<PAGE> 1
As filed with the Securities and Exchange Commission on March 29, 1999
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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, 1998
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
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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
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<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, 1997 and 1998, 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 29, 1999
- -----------------------
(Robert A. Gunst)
/s/ DENNIS C. CARROLL March 29, 1999
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(Dennis C. Carroll)
-2-
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APPENDIX 1
THE GOOD GUYS!
DEFERRED PAY PLAN
FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED SEPTEMBER 30, 1998 AND 1997,
SUPPLEMENTAL SCHEDULES AS OF AND FOR THE YEAR ENDED SEPTEMBER 30, 1998 AND
INDEPENDENT AUDITORS' REPORT
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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, 1998 and 1997 2
Statements of Changes in Assets Available for Benefits
for the Years Ended September 30, 1998 and 1997 2
Notes to Financial Statements 3-8
SUPPLEMENTAL SCHEDULES AS OF AND FOR THE
YEAR ENDED SEPTEMBER 30, 1998:
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, 1998 and 1997,
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, 1998
and 1997, 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, 1998 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 1998 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.
/s/ DELOITTE & TOUCHE LLP
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March 24, 1999
<PAGE> 6
THE GOOD GUYS! DEFERRED PAY PLAN
STATEMENTS OF ASSETS AVAILABLE FOR BENEFITS
SEPTEMBER 30, 1998 AND 1997
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<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
ASSETS:
Investments, at fair value:
Investment Company of America $ 4,754,313 $ 3,922,606
New Perspective Fund 3,461,616 3,742,839
Bond Fund of America 594,911 536,251
American Balanced Fund 2,160,772 1,899,512
Merrill Lynch Retirement Preservation Trust 1,146,563 1,127,827
The Good Guys! Company Stock Fund 993,738 648,895
Loans to participants 1,066,343 719,265
---------------------------
ASSETS AVAILABLE FOR BENEFITS $14,178,256 $12,597,195
===========================
</TABLE>
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STATEMENTS OF CHANGES IN ASSETS AVAILABLE FOR BENEFITS
YEARS ENDED SEPTEMBER 30, 1998 AND 1997
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<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
ADDITIONS TO ASSETS:
Investment income:
Interest income $ 71,813 $ 59,640
Net appreciation in fair value of investments 168,068 2,144,651
---------------------------
Total investment income 239,881 2,204,291
Contributions from participants 3,180,867 2,671,010
---------------------------
Total additions 3,420,748 4,875,301
DEDUCTIONS FROM ASSETS -
Payments to participants 1,839,687 931,502
---------------------------
NET INCREASE 1,581,061 3,943,799
ASSETS AVAILABLE FOR BENEFITS:
At beginning of year 12,597,195 8,653,396
---------------------------
At end of year $14,178,256 $12,597,195
===========================
</TABLE>
See notes to financial statements.
2
<PAGE> 7
THE GOOD GUYS! DEFERRED PAY PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 1998 AND 1997
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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, Inc.
(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 provided they have completed twelve months (six months in
1997) of continuous service. Participants may contribute up to 20% (15% in
1997) 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 with the investment choice elected by the
participant. The participants have a choice of six investments, four of
those investments are mutual funds, one is in a collective trust and one
is in Company Stock. 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 Preservation 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 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 additions
and deductions to assets during the reporting periods. 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, 1998 and 1997, assets
available for benefits included benefits of $2,319,494 and $1,908,596 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,
or up to 30 years for the purchase of a primary residence, 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, 1998,
there are 246 loans, maturing from 1998 to 2028 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 Preservation Trust (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 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, 1998 and 1997 are separately identified in the following table:
<TABLE>
<CAPTION>
1998 1997
--------------------- ---------------------
Fair Fair
Cost Value Cost Value
<S> <C> <C> <C> <C>
Investment Company of America $4,086,382 $4,754,313 $2,866,067 $3,922,606
New Perspective Fund 2,973,381 3,461,616 2,844,428 3,742,839
American Balanced Fund 2,089,574 2,160,772 1,550,012 1,899,512
Merrill Lynch Retirement
Preservation Trust 1,146,563 1,146,563 1,127,827 1,127,827
The Good Guys! Company Stock
Fund 1,372,550 993,738 931,609 648,895
Loans to participants 1,066,343 1,066,343 719,265 719,265
</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, 1998
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<TABLE>
<CAPTION>
MERRILL THE GOOD
LYNCH GUYS!
