UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
(X) Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For Fiscal Year Ended: February 3, 1996
or
( ) Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from _______________ to _______________
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: (423) 983-7000
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, PAR VALUE $.10 and PREFERRED STOCK PURCHASE RIGHTS
Indicate by check mark whether Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities and
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 ( )
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not
be contained, to the best of the Registrant's knowledge, in
definitive proxy or information statements incorporated by
reference in Part II of this Form 10-K or any amendment to this
Form 10-K. (X)
The aggregate market value of the voting stock held by non-
affiliates of the Registrant as of March 22, 1996 was approximately
$532,150,352.
As of March 22, 1996, the number of shares of the Registrant's
Common Stock outstanding was 19,210,024.
DOCUMENTS INCORPORATED BY REFERENCE
(1) Portions of the Proffitt's, Inc. Annual Report to
Shareholders for the Fiscal Year Ended February 3, 1996 are
incorporated by reference into Part II.
(2) Portions of the Proffitt's, Inc. Proxy Statement dated May
1, 1996 for the Annual Shareholders' Meeting to be held on June 19,
1996 are incorporated by reference into Part III.
The Exhibit Index is on page of this document.
TABLE OF CONTENTS
Item Page
Part I 1 Business. 3
2 Properties. 7
3 Legal Proceedings. 13
4 Submission of Matters to a Vote of
Security Holders 13
Executive Officers of the Registrant. 13
Part II 5 Market for Registrant's Common Equity
and Related Stockholder Matters. 13
6 Selected Financial Data. 18
7 Management's Discussion and Analysis of
Financial Condition and Results of
Operations. 18
8 Financial Statements and Supplementary
Data. 18
9 Changes in and Disagreements with 18
Accountants on Accounting and
Financial Disclosure.
Part III 10 Directors and Executive Officers of
the Registrant. 19
11 Executive Compensation. 19
12 Security Ownership of Certain Beneficial
Owners and Management. 19
13 Certain Relationships and Related 19
Transactions.
Part IV 14 Exhibits, Financial Statement Schedules,
and Reports on Form 8-K. 20
Signatures 22
PART I
Item 1. Business.
General.
Founded in 1919, Proffitt's is a leading regional department store
company primarily offering moderate to better brand name fashion
apparel, accessories, cosmetics, and decorative home furnishings.
The Company's stores are principally anchor stores in leading
regional or community malls. The Company's objective is to be the
dominant department store chain in its regions through a strategy
which combines fashion leadership in branded and high quality
private-label merchandise with opening or acquiring new stores and
expanding and renovating existing stores.
The Company operates three department store divisions. The
Proffitt's Division, headquartered in Knoxville, Tennessee,
operates 25 stores in Tennessee (12), Virginia (8), Georgia (2),
Kentucky (2), and North Carolina (1). The McRae's Division,
headquartered in Jackson, Mississippi, operates 29 stores in
Alabama (14), Mississippi (12), Florida (2), and Louisiana (1).
The Younkers Division, headquartered in Des Moines, Iowa, operates
49 stores in Iowa (18), Wisconsin (18), Michigan (5), Nebraska (5),
Illinois (1), Minnesota (1), and South Dakota (1).
The Company has experienced significant growth since 1992. During
1992 and 1993, the Company purchased certain real and personal
property and assumed certain operating leases of eighteen store
locations from Hess Department Stores, Inc. and Crown American
Corporation. The acquired locations were in Tennessee, Virginia,
Georgia, and Kentucky. These stores were renovated and placed in
service as Proffitt's Division stores in 1992 and 1993.
In March 1994, Proffitt's, Inc. acquired all of the outstanding
Common Stock of Macco Investments, Inc., a holding company for
McRae's, Inc., a privately-owned retail department store chain with
28 stores headquartered in Jackson, Mississippi. The transaction
was accounted for as a purchase.
In April 1995, the Company completed its purchase of Parks-Belk
Company, the owner/operator of four Parks-Belk stores located in
northeastern Tennessee. Three stores were renovated and opened as
Proffitt's Division stores during 1995; one store was permanently
closed. The transaction was accounted for as a purchase.
Effective February 3, 1996 (immediately preceding the Company's
fiscal year end), Proffitt's, Inc. combined its business with
Younkers, Inc., a 51 unit, publicly-owned retail department store
chain, headquartered in Des Moines, Iowa. This combination was
structured as a tax-free transaction and was accounted for as a
pooling of interests. Each outstanding share of Younkers, Inc.
Common Stock was converted into ninety-eight one-hundredths (.98)
shares of Proffitt's, Inc. Common Stock, with approximately 8.8
million shares issued in the transaction.
The Company closed three unproductive units (one Proffitt's store
and two Younkers stores) in January 1996. Two additional Younkers
units were sold to a third party subsequent to February 3, 1996.
A new McRae's store in Selma, Alabama was opened in March 1996.
The Company has announced the planned openings of new Proffitt's
stores in Morgantown and Parkersburg, West Virginia in fall 1996
and 1997, respectively, and new McRae's stores in Biloxi and
Meridian, Mississippi in 1997. The Company is currently
negotiating several other new unit opportunities. In addition,
several store renovations and expansions are planned for 1996.
During 1995, in order to improve efficiencies and reduce overhead
costs, the Company centralized certain administrative and support
functions, such as accounting, information systems, credit, store
planning, and human resources, for the McRae's and Proffitt's
Divisions. The Company is in the process of further consolidating
these functions to include the Younkers Division, with the majority
of this restructuring to be completed by fall 1996. Merchandising,
stores, sales promotion/advertising, visual, and various support
functions for the Proffitt's, McRae's, and Younkers Divisions will
remain headquartered in Knoxville, Jackson, and Des Moines,
respectively.
Merchandising.
The Company's merchandising strategy is to provide middle to upper
income customers a wide assortment of quality fashion apparel,
shoes, accessories, cosmetics, and decorative home furnishings at
competitive prices. The Company's commitment to a branded
merchandising strategy, enhanced by its merchandise presentation
and high level of customer service, makes it a preferred
distribution channel for premier brand-name merchandise. Key
brands featured include Liz Claiborne, Marisa Christina, Susan
Bristol, Polo/Ralph Lauren, Tommy Hilfiger, Nautica, Guess, Haggar,
Levi's, Estee Lauder, Clinique, Lancome, Vanity Fair, and Nine
West. The Company supplements its branded assortments with high-
quality, private-label merchandise in selected areas. Private label
offerings are intended to provide national brand quality at lower
prices.
The Company has developed a thorough knowledge of each of its
regional markets and customer bases. Such knowledge, in
conjunction with frequent store visits by senior management and
merchandising personnel and use of on-line merchandise information,
enables the Company to tailor each store's merchandise assortments
to the unique characteristics of its markets and respond to
demographic and customer profiles.
Certain departments in the Company's stores are leased to
independent companies in order to provide high quality service and
merchandise where specialization and expertise are critical and
economics do not justify the Company's direct participation in the
business. The leased departments vary by store to complement the
Company's own merchandising departments. Leased departments
include shoe, fine jewelry, beauty salon, and maternity
departments. The terms of the lease agreements typically are
between one and three years and require the lessee to pay for
fixtures and provide its own employees. Leased department sales
are included in the Company's total sales. Management regularly
evaluates the performance of the leased departments and requires
compliance with established customer service guidelines.
The shoe business is currently leased at the Younkers Division and
owned at both the Proffitt's and McRae's Divisions. In August
1996, the Company will convert the leased shoe operation at the
Younkers Division to owned. Management believes this has positive
sales and gross margin implications for the Company.
During 1995, the Company's net sales by major merchandise category
were as follows:
Proffitt's McRae's Younkers
Merchandise Category: Division Division Division Total
Women's Apparel 32.5% 26.7% 31.9% 30.3%
Men's Apparel 13.7 16.6 15.6 15.6
Home 10.6 14.9 15.7 14.4
Cosmetics 14.8 11.3 10.8 11.8
Children's Apparel 8.5 7.6 7.0 7.5
Accessories 6.8 6.7 6.3 6.6
Shoes 7.1 7.8 - 4.0
Intimate Apparel 4.4 3.9 4.6 4.3
Total Owned 98.4 95.5 91.9 94.5
Leased Departments 1.6 4.5 8.1 5.5
Total 100.0% 100.0% 100.0% 100.0%
Purchasing and Distribution.
The Company purchases merchandise from numerous suppliers.
Management monitors the Company's profitability and sales history
with each supplier and believes it has alternative sources
available for each category of merchandise it purchases.
Management believes it has a good relationship with its suppliers.
The 85,000 square foot distribution facility serving the Proffitt's
Division is located in metropolitan Knoxville, Tennessee, and the
164,000 square foot distribution center for the McRae's Division is
located in Jackson, Mississippi. The Younkers Division is served
by two distribution facilities. A 182,000 square foot center in
Green Bay, Wisconsin serves the Division's northern stores, and a
120,000 square foot facility in Ankeny, Iowa serves the Division's
southern stores.
The distribution centers utilize certain latest technology. The
Company utilizes UPC barcode technology which is designed to move
merchandise onto the selling floor quicker and more cost-
effectively by allowing vendors to deliver floor-ready merchandise
to the distribution facilities. For example, high speed automated
conveyor systems are capable of scanning bar coded labels and
diverting cartons to the proper merchandise processing areas. Some
types of merchandise are being processed in the receiving area and
immediately "cross docked" to the shipping dock for delivery to the
stores. Certain processing areas are staffed with personnel
equipped with hand held radio frequency terminals that can scan a
vendor's bar code and transmit the necessary information to a
computer to check-in merchandise. This technology, when fully
utilized, will create a nearly paperless environment for the
distribution function.
Management Information Systems.
The Company's information systems provide information necessary for
management operating decisions, cost reduction programs, and
customer service enhancements. Individual data processing systems
include point-of-sale and sales reporting, purchase order
management, receiving, merchandise planning and control, payroll,
general ledger, and accounts payable systems. Bar code ticketing
is used, and scanning is utilized at all point-of-sale terminals.
Information is made available on-line to merchandising staff and
store management on a timely basis, thereby reducing the need for
paper reports. The Company uses electronic data interchange
technology (EDI) with its top vendors to facilitate timely
merchandise replenishment.
The Company continually upgrades its information systems to improve
operations and support future growth.
Advertising and Sales Promotion.
The Company's advertising and promotions are coordinated to
reinforce its market position as a fashion department store selling
quality merchandise at competitive prices. Advertising is balanced
among fashion advertising, price promotions, and special events.
The Company uses a multi-media approach, including newspaper,
television, radio, and direct mail. The Company's advertising and
special events are produced by in-house sales promotion staffs in
conjunction with outside advertising agencies, when needed. The
Company utilizes data captured through the use of the Proffitt's,
McRae's, and Younkers credit cards to develop segmented advertising
and promotional events targeted at specific customers who have
established purchasing patterns for certain brands, departments,
and store locations. To promote its image as the fashion leader in
its markets, the Company also sponsors fashion shows and in-store
special events highlighting the Company's key brands.
Customer Service.
The Company believes that personal customer attention builds
loyalty and that the Company's sales associates provide a level of
customer service superior to its competitors. Each store is
staffed with knowledgeable, friendly sales associates skilled in
salesmanship and customer service. Sales associates maintain
customer records, send personalized thank-you notes, and
communicate personally with customers to advise them of special
promotions and new merchandise offerings. Superior customer
service is encouraged through the development and monitoring of
sales/ productivity goals and through specific award and
recognition programs.
Seasonality.
The Company's business, like that of most retailers, is subject to
seasonal influences, with a significant portion of its net sales
and net income realized during the fourth quarter of each year,
which includes the Christmas selling season. Generally, more than
30% of the Company's sales and over 50% of its net income are
generated during the fourth quarter.
Competition.
The retail department store business is highly competitive. The
Company's stores compete with several national and regional
department stores, specialty apparel stores, and other retail
stores, some of which have greater financial and other resources
than the Company. Management believes that its knowledge of the
Company's regional markets and customer base, combined with
providing superior customer service and a broad selection of
quality fashion merchandise at competitive prices in prime store
locations, provides a competitive advantage.
Associates
At March 31, 1996, the Company employed approximately 14,000
associates, of whom approximately 6,300 were employed on a part-
time basis. The Company hires additional temporary employees and
increases the hours of part-time employees during seasonal peak
selling periods. Approximately twenty associates in the Younkers
Division are covered by a collective bargaining agreement. The
Company considers its relations with its employees to be good.
Item 2. Properties.
The Proffitt's Division's leased administrative offices are located
in the Midland Shopping Center in metropolitan Knoxville, Tennessee
and consist of approximately 44,000 square feet. The Division's
owned distribution center is located in metropolitan Knoxville and
contains approximately 85,000 square feet.
The McRae's Division owns its administrative office building in
Jackson, Mississippi. This facility consists of 272,000 square
feet of space, of which 168,000 square feet are corporate offices
and 104,000 square feet are the Division's processing area for
merchandise returns to vendors and a furniture warehouse. The
164,000 square foot distribution center in metropolitan Jackson is
owned.
The Younkers Division leased administrative office space is located
with the Downtown store in Des Moines, Iowa and consists of 127,000
square feet of space.
The 120,000 and 182,000 square foot distribution centers in Ankeny,
Iowa and Green Bay, Wisconsin, respectively, are owned.
The following table summarizes all owned and leased store
locations. Store leases generally require the Company to pay the
greater of a fixed minimum rent or an amount based on a percentage
of sales. Generally, the Company is responsible under its store
leases for a portion of mall promotion and common area maintenance
expenses and for certain utility, property tax, and insurance
expenses. Typically, the Company contributes to common mall
promotion, maintenance, property tax, and insurance expenses at its
owned locations.
APPROX. YEAR
GROSS YEAR RENOVATED
SQUARE OWNED/ OPENED OR OR
STORE LOCATIONS FOOTAGE LEASED ACQUIRED EXPANDED
PROFFITT'S DIVISION:
KNOXVILLE, TN
METROPOLITAN MARKET:
West Town 161,800 Leased 1972 1995
East Towne 102,000 Owned 1984 1992
Foothills
(Maryville, TN)* 145,000 Owned 1983 1993
Oak Ridge
(Oak Ridge, TN)* 111,000 Leased 1974 1993
Proffitt's Plaza
(Athens, TN) 54,000 Leased 1965 1992
College Square
(Morristown, TN) 50,000 Owned 1993 -
CHATTANOOGA, TN
METROPOLITAN MARKET:
Hamilton Place* 245,000 Owned 1988 1993
Walnut Square
(Dalton, GA) 55,000 Owned 1988 1988
Northgate 94,500 Owned 1989 1993
Bradley Square
(Cleveland, TN) 50,000 Leased 1992 1992
Mt. Berry Square
(Rome, GA) 65,000 Leased 1993 1993
TRI-CITIES, TN/VA
METROPOLITAN MARKET:
Mall at Johnson City
(Johnson City, TN)* 152,000 Leased 1992 1995
Fort Henry
(Kingsport, TN)* 141,500 Leased 1992 1995
Bristol Mall
(Bristol, VA) 46,000 Leased 1992 -
Greeneville Commons
(Greeneville, TN) 41,700 Leased 1995 -
ASHEVILLE, NC
METROPOLITAN MARKET:
Biltmore Square Mall 80,000 Owned 1989 -
NORFOLK/VA BEACH, VA
METROPOLITAN MARKET:
Coliseum
(Hampton, VA)* 110,600 Leased 1993 1993
Patrick Henry
(Newport News, VA) 65,000 Leased 1993 1993
Greenbrier
(Chesapeake, VA) 79,600 Leased 1993 1993
Chesapeake Square
(Chesapeake, VA) 80,000 Owned 1993 1993
Pembroke
(Virginia Beach, VA) 65,000 Owned 1993 1993
RICHMOND, VA
METROPOLITAN MARKET:
Chesterfield 64,000 Leased 1993 1993
Virginia Commons 80,000 Leased 1993 1993
KENTUCKY:
Towne Mall
(Elizabethtown, KY) 50,000 Leased 1993 1993
Ashland Town Center
(Ashland, KY) 65,000 Leased 1993 1993
TOTAL PROFFITT'S
DIVISION 2,253,700
*Dual store operation.
