FORM 10Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(X) Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended April 29, 1995
OR
( ) Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from to
For Quarter Ended: April 29, 1995
Commission File Number: 0-15907
Exact name of registrant as specified in its charter:
PROFFITT'S, INC.
State of Incorporation: Tennessee
I.R.S. Employer Identification Number: 62-0331040
Address of Principal Executive Offices (including zip code):
P.O. Box 9388, Alcoa, Tennessee 37701
Registrant's telephone number, including area code:
(615) 983-7000
Indicate by check mark whether Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such
reports) and (2) has been subject to such filing requirements for
the past 90 days.
Yes (X) No ( )
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Common Stock, $.10 Par Value -- 10,196,755 shares as of April 29,
1995
<PAGE>
PROFFITT'S, INC.
Index
PART I. FINANCIAL INFORMATION Page No.
Item 1. FINANCIAL STATEMENTS (UNAUDITED)
Condensed Consolidated Balance Sheets --
April 29, 1995, January 28, 1995, and
April 30, 1994 2
Condensed Consolidated Statements of Income --
Three Months Ended April 29, 1995 and April 30, 1994 3
Condensed Consolidated Statements of Cash Flows --
Three Months Ended April 29, 1995 and April 30, 1994 4
Notes to Condensed Consolidated Financial
Statements 5
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 7
PART II. OTHER INFORMATION
Item 5. OTHER INFORMATION 10
Item 6. EXHIBITS AND REPORTS ON FORM 8-K 10
SIGNATURES 11
<PAGE>
PROFFITT'S, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
APRIL 29, JANUARY 28, APRIL 30,
1995 1995 1994
(UNAUDITED) (AUDITED) (UNAUDITED)
ASSETS
Current assets
Cash and cash equivalents $ 1,145 $ 1,133 $ 1,112
Net trade accounts receivable, less
receivables sold to third party 12,915 2,701 11,957
Merchandise inventories 182,114 162,080 176,098
Other current assets 15,462 13,646 16,023
--------- --------- ---------
Total current assets 211,636 179,560 205,190
Property and equipment, net 310,482 300,285 290,215
Goodwill 48,956 44,624 46,809
Other assets 16,277 15,586 15,147
--------- --------- ---------
$ 587,351 $ 540,055 $ 557,361
========= ========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Trade accounts payable $ 44,304 $ 34,587 $ 50,602
Other accrued liabilities 27,250 26,565 23,457
Current portion of long-term debt
and capital lease obligations 15,617 15,269 16,893
--------- --------- ---------
Total current liabilities 87,171 76,421 90,952
Real estate and mortgage notes 68,695 64,726 72,126
Notes payable 71,748 49,376 63,125
Capital lease obligations 11,200 11,319 11,638
Deferred income taxes 57,676 54,830 51,958
Other long-term liabilities 3,196 2,438 1,491
Subordinated debentures 100,326 100,269 100,090
Shareholders' equity 187,339 180,676 165,981
--------- --------- ---------
$ 587,351 $ 540,055 $ 557,361
========= ========= =========
See notes to condensed consolidated financial statements.
<PAGE>
PROFFITT'S, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(in thousands, except per share amounts)
THREE MONTHS ENDED
APRIL 29, APRIL 30,
1995 1994
Net sales $ 160,421 $ 86,119
Costs and expenses:
Cost of sales 102,262 58,193
Selling, general, and administrative expenses 40,698 20,103
Other operating expenses 11,950 7,384
---------- --------
Operating income 5,511 439
Other income (expense):
Finance charge income, net of allocation to
purchaser of accounts receivable 3,616 2,602
Interest expense (4,781) (2,655)
Other income (expense), net 354 319
---------- --------
Income before provision for income taxes 4,700 705
Provision for income taxes 1,898 305
---------- --------
NET INCOME 2,802 400
Preferred stock dividends 488 181
---------- --------
Net income available to common shareholders $ 2,314 $ 219
========== ========
Earnings per common share $ 0.23 $ 0.02
========== ========
Weighted average common shares 10,161 9,595
========== ========
Note/Earnings per common share amounts are based on the weighted average
number of shares of common stock and dilutive common stock equivalents
(employee stock options) outstanding during each period, after
recognition of preferred stock dividends.
