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EXHIBIT 99
JO-ANN STORES, INC.
ASSOCIATE STOCK OWNERSHIP PLAN
Financial Statements
As of December 31, 2000 and 1999
Together With Report of Independent Public Accountants
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JO-ANN STORES, INC.
ASSOCIATE STOCK OWNERSHIP PLAN
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Advisory Committee of Jo-Ann Stores, Inc. and Participants
of the Jo-Ann Stores, Inc. Associate Stock Ownership Plan:
We have audited the accompanying statements of financial condition of the Jo-Ann
Stores, Inc. Associate Stock Ownership Plan (the Plan) as of December 31, 2000
and 1999, and the related statements of operations and changes in participants'
contributions for the year and period ended December 31, 2000 and 1999. 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 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 financial condition of the Plan as of December 31,
2000 and 1999, and the changes in its financial condition for the year and
period ended December 31, 2000 and 1999, in conformity with accounting
principles generally accepted in the United States.
ARTHUR ANDERSEN LLP
Cleveland, Ohio,
March 23, 2001.
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JO-ANN STORES, INC.
ASSOCIATE STOCK OWNERSHIP PLAN
Statements of Financial Condition
As of December 31, 2000 and 1999
2000 1999
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ASSETS:
Receivable from employer $301,914 $584,596
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Total assets $301,914 $584,596
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LIABILITIES:
Liability to participants for future Stock purchases $301,914 $584,596
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Total liabilities $301,914 $584,596
======== ========
The accompanying notes to financial statements are an integral part of these
statements.
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JO-ANN STORES, INC.
ASSOCIATE STOCK OWNERSHIP PLAN
Statements of Operations and Changes in Participants' Contributions
for the Year and Period Ended December 31, 2000 and 1999
2000 1999
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Participant contributions $ 1,306,423 $ 1,219,421
Employer contributions 280,330 112,028
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Total additions 1,586,753 1,331,449
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Stock purchases 1,869,435 746,853
Change in contributions reserved for future Stock
purchases (282,682) 584,596
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Total deductions 1,586,753 1,331,449
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Net additions $ - $ -
=========== ===========
The accompanying notes to financial statements are an integral part of these
statements.
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JO-ANN STORES, INC.
ASSOCIATE STOCK OWNERSHIP PLAN
Notes to Financial Statements
December 31, 2000 and 1999
1. DESCRIPTION OF THE PLAN:
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The Jo-Ann Stores, Inc. Associate Stock Ownership Plan (the Plan), represents
rules adopted April 1, 1999 as part of the Company's 1998 Incentive Compensation
Plan (the Incentive Plan). The Incentive Plan is administered by the
Compensation Committee of the Board of Directors (Committee) of Jo-Ann Stores,
Inc. (the Company). Participants should refer to the Plan document for a more
complete description of the Plan's provisions.
General
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The Plan is an employee stock purchase plan that allows participants to acquire
shares of Jo-Ann Stores, Inc. Class A Common Stock (Stock) through payroll
deductions. Payroll deductions for the purpose of purchasing Stock are
accumulated during two six-month periods, April 1 to September 30 and October 1
to March 31 (Accumulation Periods). At the end of each Accumulation Period, the
participants' accumulated payroll deductions are used to purchase shares, or
fractional shares, of Stock. The shares are purchased for an amount equal to 85%
of the lesser of (1) the closing price of a share of Stock on the first trading
day of the Accumulation Period or (2) the closing price of a share of Stock on
the last trading day of the Accumulation Period (Purchase Price).
Subject to limitations set forth in the Incentive Plan, the maximum number of
shares which may be purchased under the Plan for any fiscal year of the Company
is 1,000,000 shares. Shares purchased under the Plan may be authorized and
unissued shares, treasury shares, outstanding shares reacquired in private
transactions or open market purchases, or any combination of any of the
foregoing, as determined by the Committee. At December 31, 2000, the
participants had purchased 296,733 shares of stock since the Plan's inception at
a discounted weighted average share price of $7.49.
The Plan is neither qualified under Section 401(a) of the Internal Revenue Code
(IRC) of 1986, as amended, nor subject to any of the provisions of the Employee
Retirement Income Security Act of 1974, as amended (ERISA).
