<PAGE> 1
As filed with the Securities and Exchange Commission on March 27, 1998
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
FORM 11-K
[X] ANNUAL REPORT PURSUANT TO SECTION 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________
---------------------------
Commission File No: 0-14134
---------------------------
A. Full title of the plan and the address of the plan, if different from that
of the issuer named below:
THE GOOD GUYS! DEFERRED PAY PLAN
B. Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office:
The Good Guys, Inc.
7000 Marina Boulevard
Brisbane, California 94005-1830
-1-
<PAGE> 2
REQUIRED INFORMATION
The Good Guys! Deferred Pay Plan ("Plan") is subject to the
Employee Retirement Income Security Act of 1974 ("ERISA"). Therefore, in lieu of
the requirements of Items 1-3 of Form 11-K, the financial statements and
schedules of the Plan for the two fiscal years ended September 30, 1996 and
1997, which have been prepared in accordance with the financial reporting
requirements of ERISA, are attached hereto as Appendix 1 and incorporated herein
by this reference.
SIGNATURES
The Plan. Pursuant to the requirements of the Securities and
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 its behalf by
the undersigned hereunto duly authorized.
THE GOOD GUYS! DEFERRED PAY PLAN
By: The Good Guys! Deferred Pay Plan Administrative Committee
/s/ ROBERT A. GUNST March 27, 1998
- ------------------------------------
(Robert A. Gunst)
/s/ DENNIS C. CARROLL March 27, 1998
- ------------------------------------
(Dennis C. Carroll)
-2-
<PAGE> 3
APPENDIX 1
THE GOOD GUYS!
DEFERRED PAY PLAN
FINANCIAL STATEMENTS AS OF AND
FOR THE YEARS ENDED SEPTEMBER 30, 1997 AND 1996,
SUPPLEMENTAL SCHEDULES AS OF AND FOR THE YEAR ENDED
SEPTEMBER 30, 1997 AND INDEPENDENT AUDITORS' REPORT
<PAGE> 4
THE GOOD GUYS! DEFERRED PAY PLAN
TABLE OF CONTENTS
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<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS:
Statements of Assets Available for Benefits
as of September 30, 1997 and 1996 2
Statements of Changes in Assets Available for Benefits
for the Years Ended September 30, 1997 and 1996 2
Notes to Financial Statements 3-8
SUPPLEMENTAL SCHEDULES AS OF AND FOR THE
YEAR ENDED SEPTEMBER 30, 1997:
Item 27a - Schedule of Assets Held for Investment Purposes 9
Item 27d - Schedule of Reportable Transactions (series of transactions
exceeding 5% of plan assets) 10
</TABLE>
<PAGE> 5
INDEPENDENT AUDITORS' REPORT
Administrative Committee
The Good Guys!
Deferred Pay Plan
We have audited the accompanying statements of assets available for benefits of
The Good Guys! Deferred Pay Plan (the "Plan") as of September 30, 1997 and 1996,
and the related statements of changes in 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 generally accepted auditing
standards. 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, such financial statements present fairly, in all material
respects, the assets available for benefits of the Plan as of September 30, 1997
and 1996, and the changes in assets available for benefits for the years then
ended in conformity with generally accepted accounting principles.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets held
for investment purposes and reportable transactions for the year ended September
30, 1997 are presented for purposes 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 ("ERISA"). The supplemental schedules are the responsibility of the Plan's
management. Such supplemental schedules have been subjected to the auditing
procedures applied in our audit of the basic 1997 financial statements and, in
our opinion, are fairly stated in all material respects when considered in
relation to the basic financial statements taken as a whole.