APPROX. YEAR
GROSS YEAR RENOVATED
SQUARE OWNED/ OPENED OR OR
STORE LOCATIONS FOOTAGE LEASED ACQUIRED EXPANDED
MCRAE'S DIVISION:
JACKSON, MS
METROPOLITAN MARKET:
Meadowbrook Mart 68,900 Leased 1955 1987
Metrocenter 231,400 Owned 1978 1992
Northpark
(Ridgeland, MS) 207,200 Owned 1984 -
BIRMINGHAM, AL
METROPOLITAN MARKET:
Roebuck Plaza 65,600 Leased 1960 -
Century Plaza 125,100 Leased 1980 1991
Brookwood Village 108,800 Leased 1975 1993
Western Hills
(Fairfield, AL) 129,600 Leased 1980 1986
Riverchase Galleria
(Hoover, AL) 136,200 Leased 1986 -
HUNTSVILLE, AL:
Parkway City 75,700 Leased 1961 -
Madison Square 99,700 Leased 1984 -
FLORIDA PANHANDLE:
University
(Pensacola, FL) 145,300 Owned 1974 1986
Santa Rosa
(Mary Ester, FL) 83,900 Owned 1986 -
MOBILE, AL:
Springdale 168,300 Owned 1984 -
OTHER MISSISSIPPI
MARKETS:
Greenville
(Greenville, MS) 68,100 Leased 1973 -
Village Fair
(Meridian, MS) 78,700 Leased 1972 -
Pemberton
(Vicksburg, MS) 63,200 Owned 1970 1985
TurtleCreek
(Hattiesburg, MS) 129,000 Owned 1973 1995
Barnes Crossing
(Tupelo, MS) 100,200 Owned 1976 1990
Natchez
(Natchez, MS) 67,300 Leased 1979 1993
Singing River
(Gautier, MS) 89,300 Owned 1980 -
Sawmill Square
(Laurel, MS) 65,800 Owned 1981 -
University
(Columbus, MS) 75,700 Owned 1983 -
OTHER ALABAMA MARKETS:
Eastdale
(Montgomery, AL) 69,200 Leased 1977 -
Gadsden
(Gadsden, AL) 80,500 Leased 1974 1994
Regency Square
(Florence, AL) 41,000 Leased 1978 -
Selma Mall
(Selma, AL) 74,000 Leased 1996 -
University
(Tuscaloosa, AL) 90,900 Leased 1980 -
Wiregrass Commons
(Dothan, AL) 96,200 Leased 1986 -
LOUISIANA:
Pecanland
(Monroe, LA) 106,500 Owned 1985 -
TOTAL MCRAE'S
DIVISION 2,941,300
APPROX. YEAR
GROSS YEAR RENOVATED
SQUARE OWNED/ OPENED OR OR
STORE LOCATIONS FOOTAGE LEASED ACQUIRED EXPANDED
YOUNKERS DIVISION:
DES MOINES, IA
METROPOLITAN MARKET:
Merle Hay 195,000 Leased 1959 1995
Valley West 164,000 Leased 1972 1995
Downtown 113,800 Leased 1900 1994
Southridge 105,000 Leased 1975 1994
CEDAR RAPIDS, IA:
Lindale 100,000 Leased 1960 -
Westdale 100,000 Leased 1980 1995
SIOUX CITY, IA:
Sioux City Mall 90,000 Leased 1980 -
Town Square Downtown 60,000 Leased 1986 -
QUAD CITIES, IA/IL
METROPOLITAN MARKET:
Southpark
(Moline, IL) 100,000 Leased 1974 1990
Northpark
(Davenport, IA) 100,000 Leased 1973 1994
Duck Creek Plaza
(Bettendorf, IA) 60,000 Leased 1960 -
MILWAUKEE, WI:
Southridge 204,400 Leased 1992 -
Northridge 167,400 Leased 1992 -
MADISON, WI:
West Towne 139,600 Leased 1992 -
East Towne 138,400 Leased 1992 1994
OMAHA, NE:
Crossroads 190,000 Leased 1987 -
Westroads 172,000 Leased 1968 1994
Oakview 150,000 Leased 1991 -
OTHER IOWA MARKETS:
North Grand
(Ames, IA) 50,000 Leased 1987 -
Westland (West
Burlington, IA) 47,000 Leased 1977 1994
College Square
(Cedar Falls, IA) 83,500 Leased 1986 1986
Kennedy Center
(Dubuque, IA) 126,300 Leased 1968 1993
Crossroads Center
(Fort Dodge, IA) 54,200 Leased 1979 1994
Old Capitol
(Iowa City, IA) 60,000 Leased 1980 -
Marshalltown Plaza
(Marshalltown, IA) 40,000 Leased 1992 1994
Southbridge
(Mason City, IA) 59,500 Leased 1984 1994
APPROX. YEAR
GROSS YEAR RENOVATED
SQUARE OWNED/ OPENED OR OR
STORE LOCATIONS FOOTAGE LEASED ACQUIRED EXPANDED
YOUNKERS DIVISION
(cont.):
OTHER WISCONSIN MARKETS:
Fox River
(Appleton, WI) 113,000 Leased 1992 -
London Square
(Eau Claire, WI) 98,800 Leased 1992 -
Forest
(Fond du Lac, WI) 78,400 Leased 1992 -
Port Plaza
(Green Bay, WI) 255,000 Leased 1992 -
Edgewater Plaza
(Manitowoc, WI) 44,300 Leased 1992 -
Pine Tree
(Marinette, WI) 43,300 Leased 1992 -
Northway
(Marshfield, WI) 44,400 Leased 1992 -
Park Plaza
(Oshkosh, WI) 98,600 Leased 1992 -
Regency
(Racine, WI) 113,600 Leased 1992 -
Downtown
(Sheboygan, WI) 136,900 Leased 1992 -
Downtown
(Sturgeon Bay, WI) 57,100 Leased 1992 -
Mariner
(Superior, WI) 43,300 Leased 1992 -
Wausau Center
(Wausau, WI) 98,900 Leased 1992 -
Rapids (Wisconsin
Rapids, WI) 44,400 Leased 1992 -
MICHIGAN MARKETS:
Bay City
(Bay City, MI) 67,700 Leased 1992 -
West Shore
(Holland, MI) 67,900 Leased 1992 -
Marquette Plaza
(Marquette, MI) 44,300 Leased 1992 -
Birchwood
(Port Huron, MI) 67,900 Leased 1992 -
Cherryland
(Traverse City, MI) 48,800 Leased 1992 -
MINNESOTA:
Oak Park
(Austin, MN) 45,000 Leased 1975 1993
SOUTH DAKOTA:
The Empire Mall
(Sioux Falls, SD) 105,000 Leased 1975 1989
NEBRASKA MARKETS:
Conestoga
(Grand Island, NE) 60,000 Leased 1974 1993
Gateway
(Lincoln, NE) 103,000 Leased 1987 1989
TOTAL YOUNKERS
DIVISION 4,749,700
GRAND TOTAL 9,944,700
Item 3. Legal Proceedings
The Company is involved in several legal proceedings arising from
its normal business activities. Management believes that none of
these legal proceedings will have a material adverse effect on the
financial condition or results of operations of the Company.
Item 4. Submission of Matters to a Vote of Security Holders.
A special meeting of the shareholders of Proffitt's, Inc. was held
on February 2, 1996. 7,718,904, or 75.3%, of the 10,257,055 shares
of Common Stock entitled to vote, were represented in person or by
proxy at the meeting. The matters submitted to a vote of the
shareholders and the vote on these matters were as follows:
1) Approval of the Agreement and Plan of Merger, dated as of
October 22, 1995 (the "Merger Agreement") among Proffitt's, Inc.
(the "Company"), Baltic Merger Corporation, a Delaware corporation
and wholly-owned subsidiary of the Company ("Sub") and Younkers,
Inc. ("Younkers"), pursuant to which Sub will merge with and into
Younkers, which will result in Younkers becoming a wholly-owned
subsidiary of the Company (the "Merger").
For - 7,708,535 Against - 5,794 Abstain - 4,575
2) Approval of the issuance of shares of the Company's Common
Stock, par value $0.10 per share (the "Company Common Stock"), in
connection with the Merger Agreement, including the issuance of
shares of Company Common Stock in the Merger and upon the exercise
of stock options of Younkers which, pursuant to the terms of the
Merger Agreement, following the Merger will constitute options to
purchase shares of Company Common Stock (the "Younkers Options").
For - 7,666,449 Against - 47,174 Abstain - 5,281
3) Approval and adoption of an amendment to the Company's 1994
Long-Term Incentive Plan (the "Incentive Plan") to increase the
number of shares of Company Common Stock issuable under the
Incentive Plan by 1,711,000 shares from 1,200,000 shares to
2,911,000 shares, 711,000 shares of which will be reserved for
issuance upon exercise of Younkers Options.
For - 6,937,211 Against - 773,607 Abstain - 8,086
EXECUTIVE OFFICERS OF THE REGISTRANT.
The name, age, and position held with the Company of each of the
executive officers of the Company are set forth below.
Name Age Position
Proffitt's, Inc. Corporate Officers:
R. Brad Martin 44 Chairman of the Board and Chief Executive
Officer
W. Thomas Gould 49 Vice Chairman of the Board and Chairman of
the Younkers Division of Proffitt's, Inc.
James A. Coggin 54 President and Chief Operating Officer
Tom R. Amerman 58 Executive Vice President of Special
Projects
David W. Baker 59 Senior Vice President of Operations
Julia A. Bentley 37 Senior Vice President of Investor
Relations and Planning and Secretary
James E. Glasscock 54 Executive Vice President, Chief Financial
Officer, and Treasurer
Brian J. Martin 39 Senior Vice President of Human Resources
and Law and General Counsel
Michael R. Molitor 36 Senior Vice President of Merchandise
Planning and Analysis
James E. VanNoy 56 Senior Vice President of Systems Support
John J. White 45 Senior Vice President of Profit
Improvement and Special Projects
William L. White, III 42 Senior Vice President of Systems
Development
Proffitt's Division Officers:
Frederick J.
Mershad 53 President and Chief Executive Officer
A. Coleman Piper 49 Executive Vice President of Stores
McRae's Division Officers:
Gary L. Howard 53 President and Chief Executive Officer
Robert Oliver 61 Executive Vice President of Stores
Younkers Division Officers:
Robert M. Mosco 47 President and Chief Executive Officer
Toni E. Browning 39 Senior Vice President of Stores
Proffitt's, Inc. Corporate Officers:
R. Brad Martin became Chairman of the Board in February 1987 and
Chief Executive Officer in July 1989. Mr. Martin previously served
as President from July 1989 until March 1994 and from September
1994 to March 1995.
W. Thomas Gould became Vice Chairman of the Board of the Company
and Chairman of the Younkers Division in February 1996. Mr. Gould
served with Younkers, Inc. as Chief Executive Officer from 1987 to
January 1996, Chairman of the Board from 1992 to January 1996, and
President from 1985 until 1992. Prior to joining Younkers, Mr.
Gould served in various executive, management, and merchandising
positions with Lazarus, Gimbel's, and Maas Brothers.
James A. Coggin was named President and Chief Operating Officer of
Proffitt's, Inc. in March 1995 and served as Executive Vice
President and Chief Administrative Officer of the Company from
March 1994 to March 1995. From June 1978 to March 1994, Mr. Coggin
served as Executive Vice President and Chief Administrative Officer
of McRae's, Inc. Mr. Coggin joined McRae's, Inc. in 1971.
Tom R. Amerman was named Executive Vice President of Special
Projects in February 1996. Mr. Amerman served as Senior Vice
President of Human Resources for Younkers, Inc. from September 1994
to January 1996. Prior to joining Younkers, Inc., Mr. Amerman was
Executive Vice President of Human Resources and Operations for
Parisian from 1977 to 1994.
David W. Baker was named Senior Vice President of Operations for
the Company in March 1994. Mr. Baker joined McRae's, Inc. in
February 1985 and served as Senior Vice President of Operations
until March 1994.
Julia A. Bentley was named Senior Vice President of Investor
Relations and Planning and Secretary of Proffitt's, Inc. in March
1994. In January 1993, Ms. Bentley became Senior Vice President,
and in March 1989 became Vice President of Finance, Chief Financial
Officer, Secretary, and Treasurer. Ms. Bentley joined the Company
in 1987. Ms. Bentley is a Certified Public Accountant with several
years of public accounting experience.
James E. Glasscock was appointed Executive Vice President, Chief
Financial Officer, and Treasurer of the Company in March 1995. Mr.
Glasscock served as Senior Vice President, Chief Financial Officer,
and Treasurer between March 1994 and March 1995. From May 1985 to
March 1994, Mr. Glasscock served as Senior Vice President of
Finance for McRae's, Inc. Mr. Glasscock is a Certified Public
Accountant with several years of public accounting and private
industry experience.
Brian J. Martin was promoted to Senior Vice President of Human
Resources and Law and General Counsel in August 1995 and served as
Senior Vice President and General Counsel of the Company from March
1995 to August 1995. He joined Proffitt's, Inc. in 1994 as Vice
President and General Counsel. From June 1990 to May 1994, Mr.
Martin was affiliated with the Indianapolis, Indiana law firm of
Barnes and Thornburg. Mr. Martin served as Assistant Solicitor
General of the United States between January 1988 and June 1990.
Michael R. Molitor was appointed Senior Vice President of
Merchandise Planning and Analysis in February 1996. Mr. Molitor
served as Vice President of Merchandise Strategies at Younkers,
Inc. between March 1994 and January 1996. Mr. Molitor held various
merchandising and financial positions with Saks Fifth Avenue
between September 1993 and February 1994 and with May Department
Stores Company between January 1988 and August 1993.
James E. VanNoy was named Senior Vice President of Systems Support
in February 1996. He became Senior Vice President and Chief
Information Officer of the Company in March 1994. Mr. VanNoy
joined McRae's, Inc. in February 1980 as Director of Management
Information Systems and was promoted to Vice President of
Management Information Systems in February 1982.
John J. White was named Senior Vice President of Profit Improvement
and Special Projects for the Company in February 1996. Mr. White
served as Vice President and Controller of Younkers, Inc. from July
1995 to January 1996. Prior to that, Mr. White served as Vice
President and Controller from January 1987 to December 1994 with
Broadway Stores. Mr. White obtained previous experience with
Allied Stores and May Department Stores Company.
William L. White, III was appointed Senior Vice President of
Systems Development in February 1996. Mr. White served as MIS
(Management Information Systems) Director of Younkers, Inc. between
June 1992 and January 1996. Before joining Younkers, Mr. White was
with Maison Blanche for eighteen years, where he served in various
MIS positions.
Proffitt's Division Officers:
Frederick J. Mershad was promoted to President and Chief Executive
Officer of the Proffitt's Division of Proffitt's, Inc. in February
1996 and served as President of the Proffitt's Division between
March 1995 and January 1996. Mershad joined the Company in May 1994
as Executive Vice President of Merchandising and Sales Promotion
for the Proffitt's Division. Mr. Mershad had over 25 years of
retail experience and has held executive merchandising positions
with such retailers as Rich's, a division of Federated Department
Stores, and McRae's.
A. Coleman Piper was named Executive Vice President of Stores for
the Proffitt's Division in March 1995. He served with Proffitt's,
Inc. as Executive Vice President for Human Resources and Proffitt's
Division Stores from September 1994 to March 1995 and Executive
Vice President of Operations and Real Estate from March 1994 to
September 1994. He has been with the Company since 1972 and
previously served as its Vice President of Operations.
McRae's Division Officers:
Gary L. Howard was promoted to President and Chief Executive
Officer of the McRae's Division of Proffitt's, Inc. in February
1996 and served as President of the McRae's Division between March
1995 and January 1996. Between March 1994 and March 1995, Mr.
Howard served as Executive Vice President for Merchandising and
Marketing for the McRae's Division. Mr. Howard joined McRae's,
Inc. in November 1993 as Executive Vice President of Merchandising
and Marketing. Mr. Howard has over 30 years of prior experience in
the retail industry, including service as Senior Vice President and
General Merchandise Manager of Maas Brothers and Woodward and
Lothrop.
Robert Oliver was promoted to Executive Vice President of Stores
for the McRae's Division in March 1995. Mr. Oliver served as Vice
President of Stores for the McRae's Division from March 1994 to
March 1995. He joined McRae's, Inc. in 1991 as Vice President of
Stores after gaining 33 years of merchandising and store management
experience with Foley's.
Younkers Division Officers:
Robert M. Mosco was named President and Chief Executive Officer of
the Younkers Division of Proffitt's, Inc. in February 1996. Mr.
Mosco served as President and Chief Operating Officer of Younkers,
Inc. between 1992 and January 1996. From 1989 to 1992, he held the
position of Executive Vice President of Merchandising and Marketing
for Younkers, Inc. Mr. Mosco joined Younkers, Inc. in 1987. Mr.
Mosco began his retail career with Gimbel's and later worked for
Rich's.
Toni E. Browning was named Senior Vice President of Stores in
February 1996 for the Younkers Division of Proffitt's, Inc. She
served as Senior Vice President of Stores for Younkers, Inc. from
February 1994 to January 1996. She joined Younkers, Inc. in
February 1993 as Vice President, Regional Director of the Western
Stores and was promoted to Senior Vice President of Southern Stores
that same year. Ms. Browning was in store management with Dayton
Hudson Department Stores from 1989 to January 1993 and gained prior
experience with Federated-Allied Stores.
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters.
The information set forth under the caption "Market Information,"
appearing on page 30 of the Proffitt's, Inc. Annual Report to
Shareholders for the Fiscal Year Ended February 3, 1996 (the
"Annual Report"), is incorporated herein by reference.
Item 6. Selected Financial Data.
The information set forth under the caption "Five-Year Financial
Summary" appearing on page 4 of the Annual Report is incorporated
herein by reference.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
The information set forth under the caption "Management's
Discussion and Analysis" appearing on pages 5 through 10 of the
Annual Report is incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data.
The Consolidated Financial Statements and the Report of Independent
Accountants appearing on pages 11 through 28 of the Annual Report
are incorporated herein by reference.
Item 9 Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
None.
PART III
Item 10. Directors and Executive Officers of the Registrant.
The information set forth under the caption "Election of Directors"
contained on pages 5 through 7 of the Proffitt's, Inc. Proxy
Statement dated May 1, 1996 (the "Proxy Statement"), with respect
to Directors of the Company, is incorporated herein by reference.
The information required under this item with respect to the
Company's Executive Officers is incorporated by reference from Part
I of this report under "Executive Officers of the Registrant."
The information set forth under the caption "Section 16(a) of the
Securities Exchange Act of 1934" contained on page 14 of the Proxy
Statement, with respect to Director and Executive Officer
compliance with Section 16(a), is incorporated herein by reference.
Item 11. Executive Compensation.