See notes to condensed consolidated financial statements.
<PAGE>
PROFFITT'S, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
THREE MONTHS ENDED
APRIL 29, APRIL 30,
1995 1994
OPERATING ACTIVITIES
Net income $ 2,802 $ 400
Adjustments to reconcile net income to
net cash (used in) provided by operating
activities:
Depreciation and amortization 4,894 2,952
Changes in operating assets and liabilities, net (10,839) 61,958
---------- --------
Net cash (used in) provided by operating
activities (3,143) 65,310
INVESTING ACTIVITIES
Purchases of property and equipment, net (6,596) (2,329)
Acquisition of Parks-Belk Company (10,422)
Acquisition of Macco Investments, Inc. (199,140)
---------- --------
Net cash used in investing activities (17,018) (201,469)
FINANCING ACTIVITIES
Payments on long-term debt and capital lease
obligations (3,052) (19,452)
Proceeds from long-term borrowings 24,200 112,640
Proceeds from issuance of stock 28,883
Dividends paid to preferred shareholders (975)
---------- --------
Net cash provided by financing activities 20,173 122,071
Increase (decrease) in cash and cash
equivalents 12 (14,088)
Cash and cash equivalents at beginning
of period 1,133 15,200
---------- --------
Cash and cash equivalents at end of period $ 1,145 $ 1,112
========== ========
Cash paid during the three months ended April 29, 1995 for interest and
income taxes totaled $3,996 and $40, respectively.
See notes to condensed consolidated financial statements.
<PAGE>
Notes to Condensed Consolidated Financial Statements
(unaudited)
NOTE A -- BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally accepted
accounting principles for interim financial information and with
the instructions to Form 10-Q and Article 10 of the Regulation S-X.
Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating
results for the three month period ended April 29, 1995 are not
necessarily indicative of the results that may be expected for the
year ending February 3, 1996. For further information, refer to
the consolidated financial statements and footnotes thereto
included in the Company's Annual Report on Form 10-K for the year
ended January 28, 1995.
The balance sheet at January 28, 1995 has been derived from the
audited financial statements at that date.
Certain items in the April 30, 1994 financial statements have been
reclassified for consistency with the current year presentation.
NOTE B -- ACQUISITIONS
On March 31, 1994, Proffitt's, Inc. acquired all of the common
stock of Macco Investments, Inc., a privately held corporation and
the parent company of McRae's, Inc. The total acquisition price of
approximately $212 million consisted of a cash payment of $176
million and the issuance of (i) 436,200 shares of Proffitt's, Inc.
Common Stock, (ii) the Company's 7.5% Junior Subordinated
Debentures due March 31, 2004 in an aggregate face amount equal to
$17.5 million, (iii) 32,962 shares of Series B Cumulative Junior
Perpetual Preferred Stock, (iv) the Company's promissory notes to
certain of the Macco shareholders for $2 million, and (v)
transaction costs of approximately $6 million. In addition and in
connection with the acquisition, Proffitt's, Inc. purchased four
regional mall stores owned by McRae family partnerships and leased
to McRae's for $18.5 million.
McRae's was a privately-owned regional specialty department store
company, offering moderate to upper-moderate brand name and private
label fashion apparel, shoes, accessories, cosmetics, and home
furnishings. McRae's operates 28 department stores in Mississippi,
Alabama, Louisiana, and Florida. Proffitt's, Inc. now operates two
divisions: the Proffitt's Stores Division and the McRae's Stores
Division.
The excess of the cost of acquiring McRae's over the fair value of
the acquired tangible assets is presented in the financial
statements as Goodwill. Amortization of goodwill is provided on a
straight-line basis over forty years.
The following unaudited pro forma summary presents the consolidated
results of operations as if the acquisition had occurred at the
beginning of the period presented and do not purport to be
indicative of what would have occurred had the acquisition been
made as of this date or of results which may occur in the future.
THREE MONTHS ENDED
APRIL 30,
1994
Pro forma: (in thousands, except per share amounts)
Net sales $149,161
Net income $ 2,181
Earnings per common share $ .16
On March 7, 1995, the Company acquired a majority interest (50.1%)
of Parks-Belk Company, the owner and operator of four department
stores in northeast Tennessee. On April 12, 1995, the Company
completed the purchase of the remaining interest of Parks-Belk.
