-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FqNIAaf/RAsbVI5hq0SqXT8ftKwK1VoUgVAljWUESfiEJQ39r6njpsyerC1AYl9w qj9TRi0Ttdqq943gRjsWcg== 0000950135-04-003291.txt : 20040628 0000950135-04-003291.hdr.sgml : 20040628 20040628143512 ACCESSION NUMBER: 0000950135-04-003291 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20031231 FILED AS OF DATE: 20040628 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TALBOTS INC CENTRAL INDEX KEY: 0000912263 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-WOMEN'S CLOTHING STORES [5621] IRS NUMBER: 411111318 STATE OF INCORPORATION: DE FISCAL YEAR END: 0129 FILING VALUES: FORM TYPE: 11-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-12552 FILM NUMBER: 04884337 BUSINESS ADDRESS: STREET 1: ONE TALBOTS DRIVE CITY: HINGHAM STATE: MA ZIP: 02043 BUSINESS PHONE: 7817497600 MAIL ADDRESS: STREET 1: ONE TALBOTS DRIVE CITY: HINGHAM STATE: MA ZIP: 02043 11-K 1 b50968tie11vk.htm THE TALBOTS, INC. 11-K The Talbots, Inc. 11-K
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 11-K

ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

(Mark One)

     
x
  ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
   
  For the fiscal year ended December 31, 2003.
   
o
  TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
   
  For the transition period from                   to                   .
   
  Commission file number 1-12552

A.   Full title of the plan and the address of the plan, if different from that of the issuer named below:
 
    THE TALBOTS, INC. RETIREMENT SAVINGS VOLUNTARY PLAN
 
B.   Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:
 
    The Talbots, Inc.
One Talbots Drive
Hingham, Massachusetts 02043

 

THE TALBOTS, INC.
RETIREMENT SAVINGS VOLUNTARY PLAN

TABLE OF CONTENTS

     
    Page
  1
 
    
FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002:
    
 
    
  2
 
    
  3
 
    
  4-8
 
    
SUPPLEMENTAL SCHEDULE AS OF DECEMBER 31, 2003:
    
 
    
  9
 
    
  10
 
   
 

Exhibit 23.1 – CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

All other schedules required by Section 2520.103-10 of the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974 have been omitted because they were not applicable.

 

Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Plan Administrator and Participants of
  The Talbots, Inc. Retirement Savings Voluntary Plan:

We have audited the accompanying statements of net assets available for benefits of The Talbots, Inc. Retirement Savings Voluntary Plan (the “Plan”) as of December 31, 2003 and 2002, and the related statements of changes in net assets available for benefits for the years then ended. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (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 also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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, such financial statements present fairly, in all material respects, the net assets available for benefits of the Plan at December 31, 2003 and 2002, and the changes in net assets available for benefits for the years then ended in conformity with accounting principles generally accepted in the United States of America.

Our audits were 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 schedule is the responsibility of the Plan’s management. Such schedule has been subjected to the auditing procedures applied in our audit of the basic 2003 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 LLP

Boston, Massachusetts
June 25, 2004

 

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THE TALBOTS, INC.
RETIREMENT SAVINGS VOLUNTARY PLAN

STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS

DECEMBER 31, 2003 AND 2002
                 
    2003   2002
ASSETS:
                
Investments—at fair value:
                
Participant loans
   $ 2,662,473     $ 2,501,929  
Common stock - The Talbots, Inc.
     13,315,891       11,678,868  
Mutual funds
     67,075,021       49,192,993  
Common/collective trusts
     25,273,001       21,946,474  
 
    
 		      
 		  
Total investments
     108,326,386       85,320,264  
 
    
 		      
 		  
Cash
     1,757       300  
 
    
 		      
 		  
Receivables:
                
Employer contributions
     —       37,779  
Employee contributions
     —       117,049  
Due from broker for investments sold
     2,782       21,018  
Dividends and interest
     14,356       31,288  
 
    
 		      
 		  
Total receivables
     17,138       207,134  
 
    
 		      
 		  
Total assets
     108,345,281       85,527,698  
 
    
 		      
 		  
LIABILITIES:
                
Payable to broker for investments purchased
     19,329       40,858  
Accrued management fee
     2,970       3,509  
Excess contributions payable
     100,668       111,134  
 
    
 		      
 		  
Total liabilities
     122,967       155,501  
 
    
 		      
 		  
NET ASSETS AVAILABLE FOR BENEFITS
   $ 108,222,314     $ 85,372,197  
 
    
 		      
 		  

See notes to financial statements.

