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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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[ X ] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 [NO FEE REQUIRED].
For the fiscal year ended December 31, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [NO FEE REQUIRED].
For the transition period from ________ to _______
Commission File Number: 1-10767
A. Full title of plan and the address of the plan, if different from
that of the issuer named below:
THE PROFIT SHARING AND 401(k) PLAN NO. SS7
B. Name of issuer of the securities held pursuant to the Plan and the
address of its principal executive office:
VALUE CITY DEPARTMENT STORES, INC.
3241 Westerville Road
Columbus, Ohio 43224
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THE PROFIT SHARING AND 401(k) PLAN NO. SS7
FINANCIAL STATEMENTS AS OF
DECEMBER 31, 2001 AND 2000 (RESTATED)
AND SUPPLEMENTAL SCHEDULE FOR
THE YEAR ENDED DECEMBER 31, 2001 AND
INDEPENDENT AUDITORS' REPORT
TABLE OF CONTENTS
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Description Page Number
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INDEPENDENT AUDITORS' REPORTS 1
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Plan Benefits
as of December 31, 2001 and 2000 (Restated) 2
Statement of Changes in Net Assets Available for Plan
Benefits for the Year Ended December 31, 2001 3
Notes to Financial Statements and Schedules 4-7
SUPPLEMENTAL SCHEDULE:
Form 5500 Schedule H, Part IV, Line 4I, Schedule of
Assets (Held at of December 31, 2001) 8
SIGNATURE 9
The following exhibit is being filed herewith:
Exhibit No. Description Page Number
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23 Independent Auditors' Consent 11
INDEPENDENT AUDITOR'S REPORT
To the Plan Committee
of The PROFIT SHARING AND 401(K) PLAN NO. SS7:
We have audited the accompanying financial statements of The Profit Sharing and
401(k) Plan No. SS7 (the "Plan") as of December 31, 2001 and 2000, and for the
year ended December 31, 2001, listed in the Table of Contents. These financial
statements and the supplemental schedule referred to below are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these supplemental financial statements and schedule based on our
audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the 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, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the Plan as
of December 31, 2001 and 2000, and the changes in net assets available for plan
benefits for the year ended December 31, 2001, in conformity with accounting
principles generally accepted in the United States of America.
As discussed in Note 1 to the financial statements, the Plan restated the
accompanying 2000 financial statements to include the Gramex Union Plan's net
assets available for benefits.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule listed in the
Table of Contents is presented for the purpose of additional analysis and is not
a required part of the basic financial statements but is supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. This supplemental schedule is the responsibility of the Plan's management.
Such supplemental schedule has been subjected to the auditing procedures applied
in our audit of the basic financial statements and, in our opinion, is fairly
stated in all material respects when considered in relation to the basic
financial statements taken as a whole.
/s/ Deloitte & Touche
September 27, 2002
1
THE PROFIT SHARING AND 401(k) PLAN NO. SS7
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
DECEMBER 31, 2001 AND 2000 (RESTATED)
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2000
(AS RESTATED
2001 SEE NOTE 1)
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INVESTMENTS, AT FAIR VALUE:
Mutual funds $147,558,689 $150,046,018
Common stock 8,176,247 10,567,200
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Total investments, at fair value 155,734,936 160,613,218
PARTICIPANT LOANS 8,564,691 2,867,081
RECEIVABLES:
Employee contributions 509,143 690,602
Employer matching contributions 307,178 304,332
Employer profit sharing contributions 1,281,754 1,794,676
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Total receivables 2,098,075 2,789,610
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NET ASSETS AVAILABLE FOR PLAN BENEFITS $166,397,702 $166,269,909
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See notes to financial statements.
2
THE PROFIT SHARING AND 401(k) PLAN NO. SS7
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 2001
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ADDITIONS TO NET ASSETS:
Investment income, net:
Dividends and interest $ 4,895,485
Net realized and unrealized depreciation in fair value of investments (16,700,704)
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Total investment loss, net (11,805,219)
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Contributions:
Employee 17,783,728
Employer matching 9,935,907
Employer profit sharing 1,281,754
Rollovers 1,238,045
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Total contributions 30,239,434
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Total additions 18,434,215
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DEDUCTIONS FROM NET ASSETS:
Distributions to participants 18,241,997
Fees 64,425
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Total deductions 18,306,422
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NET INCREASE 127,793
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NET ASSETS AVAILABLE FOR PLAN BENEFITS -
Beginning of year:
As previously reported 166,170,416
Adjustment (Note 1) 99,493
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As restated 166,269,909
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NET ASSETS AVAILABLE FOR PLAN BENEFITS - End of year $ 166,397,702
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See notes to financial statements.