Specific terms of the transaction were not disclosed, but
consideration was paid in Proffitt's, Inc. Common Stock and cash
(aggregated less than $20 million). On June 18, 1995, the Parks-
Belk locations in Johnson City, Kingsport, and Greeneville,
Tennessee will be converted into Proffitt's stores, and the Parks-
Belk store in Morristown, Tennessee will permanently close.
Presently, these locations are operated as Parks-Belk stores within
the Proffitt's Division.
NOTE C -- INCOME TAXES
The difference between the actual income tax expense and the amount
expected by applying the statutory federal income tax rate is due
to the inclusion of state income taxes and to the amortization of
goodwill, which is not deductible for income tax purposes.
The deferred income tax liability reflects the impact of temporary
differences between values recorded for assets and liabilities for
financial reporting purposes and values utilized for measurement in
accordance with tax laws. The major component of the liability
results from the allocation of the purchase price to the assets and
liabilities related to the McRae's acquisition.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
Accounts receivable, inventory, accounts payable, and notes payable
balances fluctuate throughout the year due to the seasonal nature
of the retail industry.
April 29, 1995 property and equipment balances increased over
January 28, 1995 and April 30, 1994 balances primarily due to the
acquisition of Parks-Belk, construction of a relocated McRae's
store, other store renovations, and information system
enhancements.
April 29, 1995 total indebtedness increased compared to year-end
balances primarily due to indebtedness incurred and assumed related
to the Parks-Belk acquisition.
April 29, 1995 shareholders' equity has increased over January 28,
1995 and April 30, 1994 primarily due to the issuance of common
stock in conjunction with the Parks-Belk transaction and net
earnings.
RESULTS OF OPERATIONS
The results of operations for the three months ended April 30, 1994
include operations from the Proffitt's Division for the entire
period and results from the McRae's Division subsequent to March
31, 1994. The results of operations for the three months ended
April 29, 1995 include the combined operations from both divisions
for the entire period. The operations of the Parks-Belk stores
subsequent to its acquisition have been included in the Company's
results for the three months ended April 29, 1995. The Company
currently operates its McRae's Division with 28 department stores
and one home furnishings specialty store and its Proffitt's
Division with 25 Proffitt's department stores and four Parks-Belk
department stores.
The following table shows, for the periods indicated, certain items
from the Company's Condensed Consolidated Statements of Income
expressed as percentages of net sales.
<PAGE>
THREE MONTHS ENDED
4/29/95 4/30/94
Net sales 100.0% 100.0%
Costs and expenses:
Cost of sales 63.7 67.6
Selling, gen., & admin. exp. 25.4 23.3
Other operating expenses 7.5 8.6
Operating income 3.4 0.5
Other income (expense):
Finance charge income, net of
allocation to purchaser of
accounts receivable 2.3 3.0
Interest expense (3.0) (3.1)
Other income (expense), net 0.2 0.4
Income before provision for
income taxes 2.9 0.8
Provision for income taxes 1.2 0.3
NET INCOME 1.7% 0.5%
===== =====
Total net sales for the three months ended April 29, 1995 increased
86% to $160.4 million from $86.1 million in the prior year.
Revenues for the McRae's Division were $103.8 million, an increase
of 4% over last year. The Proffitt's Division sales, including
revenues of $3.9 million generated from the four newly acquired
Parks-Belk stores, were $56.7 million for the quarter, up 15% from
last year. For the quarter, comparable store sales increased 3%
for the McRae's Division and 7% for the Proffitt's Division.
Cost of sales as a percent of net sales decreased 3.9% for the
three months ended April 29, 1995 as compared to the same prior
year period primarily due to improved inventory control and lower
merchandise markdowns. Cost of sales as a percent of net sales for
the three months ended April 30, 1994 was higher than normal due to
excessive inventory markdowns needed to clear aged merchandise at
the Proffitt's Division. These markdowns resulted from
overstocking new store locations in 1993 and weakness in women's
apparel sales in fall 1993.