DELOITTE & TOUCHE LLP
San Francisco, California
March 12, 1998
<PAGE> 6
THE GOOD GUYS! DEFERRED PAY PLAN
STATEMENTS OF ASSETS AVAILABLE FOR BENEFITS
SEPTEMBER 30, 1997 AND 1996
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
1997 1996
<S> <C> <C>
ASSETS:
Investments, at fair value:
Investment Company of America $ 3,922,606 $ 2,081,090
New Perspective Fund 3,742,839 2,397,095
Bond Fund of America 536,251 487,989
American Balanced Fund 1,899,512 1,327,227
Merrill Lynch Retirement Trust 1,127,827 1,081,241
The Good Guys! Company Stock Fund 648,895 684,670
Loans to participants 719,265 594,084
----------------------------
ASSETS AVAILABLE FOR BENEFITS $12,597,195 $ 8,653,396
============================
- ----------------------------------------------------------------------------------------
</TABLE>
STATEMENTS OF CHANGES IN ASSETS AVAILABLE FOR BENEFITS
YEARS ENDED SEPTEMBER 30, 1997 AND 1996
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
1997 1996
<S> <C> <C>
ADDITIONS TO ASSETS:
Investment income:
Interest and collective trust fund income $ 59,640 $ 44,608
Net appreciation in fair value of investments 2,144,651 408,232
----------------------------
Total investment income 2,204,291 452,840
Contributions from participants 2,671,010 2,146,921
----------------------------
Total additions 4,875,301 2,599,761
DEDUCTIONS FROM ASSETS -
Payments to participants 931,502 800,683
----------------------------
NET INCREASE 3,943,799 1,799,078
ASSETS AVAILABLE FOR BENEFITS:
At beginning of year 8,653,396 6,854,318
----------------------------
At end of year $12,597,195 $ 8,653,396
============================
See notes to financial statements.
</TABLE>
2
<PAGE> 7
THE GOOD GUYS! DEFERRED PAY PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 1997 AND 1996
- --------------------------------------------------------------------------------
1. SUMMARY DESCRIPTION OF PLAN
The Good Guys! Deferred Pay Plan (the "Plan") is a defined contribution tax
deferred savings plan available to employees of The Good Guys! (the
"Company"). It is subject to the provisions of the Employee Retirement
Income Security Act of 1974. Employees of the Company may voluntarily
commence participation in the Plan on October 1st or April 1st of each year
providing they have completed six months of continuous service.
Participants may contribute up to 15% of their annual compensation to the
Plan. However, the sum of the participants' contributions to the Plan and
the Company's contribution to The Good Guys! Profit-Sharing Plan on the
participants' behalf may not be in excess of the amount allowed for federal
income tax purposes. Additional contributions may be made to the Plan by
the Company at the option of the Plan's Administrative Committee.
Each participant's share of assets is segregated in an individual account
and invested in accordance to the investment choice elected by the
participant. The participants have a choice of six investments, four of
those investments are mutual funds and one is in a collective trust. The
prospectuses for these investment options describe the funds as follows:
Investment Company of America (Equity Growth & Income Fund) - Funds are
invested in marketable securities, principally common stock, for
long-term growth of capital and income.
New Perspective Fund (Global Growth Fund) - Funds are invested in common
stocks of both foreign and domestic companies for long-term growth of
capital.
Bond Fund of America (Fixed Income Fund) - Funds are invested in
marketable fixed-income debt securities, government obligations, and
money-market instruments for current income and the preservation of
capital.
American Balanced Fund (Equity Growth & Income Fund) - Funds are
invested in a diversified array of equities, debt, and cash instruments
for capital preservation, current income, and long-term growth of
capital and income.
Merrill Lynch Retirement Trust (Cash Equivalents; Collective Trust Fund)
- Funds are invested in Guaranteed Investment Contracts, U.S. Government
obligations and money market instruments for current income and
preservation of capital (see Note 4).
3
<PAGE> 8
The Good Guys! Company Stock Fund - Funds are invested in The Good Guys!
common stock.
VESTING - All employee and employer contributions are fully vested at the
time of contribution.
DISTRIBUTION OF BENEFITS - Benefits are payable to employees upon
termination of employment, normal retirement, total disability, death, or
for financial hardship as defined by the Internal Revenue Service. The Plan
provides that all administrative costs be paid by the Company.
PLAN TERMINATION - Although it has not expressed any intent to do so, the
Company has the right to terminate the Plan at any time, subject to the
provisions of ERISA. Upon termination, all amounts credited to the
participants' accounts will be distributed in accordance with Plan
provisions.