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THE TALBOTS, INC.
RETIREMENT SAVINGS VOLUNTARY PLAN

STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS

YEARS ENDED DECEMBER 31, 2003 AND 2002
                 
    2003   2002
Contributions:
                
Employer
   $ 3,129,141     $ 3,269,593  
Employee
     9,980,211       9,744,668  
Rollover
     162,681       268,062  
 
    
 		      
 		  
Total contributions
     13,272,033       13,282,323  
 
    
 		      
 		  
Investment activity:
                
Dividend and interest income
     1,146,874       1,592,651  
Net appreciation (depreciation) in fair value of investments
     13,851,320       (13,759,221 )
 
    
 		      
 		  
Total investment activity
     14,998,194       (12,166,570 )
 
    
 		      
 		  
DEDUCTIONS:
                
Benefit payments
     5,361,084       4,298,872  
Administrative plan expenses
     59,026       58,829  
 
    
 		      
 		  
Total deductions
     5,420,110       4,357,701  
 
    
 		      
 		  
NET INCREASE (DECREASE)
     22,850,117       (3,241,948 )
 
NET ASSETS AVAILABLE FOR BENEFITS:
                
Beginning of year
     85,372,197       88,614,145  
 
    
 		      
 		  
End of year
   $ 108,222,314     $ 85,372,197  
 
    
 		      
 		  

See notes to financial statements.

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Table of Contents

THE TALBOTS, INC.
RETIREMENT SAVINGS VOLUNTARY PLAN

NOTES TO FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2003 AND 2002

1.   DESCRIPTION OF THE PLAN
 
    The following brief description of The Talbots, Inc. Retirement Savings Voluntary Plan (the “Plan”) is for general information purposes only. Participants should refer to the Plan document for more complete information.
 
    General Information—The Plan is a defined contribution 401(k) plan established by The Talbots, Inc. (the “Company”) on January 1, 1989 and amended and restated effective as of January 1, 1997 for the employees of the Company. Employees are eligible to participate following completion of one year of service, attainment of age 21, and at least 1,000 hours worked during the eligibility year of service. American Express Trust Co. (“AETC”) Retirement Services serves as both trustee and recordkeeper of the Plan. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”).
 
    Participation—Once an employee becomes eligible to participate in the Plan, he or she may elect to become a participant by entering into a compensation reduction authorization agreement. This agreement provides that the participant accept a reduction in compensation in an amount equal to 1% to 50% of the participant’s compensation up to $12,000, indexed for inflation in accordance with the Internal Revenue Code (the “Code”). Effective January 1, 2002, participants who are ages 50 and older are permitted to make additional, catch-up contributions. The catch-up contribution limit was $2,000 and $1,000 for the fiscal years 2003 and 2002, respectively.
 
    Contributions—During each Plan year, the Company makes matching contributions at its discretion. The Company’s matching contribution for the years ended December 31, 2003 and 2002 was 50% of the employee contribution up to 6% of the employee compensation.
 
    Participant Accounts—Individual accounts are maintained for each Plan participant. Each participant’s account is credited with the participant’s contribution and the Company’s discretionary matching contribution and allocations of Plan earnings, and charged with withdrawals and an allocation of Plan losses and administrative expenses. Allocations are based on participant earnings/losses or account balances, as defined. The benefit to which a participant is entitled is the benefit that can be provided from the participant’s vested account.
 
    Investments—Participants direct the investment of their contributions and company matching contributions into various investment options offered by the Plan. The Plan currently offers seven mutual funds, two common/collective trusts and a Company common stock fund as investment options for participants.

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    Vesting and Forfeitures—All employee contributions are 100% vested. Company contributions vest 20% after each year of service. Forfeitures generated from Company contributions are first applied to restore previously forfeited accounts where the participant is re-employed within a certain time after termination, second applied against administrative expenses, and third to reduce Company contributions. At December 31, 2003 and 2002, forfeited nonvested accounts totaled $93,068 and $108,320, respectively. These accounts will be used to reduce Plan administrative expenses.
 
    Benefit Arrangements—The Plan provides for the payment of participant account balances to participants who have reached the later of the normal retirement age of 65 or completion of five years of vesting service. A participant may also choose to withdraw his or her vested account balance upon attainment of the early retirement age or age 59½. If the participant’s service with the Company terminates other than by reason of retirement, the participant may elect to receive his or her vested account balance as soon as possible following termination of employment. Distributions will be made in a lump sum, provided that no payment may be made without the participant’s consent before his or her normal or early retirement age, if such payment would be in excess of certain amounts designated in the Plan document. Participants may elect to take distributions from the Talbots common stock fund in the form of whole shares of Company common stock.
 