Selling, general, and administrative expenses as a percent of net
sales increased 2.1% from last year. Total selling, general, and
administrative expenses increased 102% over last year, to $40.7
million, primarily due to additional overhead and other expenses
required to operate the expanded store base. The Company is
consolidating certain administrative support areas for the
Proffitt's and McRae's Divisions (accounting, credit, and
management information systems) during the second quarter of 1995.
The Company anticipates future leverage of selling, general, and
administrative expenses due to these consolidations, increased
sales volume, and continued expense control efforts.
Other operating expenses as a percentage of net sales decreased
1.1% for the three month period over last year primarily due to
leverage generated from a larger sales base.
Net finance charge income, as a percent of net sales, was down 0.7%
from last year primarily due to the allocation to the third party
purchaser of accounts receivable of finance charges of
approximately $2.2 million, or 1.3% of net sales, compared to
approximately $400,000, or 0.5% of net sales, last year. Gross
finance charge income (before allocation to third party), as a
percent of net sales, remained fairly level for the three month
period over last year.
Interest expense as a percent of net sales was relatively flat for
the three months ended April 29, 1995 as compared to the same prior
year period. Total interest expense increased 80% over last year,
to $4.8 million, primarily due to higher borrowings associated with
the McRae's and Parks-Belk acquisitions and higher interest rates.
Net income for the three months ended April 29, 1995 totaled $2.8
million, or $.23 per share. Net earnings for the three months
ended April 30, 1994 was $400,000, or $.02 per share. The increase
in earnings primarily was due to enhanced gross margin performance.
<PAGE>
PROFFITT'S, INC.
PART II. Other Information
Item 5. OTHER INFORMATION.
None.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
10.1 Form of Amended and Restated Employment Agreement
by and between Proffitt's, Inc. and R. Brad Martin
dated March 28, 1995
11.1 Statement re: Computation of Earnings per Common
Share
(b) Form 8-K Reports -- None.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
PROFFITT'S, INC.
------------------------------------
Registrant
6-9-95
------------------------------------
Date
James E. Glasscock
------------------------------------
James E. Glasscock
Executive Vice President, Chief
Financial Officer, and Treasurer
<PAGE>
EXHIBIT 11.1
STATEMENT RE: COMPUTATION OF HISTORICAL EARNINGS PER COMMON SHARE
PROFFITT'S, INC. AND SUBSIDIARIES
(in thousands, except per share amounts)
THREE MONTHS ENDED
APRIL 29, APRIL 30,
1995 1994
PRIMARY:
Average shares outstanding 10,076 9,446
Net effect of dilutive stock
options - based on the treasury
stock method using average
market price 85 149
--------- -------
Total 10,161 9,595
========= =======
Net income $ 2,802 $ 400
Less preferred stock dividends (488) (181)
--------- -------
Net income available to common
shareholders $ 2,314 $ 219
========= =======
Primary earnings per common share $ 0.23 $ 0.02
========= =======
<PAGE>
EXHIBIT 11.1 (continued)
STATEMENT RE: COMPUTATION OF HISTORICAL EARNINGS PER COMMON SHARE
PROFFITT'S, INC. AND SUBSIDIARIES
(in thousands, except per share amounts)
THREE MONTHS ENDED
APRIL 29, APRIL 30,
1995 1994
FULLY DILUTED:
Average shares outstanding 10,076 9,446
Net effect of dilutive stock
options - based on the treasury
stock method using period-end
market price if higher than
average price 90 149
Assumed conversion of 4.75%
subordinate debenture 2,020 2,020
Assumed conversion of preferred
stock 1,422 521
--------- --------
Total 13,608 12,136
========= ========
Income before interest adjustment $ 2,802 $ 400
Add 4.75% convertible subordinated
debenture interest, net of
federal income tax effect 625 625
--------- --------
Adjusted net income $ 3,427 $ 1,025
========= ========
Fully diluted earnings per
common share $ 0.25 $ 0.08
========= ========
Note/For each period shown, the fully diluted earnings
per common share calculation is anti-dilutive, and
therefore, no fully diluted presentation is needed.
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This Amended and Restated Employment Agreement ("Agreement")
is entered into as of the 28th day of March 1995, by and between
Proffitt's, Inc. ("Company"), and R. Brad Martin ("Executive").
