 13 WEEKS ENDED -------------- MAY 29, MAY 31, 2004 2003 ---- ---- (Unaudited) <S> <C> <C> Net sales $ 68,321 $ 63,534 Cost of goods sold 40,165 37,620 -------- -------- Gross profit 28,156 25,914 Expenses: Selling, general and administrative 18,653 19,169 Advertising 2,744 2,380 Occupancy 4,219 4,164 Depreciation and amortization 2,609 2,623 Other income (22) (110) -------- -------- Loss from operations (47) (2,312) Interest income (54) (12) -------- -------- Income/(loss) before income taxes 7 (2,300) Provision (benefit) for income taxes 3 (551) -------- -------- Net income/(loss) $ 4 $ (1,749) ======== ======== Net income/(loss) per share-basic $ - $ (0.11) ======== ======== Weighted average shares outstanding-basic 15,103 15,439 ======== ======== Net income/(loss) per share-diluted $ - $ (0.11) ======== ======== Weighted average shares outstanding- diluted 15,103 15,439 ======== ======== </TABLE> See Notes to Condensed Consolidated Financial Statements 2
---------------------------- SYMS CORP AND SUBSIDIARIES ---------------------------- CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS) - -------------------------------------------------------------------------------- <TABLE> <CAPTION> 13 WEEKS ENDED -------------- MAY 29, MAY 31, 2004 2003 ---- ---- (UNAUDITED) <S> <C> <C> CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ 4 $ (1,749) -------- -------- Adjustments to reconcile net income/(loss) to net cash provided by operating activities: Depreciation and amortization 2,609 2,621 Loss on disposal of assets 85 - (Increase) decrease in operating assets: - Merchandising inventories (14,232) (10,126) Prepaid expenses and other current assets (1,434) 1,147 Other assets (865) (1,792) Increase (decrease) in operating liabilities: Accounts payable 23,986 23,008 Accrued expenses 1,699 (1,419) Other long term liabilities (10) (5) -------- -------- Net cash provided by operating activities 11,842 11,685 -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Stanley Blacker Acquisition - - Expenditures for property and equipment (864) (473) -------- -------- Net cash used in investing activities (864) (473) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Exercise of options/Issuance of stock 132 25 -------- -------- Purchase of treasury shares (126) - -------- -------- Net cash provided by financing activities 6 25 -------- -------- NET INCREASE IN CASH AND CASH EQUIVALENTS 10,984 11,237 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 21,386 19,197 -------- -------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 32,370 $ 30,434 ======== ======== SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid during the period for: Interest (net of amount capitalized) $ - $ - ======== ======== Income taxes paid (refunds received) $ 10 $ - ======== ======== </TABLE> See Notes to Condensed Consolidated Financial Statements 3
---------------------------- SYMS CORP AND SUBSIDIARIES ---------------------------- NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 13 WEEKS ENDED MAY 29, 2004 AND MAY 31, 2003 - -------------------------------------------------------------------------------- (UNAUDITED) NOTE 1 - THE COMPANY Syms Corp (the "Company") operates a chain of 39 "off-price" retail clothing stores located throughout the United States in 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 29, 2004 is not necessarily indicative of the results that may be expected for the entire fiscal year ending February 26, 2005. 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 28, 2004. NOTE 3 - ACCOUNTING PERIOD The Company's fiscal year ends the Saturday nearest to the end of February. The fiscal year ending February 28, 2004 was comprised of 52 weeks. The fiscal year ended February 26, 2005 will be 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 On November 5, 2003, the Company entered into an unsecured revolving credit agreement with a bank for a line of credit not to exceed $20,000,000 through April 30, 2005. The unsecured revolving credit agreement replaced the Company's prior unsecured revolving credit agreement which expired by its terms. Under the new credit agreement, interest on individual advances is payable quarterly at 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 other alternative calculation, 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 .5 of 1% per annum. As of May 29, 2004 and February 28, 2004, there were no outstanding borrowings under this new agreement and as of May 31, 2003, there were no outstanding borrowings under the prior credit agreement. At May 29, 2004 and February 28, 2004, the Company had $3,902,000 and $2,597,000 respectively, in outstanding letters of credit under this new agreement. The prior credit agreement did not provide for the issuance of letters of credit. The agreement contains financial covenants with respect to consolidated tangible net worth, as defined therein, working capital and maximum capital expenditures, including dividends (defined to include cash repurchases of capital stock), as well as other financial ratios. The Company was in compliance with all covenants as of May 29, 2004. 4
