UNITED STATES
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 [NO FEE REQUIRED]
For the fiscal year ended December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF
THE SECURITIES EXCHANGE ACT [NO FEE REQUIRED]
For the transition period
from_________________to__________________.
Commission file number 1-09100
A. Full title of the plan and the address of the
plan, if different from that of the issuer named
below:
Gottschalks Inc.
Retirement Savings Plan
B. Name of issuer of the securities held pursuant to
the plan and the address of its principal
executive office:
Gottschalks Inc.
7 River Park Place East
Fresno, California 93720
REQUIRED INFORMATION
Gottschalks Inc. hereby files the financial
statements required by Form 11-K with respect to the
Gottschalks Inc. Retirement Savings Plan (the "Plan").
The financial statements for the Plan and the report of
independent accountants are attached hereto as Exhibits
and are incorporated in this Annual Report on Form 11-K
by reference.
SIGNATURES
The Plan. Pursuant to the requirements
of the Securities Exchange Act of 1934, the Plan's
administrative committee has duly caused this annual
report to be signed on its behalf by the undersigned
thereunto duly authorized.
GOTTSCHALKS INC.
RETIREMENT SAVINGS PLAN
By: INVESTMENT SAVINGS
COMMITTEE
(Name of Plan
Administrative Committee)
By: \s\ Alan A. Weinstein
Alan A. Weinstein
Its: Secretary
GOTTSCHALKS INC.
RETIREMENT SAVINGS PLAN
FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996
GOTTSCHALKS INC.
RETIREMENT SAVINGS PLAN
Financial Statements and
Supplemental Schedules
Years ended December 31, 1997 and 1996
Table of Contents
Independent Accountants' Report 1-2
Financial Statements:
Statements of Net Assets Available for
Plan Benefits 3
Statements of Changes in Net Assets
Available for Plan Benefits, With
Fund Information 4
Notes to Financial Statements 5
Supplemental Schedules as of and for the
year ended December 31, 1997 11
Schedule of Assets Held for Investment Purposes
Schedule of Reportable Transactions
To the Participants and
Plan Administrator of the
Gottschalks Inc. Retirement Savings Plan
INDEPENDENT ACCOUNTANTS' REPORT
We were engaged to audit the financial statements
and supplemental schedules of the Gottschalks Inc.
Retirement Savings Plan (the Plan) as of December 31,
1997 and 1996, and for the years then ended, as listed
in the accompanying table of contents. 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 audits 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 the Plan's 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
net assets available for plan benefits of the Plan as
of December 31, 1997 and 1996, and the changes in net
assets available for plan 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 information
included in the supplemental schedules 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 supplemental information is
the responsibility of the Plan's management. The fund
information in the statement of changes in net assets
available for plan benefits, with fund information is
presented for purposes of additional analysis rather
than to present the changes in net assets available for
plan benefits for each fund. The supplemental
information and fund information have been subjected to
the auditing procedures applied in the audits of the
basic financial statements and, in our opinion, are
fairly stated in all material respects in relation to
the basic financial statements taken as a whole.
MOHLER, NIXON & WILLIAMS
Accountancy Corporation
Campbell, California
April 22, 1998
<TABLE>
<CAPTION>
GOTTSCHALKS INC.
RETIREMENT SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
December 31,
1997 1996
<S> <C> <C>
Investments, at fair value $13,868,347 $10,133,993
Assets held for
investment purposes 13,868,347 10,133,993
Employer's contribution
receivable 221,722 277,859
Net assets available
for plan benefits $14,090.069 $10,411,852
</TABLE>
See independent accountant's report and
accompany notes to financial statements.
<TABLE>
<CAPTION>
GOTTSCHALKS INC.
RETIREMENT SAVINGS PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
Self - Participant Directed
S&P
Asset Income S&P 500 Growth Midcap
Allocation Accumulation Stock Stock Stock
Fund Fund Fund Fund Fund
Net assets available for
plan benefits at
<C> <C> <C> <C> <C> <C>
December 31, 1995 $2,601,339 $1,364,727 $881,403 $384,380 $300,992
Employer's contribution
Participant's contributions/
rollovers
Withdrawals/distributions
Dividends and interest
Net appreciation
(depreciation) in fair
value of investments
Administrative fees
Transfers in (out) (2,601,339) (1,364,727) (881,403) (384,380) (300,992)
Increase (decrease) in
net assets (2,601,339) (1,364,727) (881,403) (384,380) (300,992)
Net assets available
for plan benefits
at December 31, 1996 -- -- -- -- --
Employer's contribution
Participants' contributions/
rollovers
Withdrawals/distributions
Dividends and Interest
Net appreciation
(depreciation) in fair
value of investments
Administrative fees
Transfers in (out)
Increase (decrease) in
net assets
Net assets available
for plan benefits
at December 31, 1997 $ -- $ -- $ -- $ -- $ --
Schwab
Value Defensive Conservative Moderate Aggressive DFA U.S.