Company and Executive agree as follows:
1. Employment. Company hereby employs Executive as Chief
Executive Officer of Company or in such other capacity with Company
and its subsidiaries as Company's Board of Directors shall
designate. It is anticipated that Executive will be elected
Chairman of the Board.
2. Duties. During his employment, Executive shall devote
substantially all of his working time, energies, and skills to the
benefit of Company's business. Executive agrees to serve Company
diligently and to the best of his ability and to use his best
efforts to follow the policies and directions of Company's Board of
Directors.
3. Compensation. Executive's compensation and benefits
under this Agreement shall be as follows:
(a) Base Salary. Company shall pay Executive a base
salary ("Base Salary") at a rate of no less than $450,000 per year
(beginning on April 1, 1995). In addition, the Board of Directors
of Company shall, in good faith, consider granting increases in
such Base Salary based upon such factors as Executive's performance
and the growth and/or profitability of Company. Executive's Base
Salary shall be paid in installments in accordance with Company's
normal payment schedule for its senior management. All payments
shall be subject to the deduction of payroll taxes and similar
assessments as required by law.
(b) Bonus. In addition to the Base Salary, Executive
shall be eligible, as long as he holds the position stated in
paragraph 1, for a yearly cash bonus of up to 50% of Base Salary
based upon his performance in accordance with specific annual
objectives, set in advance. The Board of Directors shall have sole
and exclusive discretion to grant or withhold any portion of
Executive's bonus.
(c) Incentive Compensation. Executive shall be and
hereby is granted a non-qualified option as of March 28, 1995,
("Option") to purchase twenty thousand (20,000) shares of Company
common stock at an option price equal to the closing price of the
stock on March 28, 1995, as reported in the Wall Street Journal.
The Option is granted pursuant to Company's 1994 Long-Term
Incentive Plan ("1994 LTIP"), and shall be subject to the terms and
conditions thereof. The Option shall be exercisable on or after
March 28, 1995, (the "Grant date") to the extent of 20% of the
shares covered thereby; exercisable to the extent of an additional
20% of the shares covered thereby on and after the first
anniversary of the Grant Date; exercisable to the extent of an
additional 20% of the shares covered thereby on and after the
second anniversary of the Grant Date; exercisable to the extent of
an additional 20% of the shares covered thereby on an after the
third anniversary of the Grant Date; and exercisable to the extent
of any remaining shares on and after the fourth anniversary of the
Grant Date; provided, however, that no portion of the Option shall
be exercisable any earlier than six months from the Grant Date.
The Option may be exercised (as provided in the 1994 LTIP) up to
ten (10) years from the Grant Date. Any portion of the Option not
exercised within said ten (10) year period shall expire.
Notwithstanding the preceding paragraph, the Option granted
under this Agreement shall not be exercisable if Executive has been
demoted from the position stated in paragraph 1 or otherwise been
reassigned duties at a lower level in the Company. In the case of
such a demotion or reassignment of duties at a lower position,
Company retains the right to reduce the number of option shares
granted under this Agreement and, in such a case, vesting will
occur as if the reduced number of option shares had been granted on
the Grant Date.
(d) End of Five-Years Service Stock Grant. In
accordance with Executive's prior employment agreements, Company
shall issue to Executive twenty-five thousand (25,000) shares of
common stock as soon as possible after July 1, 1998 provided
Executive has served the Company continuously for five years
following July 1, 1993. In the event of Executive's death prior to
July 1, 1998, Executive's estate shall be issued a pro rata portion
of the 25,000 shares, on the basis of 5,000 shares per year.
(e) Stock Grant. Five thousand (5,000) shares of
Company common stock shall be issued to Executive as soon as
possible after the end of each fiscal year of Company, based upon
annual targeted growth in intrinsic value of the Company, as
determined by the Board of Directors. The Board of Directors shall
have sole and exclusive discretion to grant or withhold any portion
of such yearly stock grant.
(e) Effect of Change of Control on Options. In the
event of a Change of Control (as defined in the 1994 LTIP) any
Options granted to Executive prior to such Change of Control shall
immediately vest.