---------------------------- SYMS CORP AND SUBSIDIARIES ---------------------------- In addition, the Company has a separate $10,000,000 credit facility with another bank available for the issuance of letters of credit for the purchase of foreign merchandise. This agreement may be canceled at any time by either party. At May 29, 2004, February 28, 2004 and May 31, 2003, the Company had $0, $0 and $4,462,000, respectively, in outstanding letters of credit. The Company is not currently utilizing this facility. NOTE 6 - NET INCOME/(LOSS) PER SHARE In accordance with SFAS 128, basic net income/(loss) per share has been computed based upon the weighted average of the common shares outstanding. Diluted net income/(loss) per share gives effect to outstanding stock options. Net income (loss) per share has been computed as follows: 13 WEEKS ENDED -------------- MAY 29, MAY 31, 2004 2003 ---- ---- Basic net income/(loss) per share: Net income/(loss) $ 4 $ (1,749) Average shares 15,103 15,439 outstanding Basic net income (loss) per share $ - $ (0.11) Diluted net income per share: Net income/(loss) $ 4 $ (1,749) Average shares 15,103 15,439 outstanding Stock - -- options Total average equivalent 15,103 15,439 shares Diluted net income/(loss) per share $ - $ (0.11) In periods with losses, options were excluded from the computation of diluted net income per share because the effect would be anti-dilutive. Options to purchase 859,000 and 977,000 shares of common stock at prices ranging from $5.63 to $10.69 per share were outstanding as of May 29, 2004 and May 31, 2003, respectively, but were not included in the computation of diluted net income per share because they would have been antidilutive. NOTE 7 - RECENT ACCOUNTING PRONOUNCEMENTS In January 2003, the Financial Accounting Standards Board ("FASB") issued Interpretation No. 46, Consolidation of Variable Interest Entities ("FIN 46"). The objective of this interpretation is to provide guidance on how to identify a variable interest entity ("VIE") and determine when the assets, liabilities, non-controlling interests, and results of operations of a VIE need to be included in a company's consolidated financial statements. A company that holds variable interests in an entity will need to consolidate the entity if the company's interest in the VIE is such that the company will absorb a majority of the VIE's expected losses and/or receive a majority of the entity's expected residual returns, if they occur. FIN 46 also requires additional disclosures by primary beneficiaries and other significant variable interest holders. In December 2003, the FASB completed deliberations of proposed modifications 5
---------------------------- SYMS CORP AND SUBSIDIARIES ---------------------------- to FIN 46 ("Revised Interpretations") resulting in multiple effective dates based on the nature as well as the creation date of the VIE. VIE's created after January 31, 2003, but prior to January 1, 2004, may be accounted for either based on the original interpretation or the Revised Interpretations. However, the Revised Interpretations must be applied no later than the Company's first quarter of fiscal 2004. VIE's created after January 1, 2004 must be accounted for under the Revised Interpretations. Special Purpose Entities ("SPE's") created prior to February 1, 2003 may be accounted for under the original or revised interpretation's provisions no later than the Company's first quarter of fiscal 2004. Non-SPE's created prior to February 1, 2003, should be accounted for under the revised interpretation's provisions no later than the Company's first quarter of fiscal 2004. The Company has not entered into any material arrangements with VIE's created after January 31, 2003. The Company has determined that the adoption of FIN 46 did not have a material effect on its results of operations and financial condition. NOTE 8 - ACCOUNTING FOR STOCK-BASED COMPENSATION The Company complies with Statement of Financial Accounting Standards No. 123 "ACCOUNTING FOR STOCK-BASED COMPENSATION" ("SFAS No. 123"). This statement defines