The Company generated $.6 million of cash from the issuance of common stock through its
employee benefit plans during fiscal 2002, compared to $.7 million in fiscal 2001.
The Company paid 41 consecutive quarterly cash dividends through fiscal 2002. At its December
19, 2001 meeting, the Board of Directors announced a 50% reduction in the regular cash
dividend of $.08 per share to $.04 per share, payable on March 1, 2002. At its February 28, 2002
meeting, the Board of Directors voted to discontinue the regular quarterly cash dividend
effective after the payment of the March 1, 2002 dividend to conserve cash for reinvestment in
the business. The Company will evaluate its dividend policy on an ongoing basis in view of its
earnings, financial position, capital requirements, and other relevant factors. Dividends in fiscal
2002 totaled $2.3 million, or $.28 per share.
On October 7, 1998, the Board of Directors authorized the Company to repurchase up to 1
million shares of its common stock in the open market from time to time, subject to market
conditions. On September 28, 1999, the Board of Directors authorized the Company to
repurchase an additional 500,000 shares of its common stock. In fiscal 2002, the Company
repurchased 426,650 shares under the current program at a total cost of $3.2 million. As of
February 23, 2002, the Company had purchased 1,178,042 shares since inception of the current
program at a total cost of $11.4 million. Prior to this, the Company completed an earlier stock
repurchase program in which it repurchased 1 million shares for a total cost of $15.2 million.
Cumulatively from October 1995 through February 23, 2002, the Company has spent $26.6
million to repurchase its stock in the open market.
The Company has amended its revolving credit facility. The amended credit facility provides for
a maximum credit line of $27 million for the Company's first and second quarters, and $32
million for the third and fourth quarters. The credit line can be used for general corporate
purposes, including working capital needs, capital expenditures, and up to $12 million of letters
of credit. There is a ninety-day period in which the Company must have no amounts
outstanding (except letters of credit) under the facility each year. It expires in fiscal 2006. At the
Company's option, interest is payable at LIBOR plus 100 basis points, prime rate, bankers'
acceptance rate plus 100 basis points, or a fixed rate. The fees payable under the revised credit
line range from 5 basis points on the letters of credit to 37.5 basis points on the available line.
The credit facility is unsecured, and the Company is subject to financial covenants principally
relating to its working capital, net worth, interest coverage ratio and capital spending
restrictions.
On April 6, 2000, the Company purchased the assets of Rue de France, Inc., a privately owned
catalog company based in Newport, Rhode Island for a cash purchase price of $2.8 million.
Additionally, the Company agreed to make future payments contingent upon Rue de France,
Inc. achieving certain cumulative earnings targets during the five fiscal years commencing
February 27, 2000. No such payments have been required to date.
The Company believes that its cash flow from operations, funds on hand, and credit facilities
will be sufficient to meet its operating needs for the upcoming fiscal year.
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