Advantage Lifestyle Lifestyle Lifestyle Lifestyle Large
Fund Fund Fund Fund Fund Company
Net assets available for
plan benefits at
December 31, 1995
Employer's contribution
Participant's
Contributions/
<S> <C> <C> <C> <C> <C>
rollovers $219,045 $148,317 $257,411 $505,011 $599,164
Withdrawals/
distributions (216,328) (22,500) (83,196) (191,269) (145,033)
Dividends and
interest 107,528 27,395 44,230 101,862 117,183
Net appreciation
(depreciation)
in fair value
of investments 7,140 23,454 72,840 115,478
Administrative
fees (4,687) (2,941) (5,202) (10,607) (11,718)
Transfers in
(out) 739,192 435,364 710,243 1,605,773 1,866,911
Increase (decrease)
in net assets 844,750 592,775 946,940 2,083,610 2,541,985
Net assets available
for plan benefits
at December 31,
1996 844,750 592,775 946,940 2,083,610 2,541,985
Employer's
contribution (785)
Participants'
contributions/
rollovers 201,837 140,699 279,904 594,340 709,271 $122,359
Withdrawals/
distributions (171,088) (57,239) (99,858) (212,557) (253,165) (789)
Dividends and
interest 46,227 36,309 68,786 154,579 188,962 6,876
Net appreciation
(depreciation) in fair
value of investments 1,588 4,361 4,402 (19,545) 75,153
Administrative
fees (5,087) (4,312) (8,194) (16,665) (19,383) (2,080)
Transfers in
(out) (54,486) (57,991) 2,661 (52,814) (169,722) 359,632
Increase (decrease)
in net assets 16,618 59,054 247,660 471,285 436,418 561,151
Net assets available
for plan benefits
at December 31,
1997 $861,368 $651,829 $1,194,600 $2,554,895 $2,978,403 561,151
Non-Participant
Directed
Gottschalks Inc. Gottschalks Inc.
Common Common Participant
Stock Fund Stock Fund Cash Receivable Loans Total
Net assets available for
plan benefits at
December 31,
<C> <C> <C> <C> <C> <C> <C>
1995 $1,079,914 $1,069,642 $ 70 $446,569 $649,304 $8,778,340
Employer's
contribution 424,792 (146,933) 277,859
Participant's
contributions/
rollovers 145,992 (21,777) 1,853,163
Withdrawals/
distributions (148,004) (158,092) (41,473) (1,005,895)
Dividends and
interest 1,665 1,665 9,222 51,629 462,379
Net appreciation
(depreciation) in
fair value of
investments (54,140) (83,188) 81,584
Administrative
fees (212) (211) (35,578)
Transfers in
(out) 184,345 (835) (9,292) 1,140 --
Increase (decrease)
in net assets 129,646 184,311 (70) (168,710) 11,296 1,633,512
Net assets available
for plan benefits
at December 31,
1996 1,209,560 1,253,773 -- 277,859 660,600 10,411,852
Employer's
contribution 737,170 (56,137) 680,248
Participants'
contributions/
rollovers 164,666 2,213,076
Withdrawals/
distributions (180,759) (214,690) (48,459) (1,238,604)
Dividends and
interest 391 392 62,093 564,615
Net appreciation
(depreciation) in
fair value of
investments 662,543 788,171 1,516,673
Administrative
fees (1,035) (1,035) (57,791)
Transfers in
(out) (169,408) 508 141,620 --
Increase (decrease)
in net assets 476,398 1,310,516 (56,137) 155,254 3,678,217
Net assets available
for plan benefits
at December 31,
1997 $1,685,958 $2,564,289 $ -- $221,722 $815,854 $14,090,069
See independent accountants' report and accompanying notes
to financial statements.
</TABLE>
GOTTSCHALKS INC.
RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 1997 and 1996
Note 1 - The Plan and its significant accounting
policies:
The following description of the Gottschalks Inc.
(the Company) Retirement Savings Plan (the Plan)
provides only general information. Participants should
refer to the Plan agreement for a more complete
description of the Plan's provisions.
The Plan is a defined contribution plan that was
established in 1986 by the Company to provide benefits
to eligible employees. The Plan covers all full-time
employees of the Company who have a minimum of one year
of service with not less than 1,000 hours of service,
are age 21 or older and not otherwise covered by a
collective bargaining agreement, a nonresident alien or
a leased employee.
Effective January 1, 1996, the Plan document was
amended and restated in its entirety.
The Plan administrator believes that the Plan is
currently designed and being operated in compliance
with the applicable requirements of the Internal
Revenue Code and the provisions of the Employee
Retirement Income Security Act of 1974 (ERISA).
Administration -
The Company has appointed an Administrative
Committee (the Committee) to manage the operation and
administration of the Plan. A third-party
administrator, appointed by the Committee, processes
and maintains the records of participant data.
Effective January 1, 1996, the Company contracted with
The Charles Schwab Trust Company (Charles Schwab) to
act as the trustee. All significant expenses incurred
for administering the Plan are paid by the Company,
except for loan fees and an annual management trustee
fee ranging from 0.10% to 0.16% of Plan assets, which
are paid by the Plan.
Investments -
During 1997 and 1996, investments of the Plan
were held by Charles Schwab, and invested based solely
upon instructions received from participants for
participant directed funds. During the years ended
December 31, 1997 and 1996, participants could direct
their employee contributions among any six of the
following investment options. No assurance of actual
fund performance can be given. Employer contributions
to the Plan are non-participant directed and invested
in the Gottschalks Inc. Common Stock Fund.
Fund options available to Plan participants
during the years ended December 31, 1997 and 1996 were
as follows:
Schwab Value Advantage Fund - Funds were invested
in a money market account.
Lifestyle Funds - Funds were invested in DFA One-Year
Fixed Income Portfolio, DFA U.S. Large Cap
Value Fund, DFA 9-10 U.S. Small Company Fund, DFA
International Value Portfolio and International
Small Cap Value Portfolio. The allocation of
investments within each of the portfolios varies
among the Lifestyle Funds to provide for
different levels of risk.
DFA U.S. Large Stock Fund - Funds were invested
in U.S. large company stocks. This fund was
available effective April 1, 1997.
Gottschalks Inc. Common Stock Fund - Funds were
invested in common stock of Gottschalks Inc.
The Plan's investments are valued at fair value
as of the last day of the Plan year, as measured by
quoted market prices.
Cash and cash equivalents -
All highly liquid investments purchased with an
original maturity of three months or less (generally
money market funds) are considered to be cash
equivalents.
Vesting -
Participants are immediately vested in their
salary deferral and rollover contributions and related
earnings. A participant vests ratably and is fully
vested in the employer's matching contributions
allocated to their account after four years of credited
service or after age 65, or because of disability or
death.
Income taxes -
The Plan has been amended since receiving its
latest favorable determination letter dated September
28, 1995. However, the Company intends that the Plan
continue to qualify under the applicable requirements
of the Internal Revenue Code and related state
statutes, and is exempt from federal income and state
franchise taxes.
Reconciliation of financial statements to Form 5500 -
The differences between the information reported in
the financial statements and the information reported in
the Form 5500 arise primarily from presenting the
financial statements on the accrual basis of accounting.
Estimates -
The preparation of financial statements in
conformity with generally accepted accounting principles
requires management to make estimates and assumptions
that affect the reported amounts of assets and
liabilities at the date of the financial statements and
the reported amounts of income and expenses during the
reporting period. Actual results could differ from those
estimates.
Risks and uncertainties -
The Plan provides for various investment options in
any combination of stocks, bonds, fixed income
securities, mutual funds and other investment securities.
Investment securities are exposed to various risks, such
as interest rate, market fluctuations and credit risks.
Due to the level of risk associated with certain
investment securities, it is at least reasonably possible
that changes in risks in the near term would materially
affect participants' account balances and the amounts
reported in the statements of net assets available for
plan benefits and the statements of changes in net assets
available for plan benefits.