a fair value based method whereby compensation cost is measured at the grant date based on the fair value of the award and is recognized over the service period, which is usually the vesting period. Under SFAS No. 123, companies are encouraged, but are not required, to adopt the fair value method of accounting for employee stock-based transactions. The Company accounts for such transactions under Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, but discloses pro forma net loss as if the Company had applied the SFAS No. 123 method of accounting. Pro forma information, assuming the Company had accounted for its employee stock options granted under the fair value method prescribed by SFAS No. 123, as amended by Financial Accounting Standards Board Statement No. 148, "Accounting for Stock Based Compensation - Transition and Disclosure, an Amendment of FASB Statement No. 123," is presented below. The fair value of each option grant is estimated on the date of each grant using the Black-Scholes option-pricing model. There were no stock options granted in the first quarter of fiscal 2004 or of fiscal 2003. 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. <TABLE> <CAPTION> 13 WEEKS ENDED -------------- 5/29/04 5/31/03 ------- ------- <S> <C> <C> Net income/(loss): 4 ($1,749) Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects - ($7) ------- ---- Pro forma net income/(loss) 4 ($1,756) ======= ======= Earnings (loss) per share: Basic, as reported - ($0.11) Basic, pro forma - ($0.11) Diluted, as reported - ($0.11) Diluted, pro forma - ($0.11) </TABLE> This pro forma information may not be representative of the amounts to 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 fiscal 1996. 6
---------------------------- SYMS CORP AND SUBSIDIARIES ---------------------------- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS The Quarterly Report (including but not limited to factors discussed below, in the Management's Discussion and Analysis of Financial Condition and Results of Operations," as well as those discussed elsewhere in this Quarterly Report on Form 10-Q) includes forward-looking statements (within the meaning of Sections 27A of the Securities Act of 1933 and 21E of the Securities Exchange Act of 1934) 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 herein 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 and elsewhere described in this Quarterly Report and other reports filed with the Securities and Exchange Commission. CRITICAL ACCOUNTING POLICIES AND ESTIMATE The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the appropriate application of certain accounting policies, many of which require us to make estimates and assumptions about future events and their impact on amounts reported in the financial statements and related notes. Since future events and their impact cannot be determined with certainty, the actual results will inevitably differ from our estimates. Such differences could be material to the consolidated financial statements. The Company believes application of accounting policies, and the estimates inherently required by the policies, are reasonable. These accounting policies and estimates are constantly reevaluated, and adjustments are made when facts and circumstances dictate a change. Historically, the Company has found the application of accounting policies to be appropriate, and actual results have not differed materially from those determined using necessary estimates. The Company's accounting policies are more fully described in Note 1 to the Consolidated Financial Statements, located in the Annual Report on Form 10-K for the fiscal year ended February 28, 2004. The Company has identified certain critical accounting policies that are described below. MERCHANDISE INVENTORY - Inventories are valued at lower of cost or market using the retail first-in, first-out ("FIFO") inventory method. Under the retail inventory method ("RIM"), the valuation of inventories at cost and the resulting gross margins are calculated by applying a calculated cost to retail ratio to the retail value of inventories. RIM is an averaging method that has been widely used in the retail industry due to its practicality. Additionally, it is recognized that the use of RIM will result in valuing inventories at the lower of cost or market if markdowns are currently taken as a reduction of the retail value of inventories. Inherent in the RIM calculation are certain significant management judgments and estimates including, among others, merchandise markon, markups, and markdowns, which significantly impact the ending inventory valuation at cost as well as resulting gross margins. Management believes that the Company's RIM and 7