3
THE PROFIT SHARING AND 401(k) PLAN NO. SS7
NOTES TO FINANCIAL STATEMENTS FOR THE
YEARS ENDED DECEMBER 31, 2001 AND 2000
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1. DESCRIPTION OF THE PLAN
GENERAL - The following description of The Profit Sharing and 401(k) Plan No.
SS7 (the "Plan") is provided for general information only. Interested parties
should refer to the Plan document for more complete information.
The Plan was adopted by Schottenstein Stores Corporation and affiliated
companies (the "Company") effective August 1, 1989 for the profit sharing
provisions of the Plan and effective October 1, 1989 for the 401(k) provisions
of the Plan. The Plan is subject to the provisions of the Employee Retirement
Income Security Act of 1974.
The Plan is administered by the Company, and all Plan expenses, with the
exception of loan fees, are paid by the Company. Heritage Trust Company is the
trustee and asset custodian of the Plan; Lifestyle fund assets are in the
custody of Reliance Trust Company.
Subsequent to the issuance of its 2000 financial statements, the Plan restated
the 2000 accompanying financial statement as a result of the Plan omitting
$99,493 of net assets available for benefits of the Gramex Corporation 401(k)
Plan for Union Employees. The effect of this restatement on the accompanying
2000 financial statement is summarized as follows:
AS PREVIOUSLY
AS RESTATED REPORTED
Net assets available for plan benefits, as restated $166,269,909 $166,170,416
Investments at fair value $160,613,218 $160,516,309
Receivables Employee Contributions $ 690,602 $ 688,018
CONTRIBUTIONS TO THE PLAN - The Plan is a defined contribution plan. Pursuant to
the 401(k) feature of the Plan, an eligible employee may contribute up to 20% of
his or her cash compensation on a pretax basis within certain dollar limitations
imposed by the Internal Revenue Service. Effective January 1, 2001, the $50,000
gross wages limitation in which the Company would match the employee
contributions was lifted. Effective January 1, 2001 the match formula was as
follows:
EMPLOYEE CONTRIBUTION EMPLOYER MATCH
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1.0 % 1.0 %
2.0 % 2.0 %
3.0 % 3.0 %
4.0 % 3.5 %
5.0 % 4.0 %
6.0 % 4.5 %
The Company may also elect to make a discretionary profit sharing contribution.
Such contributions are allocated to eligible participants, as defined by the
Plan, based on the ratio of
4
each participant's compensation to the total of all eligible participants'
compensation. Total discretionary contributions for 2001 was approximately
$1,281,754.
INVESTMENT OPTIONS - Participants have the option to direct the investment of
their accounts among alternative investment funds selected by the Plan
committee. A participant chooses from a number of different mutual fund options.
In addition, participants are able to invest in the stock of Value City
Department Stores, Inc. or American Eagle Outfitters, Inc., the affiliated
companies.
ELIGIBILITY AND VESTING - Employees are eligible for participation in the Plan
on the first of the month following the completion of 60 days of service, and
having attained the age of twenty and one-half years.
Amounts contributed by the participants and earnings thereon are fully vested
and nonforfeitable at all times. Amounts contributed by the Company (matching
and profit sharing contributions) to a participant's account and earnings
thereon vest at the rate of 25% per year, beginning with the second full year of
plan matching participation. Participants are fully vested at the end of the
fifth year of matching participation.
ALLOCATION OF INVESTMENT INCOME AND FORFEITURES - Investment income for each
fund is allocated to the applicable participants' accounts based on the ratio of
each participant's account balance to the total of all participants' account
balances in that fund, as defined. Forfeitures have historically been used to
offset employer contributions after five consecutive one year service breaks, as
defined by the Plan, based on the ratio of each eligible participant's
compensation to the total of all eligible participants' compensation. The Plan's
forfeitures are immediately available to offset employer contributions.
BENEFIT PAYMENTS - Benefits are generally payable upon the participating
employee's retirement, death, disability or termination of employment and are
paid as a lump-sum amount.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING - The financial statements are prepared using the accrual
basis of accounting.
USE OF ESTIMATES - The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
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.
The Plan utilizes various investment instruments. Investment securities, in
general, are exposed to various risks, such as interest rate, credit and overall
market volatility. Due to the level of risk associated with certain investment
securities, it is reasonably possible that changes in the values of investment
securities will occur in the near term and that such changes could materially
affect the amounts reported in the statements of net assets available for
benefits.
5
VALUATION OF INVESTMENTS - Investments are stated at fair value.
Unrealized appreciation (depreciation) of assets is based on fair values at year
end and fair values at the beginning of the Plan year or cost at the time of
purchase during the year. Realized appreciation (depreciation) on sale or
redemption of assets is based on the proceeds and the fair value of the assets
at the beginning of the Plan year or cost at the time of purchase during the
year.
Purchases and sales of securities are recorded on a trade date basis. Dividends
are recorded on the ex-dividend date.