The information set forth under the caption "Executive
Compensation" contained on pages 8 through 12 of the Proxy
Statement with respect to executive compensation and the
information set forth under the caption "Directors' Fees" on page
7 of the Proxy Statement is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
The information set forth under the caption "Outstanding Voting
Securities" contained on pages 3 through 5 of the Proxy Statement
with respect to security ownership of certain beneficial owners and
management is incorporated herein by reference.
Item 13 Certain Relationships and Related Transactions.
The information set forth under the captions "Further Information
Concerning Directors" and "Certain Transactions" contained on pages
7 and 13 and 14, respectively, of the Proxy Statement with respect
to certain relationships and related transactions is incorporated
herein by reference.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K.
(a) (1) and (2)--The response to this portion of Item 14 is
submitted as a separate section of this report.
(3)--The response to this portion of Item 14 is submitted as
a separate section of this report.
(b) Reports on Form 8-K filed during the fourth quarter.
A report on Form 8-K was filed with the Commission on January
16, 1996 regarding fourth quarter and year-end performance updates
for Proffitt's, Inc. and Younkers, Inc.
A report on Form 8-K was filed with the Commission on February
16, 1996 regarding the consummation of the business combination
between Proffitt's, Inc. and Younkers, Inc.
(c) Exhibits--The response to this portion of Item 14 is submitted
as a separate section of this report.
(d) Financial statement schedules--The response to this portion of
Item 14 is submitted as a separate section of this report.
FORM 10-K--ITEM 14(a)(1) AND (2) AND (d)
PROFFITT'S, INC. AND SUBSIDIARIES
LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
(a) The following documents are filed as a part of this report:
(1) Consolidated Financial Statements
The following consolidated financial statements of Proffitt's, Inc.
and subsidiaries and the Report of Independent Accountants,
included on pages 11 through 28 of the Proffitt's, Inc. Annual
Report to Shareholders for the Fiscal Year Ended February 3, 1996,
are incorporated by reference in Item 8:
Consolidated Balance Sheets as of February 3, 1996 and January 28,
1995
Consolidated Statements of Income for Fiscal Years Ended February
3, 1996, January 28, 1995, and January 29, 1994
Consolidated Statements of Shareholders' Equity for Fiscal Years
Ended February 3, 1996, January 28, 1995, and January 29, 1994
Consolidated Statements of Cash Flows for Fiscal Years Ended
February 3, 1996, January 28, 1995, and January 29, 1994
Notes to Consolidated Financial Statements
Report of Independent Accountants
(2) Schedules to Financial Statements
The following consolidated financial statement schedules of
Proffitt's, Inc. and subsidiaries are included in item 14(d):
Report of Independent Accountants for the Fiscal Year Ended
February 3, 1996
Schedule II - Valuation and Qualifying Accounts and Reserves
All other schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are
not required under the related instructions or are inapplicable and
therefore have been omitted.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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
Date: May 1, 1996 /s/ James E. Glasscock
___________________________
James E. Glasscock
Executive Vice President,
Chief Financial Officer,
and Treasurer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the Registrant and in the capacities and on the dates
indicated.
/s/ R. Brad Martin /s/ Michael S. Gross
___________________________ ______________________________
R. Brad Martin Michael S. Gross
Chairman of the Board Director
and Chief Executive Officer
/s/ W. Thomas Gould /s/ G. David Hurd
__________________________ ______________________________
W. Thomas Gould G. David Hurd
Vice Chairman of the Board Director
/s/ James A. Coggin /s/ Richard D. McRae
__________________________ ______________________________
James A. Coggin Richard D. McRae
President and Chief Director
Operating Officer
/s/ Bernard E. Bernstein /s/ C. Warren Neel
_________________________ _______________________________
Bernard E. Bernstein C. Warren Neel
Director Director
/s/ Edmond D. Cicala /s/ Harwell W. Proffitt
___________________________ _______________________________
Edmond D. Cicala Harwell W. Proffitt
Director Director
/s/ Ronald de Waal /s/ Gerald Tsai, Jr.
___________________________ _______________________________
Ronald de Waal Gerald Tsai, Jr.
Director Director
/s/ Gerard K. Donnelly /s/ Julia A. Bentley
__________________________ ________________________________
Gerard K. Donnelly Julia A. Bentley
Director Senior Vice President
and Secretary
/s/ Donald F. Dunn
__________________________
Donald F. Dunn
Director
REPORT OF INDEPENDENT ACCOUNTANTS
Board of Directors
Proffitt's, Inc.
We have audited the accompanying consolidated balance sheets of
Proffitt's, Inc. and Subsidiaries as of February 3, 1996 and
January 28, 1995, and the related consolidated statements of
income, shareholders' equity and cash flows for each of the three
years in the period ended February 3, 1996. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audits. The consolidated financial
statements give retroactive effect to the merger with Younkers,
Inc., which has been accounted for as a pooling of interests as
described in Note A to the consolidated financial statements. We
did not audit the financial statements of Younkers for the years
ended January 28, 1995 and January 29, 1994. Such statements
reflect aggregate total assets constituting 38.3% and 54.7% in 1994
and 1993, respectively, and aggregate total revenues constituting
49.3% and 74.9% in 1994 and 1993, respectively, of the related
consolidated totals. Those statements were audited by other
auditors, whose reports have been furnished to us, and our opinion,
insofar as it related to the amounts included for Younkers, Inc.,
is based solely on the respective reports of the other auditors.
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 and
the respective reports of the other auditors provide a reasonable
basis for our opinion.
In our opinion, based on our audits and the respective reports of
the other auditors, the consolidated financial statements referred
to above present fairly, in all material respects, the consolidated
financial position of Proffitt's, Inc. and Subsidiaries as of
February 3, 1996 and January 28, 1995 and the consolidated results
of their operations and their cash flows for each of the three
years in the period ended February 3, 1996, in conformity with
generally accepted accounting principles.
As described in Note N to the financial statements, the Company
changed its method of costing inventory, accounting for store pre-
opening expenses and accounting for income taxes in the year ended
January 29, 1994 and changed its method of valuing inventory in the
year ended January 28, 1995.
/s/ COOPERS & LYBRAND, L.L.P.
Atlanta, Georgia
March 15, 1996
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders
Younkers, Inc.
We have audited the accompanying consolidated balance sheet of
Younkers, Inc. and subsidiary as of January 28, 1995, and the
related consolidated statements of earnings, shareholders' equity,
and cash flows for the year then ended. These financial statements
are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audit. The Company's financial statements
as of January 29, 1994 and January 30, 1993 were audited by other
auditors whose report, dated March 3, 1994, expressed an
unqualified opinion on those financial statements.
We conducted our audit 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 audit
provides a reasonable basis for our opinion.
In our opinion, the 1995 consolidated financial statements present
fairly, in all material respects, the consolidated financial
position of Younkers, Inc. and subsidiary at January 28, 1995, and
the consolidated results of their operations and their cash flows
for the year then ended, in conformity with generally accepted
accounting principles.
/s/ Deloitte & Touch LLP
Des Moines, Iowa
March 3, 1995
Report of Independent Auditors
The Shareholder
Younkers, Inc.
We have audited the consolidated statements of earnings,
shareholders' equity, and cash flows of Younkers, Inc. for the year
ended January 29, 1994 (not separately presented herein), prior to
the adjustments relating to the changes in methods of accounting
for certain items as described in Note N to the financial
statements of Proffitt's, Inc. for the year ended February 3, 1996.
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit 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 audit
provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements, prior to
restatement for changes in methods of accounting, referred to above
present fairly, in all material respects the consolidated results
of their operations and their cash flows for the year ended January
29, 1994, in conformity with generally accepted accounting
principles.
/s/ ERNST & YOUNG LLP
Des Moines, Iowa
March 3, 1994
REPORT OF INDEPENDENT ACCOUNTANTS
Our report on the consolidated financial statements of Proffitt's,
Inc. has been incorporated by reference in this Form 10-K from page
32 of the 1995 Annual Report to Shareholders of Proffitt's, Inc.
In connection with our audits of such financial statements, we have
also audited the related financial statement schedule listed in
Item 14(a)2 of this Form 10-K.
In our opinion, the financial statement schedule referred to above,
when considered in relation to the basic financial statements taken
as a whole, presents fairly, in all material respects, the
information required to be included therein.
/s/ COOPERS & LYBRAND L.L.P.
Atlanta, Georgia
March 15, 1996
<TABLE>
<CAPTION>
PROFFITT'S, INC. AND SUBSIDIARIES
ALLOWANCE FOR DOUBTFUL ACCOUNTS
Balance at Charged to Charged to Balance at
Beginning costs and other end
Description of period expenses accounts Deductions(b) of period
<S> <C> <C> <C> <C> <C>
Year ended February 3, 1996:
Allowance for doubtful accounts 4,723,170 8,723,463 0 (6,845,551) 6,601,082
Year ended January 28, 1995:
Allowance for doubtful accounts 3,255,043 4,956,351 1,431,988 (a) (4,920,212) 4,723,170
Year ended January 29, 1994:
Allowance for doubtful accounts 3,149,670 2,448,838 0 (2,343,465) 3,255,043
(a) Balance in account of company (McRae's, Inc.) acquired at March 31, 1994.
(b) Uncollectible accounts written off, net of recoveries.
FORM 10-K -- ITEM 14(a)(3) AND 14(c)
PROFFITT'S, INC. AND SUBSIDIARIES
EXHIBITS
Exhibit
No. Description
2.1 Agreement and Plan of Merger, dated as of October 22,
1995, among Proffitt's, Inc., Baltic Merger Corporation
and Younkers, Inc. (13)
3.1 Charter of the Company, as amended (1), (6), (12), (9)
3.2 * Articles of Amendment to the Charter of Proffitt's,
Inc., increasing the number of authorized shares of
Series C Preferred Stock
3.3 Amended and Restated Bylaws of the Company (12)
4.1 Form of 7.5% Junior Subordinated Debentures due 2004
(6)
4.2 Form of 4.75% Convertible Subordinated Debentures due
2003 (4)
10.1 Registration Rights Agreement made as of March 31, 1994
by and among Proffitt's, Inc. and Richard D. McRae,
Jr., as Representative of the former shareholders of
Macco Investments, Inc. (6)
10.2 Non-competition Agreement by and between Proffitt's,
Inc. and Richard D. McRae dated March 31, 1994 (6)
10.3 Credit Facilities and Reimbursement Agreement by and
among Proffitt's, Inc., the lenders from time to time
party thereto and NationsBank of Texas, National
Association, as agent, dated March 31, 1994 (6)
10.4 Amendment No. 1 to Credit Facilities and Reimbursement
Agreement between Proffitt's, Inc. and NationsBank of
Texas, National Association, as agent, dated
November 15, 1994 (10)
10.5 Amendment No. 2 to Credit Facilities and Reimbursement
Agreement between Proffitt's, Inc. and NationsBank of
Texas, National Association, as agent, dated March 7,
1995 (10)
10.6 * Amendment No. 3 to Credit Facilities and Reimbursement
Agreement between Proffitt's, Inc. and NationsBank of
Texas, National Association, as agent, dated October 25,
1996
10.7 * Amendment No. 4 to Credit Facilities and Reimbursement
Agreement between Proffitt's, Inc. and NationsBank of
Texas, National Association, as agent, dated February 3,
1996
10.8 * Form of letter extending termination date of Credit
Facilities and Reimbursement Agreement between
Proffitt's, Inc. and NationsBank of Texas, National
Association, as agent, dated June 8, 1995
10.9 Guaranty Agreement made and entered into as of March 31,
1994, by and between each of Proffitt's Investments,
Inc., PDS Agency, Inc., Macco Investments, Inc., McRae's,
Inc., and McRae's of Alabama, Inc., and NationsBank of
Texas, National Association (6)
10.10 Transfer and Administration Agreement dated as of January
27, 1993, and amended by Amendment dated as of March 31,
1994 thereto, by and between Enterprise Funding
Corporation and McRae's, Inc. (6)
10.11 Amendment to Transfer and Administration Agreement by and
between Enterprise Funding Corporation and McRae's, Inc.
dated March 31, 1995 (10)
10.12 * Amendment to Transfer and Administration Agreement by
and between Enterprise Funding Corporation and McRae's,
Inc. dated May 11, 1995
10.13 * Amendment to Transfer and Administration Agreement by
and between Enterprise Funding Corporation and McRae's,
Inc. dated September 30, 1995
10.14 * Amendment to Transfer and Administration Agreement by
and between Enterprise Funding Corporation and McRae's,
Inc. dated October 25, 1995
10.15 Securities Purchase Agreement dated March 3, 1994,
between Proffitt's, Inc. and Apollo Specialty Retail
Partners, L.P. (6)
10.16 Registration Rights Agreement made and entered into as of
March 31, 1994, by and among Proffitt's, Inc. and Apollo
Specialty Retail Partners, L.P. (6)
10.17 Land Deed of Trust dated April 1, 1994 by and among
McRae's, Inc., Don B. Cannada, and Park Real Estate
Company (6)
10.18 Secured Promissory Note, dated April 1, 1994, for the
principal amount of $3,906,558 by McRae's, Inc. payable
to Park Real Estate Company (6)
10.19 Assumption, Consent, and Release Agreement, entered into
between McRae's, Inc. and Deposit Guaranty National Bank
dated April l, 1994 (6)
10.20 Amended and Restated Promissory Note dated April 1, 1994
for the principal amount of $2,075,000 by McRae's, Inc.
payable to First Tennessee Bank National Association
(Gautier) (6)
10.21 Assumption, Consent, and Release Agreement, entered into
between McRae's, Inc. and First Tennessee Bank National
Association dated April 1, 1994 (6)
10.22 Secured Promissory Note, dated April 1, 1994, for the
principal amount of $556,851 by McRae's, Inc. payable to
Arvey Real Estate Company (Gautier) (6)
10.23 Land Deed of Trust dated April 1, 1994 by and among
McRae's, Inc., Don B. Cannada, and Arvey Real Estate
Company (Gautier) (6)
10.24 Assumption, Consent, and Release Agreement, entered into
between McRae's, Inc. and First Tennessee Bank National
Association dated April 1, 1994 (Gautier) (6)
10.25 Secured Promissory Note, dated April 1, 1994, for the
principal amount of $1,487,919 by McRae's, Inc. payable
to Green's Crossing Real Estate Company (6)
10.26 Assumption, Consent, and Release Agreement, entered into
between McRae's, Inc. and Deposit Guaranty National Bank
dated April 1, 1994 (6)
10.27 Land Deed of Trust dated April 1, 1994 by and among
McRae's, Inc., Don B. Cannada, and Green's Crossing Real
Estate Company (6)
10.28 Secured Promissory Note, dated April 1, 1994, for the
principal amount of $1,779,223 by McRae's, Inc. payable
to Arvey Real Estate Company (Laurel) (6)
10.29 Assumption, Consent, and Release Agreement, entered into
between McRae's, Inc. and AmSouth Bank National
Association dated April 1, 1994 (6)
10.30 Leasehold Deed of Trust dated April 1, 1994 by and among
McRae's, Inc., Don B. Cannada, and Arvey Real Estate
Company (Laurel) (6)
10.31 Indemnification and Confirmation of Lease Agreement
dated March 31, 1994, entered into among McRae's, Inc.,
Richard D. McRae, Jr., Susan McRae Shanor, and Vaughan
McRae (Heritage Building) (6)
10.32 Guaranty Agreement dated March 31, 1994 of McRae's, Inc.
to guarantee Richard D. McRae, Jr., Carolyn McRae, Susan
McRae Shanor, and Vaughan W. McRae giving or extending
credit to Proffitt's, Inc. (6)
10.33 Land Deed of Trust dated April 1, 1994 by and among
McRae's, Inc., Don B. Cannada, and Green's Crossing Real
Estate Company (6)
10.34 Guaranty Agreement by Proffitt's, Inc. to AmSouth Bank
guaranteeing credit extended to McRae's, Inc. (6)
10.35 Promissory Note dated January 25, 1983 by McRae's, Inc.
payable to Selby W. McRae in the principal sum of
$l,346,442 (5)
10.36 Form of Rights Certificate and Rights Agreement, dated
as of March 28, 1995 between Proffitt's, Inc. and Union
Planters National Bank as Rights Agent (9)
10.37 Pooling and Servicing Agreement dated as of June 13,
1995 among Younkers Credit Corporation, Younkers, Inc.
and Chemical Bank, as Trustee (20)
10.38 Series 1995-1 Supplement dated as of June 13, 1995 to
Pooling and Servicing Agreement dated as of June 13, 1995
among Younkers Credit Corporation, Younkers, Inc. and
Chemical Bank, as Trustee (20)
10.39 Receivables Purchase Agreement dated as of June 13, 1995
between Younkers Credit Corporation and Younkers, Inc.
(20)
10.40 Series 1995-2 Supplement dated as of July 18, 1995 to
Pooling and Servicing Agreement dated as of June 13, 1995
among Younkers Credit Corporation, Younkers, Inc. and
Chemical Bank, as Trustee (20)
10.47 ISDA Master Agreement and Schedule thereto, each dated
as of July 19, 1995, between Younkers, Inc. and
NationsBank of Texas, N.A., with Confirmation of Interest
Rate Cap Transaction dated July 19, 1995, and Assignment
Agreement dated as of July 19, 1995 between Younkers
Credit Corporation, Younkers, Inc. and Chemical Bank, as
Trustee (20)
MANAGEMENT CONTRACTS, COMPENSATORY PLANS, OR ARRANGEMENTS, ETC.