---------------------------- SYMS CORP AND SUBSIDIARIES ---------------------------- application of FIFO provides an inventory valuation which reasonably approximates cost using a first-in, first-out assumption and results in a carrying value at the lower of cost or market. If actual market conditions are less favorable than those projected by management, additional markdowns may be required. LONG-LIVED ASSETS - In evaluation of the fair value and future benefits of long-lived assets, the Company performs analyses of the anticipated undiscounted future net cash flows of the related long-lived assets. If the carrying value of the related asset exceeds the undiscounted cash flows, the Company reduces the carrying value to its fair value, which is generally calculated using discounted cash flows. Various factors including future sales growth and profit margins are included in this analysis. To the extent these future projections or our strategies change, the conclusion regarding impairment may differ from the Company's current estimates. DEFERRED TAX VALUATION ALLOWANCE - The Company records a valuation allowance to reduce its deferred tax assets to the amount that is more likely than not to be realized. The Company has considered future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for the valuation allowance. If the Company were to determine that it would be able to realize its deferred tax assets in the future in excess of its net recorded amount, an adjustment to the deferred tax asset would increase income in the period such determination was made. Likewise, should the Company determine that it would not be able to realize all or part of our net deferred tax asset in the future, an adjustment to the deferred tax asset would be charged to income in the period such determination was made. SELF-INSURANCE ACCRUALS - The Company had been self-insured for workers' compensation liability claims. The Company is responsible for the payment of claims from prior years. In estimating the obligation associated with incurred losses, the Company utilizes loss development factors. These development factors utilize historical data to project incurred losses. Loss estimates are adjusted based upon actual claims settlements and reported claims. RESULTS OF OPERATIONS 13 WEEKS ENDED MAY 29, 2004 COMPARED TO 13 WEEKS ENDED MAY 31, 2003 Net sales for the 13 weeks ended May 29, 2004 were $68,321,000, an increase of $4,787,000 (7.5%) as compared to net sales of $63,534,000 for the 13 weeks ended May 31, 2003. The increases were primarily due to sales increases in haberdashery, women's apparel, shoes and tailored clothing. Gross profit for the 13 weeks ended May 29, 2004 was $28,156,000 (41.2% as a percentage of net sales), an increase of $2,242,000 as compared to gross profit of $25,914,000 (40.8% as a percentage of net sales) for the fiscal period ended May 31, 2003. This increase in gross profit during this period is largely attributable to higher sales and lower markdowns compared to the comparable period a year ago. Selling, general and administrative expense decreased $516,000 to $18,653,000 (27.3% as a percentage of net sales) for the 13 weeks ended May 29, 2004, as compared to $19,169,000 (30.2% as a percentage of net sales) for the 13 weeks ended May 31, 2003. The decrease in expenses in existing stores is largely due to lower payrolls which was partially offset by higher pension expense. Advertising expense for the 13 weeks ended May 29, 2004 was $2,744,000 (4.0% as a percentage of net sales) for the 13 weeks ended May 29, 2004 as compared to $2,380,000 (3.8% as a percentage of net sales) for the 13 weeks ended May 31, 2003. Occupancy costs were $4,219,000 (6.2% as a percentage of net sales) for the 13-week period ended May 29, 2004 as compared to $4,164,000 (6.6% as a percentage of net sales) for the 13 weeks ended May 31, 2003. 8