INCOME TAXES - The Plan obtained a determination letter on February 21,
1997, in which the Internal Revenue Service stated that the Plan is in
compliance with the applicable requirements of the Internal Revenue Code.
Participants should refer to the plan agreement for a more complete
description of the Plan's provisions.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING - The accompanying financial statements of the Plan are
prepared on the accrual method of accounting.
USE OF ESTIMATES - In preparing the Plan's financial statements, the
administrator is required to make estimates and assumptions that affect the
reported amounts of assets and disclosure of contingent assets at the date
of the financial statements, and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
these estimates.
INVESTMENT VALUATION AND INCOME RECOGNITION - The Plan's investments are
stated at estimated fair value, which is determined by quoted market
prices. The Plan's guaranteed investment contract is valued at contract
value. Participant loans are carried at amortized cost, which approximates
fair value (See Note 4).
Purchases and sales of securities are recorded on a trade-date basis.
Interest income is recorded on an accrual basis. Dividends are recorded on
the ex-dividend date.
4
<PAGE> 9
BENEFITS are recorded when paid. As of September 30, 1997 and 1996, assets
available for benefits included benefits of $1,908,596 and $900,375 due to
participants who have withdrawn from participation in the Plan.
3. PARTICIPANT LOANS
Under the terms of the Plan and subject to certain limitations as defined
in the Plan agreement, participants may borrow against the amount of their
vested accounts. Such loans are payable over periods of up to five years
and bear interest at a rate equal to that charged by institutional lenders
for similar loans at the time the loan is made. As of September 30, 1997,
there are 244 loans to participants, maturing from 1997 to 2002 with
interest rates ranging between 9% and 11%.
4. FINANCIAL INSTRUMENTS WITH CONCENTRATIONS OF CREDIT RISK
As required by Financial Accounting Standard No. 105, Disclosure of
Information about Financial Investments with Off-Balance Sheet Risk and
Financial Instruments with Concentrations of Credit Risk," the following
information about the risk characteristics associated with the Merrill
Lynch retirement trust fund (the "Fund") is presented.
The fund invests in guaranteed investment contracts ("GIC"), bank
investment contracts ("BIC") and other synthetic guaranteed investment
contracts issued by selected North American life insurance companies and
U.S. banks. The issuer of each investment contract undertakes to repay the
principal amounts deposited pursuant to the contract plus accrued interest
at fixed or variable rates as specified under its terms. The credit risk of
the issuer of each investment contract is evaluated and monitored by the
trustee.
The Merrill Lynch retirement trust fund's policy is to require that the
investment contract issuer has ratings no lower than: a rating of AAA from
Standard & Poor's or Aa2 from Moody's at the time of purchase.
The GIC issuer is subject to an analysis of asset quality, liquidity,
management quality, surplus adequacy and profitability. Further, the
issuer's mortgage loan portfolio and bond holdings are scrutinized for
exposure to high risk bonds and geographical concentrations.
A credit review of all issuers of GICs is performed periodically. The
reviews are based upon the external rating services listed above. An
investment contract may be identified as substandard or removed from the
Fund depending on the degree of deterioration of the issuer's rating. The
Trustee may elect to segregate a contract from the Fund, resulting in
separate accounting for the investment contract. As a result, participants
admitted to the Fund after the contract has been segregated from the Fund
will not be affected.
5
<PAGE> 10
The Fund's policy is to review a variety of factors prior to selecting a
BIC issuer for bidding on BICs. These factors include, but are not limited
to, asset quality, liquidity, management quality, profitability and, as is
the policy of the Trustee, the Trustee's exposure to the issuing bank.
Furthermore, the Fund's investments in BICs are insured by the Federal
Deposit Insurance
Corporation within applicable limits. Such coverage was eliminated
effective December 1993, or, for contracts purchased prior to December
1991, at maturity.