Note 2 - Participation and benefits:
Employee contributions -
Participants may elect to have the Company
contribute a percentage, from 1% to 15%, of their
eligible pre-tax compensation up to the amount
allowable under current income tax regulations.
Participants who elect to have the Company contribute a
portion of their compensation to the Plan agree to
accept an equivalent reduction in taxable compensation.
Contributions withheld are invested in accordance with
the participant's direction and are allocated to funds
in whole percentage increments.
Participants are also allowed to make rollover
contributions of amounts received from other tax -
qualified employer-sponsored retirement plans. Such
contributions are deposited in the appropriate
investment funds in accordance with the participant's
direction and the Plan's provisions.
Employer contributions -
The Company is allowed to make matching
contributions as defined in the Plan and as approved by
the Board of Directors. The Company's contributions
may be made in the form of cash or common stock of the
Company. During fiscal 1997, the Company revised its
discretionary contribution policy for the Plan such
that contributions are now made on a quarterly basis of
up to 3% of a participants' quarterly eligible
compensation, with the ability to receive an additional
contribution of up to 1% of annual eligible
compensation, depending on the Company's quarterly and
annual financial performance during those periods. For
1996, the Company matched 100% of each participant's
contribution up to a maximum of 1% of the participant's
compensation. The Company's actual contribution is
reduced by available forfeitures, if any, during the
Plan year. During 1997, the Company made matching
contributions of $680,249, which includes forfeitures
of $18,225, and during 1996 the Company made matching
contributions of $277,859, which includes forfeitures
of $3,505.
Participant accounts -
Each participant's account is credited with the
participant's contribution, Plan earnings or losses,
administration fees, and an allocation of the Company's
contribution, if any. Allocations of the Company
contributions are based on participant contributions.
The benefit to which a participant is entitled is the
benefit that can be provided from the participant=s
vested account.
Payment of benefits -
Upon termination, the participant or beneficiary
will receive the benefits in a lump-sum amount equal to
the value of the participant's vested interest in his
or her account.
Loans to participants -
The Plan allows participants to borrow not less
than $500 and up to the lesser of $50,000 or 50% of
their vested account balance. The loans are secured by
the participant's vested balance. Such loans bear
interest at the available market financing rates and
must be repaid to the Plan within a five year period,
unless the loan is used for the purchase of a primary
residence in which case the maximum repayment period is
fifteen years. Interest rates on outstanding
participant loans currently range from 6.1% to 10.5%.
The specific terms and conditions of such loans are
established by the Plan administrator.
Note 3 - Investments:
The following table includes the fair values of
investments and investment funds that represent 5% or
more of the Plan's net assets at December 31:
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Schwab Value Advantage Fund $ 861,368 $ 844,750
Lifestyle Funds 7,379,727 6,165,310
DFA U.S. Large Company 561,151
Gottschalks Inc. Common
Stock Fund 4,250,247 2,463,333
Participant Loans 815,854 660,600
Total investments at fair
value $13,868,347 $10,133,993
</TABLE>
Note 4 - Party in interest transactions:
Employer contributions are invested in common
stock of the Company. In addition, as allowed in the
Plan, participants may elect to invest a portion of
their accounts in the common stock of the Company.
Aggregate investment in Company common stock at
December 31, 1997 and 1996 was as follows:
<TABLE>
<CAPTION>
Date Number of shares Fair value Cost
<C> <C> <C> <C>
1997 512,771 $4,250,247 $4,226,669
1996 465,073 $2,463,333 $2,663,491
</TABLE>
Note 5 - Plan termination and/or modification:
The Company intends to continue the Plan
indefinitely for the benefit of its employees; however,
it reserves the right to terminate and/or modify the
Plan at any time by resolution of its Board of
Directors and subject to the provisions of ERISA. In
the event the Plan is terminated in the future,
participants would become fully vested in their
accounts.
GOTTSCHALKS INC.
RETIREMENT SAVINGS PLAN
SUPPLEMENTAL SCHEDULES
DECEMBER 31, 1997
<TABLE>
<CAPTION>
GOTTSCHALKS INC.