---------------------------- SYMS CORP AND SUBSIDIARIES ---------------------------- Depreciation and amortization amounted to $2,609,000 (3.8% as a percentage of net sales) for the 13 weeks ended May 29, 2004 as compared to $2,623,000 (4.1% as a percentage of net sales) for the 13 weeks ended May 31, 2003. Net income before taxes for the 13 weeks ended May 29, 2004 was $7,000 as compared to a net loss before income taxes of $2,300,000 for the 13 weeks ended May 31, 2003. The net profit for this period resulted principally from higher sales, improved gross profit margins and lower expenses as compared to the same period last year. For the 13-week period ended May 29, 2004, the effective income tax rate was 43% compared to 24% for the period ended May 31, 2003. The fluctuation on the effective income tax rate is due to the non-deductibility of officer's life insurance premiums. LIQUIDITY AND CAPITAL RESOURCES Working capital as of May 29, 2004 was $77,126,000, an increase of $1,157,000, as compared to $75,969,000 as of May 31, 2003. The ratio of current assets to current liabilities was 2.42 to 1 as compared to 2.46 to 1 as of May 31, 2003. Net cash provided by operating activities totaled $11,842,000 for the 13 weeks ended May 29, 2004, an increase of $157,000 as compared to $11,685,000 for the 13 weeks ended May 31, 2003. Net cash used in investing activities was $864,000 for the 13 weeks ended May 29, 2004, as compared to $473,000 for the 13 weeks ended May 31, 2003. Expenditures for property and equipment totaled $864,000 and $473,000 for the 13 weeks ended May 29, 2004 and May 31, 2003, respectively. Net cash provided by financing activities was $6,000 for the 13 weeks ended May 29, 2004, as compared to $25,000 for the 13 weeks ended May 31, 2003. On November 5, 2003 the Company entered into an unsecured revolving credit agreement with a bank for a line of credit not to exceed $20,000,000 through April 30, 2005. This unsecured revolving credit agreement replaced the Company's prior unsecured revolving credit agreement which expired by its terms. Under the new agreement, interest on individual advances is payable quarterly at 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 other alternative calculation, 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 .5 of 1% per annum. As of May 29, 2004 and February 28, 2004, there were no outstanding borrowings under this new agreement and as of May 31, 2003, there were no outstanding borrowings under the prior agreement. At May 29, 2004 and February 28, 2004, the Company had $3,902,000 and $2,597,000 respectively, in outstanding letters of credit under this new agreement. The prior credit agreement did not provide for the issuance of letters of credit. The agreement contains financial covenants with respect to consolidated tangible net worth, as defined therein, working capital and maximum capital expenditures, including dividends (defined to include cash repurchases of capital stock), as well as other financial ratios. The Company was in compliance with all covenants as of May 29, 2004. In addition, the Company has a separate $10,000,000 credit facility with another bank available for the issuance of letters of credit for the purchase of foreign merchandise. This agreement may be canceled at any time by either party. At May 29, 2004, February 28, 2004 and May 31, 2003, the Company had $0, $0 and $4,462,000, respectively, in outstanding letters of credit. The Company is not currently utilizing this facility. 9
---------------------------- SYMS CORP AND SUBSIDIARIES ---------------------------- The Company has planned capital expenditures of approximately $5,000,000 for the fiscal year ending February 26, 2005. Through the 13 week period ended May 29, 2004, the Company incurred $864,000 of capital expenditures. On April 22, 2004, the Company's Board of Directors approved the repurchase by the Company through June 7, 2006 of up to an additional 3,100,000 shares of common stock at prevailing market prices. All shares repurchased will be held as treasury stock. Under prior authorization, the Company repurchased during the 13 week period ended May 29, 2004, 16,100 shares of common stock at a total cost of $126,002, and during the year ended February 28, 2004, 366,300 shares of common stock representing 2.4% of its outstanding shares, at a total cost of $2,438,000. Management believes that existing cash, internally generated funds, trade credit and funds available from the revolving credit agreement will be sufficient for working capital and capital expenditure requirements for the fiscal year ending February 26, 2005. 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 See Note 7 of the Consolidated Financial Statements for a full description of the Recent Accounting Pronouncements including the respective dates of adoption and the effects on Results of Operation and Financial Condition. