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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, 1999
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:
SCHOTTENSTEIN STORES CORPORATION AND AFFILIATES ASSOCIATES
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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SCHOTTENSTEIN STORES CORPORATION AND AFFILIATES
ASSOCIATES PROFIT SHARING AND 401(k) PLAN NO. SS7
FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1999 AND 1998
AND FOR THE YEAR ENDED DECEMBER 31, 1999
TOGETHER WITH AUDITORS' REPORT
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
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Report of Independent Public Accountants
Statements of Net Assets Available for Plan Benefits as of December 31, 1999 and
1998
Statement of Changes in Net Assets Available for Plan Benefits for the Year
Ended December 31, 1999
Notes to Financial Statements and Schedules
Schedule I - Item 4i - Schedule of Assets Held for Investment Purposes as of
December 31, 1999
Schedule II - Item 4 - Schedule of Nonexempt Transactions for the Year Ended
December 31, 1999
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Plan Administration Committee
of the SCHOTTENSTEIN STORES CORPORATION
AND AFFILIATES ASSOCIATES PROFIT SHARING
AND 401(K) PLAN NO. SS7:
We have audited the accompanying statements of net assets available for plan
benefits of the SCHOTTENSTEIN STORES CORPORATION AND AFFILIATES ASSOCIATES
PROFIT SHARING AND 401(k) PLAN NO. SS7 (the "Plan") as of December 31, 1999 and
1998, and the related statement of changes in net assets available for plan
benefits for the year ended December 31, 1999. These financial statements and
the schedules referred to below are the responsibility of the Plan's management.
Our responsibility is to express an opinion on these financial statements and
schedules based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. 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, 1999 and 1998, and the changes in net assets available for plan
benefits for the year ended December 31, 1999, in conformity with accounting
principles generally accepted in the United States.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental Schedule of Assets Held
for Investment Purposes and Schedule of Nonexempt Transactions are presented for
the purpose of additional analysis and are not a required part of the basic
financial statements but are 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. The supplemental schedules
have been subjected to the auditing procedures applied in the audits of the
basic financial statements and, in our opinion, are fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
/s/ Arthur Andersen LP
Columbus, Ohio,
December 15, 2000.
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SCHOTTENSTEIN STORES CORPORATION AND AFFILIATES
ASSOCIATES PROFIT SHARING AND 401(k) PLAN NO. SS7
Statements of Net Assets Available for Plan Benefits
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1999 1998
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INVESTMENTS:
At fair market value $137,130,596 $ 43,645,325
At contract value -- 47,111,819
Participant loans 2,201,222 1,360,589
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Total investments 139,331,818 92,117,733
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RECEIVABLES:
Employee contributions 458,732 918,445
Employer matching contributions 153,308 395,028
Employer profit sharing contributions 2,172,319 2,839,686
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Total receivables 2,784,359 4,153,159
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NET ASSETS AVAILABLE FOR PLAN BENEFITS $142,116,177 $ 96,270,892
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The accompanying notes to financial statements and schedules are an integral
part of these statements.
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SCHOTTENSTEIN STORES CORPORATION AND AFFILIATES
ASSOCIATES PROFIT SHARING AND 401(k) PLAN NO. SS7
Statement of Changes in Net Assets Available for Plan Benefits
For the Year Ended December 31, 1999
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ADDITIONS TO NET ASSETS ATTRIBUTED TO:
Investment income, net:
Dividends and interest $ 8,387,558
Net realized and unrealized appreciation in market
value of investments 9,557,166
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Total investment income, net 17,944,724
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Contributions:
Employee 12,839,510
Employer matching 5,820,980
Employer profit sharing contributions 2,171,130
Rollovers 1,121,294
Net assets transferred 16,297,369
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Total contributions 38,250,283
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Total additions 56,195,007
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DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO:
Distributions to participants 10,332,578
Fees 17,144
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Total deductions 10,349,722
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Net increase 45,845,285
NET ASSETS AVAILABLE FOR PLAN BENEFITS, beginning of year 96,270,892
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NET ASSETS AVAILABLE FOR PLAN BENEFITS, end of year $142,116,177
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The accompanying notes to financial statements and schedules are an integral
part of this statement.
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SCHOTTENSTEIN STORES CORPORATION AND AFFILIATES
ASSOCIATES PROFIT SHARING AND 401(k) PLAN NO. SS7
Notes to Financial Statements and Schedules
December 31, 1999 and 1998
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(1) DESCRIPTION OF THE PLAN
GENERAL
The following description of Schottenstein Stores Corporation and
Affiliates Associates 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. Effective April 1, 1999,
Reliance Trust Company became the trustee and asset custodian of the
Plan. Prior to April 1, 1999, Metropolitan Life Insurance Company acted
in this capacity.