INVESTMENT NEW BOND AMERICAN RETIREMENT COMPANY
COMPANY PERSPECTIVE FUND OF BALANCED PRESERVATION STOCK PARTICIPANT
OF AMERICA FUND AMERICA FUND TRUST FUND LOANS TOTAL
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ADDITIONS TO ASSETS:
Investment income:
Interest income $ $ $ $ $ $ $ 71,813 $ 71,813
Net appreciation
(depreciation)
in fair value
of investments 226,890 80,541 24,161 59,267 62,660 (285,451) -- 168,068
Contributions from
participants 1,164,492 801,572 136,687 459,479 314,641 768,074 (464,078) 3,180,867
----------------------------------------------------------------------------------------------------
Total additions 1,391,382 882,113 160,848 518,746 377,301 482,623 (392,265) 3,420,748
----------------------------------------------------------------------------------------------------
DEDUCTIONS FROM ASSETS -
Participants' withdrawals 850,674 795,152 79,503 308,993 275,316 213,040 (682,991) 1,839,687
----------------------------------------------------------------------------------------------------
NET INCREASE PRIOR TO
INTERFUND TRANSFERS 540,708 86,961 81,345 209,753 101,985 269,583 290,726 1,581,061
INTERFUND TRANSFERS 290,999 (368,184) (22,685) 51,507 (83,249) 75,260 56,352 --
----------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) 831,707 (281,223) 58,660 261,260 18,736 344,843 347,078 1,581,061
ASSETS AVAILABLE
FOR BENEFITS:
Beginning of year 3,922,606 3,742,839 536,251 1,899,512 1,127,827 648,895 719,265 12,597,195
----------------------------------------------------------------------------------------------------
End of year $ 4,754,313 $3,461,616 $594,911 $2,160,772 $1,146,563 $ 993,738 $1,066,343 $14,178,256
====================================================================================================
</TABLE>
7
<PAGE> 12
CHANGES IN ASSETS AVAILABLE FOR BENEFITS BY FUND
YEAR ENDED SEPTEMBER 30, 1997
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<TABLE>
<CAPTION>
MERRILL THE GOOD
LYNCH GUYS!
INVESTMENT NEW BOND AMERICAN RETIREMENT COMPANY
COMPANY PERSPECTIVE FUND OF BALANCED PRESERVATION STOCK PARTICIPANT
OF AMERICA FUND AMERICA FUND TRUST FUND LOANS TOTAL
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ADDITIONS TO ASSETS:
Investment income:
Interest income $ $ $ $ $ $ $59,640 $ 59,640
Net appreciation
(depreciation) in fair
value of investments 922,591 789,325 53,492 367,821 61,721 (50,299) -- 2,144,651
Contributions from
participants 982,512 833,800 164,571 456,634 402,508 164,565 (333,580) 2,671,010
------------------------------------------------------------------------------------------------------
Total additions 1,905,103 1,623,125 218,063 824,455 464,229 114,266 (273,940) 4,875,301
------------------------------------------------------------------------------------------------------
DEDUCTIONS FROM ASSETS -
Participants' withdrawals 384,413 384,193 103,862 268,727 177,779 86,973 (474,445) 931,502
------------------------------------------------------------------------------------------------------
NET INCREASE BEFORE
INTERFUND TRANSFERS 1,520,690 1,238,932 114,201 555,728 286,450 27,293 200,505 3,943,799
INTERFUND TRANSFERS 320,826 106,812 (65,939) 16,557 (239,864) (63,068) (75,324) 0
------------------------------------------------------------------------------------------------------
NET INCREASE 1,841,516 1,345,744 48,262 572,285 46,586 (35,775) 125,181 3,943,799
ASSETS AVAILABLE
FOR BENEFITS:
Beginning of year 2,081,090 2,397,095 487,989 1,327,227 1,081,241 684,670 594,084 8,653,396
------------------------------------------------------------------------------------------------------
End of year $3,922,606 $3,742,839 $536,251 $1,899,512 $1,127,827 $648,895 $ 719,265 $12,597,195
======================================================================================================
</TABLE>
8
<PAGE> 13
THE GOOD GUYS! DEFERRED PAY PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
SEPTEMBER 30, 1998
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<TABLE>
<CAPTION>
INVESTMENTS UNITS/SHARE COST FAIR VALUE
<S> <C> <C> <C>
INVESTMENT COMPANY OF AMERICA 159,491 $ 4,086,382 $ 4,754,313
NEW PERSPECTIVE FUND 164,348 2,973,381 3,461,616
BOND FUND OF AMERICA 41,989 580,326 594,911
AMERICAN BALANCED FUND 141,168 2,089,574 2,160,772
MERRILL LYNCH RETIREMENT PRESERVATION TRUST 1,146,563 1,146,563 1,146,563
THE GOOD GUYS! COMPANY STOCK FUND 130,444 1,372,550 993,738
LOANS TO PARTICIPANTS (See Note 3) 1,066,343 1,066,343
--------------------------
TOTAL INVESTMENTS $13,315,119 $14,178,256
==========================
</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, 1998
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<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 64 $1,911,498 30 $ 868,272 $163,455
New Perspective Fund 53 1,060,852 35 1,161,179 227,335
American Balanced Fund 53 949,063 30 459,996 48,060
Merrill Lynch Retirement Preservation
Trust 285 470,181 26 419,171 --
The Good Guys! Company Stock Fund 48 686,417 25 235,886 (4,148)
</TABLE>
10