RETIREMENT SAVINGS PLAN
E.I.N. #77-0159791
PLAN #: 001
ITEM 27a, PART I - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
December 31, 1997
(a) (b) (c)
Identity of issue, borrower, Description of investment including
lessor or similar party maturity date, rate of interest,
collateral, par or maturity value
Charles Schwab:
<S>
Schwab Value Advantage Fund Mutual Fund
DFA US Large Co (S&P 500) Mutual Fund
DFA One Year Fixed Income Mutual Fund
DFA US Large Cap Value Fund Mutual Fund
DFA 9 & 10 US Small Co. Mutual Fund
DFA International Small Cap Mutual Fund
DFA International Value Mutual Fund
Schwab Retirement Money Fund Mutual Fund
(Stock Liquidity Fund)
*Gottschalks Stock Common Stock
*Participant Loans Loan Fund (6.1% to 10.5%)
(d) (e)
Cost Current
Value
Charles Schwab:
<S> <C> <C>
Schwab Value Advantage Fund $ 861,368 $ 861,368
DFA US Large Co (S&P 500) 551,325 561,151
DFA One Year Fixed Income 2,823,932 2,808,301
DFA US Large Cap Value Fund 1,841,412 1,710,673
DFA 9 & 10 Small Co. 1,082,589 894,230
DFA International Small Cap 725,159 581,725
DFA International Value 1,553,011 1,384,800
Schwab Retirement Money Fund 19,884 19,884
*Gottschalks Stock 4,206,785 4,230,361
*Participant Loans 0 815,854
Total Assets Held for Investment
Purposes $13,868,347
*Parties-in-interest
</TABLE>
<TABLE>
<CAPTION>
GOTTSCHALKS INC,
RETIREMENT SAVINGS PLAN
ITEM 27d, PART V - SCHEDULE OF REPORTABLE TRANSACTIONS
E.I.N: 77-0159791
PLAN#: 001
December 31, 1997
(a) (b) (c) (d) (e) (f)
Description of asset Expense
(including interest rate incurred
and maturity in case Purchase Selling Lease with
of a loan price price rental transaction
Charles Schwab:
<S> <C> <C>
Schwab Value Advantage Fund $ 339,857
Schwab Value Advantage Fund $323,239
DFA One-Year Fixed Income
Fund 1,110,937
DFA One-Year Fixed Income
Fund 600,519
DFA US Large Cap Value Fund 603,254
DFA US Large Cap Value Fund 423,340
DFA 9 & 10 Small Cap Fund 425,393
DFA 9 & 10 Small Cap Fund 177,575
DFA Int'l Small Cap Fund 367,740
DFA Int'l Small Cap Fund 156,191
DFA International Value 611,647
DFA International Value 537,733
DFA US Large Co. 538,809
DFA US Large Co. 52,811
Schwab Retirement Money
Mkt. Fund 1,349,122
Schwab Retirement Money
Mkt. Fund 1,350,938
* Gottschalks 2,260,11
* Gottschalks 1,922,099
* Parties-In-Interest
(g) (h) (i)
Current value
of asset on
Cost of transaction Net gain
asset date or (loss)
Charles Schwab:
<S> <C> <C> <C>
Schwab Value Advantage Fund $339,857 $339,857 --
Schwab Value Advantage Fund 323,239 323,239
DFA One-Year Fixed Income Fund 1,110,937 1,110,937
DFA One-Year Fixed Income Fund 599,060 600,519 1,459
DFA US Large Cap Value Fund 603,254 603,254
DFA US Large Cap Value Fund 384,220 423,340 39,120
DFA 9 & 10 Small Cap Fund 425,393 425,393
DFA 9 & 10 Small Cap Fund 165,206 177,575 12,369
DFA Int'l Small Cap Fund 367,740 367,740
DFA Int'l Small Cap Fund 161,410 156,191 ( 5,219)
DFA International Value 611,647 611,647
DFA International Value 541,650 537,733 (3,917)
DFA US Large Co. 538,809 538,809
DFA US Large Co. 46,663 52,811 6,148
Schwab Retirement Money Mkt.
Fund 1,349,122 1,349,122
Schwab Retirement Money Mkt.
Fund 1,350,938 1,350,938
* Gottschalks 2,260,112 2,260,112
* Gottschalks 1,489,13 1,922,099 432,969
* Parties-In-Interest
</TABLE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the use of our name on our report, dated April 22, 1998, with
respect to the financial statements and schedules of the Gottschalks Inc.
Retirement Savings Plan for the year ended December 31, 1997, included in
the Annual Report on Form 11-K which is filed electronically with the
Securities and Exchange Commission.
MOHLER, NIXON & WILLIAMS
Accountancy Corporation
Campbell, California
April 22, 1998