5. INVESTMENTS
Investments that represent 5% or more of the Plan's net assets at September
30, 1997 and 1996 are separately identified in the following table:
<TABLE>
<CAPTION>
1997 1996
------------------------- ---------------------------
Cost Fair Value Cost Fair Value
<S> <C> <C> <C> <C>
Investment Company of America $2,866,067 $3,922,606 $1,790,301 $2,081,090
New Perspective Fund 2,844,428 3,742,839 2,134,006 2,397,095
Bond Fund of America 479,587 487,989
American Balanced Fund 1,550,012 1,899,512 1,182,109 1,327,227
Merrill Lynch Retirement Trust 1,127,827 1,127,827 1,081,241 1,081,241
The Good Guys! Stock Fund 931,609 648,895 1,001,744 684,670
Loans to participants 719,265 719,265 594,084 594,084
</TABLE>
6. FUND INFORMATION
The following information shows the changes in assets available for benefits
by fund type:
6
<PAGE> 11
CHANGES IN ASSETS AVAILABLE FOR BENEFITS BY FUND
YEAR ENDED SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
MERRILL
INVESTMENT NEW BOND AMERICAN LYNCH
COMPANY PERSPECTIVE FUND OF BALANCED RETIREMENT
OF AMERICA FUND AMERICA FUND TRUST FUND
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ADDITIONS TO ASSETS:
Investment income:
Interest and collective trust fund income
Net appreciation (depreciation) in fair
value of investments $ 922,591 $ 789,325 $ 53,492 $ 367,821 $ 61,721
Contributions from participants 982,512 833,800 164,571 456,634 402,508
--------------------------------------------------------------------------------
Total additions 1,905,103 1,623,125 218,063 824,455 464,229
--------------------------------------------------------------------------------
DEDUCTIONS FROM ASSETS -
Participants' withdrawals 384,413 384,193 103,862 268,727 177,779
--------------------------------------------------------------------------------
NET INCREASE BEFORE
INTERFUND TRANSFERS 1,520,690 1,238,932 114,201 555,728 286,450
INTERFUND TRANSFERS 320,826 106,812 (65,939) 16,557 (239,864)
--------------------------------------------------------------------------------
NET INCREASE 1,841,516 1,345,744 48,262 572,285 46,586
ASSETS AVAILABLE
FOR BENEFITS:
Beginning of year 2,081,090 2,397,095 487,989 1,327,227 1,081,241
--------------------------------------------------------------------------------
End of year $ 3,922,606 $ 3,742,839 $ 536,251 $ 1,899,512 $ 1,127,827
================================================================================
</TABLE>
<TABLE>
<CAPTION>
THE GOOD
GUYS!
STOCK PARTICIPANT
FUND LOANS TOTAL
-----------------------------------------------
<S> <C> <C>
ADDITIONS TO ASSETS:
Investment income:
Interest and collective trust fund income $ 59,640 $ 59,640
Net appreciation (depreciation) in fair
value of investments $ (50,299) -- 2,144,651
Contributions from participants 164,565 (333,580) 2,671,010
-----------------------------------------------
Total additions 114,266 (273,940) 4,875,301
----------------------------------------------
DEDUCTIONS FROM ASSETS -
Participants' withdrawals 86,973 (474,445) 931,502
----------------------------------------------
NET INCREASE BEFORE
INTERFUND TRANSFERS 27,293 200,505 3,943,799
INTERFUND TRANSFERS (63,068) (75,324) 0
----------------------------------------------
NET INCREASE (35,775) 125,181 3,943,799
ASSETS AVAILABLE
FOR BENEFITS:
Beginning of year 684,670 594,084 8,653,396
----------------------------------------------
End of year $ 648,895 $ 719,265 $ 12,597,195
===============================================
</TABLE>
7
<PAGE> 12
CHANGES IN ASSETS AVAILABLE FOR BENEFITS BY FUND
YEAR ENDED SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
MERRILL
INVESTMENT NEW BOND AMERICAN LYNCH
COMPANY PERSPECTIVE FUND OF BALANCED RETIREMENT
OF AMERICA FUND AMERICA FUND TRUST FUND
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ADDITIONS TO ASSETS:
Investment income:
Interest and collective trust fund income
Net appreciation (depreciation) in fair
value of investments $ 252,891 $ 214,102 $ 31,916 $ 136,060 $ 61,857
Contributions from participants 639,445 710,739 162,175 350,464 304,908
Total additions 892,336 924,841 194,091 486,524 366,765
DEDUCTIONS FROM ASSETS -
Participants' withdrawals 277,416 398,807 79,833 171,035 156,208
NET INCREASE (DECREASE) PRIOR TO
INTERFUND TRANSFERS 614,920 526,034 114,258 315,489 210,557
INTERFUND TRANSFERS 175,358 114,694 (18,062) 126,697 (279,978)
NET INCREASE (DECREASE) 790,278 640,728 96,196 442,186 (69,421)
ASSETS AVAILABLE
FOR BENEFITS:
Beginning of year 1,290,812 1,756,367 391,793 885,041 1,150,662
End of year $ 2,081,090 $ 2,397,095 $ 487,989 $ 1,327,227 $ 1,081,241
</TABLE>
<TABLE>
<CAPTION>
THE GOOD
GUYS!