    Participant Loans—Participants may borrow from their accounts up to 50% of the vested value of their accounts. The minimum loan amount is $500 and the maximum loan amount is $50,000. Loan terms range from one to five years or up to 10 years for the purpose of purchasing a primary residence and are secured by the balance in the participant’s account. Interest rates are charged at current market rates. As of December 31, 2003, interest rates on outstanding loans range from 5.0% to 10.50%.
 
2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
    Basis of Accounting—The financial statements of the Plan are prepared in accordance with accounting principles generally accepted in the United States of America.
 
    Investment Valuation and Income Recognition—The investments of the Plan are stated at fair value. The Talbots, Inc. common stock is recorded at quoted market prices. Shares of mutual funds are recorded at net asset value based on quoted market prices. Fair values of investments that do not have readily ascertainable market values (such as common/collective trusts) have been estimated by the trustee based on the underlying publicly traded assets of the portfolio. These investments aggregated $25,273,001 or 23.3% of the assets of the Plan at December 31, 2003 and $21,946,474 or 25.7% of the assets at December 31, 2002. Investment gain (loss) related to these assets was $1,894,593 and $(116,893) for the years ended December 31, 2003 and 2002, respectively. Participant loans are recorded at cost, which approximates fair value. Purchases and sales of securities are recorded on the trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date.
 
    Management fees and operating expenses charged to the Plan for investments in the mutual funds and common/collective trusts are deducted from income earned on a daily basis and are not separately reflected. Consequently, management fees and operating expenses are reflected as a reduction of investment return for such investments.
 
    Benefit Payments—Benefit payments to participants are recorded when paid.

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    Administrative Plan Expenses—Most expenses incurred in administering the Plan, including those necessary for the administration of the trust, are paid out of the principal or income of the trust unless paid by the Company at its sole discretion.
 
    Use of Estimates—The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the Plan administrator to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results may differ from those estimates.
 
    The Plan invests in various securities including mutual funds and corporate stocks. 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.
 
    Reclassifications—Certain 2002 balances have been reclassified to conform with the 2003 presentation.
 
3.   INVESTMENTS
 
    The following investments represent five percent or more of the Plan’s net assets available for benefits as of December 31:

                 
    2003   2002
Common stock - The Talbots, Inc.
   $ 13,315,891     $ 11,678,868  
AETC Income Fund II
     19,139,330       18,256,471  
AETC Equity Index II
     6,133,671       —  
Invesco Total Return Fund
     18,225,336       15,057,827  
AXP New Dimensions Fund
     26,450,350       19,823,847  
PIMCo Total Return Fund
     6,283,113       5,997,935  
Davis New York Venture Fund (Class A)
     5,998,842       —  

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Table of Contents

    During 2003 and 2002, the Plan’s investments (including gains and losses on investments bought and sold, as well as held, during the year) appreciated (depreciated) in value by $13,851,320 and $(13,759,221), respectively, as follows:

                 
    2003   2002
At fair value:
                
Common stock - The Talbots, Inc.
   $ 1,388,029     $ (3,283,741 )
Common/collective trusts:
                
AETC Income Fund II
     717,500       793,788  
AETC Equity Index Fund II
     1,177,093       (910,681 )
Mutual funds:
                
PIMCo Total Return Fund
     23,593       40,454  
AIM Balanced Class A Fund
     123,568       (101,719 )
Invesco Total Return Fund
     2,298,585       (2,828,360 )
New Dimensions Fund
     4,954,066       (5,355,688 )
Baron Asset Fund
     791,360       (679,311 )
Janus Overseas Fund
     1,143,263       (822,303 )
Davis New York Venture Fund (Class A)
     1,234,263       (611,660 )
 
    
 		      
 		  
Total
   $ 13,851,320     $ (13,759,221 )
 
    
 		      
 		  

4.   RELATED PARTY TRANSACTIONS
 
    Certain Plan investments are shares of common/collective trusts managed by AETC. AETC is the trustee and custodian as defined by the Plan. These transactions qualify as party-in-interest transactions. Fees paid by the Plan to the trustee for management services were $13,337 and $15,758 for the years ended December 31, 2003 and 2002, respectively.
 