10.42 Proffitt's, Inc. 1987 Stock Option Plan, as amended (3)
10.43 Proffitt's, Inc. Employee Stock Purchase Plan (8)
10.44 Proffitt's, Inc. 1994 Long-Term Incentive Plan (7)
10.45 Proffitt's, Inc. 401(k) Retirement Plan (5)
10.46 $500,000 Loan Agreement dated February 1, 1989 between
Proffitt's, Inc. and R. Brad Martin (2)
10.47 Form of Amended and Restated Employment Agreement by and
between Proffitt's, Inc. and R. Brad Martin dated March
28, 1995 (11)
10.48 Form of Employment Agreement by and between Proffitt's,
Inc. and James A. Coggin dated March 28, 1995 (10)
10.49 Form of Employment Agreement by and between Proffitt's,
Inc. and James E. Glasscock dated March 28, 1995 (10)
10.50 Form of Employment Agreement by and between Proffitt's,
Inc. and Frederick J. Mershad dated March 28, 1995 (10)
10.51 Form of Employment Agreement by and between Proffitt's,
Inc. and Gary L. Howard dated March 28, 1995 (10)
10.52 Form of Employment Agreement by and between Proffitt's,
Inc. and Brian J. Martin dated March 28, 1995 (10)
10.53 * Form of Employment Agreement by and between
Proffitt's, Inc. and James E. VanNoy dated April 1, 1996
10.54 * Form of Employment Agreement by and between
Proffitt's, Inc. and David W. Baker dated April 1, 1996
10.55 Form of Employment Agreement by and between Proffitt's,
Inc. and A. Coleman Piper dated March 28, 1995 (10)
10.56 Form of Employment Agreement by and between Proffitt's,
Inc. and Robert Oliver dated March 28, 1995 (10)
10.57 Form of Employment Agreement by and between Proffitt's,
Inc. and Julia A. Bentley dated March 28, 1995 (10)
10.58 Form of Employment Agreement by and between Proffitt's,
Inc. and Anne Breier Pope dated March 28, 1995 (10)
10.59 * Form of Employment Agreement by and between
Proffitt's, Inc. and William White dated February 2,
1996
10.60 * Form of Employment Agreement by and between
Proffitt's, Inc. and John White dated February 2, 1996
10.61 * Form of Employment Agreement by and between
Proffitt's, Inc. and Tom Amerman dated February 2, 1996
10.62 * Form of Employment Agreement by and between
Proffitt's, Inc. and W. Thomas Gould dated October 22,
1995
10.63 * Form of Employment Agreement by and between
Proffitt's, Inc. and Robert M. Mosco dated October 22,
1995
10.64 Younkers, Inc. Stock and Incentive Plan (14)
10.65 Younkers, Inc. Management Stock Option Plan (14)
10.66 Deferred Compensation Agreement between Younkers, Inc.
and W. Thomas Gould, as amended (14)
10.67 Deferred Compensation Agreement between Younkers, Inc.
and Robert M. Mosco, as amended (14)
10.68 Younkers, Inc. 1993 Long-Term Incentive Plan (16)
10.69 Amended and Restated Younkers Associate Profit Sharing
and Savings Plan (15)
10.70 First Amendment to Younkers Associate Profit Sharing
and Savings Plan effective as of June 1, 1993 (17)
10.71 Second Amendment to Younkers Associate Profit Sharing
and Savings Plan effective as of July 7, 1993 (18)
10.72 Form of Younkers, Inc. Deferred Compensation Plan (17)
10.73 Form of Severance Agreement between Younkers, Inc. and
its executive officers (19)
11.1 * Statement re: computation of earnings per share
13.1 * Annual Report to Shareholders for the fiscal year ended
February 3, 1996 (not to be deemed filed except for
those portions thereof which are incorporated herein by
reference in this Annual Report)
21.1 * Subsidiaries of the registrant
23.1 * Consents of Independent Accountants
27.1 * Financial Data Schedule
* Previously unfiled documents are noted with an asterisk.
(1) Incorporated by reference from the Exhibits to the Form S-1
Registration Statement No. 33-13548 of Proffitt's, Inc. dated June
3, 1987.
(2) Incorporated by reference from the Exhibits to the Form 10-K
of Proffitt's, Inc. for the fiscal year ended January 28, 1989.
(3) Incorporated by reference from the Exhibits to the Form S-8
Registration Statement No. 33-46306 of Proffitt's, Inc. dated March
10, 1992.
(4) Incorporated by reference from the Exhibits to the Form S-3
Registration Statement No. 33-70000 of Proffitt's, Inc. dated
October 19, 1993.
(5) Incorporated by reference from the Exhibits to the Form 10-K
of Proffitt's, Inc. for the fiscal year ended January 29, 1994.
(6) Incorporated by reference from the Exhibits to the Form 8-K of
Proffitt's, Inc. dated April 14, 1994.
(7) Incorporated by reference from the Exhibits to the Form S-8
Registration Statement No. 33-80602 of Proffitt's, Inc. dated June
23, 1994.
(8) Incorporated by reference from the Exhibits to the Form S-8
Registration Statement No. 33-88390 of Proffitt's, Inc. dated
January 11, 1995.
(9) Incorporated by reference from the Exhibits to the Form 8-K of
Proffitt's, Inc. dated April 3, 1995.
(10) Incorporated by reference from the Exhibits to the Form 10-K
of Proffitt's, Inc. for the fiscal year ended January 28, 1996.
(11) Incorporated by reference from the Exhibits to the Form 10-Q
of Proffitt's, Inc. for the quarter ended April 29, 1995.
(12) Incorporated by reference from the Exhibits to the Form 10-Q
of Proffitt's, Inc. for the quarter ended July 29, 1995.
(13) Incorporated by reference from the Exhibits to the Form S-4
Registration Statement No. 333-00029 of Proffitt's, Inc. dated
January 3, 1996.
(14) Incorporated by reference from the Exhibits to the Form S-1
Registration Statement No. 33-45771 of Younkers, Inc.
(15) Incorporated by reference from the Exhibits to the Form S-1
Registration Statement No. 33-60060 of Younkers, Inc.
(16) Incorporated by reference from the Exhibits to the Form S-8
Registration Statement No. 33-59224 of Younkers, Inc.
(17) Incorporated by reference from the Exhibits to the Form 10-Q
of Younkers, Inc. for the quarter ended May 1, 1993.
(18) Incorporated by reference from the Exhibits to the Form 10-Q
of Younkers, Inc. for the quarter ended July 31, 1993.
(19) Incorporated by reference from Exhibit 4 of Younkers, Inc.
Solicitation/Recommendation Statement on Schedule 14D-9 dated
January 9, 1995.
(20) Incorporated by reference from the Exhibits to the Form 10-Q
of Younkers, Inc. for the quarter ended July 29, 1995.
</TABLE>
ARTICLES OF AMENDMENT TO THE CHARTER
OF PROFFITT'S, INC.
Pursuant to the provisions of Section 6.02 of the Tennessee
Business Corporation Act, the undersigned corporation adopts the
following Articles of Amendment to its Charter.
A. The name of the corporation is PROFFITT'S, INC. (the
"Corporation").
B. The Charter is amended by increasing the number of
authorized shares of Series C Junior Preferred Stock from 200,000
shares to 500,000 shares.
C. As of the date of this Amendment, no shares of Series C
Junior Preferred Stock have been issued.
D. The Amendment was duly adopted on November 17, 1995 by the
Board of Directors of the Corporation.
IN WITNESS WHEREOF, the Corporation has caused these Articles
of Amendment to be duly executed by R. Brad Martin, its Chairman
and Chief Executive Officer, and attested by Julia A. Bentley, its
Secretary, this 6th day of February, 1996.
PROFFITT'S, INC.
By:___________________
R. Brad Martin, Chairman and
Chief Executive Officer
ATTEST:
By:_______________________
Julia A, Bentley, Secretary
AMENDMENT NO. 3 TO CREDIT FACILITIES
AND REIMBURSEMENT AGREEMENT
THIS AMENDMENT NO. 3 TO CREDIT FACILITIES AND REIMBURSEMENT
AGREEMENT (this "Agreement") is made and entered into as of this
25th day of October, 1995 among:
PROFFITT'S, INC., a Tennessee corporation having its principal
place of business in Alcoa, Tennessee (the "Borrower"); and
Each lender executing and delivering a signature page hereto
(hereinafter such lenders may be referred to individually as a
"Lender" or collectively as the "Lenders"); and
NATIONSBANK OF TEXAS, NATIONAL ASSOCIATION, a national
banking association organized and existing under the laws of the
United States of America ("NationsBank"), in its capacity as agent
for the Lenders (in such capacity, the "Agent");
W I T N E S S E T H:
WHEREAS, the Borrower, the Lenders and the Agent have entered
into a Credit Facilities and Reimbursement Agreement dated as of
March 31, 1994, pursuant to which the Lenders agreed to make
certain Advances to the Borrower;
WHEREAS, the Borrower, the Lenders and the Agent amended the
Credit Agreement pursuant to Amendment No. 1 to Credit Facilities
and Reimbursement Agreement dated as of November 15, 1994
("Amendment No. 1") and Amendment No. 2 to Credit Facilities and
Reimbursement Agreement dated as of March 7, 1995 ("Amendment No.
2") (as amended, the "Credit Agreement"); and
WHEREAS, the Borrower has requested that the Credit Agreement
be amended in the manner set forth herein and the Agent and the
Lenders are willing to agree to such amendment;
NOW, THEREFORE, in consideration of the mutual covenants and
the fulfillment of the conditions set forth herein, the parties
hereto do hereby agree as follows:
1. Definitions. Any capitalized terms used herein without
definition shall have the meaning set forth in the Credit
Agreement.
2. Amendment. Subject to the terms and conditions set forth
herein, and in accordance with Section 11.06 of the Credit
Agreement, the Credit Agreement is hereby amended as follows:
(a) The definition of "Borrowing Base Factor" in Section
1.01 is hereby amended and restated in its entirety to read as
follows:
" ' Borrowing Base Factor' means 55%;"
(b) Section 7.20 (i) is hereby amended and restated in
its entirety to read as follows:
7.20 New Subsidiaries. Simultaneously with the
acquisition or creation of any subsidiary, or upon any previously
existing Persons becoming a Subsidiary, cause to be delivered to
the Agent for the benefit of the Lenders each of the following:
(i) a Guaranty executed by such Subsidiary, with
appropriate insertions of identifying information and such other
changes to which the Agent may consent in its discretion;
(c) Section 8.04 of the Credit Agreement is hereby
amended and restated in its entirety to read as follows:
8.04 Consolidated Fixed Charge Ratio. Permit at any
time during any Four-Quarter Period of the Borrower ending during
the periods set forth below, the Consolidated Fixed Charge Ratio
for such Four Quarter Period to be equal to or less than the ratios
set forth opposite the respective periods below:
Period Ratio
Closing Date through and
including January 31, 1997 1.50 to 1.00
February 1, 1997 through
and including May 2, 1997 1.60 to 1.00
May 3, 1997 and thereafter 1.75 to 1.00
(d) Section 8.06 of the Credit Agreement is hereby
amended and restated in its entirety to read as follows:
8.06 Consolidated Funded Indebtedness to EBITDA.
Permit at any time the ratio of Consolidated Funded Indebtedness to
Consolidated EBITDA to be equal to or greater than the following
ratios set forth opposite the following periods below:
Period Ratio
Closing Date through and
including January 27, 1995 4.50 to 1.00
January 28, 1995 3.50 to 1.00
January 29, 1995 through and
including February 2, 1996 3.90 to 1.00
February 3, 1996 through and
including January 31, 1997 3.60 to 1.00
February 1, 1997 3.25 to 1.00
First, second and fourth
quarter of each Fiscal Year
commencing with Fiscal Year 1997 3.25 to 1.00
Third quarter of each Fiscal
Year commencing with iscal Year 1997 3.50 to 1.00
3. Waivers. The Agent and the Lenders hereby waive any
Default or Event of Default created under Section 8.05 of the
Credit Agreement with respect to and for the twelve month period
ending October 28, 1995.
4. Representations and Warranties. In order to induce the
Agent and the Lenders to enter into this Agreement, the Borrower
represents and warrants to the Agent and the Lenders as follows:
(a) The representations and warranties made by Borrower
in Article VI of the Credit Agreement are true and correct on and
as of the date hereof;
(b) There has been no material adverse change in the
condition, financial or otherwise, of the Borrower and its
Subsidiaries, taken as a whole, since the date of the most recent
financial reports of the Borrower received by the Agent and the
Lenders under Section 7.01(a) of the Credit Agreement, other than
changes in the ordinary course of business;
(c) The business and properties of the Borrower and
its Subsidiaries, taken as a whole, are not, and since the date of
the most recent financial report of the Borrower and its
Subsidiaries received by the Agent and the Lenders under Section
7.01(a) of the Credit Agreement, have not been adversely affected
in any substantial way as the result of any fire, explosion,
earthquake, accident, strike, lockout,combination of workers,
flood, embargo, riot, activities of armed forces, war or acts of
God or the public enemy, or cancellation or loss of any major
contracts; and
(d) No event has occurred and is continuing which
constitutes, and no condition exist which upon the consummation of
the transaction contemplated hereby would constitute a Default or
an Event of Default on the part of the Borrower under the Credit
Agreement.
5. Conditions Precedent. The effectiveness of this
Agreement is subject to the receipt by the parties hereto of the
following:
(a) The Agent shall have received:
(i) eight (8) counterparts of this Agreement duly
executed by all signatories hereto;
(ii) copies of all additional agreements,
instruments and documents which the Agent may reasonably request,
such documents, when appropriate, to be certifie by appropriate
governmental authorities.
(b) All proceedings of the Borrower relating to the
matters provided for herein shall be satisfactory to the Lenders,
the Agent and their counsel.
6. Entire Agreement. This Agreement sets forth the entire
understanding and agreement of the parties hereto in relation to
the subject matter hereof and supersedes any prior negotiations and
agreements among the parties relative to such subject matter. No
promise, condition, representation or warranty, express or implied,
not herein set forth shall bind any party hereto, and not one of
them has relied on any such promise, condition, representation or
warranty. Each of the parties hereto acknowledges that, except as
in this Agreement otherwise expressly stated, no representations,
warranties or commitments, express or implied, have been made by
any party to the other. None of the terms or conditions of this
Agreement may be changed, modified, waived or cancelled orally or
otherwise, except by writing, signed by all the parties hereto,
specifying such change, modification, waiver or cancellation of
such terms or conditions, or of any proceeding or succeeding breach
thereof.
7. Full Force and Effect of Agreement. Except as hereby
specifically amended, modified, waived or supplemented, the Credit
Agreement and all other Loan Documents are hereby confirmed and
ratified in all respects and shall remain in full force and effect
according to their respective terms.
8. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original
as against any party whose signature appears thereon, and all of
which shall together constitute one and the same instrument.
9. Governing Law. This Amendment Agreement shall in all
respects be governed by the laws and judicial decisions of the
state of Tennessee.
10. Enforceability. Should any one or more of the provisions
of this Agreement be determined to be illegal or unenforceable as
to one or more of the parties hereto, all other provisions
nevertheless shall remain effective and binding on the parties
hereto.
11. Credit Agreement. All references in any of the Loan
Documents to the Credit Agreement shall mean the Credit Agreement
as amended hereby.
12. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of each of the Borrower, the Lenders
and the Agent and their respective successors, assigns and legal
representatives; provided, however, that the Borrower, without the
prior consent of the Agent, may not assign any rights, powers,
duties or obligations hereunder.
13. Consent of Guarantors. Each of the Guarantors by their
execution and delivery hereof (i) consent and agree to the
amendments to the Credit Agreement set forth herein and in
Amendment No. 1 and Amendment No. 2 and (ii) reaffirm their
obligations set forth in each Guaranty. Parks-Belk Company hereby
acknowledges and agrees that as a result of the amendment of
Section 7.20 (i) of the Credit Agreement hereby the limitation set
forth in the third paragraph of Section 1 of the Guaranty Agreement
dated as of March 7, 1995 among the Guarantors party thereto and
the Agent is no longer applicable and shall be of no force or
effect and is deleted hereby.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their duly authorized officers,
all as of the day and year first above written.
BORROWER
ATTEST: PROFFITT, INC.
By:___________________ By:_________________________
Name:_________________ Name:_______________________
Title:________________ Title:______________________
(CORPORATE SEAL)
LENDERS:
NATIONSBANK OF TEXAS,
NATIONAL ASSOCIATION
By:_________________________
Name:_______________________
Title:______________________
FIRST AMERICAN NATIONAL BANK
By:_________________________
Name:_______________________
Title:______________________
FIRST TENNESSEE BANK
NATIONAL ASSOCIATION
By:_________________________
Name:_______________________
Title:______________________
TRUST COMPANY BANK
By:_________________________
Name:_______________________
Title:______________________
By:_________________________
Name:_______________________
Title:______________________
(Signature Page 1 of 2)
DEPOSIT GUARANTY NATIONAL BANK
By:_________________________
Name:_______________________
Title:______________________
HIBERNIA NATIONAL BANK
By:_________________________
Name:_______________________
Title:______________________
AGENT:
NATIONSBANK OF TEXAS,
NATIONAL ASSOCIATION,
as Agent for the Lenders
By:_________________________
Name:_______________________
Title:______________________
Acknowledged, agreed and consented to, this the 25th day of
October, 1995.
PROFFITT'S INVESTMENTS, INC.
PDS AGENCY, INC.
MACCO INVESTMENT, INC.
McRAE'S, INC.
McRAE'S OF ALABAMA, INC.
PARKS ENTERPRISES, INC.