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company's operations are not currently subject to material market risks for interest rates, foreign currency rates or other market price risks. ITEM 4. CONTROLS AND PROCEDURES Based on the evaluation of the Company's disclosure controls and procedures as of the end of the period covered by this Quarterly Report, each of Marcy Syms, the Chief Executive Officer of the Company, and Antone F. Moreira, the Chief Financial Officer of the Company, have concluded that the Company's disclosure controls and procedures are effective in ensuring that information required to be disclosed by the Company in the reports that it files or submits under the Securities and Exchange Act of 1934, as amended, is recorded, processed, summarized and reported, within the time period specified by the Securities and Exchange Commission's rules and forms. Notwithstanding the foregoing, a control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that it will detect or uncover failures within the Company to disclose material information otherwise required to be set forth in the Company's periodic reports. Internal Control Over Financial Reporting There have not been any changes in the Company's internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the Company's most recent completed fiscal quarter that have materially affected, or are reasonably likely to materially affect the Company's internal control over financial reporting. 10
---------------------------- SYMS CORP AND SUBSIDIARIES ---------------------------- PART II. OTHER INFORMATION Item 1. LEGAL PROCEEDINGS - None Item 2. CHANGES IN SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASES OF EQUITY SECURITIES Issuer Purchases of Equity Securities <TABLE> <CAPTION> - ----------------------- --------------------- -------------------- --------------------- -------------------- PERIOD TOTAL NUMBER OF AVERAGE PRICE PAID TOTAL NUMBER OF MAXIMUM NUMBER OF SHARES PURCHASED PER SHARE SHARES PURCHASED AS SHARES THAT MAY PART OF PUBLICLY YET BE PURCHASED ANNOUNCED PLANS OR UNDER THE PLANS OR PROGRAMS PROGRAMS (1) (2) - ----------------------- --------------------- -------------------- --------------------- -------------------- <S> <C> <C> <C> <C> February 29, 2004 - 0 0 0 0 April 3, 2004 - ----------------------- --------------------- -------------------- --------------------- -------------------- April 3, 2004 - 3,100 7.90 3,100 2,469,600 May 1, 2004 - ----------------------- --------------------- -------------------- --------------------- -------------------- May 2, 2004 - 13,000 7.81 13,000 2,456,600 May 29, 2004 - ----------------------- --------------------- -------------------- --------------------- -------------------- Total 16,100 7.83 16,100 2,456,600 - ----------------------- --------------------- -------------------- --------------------- -------------------- </TABLE> (1) On June 7, 2002, the Company's Board of Directors' authorized the repurchase of up to 20% of its outstanding shares of common stock (not to exceed 3,200,000 shares) at prevailing market prices through June 7, 2004. The shares repurchased pursuant to this authorization are represented in this chart. (2) On April 22, 2004, the Company's Board of Directors approved the repurchase of up to an additional 3,100,000 shares of common stock at prevailing market prices through June 7, 2006. All shares repurchased will be held as treasury stock. Item 3. DEFAULTS UPON SENIOR SECURITIES - None Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - None Item 5. OTHER INFORMATION - None 11
---------------------------- SYMS CORP AND SUBSIDIARIES ---------------------------- Item 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits filed with this Form 10-Q 31.1 Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities and Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 31.2 Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities and Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1 Certification of Chief Executive Officer pursuant to Rule 13a-14(b) under the Securities and Exchange Act of 1934, and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 32.2 Certification of Chief Financial Officer pursuant to Rule 13a-14(b) under the Securities and Exchange Act of 1934, and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (b) Reports on Form 8-K On April 23, 2004, the Company furnished a Report on Form 8-K pursuant to Items 7 and 12 of such form regarding its results of operations for the fiscal quarter and year ended February 28, 2004. 12
---------------------------- SYMS CORP AND SUBSIDIARIES ---------------------------- 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 8, 2004 BY /s/ MARCY SYMS -------------- MARCY SYMS CHIEF EXECUTIVE OFFICER DATE: July 8, 2004 BY /s/ ANTONE F. MOREIRA --------------------- ANTONE F. MOREIRA VICE PRESIDENT, CHIEF FINANCIAL OFFICER (Principal Financial and Accounting Officer) 13