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. The Company matches employee
contributions on the first $50,000 of gross wages as follows: a) the
first 1% of an employee's 401(k) savings contribution is matched with an
employer contribution of 1.5%, b) the next 1% of an employee's 401(k)
savings contribution is matched with an employer contribution of 1%, and
c) the next 1% of an employee's 401(k) savings contribution is matched
with an employer contribution of one-half percent. 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 each participant's compensation to the total
of all eligible participants' compensation. Total discretionary
contributions for 1999 were approximately $2,000,000.
ELIGIBILITY AND VESTING
Employees are eligible for participation in the Plan after completing 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.
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SCHOTTENSTEIN STORES CORPORATION AND AFFILIATES
ASSOCIATES PROFIT SHARING AND 401(k) PLAN NO. SS7
Notes to Financial Statements and Schedules
December 31, 1999 and 1998
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ALLOCATION OF INVESTMENT INCOME AND FORFEITURES
Investment income for each fund is allocated to the applicable
participant's 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 participant's compensation.
During 1998, the Plan was amended such that forfeitures are now
immediately available to offset employer contributions. The impact of
this plan amendment was that the availability to utilize forfeitures was
accelerated. The impact of this acceleration was that approximately
$2,000,000 in forfeitures became available and were utilized to offset
employer contributions in 1999. As of December 31, 1999 and 1998,
forfeited nonvested accounts, included as Plan assets in the Guaranteed
Fixed Income Fund, totaled $15,563 and $852,095, respectively.
BENEFIT PAYMENTS
Benefits are generally payable upon the participating employee's
retirement, death or disability, or termination of employment and are
paid as a lump-sum amount.
NET ASSETS TRANSFERRED
In 1999 the net assets of an affiliated Company's 401(k) plan were
transferred to the Plan, and the affiliated Company's 401(k) plan was
merged into the Plan. The total amount of transferred assets was
$16,297,369.
(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 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.
VALUATION OF INVESTMENTS
Investments are stated at market value except for the Guaranteed Fixed
Income Fund which is stated at contract value, which approximates fair
value in 1998. This investment option was not
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SCHOTTENSTEIN STORES CORPORATION AND AFFILIATES
ASSOCIATES PROFIT SHARING AND 401(k) PLAN NO. SS7
Notes to Financial Statements and Schedules
December 31, 1999 and 1998
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available to participants in 1999. Contract value represents
contributions made under the contracts, plus earnings, less Plan
withdrawals. The year-end rate for this fund was 6.4% at December 31,
1998.
Unrealized appreciation (depreciation) of assets is based on market
values at year-end and market 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 market value 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 the 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. Participant loans are valued at cost
which approximates market value.
ADOPTION OF NEW ACCOUNTING PRONOUNCEMENT
The Accounting Standards Executive Committee issued statement of Position
99-3, "Accounting for and Reporting of Certain Defined Contribution Plan
Investments and Other Disclosure Matters" (SOP 99-3), which eliminates
the requirement for a defined contribution plan to disclose participant
directed investment programs. As required by SOP 99-3, the Plan adopted
SOP 99-3 for the 1999 financial statements and reclassified certain
amounts in the 1998 financial statements to eliminate the participant -
directed fund investment program disclosures.
(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 that the Plan, as currently designed, is
in compliance and is being operated within the applicable requirements of
the IRC.
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SCHOTTENSTEIN STORES CORPORATION AND AFFILIATES
ASSOCIATES PROFIT SHARING AND 401(k) PLAN NO. SS7
Notes to Financial Statements and Schedules
December 31, 1999 and 1998
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(4) PLAN INVESTMENTS
Investments, which represent 5% or more of net assets available for Plan
benefits, as of December 31, 1999 or 1998, are as follows:
FAIR MARKET VALUE
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1999 1998
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Guaranteed Fixed Income Fund $ - $47,111,819
Capital Fund - 12,276,113
Alpha Fund - 12,025,244
Argo Fund - 14,123,836
MFS Institutional Fixed Fund 56,785,787 -
Massachusetts Investors Trust Fund 13,147,263 -
Massachusetts Investors Growth Stock fund 21,217,040 -
MFS Capital Opportunities Fund 14,899,374 -
American Eagle Stock Fund 7,687,293 -
(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.
(6) RECONCILIATION TO FORM 5500
As of December 31, 1999 and 1998, the Plan had $0 and $109,392,
respectively, of pending distributions to participants who elected to
withdraw from the Plan. These amounts are recorded as a liability in the
Plan's Form 5500; however, these amounts are not recorded as a liability
in the accompanying statements of net assets available for plan benefits
in accordance with accounting principles generally accepted in the United
States.