4. Insurance and Benefits. Company shall allow Executive to
participate in each employee benefit plan and to receive each
executive benefit that Company provides for persons in Executive's
position, including, but not limited to: (a) tax return preparation
and financial planning; and (b) payment of life insurance premiums
that Company has paid in the past.
5. Term. The term of this Agreement shall be for five (5)
years, beginning March 28, 1995, provided, however, that Company
may terminate this Agreement at any time upon thirty (30) days'
prior written notice (at which time this Agreement shall terminate
except for Section 9, which shall continue in effect as set forth
in Section 9). In the event of such termination by Company,
Executive shall be entitled to receive his Base Salary (at the rate
in effect at the time of termination) through the end of the term
of this Agreement. Such Base Salary shall be paid thereafter in
monthly installments.
In addition, this Agreement shall terminate upon the death of
Executive, except as to Executive's estate's right to exercise any
unexercised stock options pursuant to Company's stock option plan
then in effect and any other entitlements under this contract that
survive death, and except as to any rights which Executive's estate
or dependents may have under COBRA or any other federal or state
law or which are derived independent of this Agreement by reason of
his participation in any plan maintained by Company.
6. Termination by Company for Cause. Company shall have the
right to terminate Executive's employment under this Agreement for
cause, in which event no compensation shall be paid or other
benefits furnished to Executive after termination for cause.
Termination for cause shall be effective immediately upon notice
sent or given to Executive. For purposes of this Agreement, the
term "cause" shall mean and be strictly limited to: (i) conviction
of Executive, after all applicable rights of appeal have been
exhausted or waived, for any crime involving moral turpitude or the
engaging by Executive in any unethical, immoral or fraudulent
conduct which materially discredits Company or is materially
detrimental to the reputation or goodwill of Company; (ii)
commission of any material act of fraud or dishonesty by Executive
against Company, provided that Executive shall first be provided
with written notice of the claim and with an opportunity to contest
said claim before the Board of Directors; or (iii) Executive's
material breach of his obligations under paragraph 2 of the
Agreement, as so determined by the Board of Directors.
(b) In the event that Executive's employment is
terminated, Executive agrees to resign as an officer and/or
director of Company (or any of its subsidiaries or affiliates),
effective as of the date of such termination, and Executive agrees
to return to Company upon such termination any of the following
which contain confidential information: all documents, instruments,
papers, facsimiles, and computerized information which are the
property of Company or such subsidiary or affiliate.
7. Change in Control. If Executive's employment is
terminated primarily as a result of a Change in Control of Company
or a Potential Change in Control of Company as defined below,
Executive shall receive his Base Salary (at the rate in effect at
the time of termination) for a period of two years or through the
end of the term of this Agreement, whichever is longer.
As used herein, the term "Change in Control" means the
happening of any of the following:
(a) Any person or entity, including a "group" as defined
in Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended, other than Company, a subsidiary of Company, or any
employee benefit plan of Company or its subsidiaries, becomes the
beneficial owner of Company's securities having 25 percent or more
of the combined voting power of the then outstanding securities of
Company that may be cast for the election for directors of Company
(other than as a result of an issuance of securities initiated by
Company in the ordinary course of business); or
(b) As the result of, or in connection with, any cash
tender or exchange offer, merger or other business combination,
sale of assets or contested election, or any combination of the
foregoing transactions, less than a majority of the combined voting
power of the then outstanding securities of Company or any
successor corporation or entity entitled to vote generally in the
election of directors of Company or such other corporation or
entity after such transaction, are held in the aggregate by holders
of Company's securities entitled to vote generally in the election
of directors of Company immediately prior to such transactions; or
(c) During any period of two consecutive years,
individuals who at the beginning of any such period constitute the
Board of Directors of Company cease for any reason to constitute at
least a majority thereof, unless the election, or the nomination
for election by Company's stockholders, of each director of Company
first elected during such period was approved by a vote of at least
two-thirds of the directors of Company then still in office who
were directors of Company at the beginning of any such period.