PARKS-BELK COMPANY
By:_________________________
Name:_______________________
Title:______________________
(Signature Page 2 of 2)
AMENDMENT NO. 4 TO CREDIT FACILITIES
AND REIMBURSEMENT AGREEMENT
THIS AMENDMENT NO. 4 TO CREDIT FACILITIES AND
REIMBURSEMENT AGREEMENT (this "Agreement") is made and entered into
as of this 3rd day of February, 1996 among:
PROFFITT'S, INC., a Tennessee corporation having its principal
place of business in Alcoa, Tennessee (the "Borrower"); and
Each lender executing and delivering a signature page hereto
(hereinafter such lenders may be referred to individually as a
"Lender" or collectively as the "Lenders"); and
NATIONSBANK OF TEXAS, NATIONAL ASSOCIATION, a national
banking association organized and existing under the laws of the
United States of America ("NationsBank"), in its capacity as agent
for the Lenders (in such capacity, the "Agent");
W I T N E S S E T H:
WHEREAS, the Borrower, the Lenders and the Agent have entered
into a Credit Facilities and Reimbursement Agreement dated as of
March 31, 1994, pursuant to which the Lenders agreed to make
certain Advances to the Borrower;
WHEREAS, the Borrower, the Lenders and the Agent amended the
Credit Agreement pursuant to Amendment No. 1 to Credit Facilities
and Reimbursement Agreement dated as of November 15, 1994,
Amendment No. 2 to Credit Facilities and Reimbursement Agreement
dated as of March 7, 1995 and Amendment No. 3 to Credit Facilities
and Reimbursement Agreement dated as of October 25, 1995 (as
amended, the "Credit Agreement"); and
WHEREAS, the Borrower has requested that the Credit Agreement
be amended in the manner set forth herein and the Agent and the
Lenders are willing to agree to such amendment;
NOW, THEREFORE, in consideration of the mutual covenants and
the fulfillment of the conditions set forth herein, the parties
hereto do hereby agree as follows:
1. Definitions. Any capitalized terms used herein without
definition shall have the meaning set forth in the Credit
Agreement.
2. Amendment. Subject to the terms and conditions set forth
herein, and in accordance with Section 11.06 of the Credit
Agreement, the Credit Agreement is hereby amended as follows:
(a) the definition of "Applicable Interest Addition" in
Section 1.01 is hereby amended to delete the table appearing at the
end thereof and to substitute in its place the following table:
Consolidated Funded Indebtedness/ Applicable
Consolidated EBITDA Ratio* Interest Addition
Greater than 3.50 to 1.00 1.25%
Greater than 2.50 to 1.00 and 1.00%
less than or equal to 3.50 to 1.00
Greater than 1.25 to 1.00 .75%
and less than or equal to 2.50 to 1.00
Less than or equal to 1.25 to 1.00 .50%
__________________________
* Commencing with the Borrower's fiscal quarter ending May 4,
1996, an adjustment to the Applicable Interest Addition will not
occur unless the ratio determined on the Determination Date for the
fiscal quarter then ended and the ratio determined on the previous
Determination Date each would result in an adjustment to the
Applicable Interest Margin.
(b) The definition of "Capital Expenditures" in Section
1.01 is hereby amended to amend and restate the proviso to clause
(iii) thereof to read in its entirety as follows:
provided, however, there shall be excluded from the
determination of Capital Expenditures (i) McRae's purchase of
certain real property as part of the Macco Acquisition and as set
forth in the Purchase Agreement and (ii) the acquisition by the
Borrower of all the stock of Younkers, Inc. ("Younkers") pursuant
to that certain Agreement and Plan of Merger among Proffitt's,
Inc., Baltic Merger Corporation and Younkers, Inc. dated as of
October 22, 1995 (the "Younkers Acquisition").
(c) Section 8.05 is hereby amended and restated to read
in its entirety as follows:
8.05 Capital Expenditures. Make or become committed to
make in any consecutive twelve month period Capital Expenditures
greater than $80,000,000 in the aggregate or greater than
$30,000,000 on any particular item or project.
(d) Section 8.07 (v), (vii), (viii), (x) and (xii) are
hereby amended and restated to read in their entirety as
follows:
(v) additional unsecured Indebtedness not to
exceed an aggregate outstanding amount of $15,000,000;
(vii) standby letters of credit in the aggregate
face amount not to exceed $40,000,000 issued to provide credit
enhancement for account receivable securitizations;
(viii) conveyances, notes, certificates of
participation or evidences of indebtedness associated with account
receivable securitizations;
(x) additional standby letters of credit in an
aggregate face amount not to exceed $20,000,000;
(xii) Indebtedness incurred directly by the
Borrower or any Subsidiary exclusively to finance machinery,
equipment, and other fixed assets purchased after the Closing Date
provided that such indebtedness (i) is secured, if at all, solely
by a Lien upon the items of property being acquired, (ii)
represents not less than 75% of the purchase price of the asset
financed, (iii) shall not be refinanced for a principal amount in
excess of the principal balance outstanding thereon at the time of
such refinancing and (iv) does not in the aggregate exceed the
principal amount of $60,000,000 incurred during any consecutive
twelve month period;
(e) Section 8.07 is further amended to add a new
subsection (xv) thereto which shall read in its entirety as
follows:
(xv) additional indebtedness not to exceed $0.00
of Younkers assumed by the Borrower in connection with the Younkers
Acquisition; provided, such Indebtedness (A) is recorded in the
financial books and records of Younkers prior to the Younkers
Acquisition and (B) was not incurred by Younkers in anticipation of
the Younkers Acquisition.
(f) Section 8.08 is amended to add the following new
Section 8.08 (ix), which shall read in its entirety as follows:
(ix) Liens granted in connection with that
certain $150,000,000 Credit Agreement dated October 27, 1993
between Younkers, Inc., the Lenders named therein, Chemical Bank as
Administrative Agent and the Co-Agents and Fronting Banks named
therein, as amended (the "Existing Younkers Credit") which secure
the inventory of Younkers, Inc. or the capital stock of Younkers
Credit Corporation (the "Existing Younkers Liens"); provided,
however, this exception to the otherwise applicable prohibition
against pledges, liens, charges and encumbrances as set forth in
Section 8.08 shall not apply upon the occurrence or failure of any
of the following: (a) the failure to terminate the Existing
Younkers Credit on or before April 30, 1996, or (b) the failure to
terminate all of the Existing Younkers Liens on or before April 30,
1996, or (c) the making of any draws, advances or other borrowings
under the Existing Younkers Credit.
(g) Section 8.09 as hereby amended and restated to read
in its entirety as follows:
8.09 Transfer of Assets
During any consecutive twelve (12) month period,
sell, lease, transfer or otherwise dispose of any assets of
Borrower or any Subsidiary, other than assets sold in the ordinary
course of business and accounts receivable transferred pursuant to
account receivable securitizations, which have an aggregate book
value in excess of five percent (5%) of the book value of the
consolidated total assets of the Borrower and its Subsidiaries.
3. Representations and Warranties. In order to induce the
Agent and the Lenders to enter into this Agreement, the Borrower
represents and warrants to the Agent and the Lenders as follows:
(a) The representations and warranties made by Borrower
in Article VI of the Credit Agreement are true and correct on and
as of the date hereof;
(b) There has been no material adverse change in the
condition, financial or otherwise, of the Borrower and its
Subsidiaries, taken as a whole, since the date of the most recent
financial reports of the Borrower received by the Agent and the
Lenders under Section 7.01(a) of the Credit Agreement, other than
changes in the ordinary course of business;
(c) The business and properties of the Borrower and its
Subsidiaries, taken as a whole, are not, and since the date of the
most recent financial report of the Borrower and its Subsidiaries
received by the Agent and the Lenders under Section 7.01(a) of the
Credit Agreement, have not been adversely affected in any
substantial way as the result of any fire, explosion, earthquake,
accident, strike, lockout, combination of workers, flood, embargo,
riot, activities of armed forces, war or acts of God or the public
enemy, or cancellation or loss of any major contracts;
(d) No event has occurred and is continuing which
constitutes, and no condition exists which upon the consummation of
the transaction contemplated hereby would constitute, a Default or
an Event of Default on the part of the Borrower under the Credit
Agreement; and
(e) There currently is no outstanding indebtedness,
advances or other borrowings under the Existing Younkers Credit;
and
(f) Pursuant to that certain Agreement and Plan of
Merger dated January 19, 1996, filed with the office of the
Mississippi Secretary of State and effective as of January 24,
1996, MACCO Investments, Inc. has been merged into McRae's, Inc.
the surviving entity of this merger is McRae's, Inc., which has
assumed all liabilities and obligations of MACCO Investments, Inc.
4. Conditions Precedent. the effectiveness of this
Agreement is subject to the following:
(a) The Agent shall have received:
(i) eight (8) counterparts of this Agreement duly
executed by all signatories hereto;
(ii) payment of an amendment fee in the aggregate
amount of 1/8 of 1% of the Total Revolving Credit Commitment in
immediately available funds payable to the Lenders pro rata based
on their respective Applicable Commitment Percentages;
(iii) copies of all additional agreements,
instruments and documents which the Agent may reasonably request,
such documents, when appropriate, to be certified by appropriate
governmental authorities.
(b) The Younkers Acquisition shall have closed and be
effective and the Agent shall have received a certified copy of all
Articles of Merger filed in connection therewith as evidence
thereof.
(c) All proceedings of the Borrower relating to the
matters provided for herein shall be satisfactory to the Lenders,
the Agent and their counsel.
5. Younkers Acquisition Charges. The parties hereto agree
that certain one-time extraordinary charges incurred by the
Borrower as a result of the Younkers Acquisition (the
"Extraordinary Acquisition Charges") will be excluded from the
covenant compliance calculations contained in Sections 8.01-8.06 of
the Credit Agreement; provided, the Agent shall make the final
determination as to whether specific items qualify as Extraordinary
Acquisition Charges.
6. Effective Date. This Agreement shall be effective as of
the effective date of the Younkers Acquisition.
7. Entire Agreement. This Agreement sets forth the entire
understanding and agreement of the parties hereto in relation to
the subject matter hereof and supersedes any prior negotiations and
agreements among the parties relative to such subject matter. No
promise, condition, representation or warranty, express or implied,
not herein set forth shall bind any party hereto, and not one of
them has relied on any such promise, condition, representation or
warranty. Each of the parties hereto acknowledges that, except as
in this Agreement otherwise expressly stated, no representations,
warranties or commitments, express or implied, have been made by
any party to the other. None of the terms or conditions of this
Agreement may be changed, modified, waived or canceled orally or
otherwise, except by writing, signed by all the parties hereto,
specifying such change, modification, waiver or cancellation of
such terms or conditions, or of any proceeding or succeeding breach
thereof.
8. Full Force and Effect of Agreement. Except as hereby
specifically amended, modified, waived or supplemented, the Credit
Agreement and all other Loan Documents are hereby confirmed and
ratified in all respects and shall remain in full force and effect
according to their respective terms.
9. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original
as against any party whose signature appears thereon, and all of
which shall together constitute one and the same instrument.
10. Governing Law. This Amendment Agreement shall in all
respects be governed by the laws and judicial decisions of the
state of Tennessee.
11. Enforceability. Should any one or more of the provisions
of this Agreement be determined to be illegal or unenforceable as
to one or more of the parties hereto, all other provisions
nevertheless shall remain effective and binding on the parties
hereto.
12. Credit Agreement. All references in any of the Loan
Documents to the Credit Agreement shall mean the Credit Agreement
as amended hereby.
13. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of each of the Borrower, the Lenders
and the Agent and their respective successors, assigns and legal
representatives; provided, however, that the Borrower, without the
prior consent of the Agent, may not assign any rights, powers,
duties or obligations hereunder.
14. Consent of Guarantors. Each of the Guarantors by their
execution and delivery hereof (i) consent and agree to the
amendments to the Credit Agreement set forth herein and (ii)
reaffirm their obligations set forth in each Guaranty.
(signatures on following pages)
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their duly authorized officers,
all as of the day and year first above written.
BORROWER:
ATTEST: PROFFITT, INC.
By:___________________ By:_________________________
Name:_________________ Name:_______________________
Title:________________ Title:______________________
(CORPORATE SEAL)
LENDERS:
NATIONSBANK OF TEXAS,
NATIONAL ASSOCIATION
By:_________________________
Name:_______________________
Title:______________________
FIRST AMERICAN NATIONAL BANK
By:_________________________
Name:_______________________
Title:______________________
FIRST TENNESSEE BANK
NATIONAL ASSOCIATION
By:_________________________
Name:_______________________
Title:______________________
SUNTRUST BANK, ATLANTA
By:_________________________
Name:_______________________
Title:______________________
By:_________________________
Name:_______________________
Title:______________________
(Signature Page 1 of 2)
DEPOSIT GUARANTY NATIONAL BANK
By:_________________________
Name:_______________________
Title:______________________
HIBERNIA NATIONAL BANK
By:_________________________
Name:_______________________
Title:______________________
AGENT:
NATIONSBANK OF TEXAS,
NATIONAL ASSOCIATION,
as Agent for the Lenders
By:_________________________
Name:_______________________
Title:______________________
Acknowledged, agreed and consented to, this the 29th day of
January, 1996.
PROFFITT'S INVESTMENTS, INC.
PDS AGENCY, INC.
McRAE'S, INC.
McRAE'S OF ALABAMA, INC.
PARKS ENTERPRISES, INC.
PARKS-BELK COMPANY
By:_________________________
Name:_______________________
Title:______________________
(Signature Page 2 of 2)
NationsBank
600 Peachtree Street, N.E.
21st Floor
Atlanta, GA 30308-2213
June 8, 1995
Mr. James E. Glasscock
Executive Vice President &
Chief Financial Officer
Proffitt's, Inc.
P.O. Box 20080
Jackson, MS 39209
RE: Credit Facilities and Reimbursement Agreement by and among
Proffitt's, Inc., NationsBank of Texas, N.A., as Agent, and the
Lenders dated March 31, 1994, (the "Credit Agreement")
Dear Jim:
In accordance with Section 2.16 of the above referenced Credit
Agreement, please accept this letter as confirmation that the
Revolving Credit Termination Date has been extended to March 31,
1998. All other terms and conditions of the Credit Agreement shall
remain in full force and effect.
As always, please feel free to give me a call with any questions
and/or comments you may have on (404) 607-5530.
Sincerely,
Shawn B. Welch
Vice President
ENTERPRISE FUNDING CORPORATION
c/o MERRILL LYNCH MONEY MARKETS, INC.
World Financial Center - South Tower
225 Liberty Street
New York, New York 10281
May 11, 1995
Mr. James E. Glasscock
Executive Vice President & CFO
Proffitt's, Inc./McRae's, Inc.
Highway 80-West
Jackson, Mississippi 39209
Dear Jim:
At your request, Enterprise Funding Corporation (the "Company")
hereby agrees to amend the Transfer and Administration Agreement
between the Company and McRae's, Inc. dated January 27, 1993
(incorporating all amendments to date, the "Agreement") as follows:
In Section 9.01, clause (19) of the Agreement, subparagraph (i)
shall be deleted in its entirety and replaced by the following:
(i) Proffitt's, Inc. permits the sum of Consolidated Tangible
Net Worth and Consolidated Subordinated Debt at any time to be less
than (x) $210,000,000, at any time from March 31, 1994 until (but
excluding) the last day of fiscal quarter immediately following the
fiscal quarter in which March 31, 1994 occurs, and (y) as of the
last date of the fiscal quarter immediately following the fiscal
quarter in which March 31, 1994 occurs and of each succeeding
fiscal quarter of Proffitt's, Inc. (each such fiscal quarter in
which such last day occurs being a "Prior Period") and until (but
excluding) the last day of the fiscal quarter of Proffitt's, Inc.
immediately following the Prior Period, the sum of (A) the amount
of Consolidated Tangible Net Worth and Consolidated Subordinated
Debt required to be maintained pursuant to this subsection during
the Prior Period plus (B) an amount equal to one hundred percent
(100%) of the Net Proceeds of each sale of capital stock or other
equity interest (including those instruments and securities
exchangeable, convertible, or exercisable into capital stock or
other equity interests) in Proffitt's, Inc. or any Subsidiary
during the Prior Period, plus (C) an amount equal to one hundred
percent (100%) of the Net Proceeds of each sale of Consolidated
Subordinated Debt during the Prior Period, plus (D) an amount equal
to seventy-five percent (75%) of Consolidated Net Income of
Proffitt's, Inc. or any Subsidiary (without deduction for any
negative Consolidated Net Income) during the Prior Period.
The Transferor hereby represents and warrants that the
representations and warranties of the Transferor set forth in
Section 3.01 of the Agreement are true and correct as of the date
hereof (except those representations and warranties set forth
therein which specifically relate to an earlier date).
All other terms and conditions of the Agreement not amended by this
letter agreement shall remain unchanged and in full force and
effect. This letter agreement shall be considered effective as of
December 12, 1994.
Please signify your concurrence with this amendment to the
Agreement by signing the enclosed duplicate original of this letter
and returning it to Michelle M. Heath, NationsBank Investment
Banking, NationsBank Corporate Center - 10th Floor, 100 N. Tryon
Street, Charlotte, North Carolina 28255.
Sincerely,
ENTERPRISE FUNDING CORPORATION
By:
Name: Thomas S. Dunstan
Title: Vice President
ACCEPTED AND AGREED this 28th day of May, 1995
MCRAE'S, INC.
By:
Name: James E. Glasscock
Title: Executive Vice President & CFO
ENTERPRISE FUNDING CORPORATION
c/o MERRILL LYNCH MONEY MARKETS, INC.