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JO-ANN STORES, INC.
ASSOCIATE STOCK OWNERSHIP PLAN
Notes to Financial Statements
December 31, 2000 and 1999
Page 2
Eligibility
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All employees, except temporary and seasonal employees, as defined by the Plan
document, are eligible to participate in the Plan. Eligible employees may only
enroll in the Plan at the beginning of an Accumulation Period. Employees who are
directors or officers of the Company may participate in the Plan only in
accordance with the requirements of Rule 16b-3 under the Securities Exchange Act
of 1934.
Stock Purchases
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On the last trading day of each Accumulation Period, the amount of each
participant's accumulated payroll deductions is applied towards the purchase of
shares of Stock. The number of shares purchased is determined by dividing the
participant's total contribution by the per share Purchase Price applicable for
that Accumulation Period. Purchased shares of Stock are then issued by the
Company and transferred to a brokerage account outside of the Plan in the name
of the participant. Participants are required to hold shares for a minimum
period of six months following their purchase. This amount includes participant
contributions from the October 1 to March 31 Accumulation Period.
Participant Contributions
- -------------------------
Participants may elect to defer 1% to 15% of their "Covered Compensation" (as
defined in the Plan) on an after-tax basis for the purchase of Stock with a
maximum purchase of the lesser of 2,000 shares per Accumulation Period or
$25,000 worth of Stock at fair market value per calendar year. Participants may
only change their deduction percentages at the beginning of an Accumulation
Period, but may cease making contributions at any time. No interest accrues or
is paid on participants' accumulated payroll deductions. Once made, the Company
may use the payroll deductions for any corporate purpose, and the Company has no
obligation to segregate employees' payroll deductions from any other funds of
the Company or to hold funds representing the same pending the application
thereof to the purchase of shares at the end of each Accumulation Period in
accordance with the Plan.
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JO-ANN STORES, INC.
ASSOCIATE STOCK OWNERSHIP PLAN
Notes to Financial Statements
December 31, 2000 and 1999
Page 3
Employer Contributions
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The 15% discount from market value granted to Plan participants on the purchase
of Stock at the end of each Accumulation Period represents the Company's
non-cash contribution to the Plan. These non-cash contributions amounted to
$280,330 and $112,028 for the year and period ended December 31, 2000 and 1999,
respectively.
Participant Refunds
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Plan participants may withdraw from the Plan at any time by properly notifying
the Company. A participant's accumulated payroll deductions prior to withdrawal
from the Plan will continue to be applied toward the purchase of shares of Stock
on the last trading day of the Accumulation Period, or may be refunded in full
to the employee at the time of withdrawal from the Plan.
Participants who terminate their employment relationship with the Company are
not eligible to continue in the Plan. All payroll deductions accumulated during
the Accumulation Period through the date of such cessation of employment will be
refunded to the employee or, in the event of the employee's death, to his or her
estate.
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. Upon termination of the Plan,
all payroll deductions not used to purchase Stock would be refunded to Plan
participants.
Reclassifications
- -----------------
Certain amounts in the prior period's financial statements have been
reclassified to conform to the presentation used for the current period.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
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Basis of Accounting
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The accompanying financial statements are prepared on the accrual basis of
accounting.
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JO-ANN STORES, INC.
ASSOCIATE STOCK OWNERSHIP PLAN
Notes to Financial Statements
December 31, 2000 and 1999
Page 4
Administrative Expenses
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The Company bears all costs in connection with the Plan, including
administrative fees and all fees associated with the issuance of Stock.
Administrative expenses related to the Plan amounted to approximately $14,900
and $14,500 for the year and period ended December 31, 2000 and 1999,
respectively.
Estimates
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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 additions and deductions during the
reporting period. Since actual results could differ from those estimates,
management revises its estimates and assumptions as better or new information
becomes available.
3. INCOME TAX STATUS:
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The Plan fulfills the requirements of an "employee stock purchase plan" as
defined in Section 423 of the IRC. As such, the Plan is not required to file
income tax returns or pay income taxes. Under Section 423, a participating
employee will recognize no income, and the Company will be entitled to no
deduction, for federal income tax purposes when an employee enrolls in the Plan
or when a participant purchases shares of Stock under the Plan.