    At December 31, 2003 and 2002, the Plan held 1,151,268 and 1,102,404 shares, respectively, of common stock of the sponsoring employer, with a cost basis of $14,433,397 and $14,032,578, respectively. Participants direct their investment allocation and may elect to invest up to 50% of their contributions in Company stock. During the years ended December 31, 2003 and 2002, the Plan recorded dividend income of $163,393 and $142,415, respectively, from common stock of the Company.
 
5.   PLAN TERMINATION
 
    Although it has not expressed any intention to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions set forth in ERISA. In the event that the Plan is terminated, participants would become 100% vested in their accounts.
 
6.   TAX STATUS OF THE PLAN
 
    The Plan obtained a favorable determination letter, dated May 28, 2003, in which the Internal Revenue Service (“IRS”) stated that the Plan, as then designed, was in compliance with the applicable requirements of the Code. The Plan has been amended since receiving the determination letter; however, the Company and the Plan administrator believe that the Plan is currently designed and being operated in compliance with the applicable requirements of the Code. Accordingly, no provision for income taxes has been included in the Plan’s financial statements.

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7.   EXCESS CONTRIBUTIONS PAYABLE
 
    The amount contributed to the Plan from highly compensated employees in excess of the IRS-approved limit was $100,668 and $111,134 in 2003 and 2002, respectively. This amount is reflected as excess contributions payable on the accompanying statements of net assets available for benefits. All such amounts will be refunded to the participants within the time allowed by the IRS.

* * * * * *

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THE TALBOTS, INC.
RETIREMENT SAVINGS VOLUNTARY PLAN

FORM 5500—SCHEDULE H, PART IV, LINE 4i—SCHEDULE OF ASSETS (HELD AT END OF YEAR)

DECEMBER 31, 2003
                     
a)   b) Identity of Issue,   c) Description of Investment, Including   d) Cost   e) Current
    Borrower, Lessor or   Maturity Date, Interest Rate,   **   Value
    Similar Party   Collateral, and Par or Maturity Value            
  Mutual Funds:                
      PIMCo Funds   PIMCo Total Return Fund       $ 6,283,113  
      AIM   AIM Balanced Class A Fund         1,005,432  
      Invesco   Invesco Total Return Fund         18,225,336  
*
      American Express Financial
   New Dimensions Fund         26,450,350  
 
      Advisors AXP                
      Baron Funds   Baron Asset Fund         4,339,750  
      Davis Funds   Davis New York Venture Fund (Class A)         5,998,842  
      Janus   Janus Overseas Fund         4,772,198  
               
 		  
      Total Mutual Funds         67,075,021  
  Common/collective Trusts:                
*
      American Express Trust Co.   AETC Income Fund II         19,139,330  
*
      American Express Trust Co.   AETC Equity Index Fund II         6,133,671  
               
 		  
      Total Common/collective Trusts:         25,273,001  
               
 		  
*
      The Talbots, Inc.   Common stock         13,315,891  
               
 		  
*
      Participants   Participant loans (Interest rates ranging from 5.0% to 10.5%; various maturity dates through May 9, 2013)         2,662,473  
               
 		  
 
      TOTAL INVESTMENTS       $ 108,326,386  
               
 		  

* Party-in-interest

** Cost information is not required for participant-directed investments, and therefore has not been included.

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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 on their behalf by the undersigned hereunto duly authorized.

                 
    THE TALBOTS, INC. RETIREMENT SAVINGS VOLUNTARY PLAN
               
Date: June 28, 2004
      By:       /s/ Edward L. Larsen
           
 
              Edward L. Larsen
Administrative Committee Member
      By:       /s/ Stuart M. Stolper
           
 
              Stuart M. Stolper
Administrative Committee Member

- 10 -

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Exhibit Index

  23.1   Consent of independent registered public accounting firm

- 11 -

EX-23.1 2 b50968tiexv23w1.txt EX-23.1 CONSENT OF DELOITTE & TOUCHE EXHIBIT 23.1 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We consent to the incorporation by reference in Registration Statement No. 33-72086 of The Talbots, Inc. on Form S-8 of our report, dated June 25, 2004, appearing in this Annual Report on Form 11-K of The Talbots, Inc. Retirement Savings Voluntary Plan for the year ended December 31, 2003. /s/ Deloitte & Touche LLP Boston, Massachusetts June 25, 2004 -----END PRIVACY-ENHANCED MESSAGE-----