World Financial Center - South Tower
225 Liberty Street
New York, New York 10281
September 30, 1995
Mr. James E. Glasscock
Executive Vice President & CFO
Proffitt's, Inc./McRae's, Inc.
Highway 80-West
Jackson, Mississippi 39209
Dear Jim:
At your request, Enterprise Funding Corporation (the "Company")
hereby agrees to amend the Transfer and Administration Agreement
between the Company and McRae's, Inc. dated January 27, 1993
(incorporating all amendments to date, the "Agreement") as follows:
In Section 1.01 of the Agreement, the definition of
Termination Date shall be amended such that the reference to the
date appearing in such definition shall be amended to read "March
31, 1997".
The Tranferor hereby represents and warrants that the
representations and warranties of the Transferor set forth in
Section 3.01 of the Agreement are true and correct as of the date
hereof (except those representations and warranties set forth
therein which specifically relate to an earlier date).
All other terms and conditions of the Agreement not amended by this
letter agreement shall remain unchanged and in full force and
effect. This letter agreement shall be effective as of the date
hereof.
Please signify your concurrence with this amendment to the
Agreement by signing the enclosed duplicate original of this letter
and returning it to Michelle M. Heath, NationsBank, N.A.
(Carolinas), NationsBank Corporate Center - 10th Floor, 100 N.
Tryon St., Charlotte, NC 28255.
Sincerely,
ENTERPRISE FUNDING CORPORATION
By:
Name: Thomas S. Dunstan
Title: Vice President
Proffitt's, Inc./McRae's, Inc.
ACCEPTED AND AGREED this 28th day of September, 1995.
MCRAE'S, INC.
BY:
Name: James E. Glasscock
Title: Executive Vice President & CFO
ENTERPRISE FUNDING CORPORATION
c/o MERRILL LYNCH MONEY MARKETS, INC.
World Financial Center - South Tower
225 Liberty Street
New York, New York 10281
October 25, 1995
Mr. James E. Glasscock
Executive Vice President & CFO
McRae's, Inc./Proffitt's, Inc.
Highway 80-West
Jackson, Mississippi 39209
Dear Jim:
At your request, Enterprise Funding Corporation (the "Company")
hereby agrees to amend as of the date hereof the Transfer and
Administration Agreement between the Company and McRae's, Inc.
dated January 27, 1993 (incorporating all amendments to date, the
"Agreement"). Capitalized terms used herein and not otherwise
defined shall have those meanings assigned in the Agreement.
In Section 9.01, Clause 19 of the Agreement, the table in
subparagraph (iii) shall be deleted in its entirety and replaced
by the following:
Period Ratio
November 1 through January 31, 1997 1.50 to 1.00
February 1, 1997 through May 2, 1997 1.60 to 1.00
May 3, 1997 and thereafter 1.75 to 1.00
In Section 9.01, Clause 19 of the Agreement, the table in
subparagraph (iv) shall be deleted in its entirety and replaced
by the following:
Period Ratio
November 1 through January 27, 1995 4.50 to 1.00
January 28, 1995 3.50 to 1.00
January 29, 1995 through February 2, 1996 3.90 to 1.00
February 3, 1996 through January 31, 1997 3.60 to 1.00
February 1, 1997 3.25 to 1.00
First, second and fourth quarter
of each Fiscal Year
commencing with Fiscal Year 1997 3.25 to 1.00
Third quarter of each Fiscal Year
commencing with Fiscal Year 1997 3.50 to 1.00
In Section 1.01 of the Agreement, subparagraph (g) of the
definition of "Eligible Account" shall be deleted in its entirety
and replaced by the following:
"(g) the Obligor on which has not been identified by the
Servicer or the Transferor in its computer files as having (i)
died, (ii) commenced, or had commenced in respect of such Obligor,
a case, action or proceeding under any law of any jurisdiction
relating to bankruptcy, insolvency, reorganization or relief of
debtors, seeking relief with respect to such Obligor's debts, or
seeking to have such Obligor adjudicated bankrupt or insolvent, or
to have a receiver, trustee, custodian or other similar official
appointed for such Obligor or for all or any substantial part of
such Obligor's assets, or (iii) made a general assignment of such
Obligor's assets for the benefit of such Obligor's creditors, which
assignment is then in full force and effect, or (iv) which has not
been identified by the Servicer or the Transferor in its computer
files as having sought consumer credit counseling services."
The Transferor hereby represents and warrants that the
representations and warranties of the Transferor set forth in
Section 3.01 of the Agreement are true and correct as of the date
hereof (except those representations and warranties set forth
therein which specifically relate to an earlier date).
All other terms and conditions of the Agreement not amended by
this letter agreement shall remain unchanged and in full force and
effect. This letter agreement shall be effective as of October 25,
1995.
Please signify your concurrence with this amendment to the
Agreement by signing the enclosed duplicate original of this letter
and returning it to Michelle M. Heath, NationsBank Structured
Finance, NationsBank Corporate Center - 10th Floor, 100 N. Tryon
Street, Charlotte, North Carolina 28255.
Sincerely,
ENTERPRISE FUNDING CORPORATION
By:
Name: Thomas S. Dunstan
Title: Vice President
ACCEPTED AND AGREED this 25th day of October, 1995
McRAE'S, INC.
By:
Name: James E. Glasscock
Title: Executive Vice President & CFO
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This Amended and Restated Employment Agreement ("Agreement") is
entered into as of the 1st day of April 1996, by and between
Proffitt's, Inc. ("Company"), and James VanNoy ("Executive").
Company and Executive agree as follows:
1. Employment. Company hereby employs Executive as Senior Vice
President\Systems Support of Company or in such other capacity with
Company and its subsidiaries as Company's Board of Directors shall
designate.
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 $195,000 per year
(beginning on April 1, 1996). 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 30% of Base Salary based upon
his performance in accordance with specific annual objectives, set
in advance, all as approved by the Board of Directors.
(c) Incentive Compensation. Executive shall be and hereby is
granted a non-qualified option as of March 27, 1996, ("Option") to
purchase five thousand (5,000) shares of Company common stock at an
option price equal to the closing price of the stock on March 27,
1996, 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 27, 1996, (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 and 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. As long as Executive remains
employed by Company, 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) 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 senior executives at
the level of Executive's position.
5. Term. The term of this Agreement shall be for two (2)
years, beginning April 1, 1996, 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 regular
payroll installments.
In addition, this Agreement shall terminate upon the death of
Executive, except as to: (a) Executive's estate's right to exercise
any unexercised stock options pursuant to Company's stock option
plan then in effect, (b) other entitlements under this contract
that expressly survive death, and (c) 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. (a) Company shall have
the right to terminate Executive's employment under this Agreement
for cause, in which event no salary or bonus shall be paid 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 that
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 or
commission of an immoral or unethical act that materially reflects
negatively on 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 Agreement.
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 one year
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 two
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: James VanNoy
124 Rollingmeadows
Jackson, MS 39211
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) Entire Agreement. Except for any prior grants of options
or other forms of incentive compensation evidenced by a written
instrument, 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.
(e) 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.
(f) 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: _____________________
James A. Coggin
President
_____________________
James VanNoy
Executive
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This Amended and Restated Employment Agreement ("Agreement")
is entered into as of the 1st day of April 1996, by and between
Proffitt's, Inc. ("Company"), and David Baker ("Executive").
Company and Executive agree as follows:
1. Employment. Company hereby employs Executive as Senior Vice
President of Operations of Company or in such other capacity with
Company and its subsidiaries as Company's Board of Directors shall
designate.
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 $195,000 per year
(beginning on April 1, 1996). 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 30% of Base Salary
based upon his performance in accordance with specific annual
objectives, set in advance, all as approved by the Board of
Directors.
(c) Incentive Compensation. Executive shall be and hereby
is granted a non-qualified option as of March 27, 1996, ("Option")
to purchase five thousand (5,000) shares of Company common stock at
an option price equal to the closing price of the stock on March
27, 1996, 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 27, 1996, (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 and 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. As long as Executive remains
employed by Company, 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) 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 senior executives at
the level of Executive's position.
5. Term. The term of this Agreement shall be for one (1) year,
beginning April 1, 1996, 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 regular
payroll installments.
In addition, this Agreement shall terminate upon the death of
Executive, except as to: (a) Executive's estate's right to exercise
any unexercised stock options pursuant to Company's stock option
plan then in effect, (b) other entitlements under this contract
that expressly survive death, and (c) 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. (a) Company shall have
the right to terminate Executive's employment under this Agreement
for cause, in which event no salary or bonus shall be paid 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 that
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 or
commission of an immoral or unethical act that materially reflects
negatively on 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 one year 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 periodconstitute 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 Agreement.
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 one year
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 two
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: David Baker
5359 Briarfield Road
Jackson, MS 39211
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) Entire Agreement. Except for any prior grants of
options or other forms of incentive compensation evidenced by a
written instrument, 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.
(e) 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.
(f) 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: _____________________
James A. Coggin
President
_____________________
Dave Baker
Executive
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into as of
the 2nd day of February 1996, by and between Proffitt's, Inc.
("Company"), and William White ("Executive").
Company and Executive agree as follows:
1. Employment. Company hereby employs Executive as Senior Vice
President of Systems Development of Company or in such other
capacity with Company and its subsidiaries as Company's Board of
Directors shall designate.
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 $155,000 per year
(beginning on February 4, 1996). 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 30% of Base Salary
based upon his performance in accordance with specific annual
objectives, set in advance, all as approved by the Board of
Directors.
(c) Incentive Compensation. Executive shall be and
hereby is granted a non-qualified option as of February 4, 1996,
("Option") to purchase ten thousand (10,000) shares of Company
common stock at an option price equal to the closing price of the
stock on February 2, 1996, 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
February 4, 1996, (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 and 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) 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 senior executives at
the level of Executive's position.
5. Term. The term of this Agreement shall be for two (2)
years, beginning February 4, 1996, 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: (a) Executive's estate's right to exercise
any unexercised stock options pursuant to Company's stock option
plan then in effect, (b) other entitlements under this contract
that expressly survive death, and (c) 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. (a) Company shall have
the right to terminate Executive's employment under this Agreement
for cause, in which event no salary or bonus shall be paid 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 that
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 or
commission of an immoral or unethical act that materially reflects
negatively on 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 Agreement.
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 one year
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 two
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: William White
c/o Proffitt's, Inc.
Post Office Box 9388
Alcoa, TN 37701
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) Entire Agreement. Except for any prior grants of
options or other forms of incentive compensation evidenced by a
written instrument, this Agreement supersedes any and all other
agreements, either oral or in writing, between the parties hereto
(and between Younkers, Inc. and Executive) with respect to
employment of Executive by Company or Younkers, Inc., and contains
all of the covenants and agreements between the parties, and
between Younkers, Inc. and Executive, 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.
(e) 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.
(f) 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: _____________________
James A. Coggin
President
_____________________
William White
Executive
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into as of
the 2nd day of February 1996, by and between Proffitt's, Inc.
("Company"), and John White ("Executive").
Company and Executive agree as follows:
1. Employment. Company hereby employs Executive as Senior Vice
President of Profit Improvement and Special Projects, reporting to
the President of the Company, or in such other capacity with
Company and its subsidiaries as Company's Board of Directors shall
designate.
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 $175,000 per year
(beginning on February 4, 1996). 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 30% of Base Salary
based upon his performance in accordance with specific annual
objectives, set in advance, all as approved by the Board of
Directors.
(c) Incentive Compensation. Executive shall be and
hereby is granted a non-qualified option as of February 4, 1996,
("Option") to purchase twelve thousand five hundred (12,500) shares
of Company common stock at an option price equal to the closing
price of the stock on February 2, 1996, 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 February 4, 1996, (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 and 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) 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 senior executives at
the level of Executive's position.
5. Term. The term of this Agreement shall be for two (2)
years, beginning February 4, 1996, 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: (a) Executive's estate's right to exercise
any unexercised stock options pursuant to Company's stock option
plan then in effect, (b) other entitlements under this contract
that expressly survive death, and (c) 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. (a) Company shall have
the right to terminate Executive's employment under this Agreement
for cause, in which event no salary or bonus shall be paid 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 that
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 or
commission of an immoral or unethical act that materially reflects
egatively on Company, provided that Executive shall first be
provided with written notice of the claim and with an pportunity 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 ompany 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 utstanding 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 Agreement.
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 one year
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 two
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: John White
c/o Proffitt's, Inc.
Post Office Box 9388
Alcoa, TN 37701
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) Entire Agreement. Except for any prior grants of
options or other forms of incentive compensation evidenced by a
written instrument, this Agreement supersedes any and all other
agreements, either oral or in writing, between the parties hereto
(and between Younkers, Inc. and Executive) with respect to
employment of Executive by Company or Younkers, Inc., and contains
all of the covenants and agreements between the parties, and
between Younkers, Inc. and Executive, 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.
(e) 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.
(f) 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: _____________________
James A. Coggin
President
_____________________
John White
Executive
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into as of
the 2nd day of February 1996, by and between Proffitt's, Inc.
("Company"), and Tom R. Amerman ("Executive").
Company and Executive agree as follows:
1. Employment. Company hereby employs Executive as Executive
Vice President of Special Projects of Company or in such other
capacity with Company and its subsidiaries as Company's Board of
Directors shall designate.
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 $300,000 per year
(beginning on February 4, 1996) -- $200,000 per year will be
compensation for services and $100,000 per year will be
compensation for cancellation of Executive's Severance Agreement
with Younkers, Inc. dated January 8, 1995. 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) Incentive Compensation. Executive shall be and
hereby is granted a non-qualified option as of February 4, 1996,
("Option") to purchase twenty-five thousand (25,000) shares of
Company common stock at an option price equal to the closing price
of the stock on February 4, 1996, 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 February 4, 1996, (the "Grant Date") to the extent of one-
third of the shares covered thereby; exercisable to the extent of
an additional one-third of the shares covered thereby on and after
the first anniversary of the Grant Date; and exercisable to the
extent of an additional one-third of the shares covered thereby on
and after the second 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.
(c) 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.
(d) Other Compensation. Company will pay Executive
$100,000 before February 15, 1996, as compensation for cancellation
of Executive's Severance Agreement with Younkers, Inc. dated
January 8, 1995.
(e) Bonus. Executive shall be eligible, as long as he
holds the position stated in paragraph 1, for a yearly bonus up to
30% of his Base Salary based upon certain objective criteria, set
in advance, all as approved by the Board of Directors.
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 senior executives at
the level of Executive's position.
5. Term. The term of this Agreement shall be for two (2)
years, beginning February 4, 1996, provided, however, that Company
may terminate this Agreement at any time upon hirty (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: (a) Executive's estate's right to exercise
any unexercised stock options pursuant to Company's stock option
plan then in effect, (b) other entitlements under this contract
that expressly survive death, and (c) 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. (a) Company shall have
the right to terminate Executive's employment under this Agreement
for cause, in which event no salary or bonus shall be paid 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 beenexhausted or waived, for any crime that
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 or
commission of an immoral or unethical act that materially reflects
egatively on 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 Agreement.
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 one year
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 two
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: Tom Amerman
c/o Proffitt's, Inc.
Post Office Box 9388
Alcoa, TN 37701
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) Entire Agreement. Except for any prior grants of
options or other forms of incentive compensation evidenced by a
written instrument, this Agreement supersedes any and all other
agreements, either oral or in writing, between the parties hereto
(and between Younkers, Inc. and Executive) with respect to
employment of Executive by Company or Younkers, Inc., and contains
all of the covenants and agreements between the parties, and
between Younkers, Inc. and Executive, with respect to such
employment. Specifically, this Agreement supersedes the Severance
Agreement between Younkers, Inc. and Tom Amerman dated January 8,
1995. 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.
(e) 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.
(f) 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: _____________________
James A. Coggin
President
_____________________
Tom R. Amerman
Executive
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of October 22, 1995, by and between
PROFFITT'S, INC., a Tennessee corporation (the "Company"), and W.
THOMAS GOULD (the "Executive").
WHEREAS, the Company, BALTIC MERGER CORPORATION ("Merger Sub"),
and YOUNKERS, INC. ("Younkers"), a Delaware corporation, have
entered into an Agreement and Plan of Merger, dated as of October
22, 1995 (the "Merger Agreement") providing for the merger of
Merger Sub with and into Younkers;
WHEREAS, the Company desires to employ, as of the Effective Time
(as such term is defined in the Merger Agreement), the Executive as
Vice Chairman of the Company, and as Chairman of Younkers, and the
Executive desires to serve the Company in this role;
NOW, THEREFORE, in consideration of the premises and the
respective covenants and agreements of the parties herein
contained, and intending to be legally bound hereby, the parties
hereto agree as follows:
ARTICLE I
Employment
Section 1.1.Position. The Company hereby agrees to employ
Executive, and Executive hereby agrees to serve the Company, as
Vice Chairman of the Company, subject to the direction of the Chief
Executive Officer of the Company ("CEO"), on the terms and
conditions set forth herein. In addition to its obligations under
Section 6.1(g) of the Merger Agreement, the Company agrees to
appoint the Executive to both the Board of Directors of the Company
and the Board of Directors of Younkers until their next annual
meetings, and thereafter shall, subject to fiduciary concerns,
utilize its best efforts to have Executive nominated for reelection
to each of the Boards during his employment under this Agreement.