As used herein, the term "Potential Change in Control" means
the happening of any of the following:
(a) The approval by stockholders of an agreement by
Company, the consummation of which would result in a Change of
Control of Company; or
(b) The acquisition of beneficial ownership, directly or
indirectly, by any entity, person or group (other than Company, a
wholly-owned subsidiary thereof or any employee benefit plan of
Company or its subsidiaries (including any trustee of such plan
acting as trustee)) of securities of Company representing 5 percent
or more of the combined voting power of Company's outstanding
securities and the adoption by the Board of Directors of Company of
a resolution to the effect that a Potential Change in Control of
Company has occurred for purposes of this Plan.
8. Disability. If Executive becomes Disabled at any time
during the term of this Agreement, he shall after he becomes
disabled continue to receive all payments and benefits provided
under the terms of this Agreement for a period of twelve
consecutive months, or for the remaining term of this Agreement,
whichever period is shorter. In the event that Executive is
disabled for more than twelve consecutive months during the term of
this Agreement, Executive shall, at the expiration of the initial
twelve consecutive month period, be entitled to receive under this
Agreement 50% of his Base Salary plus the insurance and benefits
described in Section 4 of this Agreement for the remaining term of
this Agreement. For purposes of this Agreement, the term disabled
shall mean the inability of Executive (as the result of a physical
or mental condition) to perform the duties of his position under
this Agreement with reasonable accommodation and which inability is
reasonably expected to last at least one (1) full year.
9. Non-competition; Unauthorized Disclosure.
(a) Non-competition. During the period Executive is
employed under this Agreement, and for a period of three years
thereafter, Executive:
(i) shall not engage in any activities, whether as
employer, proprietor, partner, stockholder (other than the holder
of less than 5% of the stock of a corporation the securities of
which are traded on a national securities exchange or in the
over-the-counter market), director, officer, employee or otherwise,
in competition with (i) the businesses conducted at the date hereof
by Company or any subsidiary or affiliate, or (ii) any business in
which Company or any subsidiary or affiliate is substantially
engaged at any time during the employment period;
(ii) shall not solicit, in competition with
Company, any person who is a customer of the businesses conducted
by Company at the date hereof or of any business in which Company
is substantially engaged at any time during the term of this
Agreement; and
(iii) shall not induce or attempt to persuade any
employee of Company or any of its divisions, subsidiaries or then
present affiliates to terminate his or her employment relationship
in order to enter into competitive employment.
(b) Unauthorized Disclosure. During the period
Executive is employed under this Agreement, and for a further
period of three years thereafter, Executive shall not, except as
required by any court or administrative agency, without the written
consent of the Board of Directors, or a person authorized thereby,
disclose to any person, other than an employee of Company or a
person to whom disclosure is reasonably necessary or appropriate in
connection with the performance by Executive of his duties as an
executive for Company, any confidential information obtained by him
while in the employ of Company; provided, however, that
confidential information shall not include any information now
known or which becomes known generally to the public (other than as
a result of unauthorized disclosure by Executive).
(c) Scope of Covenants; Remedies. The following
provisions shall apply to the covenants of Executive contained in
this Section 9:
(i) the covenants contained in paragraph (i) and
(ii) of Section 9(a) shall apply within all the territories in
which Company is actively engaged in the conduct of business while
Executive is employed under this Agreement, including, without
limitation, the territories in which customers are then being
solicited;
(ii) without limiting the right of Company to
pursue all other legal and equitable remedies available for
violation by Executive of the covenants contained in this Section
9, it is expressly agreed by Executive and Company that such other
remedies cannot fully compensate Company for any such violation and
that Company shall be entitled to injunctive relief to prevent any
such violation or any continuing violation thereof;
(iii) each party intends and agrees that if, in any
action before any court or agency legally empowered to enforce the
covenants contained in this Section 9, any term, restriction,
covenant or promise contained therein is found to be unreasonable
and accordingly unenforceable, then such term, restriction,
covenant or promise shall be deemed modified to the extent
necessary to make it enforceable by such court or agency; and
(iv) the covenants contained in this Section 9
shall survive the conclusion of Executive's employment by Company.
10. General Provisions.
(a) Notices. Any notice to be given hereunder by either
party to the other may be effected by personal delivery, in writing
or by mail, registered or certified, postage prepaid with return
receipt requested. Mailed notices shall be addressed to the
parties at the addresses set forth below, but each party may change
his or its address by written notice in accordance with this
Section 10 (a). Notices shall be deemed communicated as of the
actual receipt or refusal of receipt.