PARTICIPANT LOANS - Subject to certain provisions, a participant may borrow from
their account balances. The participant executes a promissory note with an
interest rate based upon prevailing commercial lending rates. Loan principal and
interest are paid over a period in excess of one year as determined by the Plan
Committee. Principal and interest are paid ratably through payroll deductions.
Participant loans are valued at cost which approximates fair value.
3. TAX STATUS
The Internal Revenue Service has determined and informed the Company by a letter
dated September 26, 1996, that the Plan and related trust are designed in
accordance with applicable sections of the Internal Revenue Code ("IRC"). The
Company adopted the proposed amendments in April 1997. The Plan has been amended
since the latest determination letter. However, the Plan Administrator believes
the Plan, as currently designed, is in compliance and is being operated within
the applicable requirements of the IRC.
4. INVESTMENTS
The fair value of investments, which represent 5% or more of net assets
available for Plan benefits, as of December 31, 2001 and 2000, are as follows:
2001 2000
MFS Institutional Fixed Fund $ 63,430,467 $ 58,231,049
Massachusetts Investors Trust Fund 9,717,069 12,451,922
Massachusetts Investors Growth Stock Fund 19,139,224 28,479,538
MFS Capital Opportunities Fund 9,910,279 14,061,726
MFS Moderate Portfolio 8,402,232
During 2001, the Plan's investments (including gains and losses on investments
bought and sold, as well as held during the year) depreciated in value by
$16,700,704 as follows:
Mutual funds $(15,812,742)
Common stock (887,962)
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Total depreciation $(16,700,704)
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5. PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the right
under the Plan to terminate the Plan at any time subject to the provisions of
ERISA. In the event of Plan termination, participants will become 100% vested in
their accounts.
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6. RELATED PARTY TRANSACTIONS
Certain Plan investments are funds managed by MFS. MFS is the asset custodian of
the Plan, and therefore, these transactions qualify as party in interest.
Additionally, as Value City Department Stores, Inc. (VCDS) and American Eagle
Outfitters, Inc. are affiliated companies, the transactions in the VCDS Stock
Fund and American Eagle Stock Fund qualify as party in interest. Participant
loans also qualify as party in interest.
******
7
THE PROFIT SHARING AND 401(k) PLAN NO. SS7
FORM 5500 SCHEDULE H, LINE 4I, SCHEDULE OF ASSETS (HELD
AT DECEMBER 31, 2001)
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IDENTITY OF ISSUE, BORROWERS, NUMBER OF
LESSOR, OR SIMILAR PARTY DESCRIPTION OF ASSET SHARES FAIR VALUE
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MUTUAL FUNDS:
Reliance Trust Company Conservative Option Fund 763,084 $ 8,003,498
Reliance Trust Company Moderate Option Fund 837,410 8,402,232
Reliance Trust Company Aggressive Option Fund 756,398 7,509,365
*MFS Institutional Fixed Fund 63,450,467 63,430,467
PIMCO Total Return Fund 231,405 2,420,500
*MFS Total Return Fund 375,489 5,437,086
Vanguard 500 Index Fund 292,523 5,092,820
*MFS Massachusetts Investors Trust 586,072 9,717,069
*MFS Massachusetts Investors
Growth Stock Fund 1,484,811 19,139,224
*MFS Capital Opportunities Fund 737,921 9,910,279
*MFS Emerging Growth Fund 101,480 3,371,185
Lord Abbett Developing Growth Fund 55,664 956,865
American Funds New Perspectives Fund 147,190 3,192,561
American Funds Europacific Growth Fund 36,305 975,538
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Total mutual funds 147,558,689
COMMON STOCK:
Value City Department Stores, Inc. Common Stock 1,152,275 3,184,082
American Eagle Outfitters, Inc. Common Stock 220,238 4,992,165
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Total common stock 8,176,247
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TOTAL INVESTMENTS,
AT FAIR VALUE 155,734,936
PARTICIPANT LOANS -
*Various Participants Outstanding Participants Loans
(with interest rates ranging from
7% to 10%, with maturities
through 2021) 8,564,691
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TOTAL $164,299,627
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*Denotes party-in-interest
8
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the trustees (or other persons who administer the employee benefit plan)
have duly caused this annual report to be signed by the undersigned hereunto
duly authorized.
The Profit Sharing and 401(k) Plan No. SS7
Dated: December 2, 2002 /s/ George Dailey
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By: George Dailey
Title: Plan Administrator
9
THE PROFIT SHARING AND 401(k) PLAN NO. SS7
ANNUAL REPORT ON FORM 11-K
FOR FISCAL YEAR ENDED DECEMBER 31, 2001
INDEX TO EXHIBITS
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Exhibit No. Description Page Number
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23 Independent Auditors' Consent 11