Section 1.2.Duties. For the period the Executive is employed
by the Company hereunder, the Executive shall devote his reasonable
time and attention in advising the CEO with respect to matters
relating to the transaction of the business of the Company as the
CEO shall reasonably request. Notwithstanding the foregoing, the
Executive may serve as a member of the Board of Directors and the
Executive Committee of both (i) the National Retail Federation, and
(ii) Frederick Atkins, Inc. Additionally, the Executive may
participate in other endeavors which in the determination of the
Board of Directors of the Company (the "Board") do not unreasonably
interfere with the business of the Company or the performance by
Executive of his duties hereunder.
Section 1.3.Term. The term of this Agreement and the
effectiveness thereof will commence on the Effective Date and end
on the fifth anniversary of the Effective Date (the "Term"). For
purposes of this Agreement, the "Effective Date" shall be the date
of the occurrence of the Effective Time of the Merger Agreement.
Section 1.4.Working Facilities. The Executive shall be
provided with such office facilities and services as are customary
for and commensurate with his position at the Company and are
appropriate for the performance of his duties, including without
limitation, an Executive Assistant at the principal executive
offices of the Company in Alcoa, Tennessee, and at any of the
mutually agreed upon places of employment under Section 1.5.
Section 1.5.Place of Performance. Executive's employment
shall be primarily based at the principal executive offices of the
Company in Alcoa, Tennessee, or at any other mutually agreed upon
place of employment, or by telephone.
Section 1.6.Non-competition; Unauthorized Disclosure.
(a) Non-competition. During the period Executive is
employed under this Agreement, and for a period of two (2) 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 (A) the businesses conducted at the date hereof
by Company or any subsidiary or affiliate, or (B) 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 two years thereafter, Executive shall not, except as
required by any court or administrative agency, without the
written consent of the Board, 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 1.6:
(i) the covenants contained in paragraph (i) and
(ii) of Section 1.6(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 the Company to
pursue all other legal and equitable remedies available for
violation by Executive of the covenants contained in this Section
1.6, it is expressly agreed by Executive and the Company that such
other remedies cannot fully compensate the Company for any such
violation and that the 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 1.6, 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 1.6 shall
survive the conclusion of Executive's employment by Company.
ARTICLE II
Compensation
Section 2.1.Base Compensation. The Company shall pay to the
Executive $750,000 per year, subject to periodic review for
increases ("base compensation"), as consideration for: (a) the
cancellation of the Severance Agreement entered into between the
Executive and Younkers, Inc. dated January 8, 1995, (b) the
cancellation of the Employment Agreement between the Executive and
Younkers, Inc. dated April 7, 1995, (c) compensation for services
rendered as an officer of Proffitt's, Inc. and (d) in consideration
of the non-competition provisions in Section 1.6 of this Agreement,
all as allocated on Exhibit A attached hereto as mutually agreed by
the parties hereto. Additionally, the Company will grant to the
Executive such options as provided in Section 2.3 of this Agreement
as compensation and in consideration of items (c) and (d). Such
$750,000 shall be paid pursuant to the Company's normal payroll
practices for senior management of the Company.
Section 2.2.Incentive Compensation. The Executive will be
eligible to participate in the Company's bonus or similar incentive
plans for senior management, on such terms and conditions as are
established from time to time by the Compensation Committee of the
Board; provided, however, that Executive's actual participation, as
well as the extent of his participation, in such plans shall (as is
the case with all other senior management) be determined by the
Compensation Committee, in its sole discretion.
Section 2.3.Stock Options. The Company shall grant on the
Effective Date to the Executive an option to purchase 100,000
shares of the common stock of the Company (the "Option") under the
Company's 1994 Long-Term Incentive Plan ("LTIP"), unless the
Company and the Executive agree to an alternative arrangement to
compensate the Executive. The exercise price of the Option shall
be equal to the closing price at the end of the first business day
coincident with or following the Effective Date (the "Grant Date").
Pursuant to the Company's policies for senior executives, the
Option shall be exercisable on 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 and 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. If
Executive's employment is terminated pursuant to this Agreement,
then all portions of this Option shall become immediately
exercisable.
Section 2.4.Benefits and Perquisites. Executive shall
participate in all employee pension and welfare benefit plans,
programs, and arrangements, and shall receive all other fringe
benefits as are from time to time made generally available to the
senior management of the Company. The Executive shall be entitled
to take time off for vacation or illness in accordance with the
Company's policies with respect thereto established from time to
time with respect to its senior management.
Section 2.5.Expense Reimbursements. All travel and other
expenses incurred by the Executive in connection with the
performance of services hereunder shall be paid by the Company in
accordance with the Company's then applicable customary expense
reimbursement policy. If such expenses are paid in the first
instance by the Executive, the Company will reimburse the Executive
for all such expenses upon the Executive's presentation of an
itemized account of such expenditures in a form acceptable to the
Company.
Section 2.6.Miscellaneous. The entire amount of base
compensation hereunder shall be treated as base salary for purposes
of any incentive plan under Section 2.2 or benefit plan under
Section 2.4. To the extent Executive owes any self-employment tax
or state tax with respect to the payments under Section 2.1 or 2.2
which would not have been owed had such payments been treated as
base salary, the Company shall reimburse Executive in an amount
such that after payment by Executive of all taxes on such amounts
Executive retains an amount of such reimbursement equal to the
amount of such additional tax owed as a result of not treating the
entire amount as base salary.
ARTICLE III
Termination of Employment
Section 3.1.Accrued Amounts. Either the Company or Executive
may terminate the Executive's employment relationship before the
expiration of the Term by providing the other party written notice
at least thirty (30) calendar days prior to the date on which such
termination is to be effective; provided, however, that the Company
and the Executive agree not to provide such written notice for a
period of one (1) year from the Effective Time. Following the
termination of Executive's employment hereunder for any reason
whatsoever, the Company shall pay Executive his unpaid base
compensation accrued through the Date of Termination and any unpaid
amounts owed to Executive pursuant to the terms and conditions of
the employee pension and welfare benefit plans, programs, and
arrangements of the Company at the time such payments are due. For
purposes of this Agreement, "Date of Termination" shall mean the
date of Executive's death or the date otherwise set forth on a
notice of termination provided by one party hereof to the other
(which shall be no earlier than 30 days following such notice).
Section 3.2.Severance Amounts. If the Executive's employment
terminates for any reason, other than by the Company upon
conviction of the Executive of, or plea by the Executive of guilty
or nolo contendere to, a felony involving moral turpitude with
respect to the business of the Company, the Company shall, in
addition to the payments under Section 3.1, for the duration of the
balance of the Term, (a) continue to pay Executive (or his
designated beneficiary) his base compensation (at the rate in
effect on the day prior to the Executive's Date of Termination),
payable at such intervals as such base compensation would
ordinarily be paid, (b) continue to allow the Executive (or his
designated beneficiary) to exercise his Option (and any
subsequently granted options) to purchase common stock of the
Company pursuant to the terms set forth in the LTIP, and (c)
continue to provide medical and life insurance coverage in
accordance with such Company's programs for similarly situated
senior management (and their dependents) as it may exist from time
to time. If the Executive's employment is terminated by his death,
the Company shall direct that all amounts described in Section 3.1
and this Section 3.2 be paid to the Executive's designated
beneficiaries, or to the executors, administrators or other legal
representatives of the Executive (in such order of priority) as the
Executive may have filed with the Company.
Section 3.3.Gross-up Payments.
(a) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any
payment or distribution by the Company or its affiliated companies
to or for the benefit of Executive (whether paid or payable or
distributed or distributable pursuant to the terms of this
Agreement or otherwise, but determined without regard to any
additional payments required under this Section 3.3) (a "Payment")
would be subject to the excise tax imposed by Section 4999 of the
Code, or any interest or penalties are incurred by Executive with
respect to such excise tax (such excise tax, together with any such
interest and penalties, are hereinafter collectively referred to as
the "Excise Tax"), then Executive shall be entitled to receive an
additional payment (a "Gross-Up Payment") in an amount such that
after payment by Executive of all taxes (including any interest or
penalties imposed with respect to such taxes), including, without
limitation, any income and employment taxes (and any interest and
penalties imposed with respect thereto) and Excise Tax, imposed
upon the Gross-Up Payment, Executive retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
(b) All determinations required to be made under this
Section 3.3, including whether and when a Gross-Up Payment is
required and the amount of such Gross-Up Payment and the
assumptions to be utilized in arriving at such determination, shall
be made by the Company's public accounting firm (the "Accounting
Firm") which shall provide detailed supporting calculations both to
the Company and Executive within fifteen (15) business days of the
receipt of notice from Executive that there has been a Payment, or
such earlier time as is requested by the Company (collectively, the
"Determination"). All fees and expenses of the Accounting Firm
shall be borne solely by the Company. Any Gross-Up Payment, as
determined pursuant to this Section 3.3, shall be paid by the
Company to Executive within five (5) days of the receipt of the
Determination. The Determination by the Accounting Firm shall be
binding upon the Company and Executive. As a result of the
uncertainty in the application of Section 4999 of the Code at the
time of the Determination, it is possible that Gross-Up Payments
which will not have been made by the Company should have been made
("Underpayment"), consistent with the calculations required to be
made hereunder. In the event that it is established pursuant to a
final determination of a court or an Internal Revenue Service
proceeding which has been finally and conclusively resolved that
the Executive is required to make payment of any Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment that
has occurred and any such Underpayment shall be promptly paid by
the Company to or for the benefit of Executive, together with
interest on such amount at the applicable federal rate (as defined
in Section 1274(d) of the Code) from the date such amount would
have been paid to Executive until the date of payment.
ARTICLE IV
Miscellaneous
Section 4.1.Successors. The Company will require any
successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company, by agreement in form and
substance satisfactory to Executive, to expressly assume and agree
to perform this Agreement in the same manner and to the same extent
that the Company would be required to perform it if no such
succession had taken place.
Section 4.2.Binding Agreement. This Agreement and all rights
of Executive hereunder shall inure to the benefit of and be
enforceable by Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees,
devisees, and legatees.
Section 4.3.Notice. For the purposes of this Agreement,
notices, demands and all other communications provided for in this
Agreement shall be in writing and shall be deemed to have been duly
given when delivered or (unless otherwise specified) mailed by
United States certified or registered mail, return receipt
requested, postage prepaid, addressed as follows:
If to Executive:
W. Thomas Gould
Younkers, Inc.
115 North Calderwood
Alcoa, Tennessee 37701-9388
If to the Company:
Proffitt's, Inc.
3455 Highway 80 West
Jackson, Mississippi 39209
Attn: Brian J. Martin, Esquire
or to such other address as any party may have furnished to the
others in writing in accordance herewith, except that notices of
change of address shall be effective only upon receipt.
Section 4.4.Miscellaneous. No provisions of this Agreement
may be modified, waived or discharged unless such waiver,
modification or discharge is agreed to in writing signed by
Executive and such officer of the Company as may be specifically
designated by its Board. No waiver by either party hereto at any
time of any breach by the other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed
by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter
hereof have been made by either party which are not set forth
expressly in this Agreement.
Section 4.5.Applicable Law. The validity, interpretation,
construction and performance of this Agreement shall be governed by
the laws of the State of Tennessee without regard to its conflicts
of law principles.
Section 4.6.Severability. The invalidity or unenforceability
of any provision or provisions of this Agreement shall not affect
the validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect.
Section 4.7.No Mitigation. The Executive shall not be
required to mitigate amounts payable pursuant to this Agreement
hereof by seeking other employment or otherwise, and no amount
shall be subject to mitigation.
Section 4.8.Withholding Taxes. The Company may withhold from
all payments due to Executive (or his beneficiary or estate)
hereunder all taxes which, by applicable federal, state, local or
other law, the Company is required to withhold therefrom.
Section 4.9.Reimbursement of Legal Fees and Expenses. If any
contest or dispute shall arise under this Agreement involving
termination of Executive's employment with the Company or involving
the failure or refusal of the Company to perform fully in
accordance with the terms hereof, the Company shall reimburse
Executive, on a current basis, for all legal fees and expenses, if
any, incurred by Executive in connection with such contest or
dispute (regardless of the result thereof), together with interest
in an amount equal to the prime rate of Chemical Bank from time to
time in effect, but in no event higher than the maximum legal rate
permissible under applicable law, such interest to accrue from the
date the Company receives Executive's statement of such fees and
expenses through the date of payment thereof.
Section 4.10.Entire Agreement. This Agreement sets forth
the entire agreement of the parties hereto in respect of the
subject matter contained herein and supersedes all prior
agreements, promises, covenants, arrangements, communications,
representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto; and any
prior agreement of the parties hereto in respect of the subject
matter contained herein, including the Employment Agreement dated
April 7, 1995, between Executive and Younkers, Inc. and the
Severance Agreement dated January 8, 1995, between Executive and
Younkers, Inc., is hereby terminated and cancelled.
IN WITNESS WHEREOF, the parties have executed this Agreement
on the date and year first above written.
PROFFITT'S, INC.
By:
R. Brad Martin
Chairman of the Board and
and Chief Executive
Officer
ATTEST:
By:
James E. Glasscock
Executive Vice President
and Chief Financial Officer
EXECUTIVE
W. Thomas Gould
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of October 22, 1995, by and between
PROFFITT'S, INC., a Tennessee corporation (the "Company"), and
ROBERT M. MOSCO (the "Executive").
WHEREAS, the Company, BALTIC MERGER CORPORATION ("Merger
Sub"), and Younkers, Inc. ("YOUNKERS"), a Delaware corporation,
have entered into an Agreement and Plan of Merger, dated as of
October 22, 1995 (the "Merger Agreement") providing for the merger
of Merger Sub with and into Younkers;
WHEREAS, the Company desires to employ, as of the Effective
Time (as such term is defined in the Merger Agreement), the
Executive as President and Chief Executive Officer of Younkers, and
the Executive desires to serve the Company in these roles;
NOW, THEREFORE, in consideration of the premises and the
respective covenants and agreements of the parties herein
contained, and intending to be legally bound hereby, the parties
hereto agree as follows:
ARTICLE I
Employment
Section 1.1.Position. The Company hereby agrees to employ
Executive, and Executive hereby agrees to serve the Company, as
President and Chief Executive Officer of Younkers, subject to the
direction of the Chief Executive Officer of the Company, on the
terms and conditions set forth herein.
Section 1.2.Duties. For the period the Executive is employed
by the Company hereunder, the Executive shall devote his full and
undivided business time and attention to the transaction of the
business of Younkers and the Company, and shall not engage in any
other business activities except with the approval of the Board of
Directors of the Company (the "Board"). Notwithstanding the
foregoing, the Executive may participate in the affairs of any
governmental, educational or other charitable institution so long
as the Board does not determine that such activities unreasonably
interfere with the business of the Company or the performance by
Executive of his duties hereunder.
Section 1.3.Term. The term of this Agreement and the
effectiveness thereof will commence on the Effective Date and end
on the third anniversary of the Effective Date (the "Term"). For
purposes of this Agreement, the "Effective Date" shall be the date
of the occurrence of the Effective Time of the Merger Agreement.
Section 1.4.Working Facilities. The Executive shall be
provided with such office facilities and services as are customary
for and commensurate with his position at the Company and are
appropriate for the performance of his duties.
Section 1.5.Place of Performance. Executive's employment
shall be based at the principal executive offices of Younkers in
Des Moines, Iowa.
Section 1.6.Non-competition; Unauthorized Disclosure.
(a) Non-competition. During the period Executive is
employed under this Agreement, and for a period of one year
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 (A) the businesses conducted at the date hereof by
Company or any subsidiary or affiliate, or (B) 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 two years thereafter, Executive shall not, except as
required by any court or administrative agency, without the
written consent of the Board, 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 1.6:
(i) the covenants contained in paragraph (i) and
(ii) of Section 1.6(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 the Company to
pursue all other legal and equitable remedies available
for violation by Executive of the covenants contained in
this Section 1.6, it is expressly agreed by Executive and
the Company that such other remedies cannot fully compensate the
Company for any such violation and that the 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 1.6, 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 1.6
shall survive the conclusion of Executive's employment by
Company.
ARTICLE II
Compensation
Section 2.1.Base Compensation. The Company shall pay to the
Executive, as compensation for his services hereunder, a minimum
annual base salary of $450,000 (subject to periodic review for
increases at the discretion of the Compensation Committee of the
Board), with such salary to be paid pursuant to the Company's
normal payroll practices for senior management of the Company.
Section 2.2.Bonus. The Executive shall be entitled to receive
with respect to each year of the Term an annual bonus ("Bonus")
pursuant to the terms of the incentive plans of the Company
available to senior management, on such terms and conditions as are
established from time to time by the Compensation Committee of the
Board in its sole discretion; provided, however, that the maximum
target Bonus payable for any year shall not exceed 50% of the
Executive's base salary for such year.
Section 2.3.Benefits and Perquisites. Executive shall
participate in all employee pension and welfare benefit plans,
programs, and arrangements, and shall receive all other fringe
benefits as are from time to time made generally available to the
senior management of the Company. The Executive shall be entitled
to take time off for vacation or illness in accordance with the
Company's policies with respect thereto established from time to
time with respect to its senior management.
Section 2.4.Stock Options. The Company shall grant on the
Effective Date to the Executive an option to purchase 50,000 shares
of the common stock of the Company (the "Option") under Company's
1994 Long-Term Incentive Plan ("LTIP"), unless the Company and the
Executive agree to an alternative arrangement to compensate the
Executive. The exercise price of the Option shall be equal to the
closing price at the end of the first business day coincident with
or following the Effective Date (the "Grant Date"). Pursuant to
the Company's policies applicable to senior executives, the Option
shall be exercisable on 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 and 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.