If to Executive: R. Brad Martin
5810 Shelby Oaks Drive
Memphis, TN 38134
If to Company: Proffitt's, Inc.
Post Office Box 9388
Alcoa, TN 37701
(b) Partial Invalidity. If any provision in this
Agreement is held by a court of competent jurisdiction to be
invalid, void or unenforceable, the remaining provisions shall,
nevertheless, continue in full force and without being impaired or
invalidated in any way.
(c) Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of
Tennessee.
(d) Attorney's Fees and Costs. If any action at law or
in equity is necessary to enforce or interpret the terms of this
Agreement, the prevailing party shall be entitled to reasonable
attorneys' fees, costs and necessary disbursements in addition to
any other relief to which he or it may be entitled.
(e) Delegation of Duties. Executive may not delegate or
assign any of his duties or obligations hereunder and Company shall
have no right to assign this Agreement without Executive's express
written consent to such assignment. This Agreement shall inure to
the benefit of and bind the parties hereto and their respective
legal representatives, successors and assigns.
(f) Entire Agreement. Except for any prior grants of
options or other forms of incentive compensation evidenced by a
written instrument, copies of which are attached hereto as Exhibit
A, this Agreement supersedes any and all other agreements, either
oral or in writing, between the parties hereto with respect to
employment of Executive by Company and contains all of the
covenants and agreements between the parties with respect to such
employment. Each party to this Agreement acknowledges that no
representations, inducements or agreements, oral or otherwise, that
have not been embodied herein, and no other agreement, statement or
promise not contained in this Agreement, shall be valid or binding.
Any modification of this Agreement will be effective only if it is
in writing signed by the party to be charged.
(g) No Conflicting Agreement. By signing this
Agreement, Executive warrants that he is not a party to any
restrictive covenant, agreement or contract which limits the
performance of his duties and responsibilities under this Agreement
or under which such performance would constitute a breach.
(h) Headings. The Section, paragraph, and subparagraph
headings are for convenience or reference only and shall not define
or limit the provisions hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
PROFFITT'S, INC.
BY: /S/ James A. Coggin
James A. Coggin
President
/s/ Julia A. Bentley
Julia A. Bentley
Secretary
/s/ R. Brad Martin
R. Brad Martin
Executive
EXHIBIT 11.1
STATEMENT RE: COMPUTATION OF HISTORICAL EARNINGS PER COMMON SHARE
PROFFITT'S, INC. AND SUBSIDIARIES
(in thousands, except per share amounts)
THREE MONTHS ENDED
APRIL 29, APRIL 30,
1995 1994
PRIMARY:
Average shares outstanding 10,076 9,446
Net effect of dilutive stock
options - based on the treasury
stock method using average
market price 85 149
--------- -------
Total 10,161 9,595
========= =======
Net income $ 2,802 $ 400
Less preferred stock dividends (488) (181)
--------- -------
Net income available to common
shareholders $ 2,314 $ 219
========= =======
Primary earnings per common share $ 0.23 $ 0.02
========= =======
<PAGE>
EXHIBIT 11.1 (continued)
STATEMENT RE: COMPUTATION OF HISTORICAL EARNINGS PER COMMON SHARE
PROFFITT'S, INC. AND SUBSIDIARIES
(in thousands, except per share amounts)
THREE MONTHS ENDED
APRIL 29, APRIL 30,
1995 1994
FULLY DILUTED:
Average shares outstanding 10,076 9,446
Net effect of dilutive stock
options - based on the treasury
stock method using period-end
market price if higher than
average price 90 149
Assumed conversion of 4.75%
subordinate debenture 2,020 2,020
Assumed conversion of preferred
stock 1,422 521
--------- --------
Total 13,608 12,136
========= ========
Income before interest adjustment $ 2,802 $ 400
Add 4.75% convertible subordinated
debenture interest, net of
federal income tax effect 625 625
--------- --------
Adjusted net income $ 3,427 $ 1,025
========= ========
Fully diluted earnings per
common share $ 0.25 $ 0.08
========= ========
Note/For each period shown, the fully diluted earnings
per common share calculation is anti-dilutive, and
therefore, no fully diluted presentation is needed.