STOCK PARTICIPANT
FUND LOANS TOTAL
-----------------------------------------------
<S> <C> <C> <C>
ADDITIONS TO ASSETS:
Investment income:
Interest and collective trust fund income $ 44,608 $ 44,608
Net appreciation (depreciation) in fair $ (288,594) -- 408,232
value of investments 241,287 (262,097) 2,146,921
Contributions from participants -----------------------------------------------
Total additions (47,307) (217,489) 2,599,761
-----------------------------------------------
DEDUCTIONS FROM ASSETS -
Participants' withdrawals 95,453 (378,069) 800,683
-----------------------------------------------
NET INCREASE (DECREASE) PRIOR TO
INTERFUND TRANSFERS (142,760) 160,580 1,799,078
INTERFUND TRANSFERS (129,510) 10,801 --
-----------------------------------------------
NET INCREASE (DECREASE) (272,270) 171,381 1,799,078
ASSETS AVAILABLE
FOR BENEFITS:
Beginning of year 956,940 422,703 6,854,318
-----------------------------------------------
End of year $ 684,670 $ 594,084 $ 8,653,396
===============================================
</TABLE>
8
<PAGE> 13
THE GOOD GUYS! DEFERRED PAY PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
INVESTMENTS UNITS/SHARE COST FAIR VALUE
<S> <C> <C> <C>
INVESTMENT COMPANY OF AMERICA 124,635 $ 2,866,067 $ 3,922,606
NEW PERSPECTIVE FUND 167,015 2,844,428 3,742,839
BOND FUND OF AMERICA 37,185 509,324 536,251
AMERICAN BALANCED FUND 110,906 1,550,012 1,899,512
MERRILL LYNCH RETIREMENT TRUST 1,127,827 1,127,827 1,127,827
THE GOOD GUYS! STOCK FUND 86,644 931,609 648,895
LOANS TO PARTICIPANTS (See Note 3) 719,265 719,265
----------------------------
TOTAL INVESTMENTS $ 10,548,532 $ 12,597,195
============================
</TABLE>
9
<PAGE> 14
THE GOOD GUYS! DEFERRED PAY PLAN
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
(SERIES OF TRANSACTIONS EXCEEDING 5% OF PLAN ASSETS)
YEAR ENDED SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
PURCHASES DISPOSITIONS
------------------------ -----------------------------------------
NUMBER OF NUMBER OF GAIN
FUND TRANSACTIONS COST TRANSACTIONS PROCEEDS (LOSS)
<S> <C> <C> <C> <C> <C>
Investment Company of America 49 $1,350,936 19 $ 362,496 $ 73,828
New Perspective Fund 41 1,006,558 27 371,677 64,407
American Balanced Fund 46 662,272 19 339,188 40,753
Merrill Lynch Retirement Fund 285 442,088 23 396,723 --
The Good Guys! Stock Fund 29 133,253 20 130,507 (91,100)
</TABLE>
10
<PAGE> 15
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement No.
33-39421 of The Good Guys!, Inc. on Form S-8 of our report dated March 12, 1998,
appearing in this Annual Report on Form 11-K of The Good Guys! Deferred Pay Plan
for the year ended September 30, 1997.
DELOITTE & TOUCHE LLP
San Francisco, California
March 12, 1998