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SCHOTTENSTEIN STORES CORPORATION AND AFFILIATES
ASSOCIATES PROFIT SHARING AND 401(k) PLAN NO. SS7
Notes to Financial Statements and Schedules
December 31, 1999 and 1998
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The following table reconciles net assets available for plan benefits
payable and benefits paid per the financial statements to the Form 5500
as filed by the Company as of December 31, 1998.
NET ASSETS
AVAILABLE FOR
BENEFITS PLAN BENEFITS
PAYABLE TO BENEFITS DECEMBER 31,
PARTICIPANTS PAID 1998
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Per financial statements $ - $ 7,399,962 $ 96,270,892
Accrued benefit payments 109,392 9,945 (109,392)
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Per Form 5500 $ 109,392 $ 7,409,907 $ 96,161,500
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(7) RELATED-PARTY TRANSACTIONS
Certain Plan investments are funds managed MFS. MFS is the asset
custodian of the Plan, and therefore, these transactions qualify as
party-in-interest. Additionally, as Value City Department Stores (VCDS)
and American Eagle Corporation are affiliated companies, the transactions
in the VCDS common stock fund and American Eagle Stock Fund qualify as
party-in-interest. Participant loans also qualify as party-in-interest.
(8) NONEXEMPT TRANSACTIONS
Certain nonexempt transactions between the Plan and the Company have been
identified and are listed in Schedule II.
(9) REQUIRED SCHEDULE INFORMATION
There is no information to be reported for the following schedules as of
December 31, 1999, or for the year then ended:
a. Assets held for investment purposes which were both acquired and
disposed of within the plan year
b. Loans or fixed income obligations in default
c. Leases in default or classified as uncollectible
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SCHOTTENSTEIN STORES CORPORATION AND AFFILIATES
ASSOCIATES PROFIT SHARING AND 401(k) PLAN NO. SS7
Item 4i - Schedule of Assets Held for Investment Purposes Schedule I
As of December 31, 1999
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IDENTITY OF ISSUE, BORROWER,
LESSOR, OR SIMILAR PARTY DESCRIPTION OF ASSET CURRENT VALUE
-------------------------------------------- ------------------------------------------------------- -----------------
Reliance Trust Company Conservative Option Fund $ 1,317,296
Reliance Trust Company Moderate Option Fund 3,129,939
Reliance Trust Company Aggressive Option Fund 3,366,674
*Reliance Trust Company MFS Institutional Fixed Fund 56,785,787
Reliance Trust Company PIMCO Total Return Fund 657,291
*Reliance Trust Company MFS Total Return Fund 2,045,561
Reliance Trust Company Vanguard 500 Index Fund 3,367,549
Reliance Trust Company Massachusetts Investors Trust Fund 13,147,263
Reliance Trust Company Massachusetts Investors Growth Stock Fund 21,217,040
*Reliance Trust Company MFS Capital Opportunities Fund 14,899,374
*Reliance Trust Company MFS Emerging Growth Fund 1,620,267
Reliance Trust Company Lord Abbott Develop Growth Fund 242,534
Reliance Trust Company American New Perspectives Fund 3,029,728
Reliance Trust Company Amer Europacific Growth Fund 474,862
*Reliance Trust Company Value City Company Stock Fund 4,142,139
*Reliance Trust Company American Eagle Stock Fund 7,687,293
*Various Participants Outstanding Participant Loans (with interest rates
ranging from 7% to 10%) 2,201,222
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Totals $ 139,331,818
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* denotes party-in-interest
The accompanying financial statements and notes thereto are an integral part of
this schedule.
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SCHOTTENSTEIN STORES CORPORATION AND AFFILIATES
ASSOCIATES PROFIT SHARING AND 401(K) PLAN NO. SS7
Item 4 - Schedule of Nonexempt Transactions Schedule II
For the Year Ended December 31, 1999
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DESCRIPTION OF TRANSACTIONS,
INCLUDING MATURITY
RELATIONSHIP TO PLAN, DATE, RATE OF INTEREST, INTEREST
IDENTITY OF EMPLOYER OR OTHER COLLATERAL AND PAR OR AMOUNT INCURRED
PARTY INVOLVED PARTY IN INTEREST MATURITY VALUE LOANED ON LOAN
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Lending of moneys from the
Plan to the employer
(contributions not timely
remitted to the Plan), as
follows:
Schottenstein Stores Sponsor Deemed loan dated June 22, $67,161 $95
Corporation and Affiliates 1999, matured June 28, 1999,
at interest based on the
Company's incremental
borrowing rate (due to delays
in trasmitting contributions
to the Plan Custodian)
The accompanying financial statements and notes thereto are an integral part of
this schedule.
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SIGNATURES
The Plan. 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.
Schottenstein Stores Corporation and Affiliates Associates
Profit Sharing and 401(k) Plan No. SS7
Dated: June 11, 2001 /s/ George Dailey
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By: George Dailey
Title: Plan Administrator