If Executive's employment is terminated without Cause by the
Company or for Good Reason by the Executive, as such phrases are
used in Section 3.1, provided, however, that a voluntary
termination pursuant to the last sentence of Section 3.1 shall not
be Good Reason for purposes of this sentence, then all portions of
this Option shall become immediately exercisable.
Section 2.5.Expense Reimbursements. All travel and other
expenses incurred by the Executive in connection with the
performance of services hereunder shall be paid by the Company in
accordance with the Company's then applicable customary expense
reimbursement policy. If such expenses are paid in the first
instance by the Executive, the Company will reimburse the Executive
for all such expenses upon the Executive's presentation of an
itemized account of such expenditures in a form acceptable to the
Company.
ARTICLE III
Termination of Employment
Section 3.1.Events of Termination. The Executive's employment
hereunder may be terminated under the following circumstances:
(a) Death. The Executive's employment hereunder shall
terminate upon his death.
(b) Disability. If, as a result of the Executive's
incapacity due to physical or mental illness ("Disability"),
the Executive shall have been absent from his duties hereunder
on a full-time basis for six (6) consecutive months, and within
thirty (30) days after written Notice of Termination is
given in accordance with Section 4.3 (which may occur before
or after the end of such six (6) month period) the Executive
shall not have returned to the performance of his duties hereunder
on a full-time basis, the Company may terminate the
Executive's employment hereunder.
(c) Other Termination by the Company. The Company may
terminate the Executive's employment hereunder for Cause or
without Cause. For purposes of this Agreement, "Cause" shall
mean (1) a material breach by Executive of the duties and
responsibilities of Executive (other than as a result of incapacity
due to physical or mental illness) which is demonstrably
willful and deliberate on Executive's part, which is committed
in bad faith or without reasonable belief that such breach is
in the best interests of the Company and which is not remedied in
a reasonable period of time after receipt of written notice
from the Company specifying such breach or (2) conviction of
the Executive of, or plea by the Executive of guilty or nolo
contendere to, a felony involving moral turpitude with respect
to the business of the Company.
Cause shall not exist unless and until the Company has
delivered to Executive a copy of a resolution duly adopted by
three-quarters (3/4) of the Board at a meeting of the Board
called and held for such purpose (after reasonable notice to
Executive and an opportunity for Executive, together with his
counsel, to be heard before the Board), finding that in the
good faith opinion of the Board, the Executive was guilty of
the conduct set forth in this subsection and specifying the
particulars thereof in detail.
(d) Termination by the Executive. The Executive may
terminate his employment hereunder for Good Reason (as defined
below) or voluntarily in the absence of Good Reason. For
purposes of this Agreement, "Good Reason" shall, unless
otherwise expressly consented to by the Executive in writing, mean:
(i) a material reduction in the nature or status
of the Executive's responsibilities, office or title from
those in effect under this Agreement; or
(ii) a reduction by the Company in the Executive's
annual base salary or bonus opportunity as in effect
pursuant to this Agreement or as the same may be
increased from time to time; or
(iii)the Executive's relocation to a work location
which is more than fifty (50) miles from the location at
which the Executive performed his duties for the Company
as of the Effective Date; or
(iv) the failure by the Company to continue to
provide the Executive with benefits substantially
equivalent to those to be received by the Executive
pursuant to Section 2.3.
Notwithstanding the foregoing, the voluntary termination of
employment by the Executive during the first thirty (30) days
following the first anniversary of the Effective Date shall also be
considered a termination for "Good Reason" under the Agreement.
Section 3.2.Notice of Termination. Any termination of the
Executive's employment by the Company or by the Executive (other
than termination pursuant to Section 3.1(a) hereof) shall be
communicated by written Notice of Termination to the other party
hereto in accordance with Section 4.3. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which
shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated.
Section 3.3.Termination Date. For purposes of this Agreement,
"Date of Termination" shall mean (i) if the Executive's employment
is terminated by his death, the date of his death, (ii) if the
Executive's employment is terminated pursuant to Section 3.1(b)
above, thirty (30) days after Notice of Termination is given
(provided that the Executive shall not have returned to the
performance of his duties on a full-time basis during such thirty
(30) day period) and (iii) if the Executive's employment is
terminated pursuant to Sections 3.1(c) or 3.1(d) above, the date
specified in the Notice of Termination, which shall be no earlier
than thirty (30) days following the Notice of Termination, unless
such termination shall be by the Company for Cause.
Section 3.4.Compensation Upon Termination or During
Disability.
(a) During any period that the Executive
fails to perform his duties hereunder as a result of
incapacity due to physical or mental illness ("Disability Period"),
the Executive shall continue to receive his full base
salary and bonus set forth in Sections 2.1 and 2.2 until his
employment is terminated pursuant to Section 3.1(b), provided
that payments so made to the Executive during the Disability
Period shall be reduced by the sum of the amounts, if any, payable
to the Executive at or prior to the time of any payment under
disability benefit plans of the Company or under the Social
Security disability insurance program.
(b) If the Executive's employment shall be terminated
due to death or Disability, or by the Company for Cause or by
the Executive for other than Good Reason, the Company shall
pay the Executive (or his beneficiary or estate), as soon as
practicable, but within thirty (30) days following the Date of
Termination, his base salary through the Date of Termination
and any earned, but unpaid, bonus for the prior calendar year,
and the Company shall have no further obligations to the
Executive under this Agreement.
(c) If (A) the Company shall terminate the Executive's
employment other than for Disability pursuant to Section
3.1(b) or Cause or (B) the Executive shall terminate
employment for Good Reason, then the Company shall pay to Executive
(or Executive's beneficiary or estate) within thirty (30)
days following the Date of Termination, as compensation for
services rendered to the Company:
(1) a lump-sum cash amount equal to the sum of (a)
Executive's full annual base salary from the Company through the
Date of Termination, (b) Executive's annual bonus in an amount at
least equal to the greater of (A) the average bonus (annualized
for any fiscal year consisting of less than twelve (12)
full months) paid or payable, including by reason of any
deferral, to Executive by the Company or Younkers, Inc. in respect
of the three (3) fiscal years of the Company or
Younkers, Inc. immediately preceding the fiscal year in
which the Date of Termination occurs, or (B) 50% of
Executive's target bonus for the fiscal year in which the
Date of Termination occurs, multiplied by (C) a fraction, the
numerator of which is the number of days in the fiscal year in
which the Date of Termination occurs through the Date of
Termination and the denominator of which is three hundred
sixty-five (365) or three hundred sixty-six (366), as
applicable, and (c) any compensation previously deferred
by Executive other than pursuant to a tax-qualified plan (together
with any interest and earnings thereon) and any accrued
vacation pay, in each cause to the extent not theretofore
paid;
(2) a lump-sum cash amount equal to (a) three (3)
times Executive's highest annual rate of base salary from
the Company or Younkers, Inc. in effect during the 12-
month period prior to the Date of Termination, plus (b)
three (3) times the greatest of (A) the average bonus (annualized
for any fiscal year consisting of less than twelve (12)
full months) paid or payable, including by reason of any
deferral, to Executive by the Company or Younkers, Inc.
in respect of the three (3) fiscal years of the Company
or Younkers, Inc. immediately preceding the fiscal year in which
the Date of Termination occurs or (B) 50% of Executive's
target bonus for the fiscal year in which the Date of
Termination occurs[; provided, however, that in the event
there are fewer than thirty-six (36) whole months
remaining from the Date of Termination to the date of Executive's
70th birthday, the amount calculated in accordance with
this Section 3.4(c)(2) shall be reduced by multiplying
such amount by a fraction the numerator of which is the
number of months, including a partial month (with a
partial month being expressed as a fraction the numerator
of which is the number of days remaining in such month and the
denominator of which is the number of days in such month), so
remaining and the denominator of which is thirty-six
(36)]; provided further, that any amount paid pursuant to
this Section 3.4(c)(2) shall be paid in lieu of any other
amount of severance relating to salary or bonus continuation to be
received by Executive upon termination of employment of Executive
under any severance plan, policy, employment agreement or
arrangement of the Company;
(3) if on the Date of Termination Executive shall
not be fully vested in his accrued benefit under the
Pension Plan, the Company shall pay to Executive within
thirty (30) days following the Date of Termination a lump
sum cash amount equal to the actuarial equivalent of his unvested
accrued benefit under the Pension Plan as of such date.
Such lump sum cash amount shall be computed using the
same actuarial methods and assumptions then in use for
purposes of computing benefits under the Pension Plan;
provided that the interest rate used in making such computation
shall not be greater than the interest rate permitted
under Section 417(a) of the Internal Revenue Code of
1986, as amended (the "Code"), on the Date of
Termination. "Pension Plan" means the defined benefit
pension plan of the Company or Younkers, Inc. (or any successor
plan) and any other employee benefit plans of the Company or
Younkers, Inc. that require any minimum period of
employment as a condition to the receipt of retirement
benefits thereunder;
(4) if on the Date of Termination Executive shall
not be fully vested in the employer contributions made on
his behalf under any defined contribution plan of the
Company or Younkers, Inc., the Company shall pay to
Executive within thirty (30) days following the Date of Termination
a lump sum cash amount equal to the value of the unvested
portion of such employer contributions; provided,
however, that if any payment pursuant to this
subparagraph may or would result in such payment being deemed a
transaction which is subject to Section 16(b) of the
Securities Exchange Act of 1934, as amended, the Company
shall make such payment so as to meet the conditions for
an exemption from such Section 16(b) as set forth in the
rules (and interpretative and no-action letters relating
thereto) under Section 16. The value of any such unvested employer
contributions shall be determined as of the Date of
Termination; provided that if the common stock of the
Company is traded on a national securities exchange or
NASDAQ on the Date of Termination, the value of a share
of common stock of the Company shall be the closing price on the
national securities exchange or NASDAQ on the Date of
Termination or, if such date is not a trading day, on the
immediately preceding trading day;
(5) For a period of three (3) years commencing on
the Date of Termination, the Company shall continue to
provide medical and life insurance coverage with respect
to Executive and his dependents, with the same level of
coverage, upon the same terms and otherwise to the same extent as
such policies shall have been in effect immediately prior
to the Date of Termination, and the Company and Executive
shall share the costs of the continuation of such
insurance coverage in the same proportion as such costs
were shared immediately prior to the Date of Termination.
(d) The maximum payments under this Section (including
the value of any medical or life insurance coverage under
Subsection (c)(5) above) shall not exceed the maximum amount
that could be paid without imposition of an excise tax under
Code Section 4999, assuming for purposes of this Subsection that
all of the payments under this Section are parachute payments
within the meaning of Code Section 280G. The determination of
this limit and the reduction of any payments hereunder shall
be determined by the Company's Accounting Firm (as defined in
Section 3.5) consistent, and in accordance, with Section 3.5.
Section 3.5.Excise Tax Limitation.
(a) Notwithstanding anything contained in this Agreement
or any other agreement or plan to the contrary, the payments
and benefits provided to, or for the benefit of, Executive
under this Agreement or under any other plan or agreement (the
"Payments") shall be reduced (but not below zero) to the extent
necessary so that no payment to be made, or benefit to be
provided, to Executive or for his benefit under this Agreement
or any other plan or agreement shall be subject to the
imposition of excise tax under Section 4999 of the Code (such
reduced amount is hereinafter referred to as the "Limited Payment
Amount"). Unless Executive shall have given prior written
notice specifying a different order to the Company, the
Company shall reduce or eliminate the Payments to Executive by
first reducing or eliminating those payments or benefits which are
not payable in cash and then by reducing or eliminating cash
payments, in each case in reverse order beginning with
payments or benefits which are to be paid the farthest in time
from the Determination (as hereinafter defined). Any notice given
by Executive pursuant to the preceding sentence shall take
precedence over the provisions of any other plan, arrangement
or agreement governing Executive's rights and entitlements to
any benefits or compensation.
(b) All determinations required to be made under this
Section 3.5 shall be made by the Company's public accounting
firm (the "Accounting Firm"), which shall provide its
calculations, together with detailed supporting documentation,
both to the Company and Executive within fifteen (15) days after
the receipt of notice from Executive that there has been a
Payment (or at such earlier times as is requested by the
Company) (collectively, the "Determination"). All fees, costs
and expenses (including, but not limited to, the costs or retaining
experts) of the Accounting Firm shall be borne by the Company.
The Determination by the Accounting Firm shall be binding upon
the Company and Executive.
(c) If it is established pursuant to a final
determination of a court or an Internal Revenue Service
proceeding which has been finally and conclusively resolved,
that Payments have been made to, or provided for the benefit of,
Executive by the Company, which are in excess of the limitations
provided in subsection (a) (hereinafter referred to as an
"Excess Payment"), such Excess Payment shall be deemed for all
purposes to be a loan to Executive made on the date Executive
received the Excess Payment and Executive shall repay the Excess
Payment to the Company on demand, together with interest on the
Excess Payment at the applicable federal rate (as defined in
Section 1274(d) of the Code) from the date of Executive's
receipt of such Excess Payment until the date of such
repayment. As a result of the uncertainty in the application of
Section 4999 of the Code at the time of the Determination, it
is possible that Payments which will not have been made by the
Company should have been made (an "Underpayment"), consistent
with the calculations required to be made under this Section
3.5. In the event that it is established, pursuant to a final
determination of a court or an Internal Revenue Service
proceeding which has been finally and conclusively resolved,
that an Underpayment has occurred, the Underpayment shall be
promptly paid by the Company to or for the benefit of Executive
together with interest on such amount at the applicable
federal rate from the date such amount would have been paid to
Executive until the date of payment.
ARTICLE IV
Miscellaneous
Section 4.1.Successors. The Company will require any
successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company, by agreement in form and
substance satisfactory to Executive, to expressly assume and agree
to perform this Agreement in the same manner and to the same extent
that the Company would be required to perform it if no such
succession had taken place.
Section 4.2.Binding Agreement. This Agreement and all rights
of Executive hereunder shall inure to the benefit of and be
enforceable by Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees,
devisees and legatees.
Section 4.3.Notice. For the purposes of this Agreement,
notices, demands and all other communications provided for in this
Agreement shall be in writing and shall be deemed to have been duly
given when delivered or (unless otherwise specified) mailed by
United States certified or registered mail, return receipt
requested, postage prepaid, addressed as follows:
If to Executive:
Robert M. Mosco
Younkers, Inc.
7th and Walnut Street
Des Moines, Iowa 50397
If to the Company:
Proffitt's, Inc.
3455 Highway 80 West
Jackson, Mississippi 39209
Attn:Brian J. Martin, Esquire
or to such other address as any party may have furnished to the
others in writing in accordance herewith, except that notices of
change of address shall be effective only upon receipt.
Section 4.4.Miscellaneous. No provisions of this Agreement
may be modified, waived or discharged unless such waiver,
modification or discharge is agreed to in writing signed by
Executive and such officer of the Company, as may be specifically
designated by its Board. No waiver by either party hereto at any
time of any breach by the other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed
by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter
hereof have been made by either party which are not set forth
expressly in this Agreement.
Section 4.5.Applicable Law. The validity, interpretation,
construction and performance of this Agreement shall be governed by
the laws of the State of Tennessee without regard to its conflicts
of law principles.
Section 4.6.Severability. The invalidity or unenforceability
of any provision or provisions of this Agreement shall not affect
the validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect.
Section 4.7.No Mitigation. The Executive shall not be
required to mitigate amounts payable pursuant to this Agreement
hereof by seeking other employment or otherwise, and no amounts
shall be subject to mitigation.
Section 4.8.Withholding Taxes. The Company may withhold from
all payments due to Executive (or his beneficiary or estate)
hereunder all taxes which, by applicable federal, state, local or
other law, the Company is required to withhold therefrom.
Section 4.9.Reimbursement of Legal Fees and Expenses. If any
contest or dispute shall arise under this Agreement involving
termination of Executive's employment with the Company or involving
the failure or refusal of the Company to perform fully in
accordance with the terms hereof, the Company shall reimburse
Executive, on a current basis, for all legal fees and expenses, if
any, incurred by Executive in connection with such contest or
dispute (regardless of the result thereof), together with interest
in an amount equal to the prime rate of Chemical Bank from time to
time in effect, but in no event higher than the maximum legal rate
permissible under applicable law, such interest to accrue from the
date the Company receives Executive's statement for such fees and
expenses through the date of payment thereof.
Section 4.10.Entire Agreement. This Agreement sets forth the
entire agreement of the parties hereto in respect of the subject
matter contained herein and supersedes all prior agreements,
promises, covenants, arrangements, communications, representations
or warranties, whether oral or written, by any officer, employee or
representative of any party hereto; and any prior agreement of the
parties hereto in respect of the subject matter contained herein
(including the Employment Agreement, dated April 7, 1995, between
Executive and Younkers, Inc. and the Severance Agreement, dated
January 8, 1995, between Executive and Younkers, Inc.) is hereby
terminated and cancelled.
IN WITNESS WHEREOF, the parties have executed this agreement
on the date and year first above written.
PROFFITT'S, INC.
By: /s/ R. Brad Martin
R. Brad Martin
Chairman of the Board
and Chief Executive Officer
ATTEST:
By: /s/ James E. Glascock
James E. Glasscock
Executive Vice President
and Chief Financial Officer
EXECUTIVE
/s/ Robert M. Mosco
Robert M. Mosco
EXHIBIT 11.1
STATEMENT RE: COMPUTATION OF HISTORICAL EARNINGS
PER COMMON SHARE
PROFFITT'S, INC. AND SUBSIDIARIES
(in thousands, except per share data)
Year Ended
February 3 January 28 January 29
1996 1995 1994
PRIMARY:
Average shares
outstanding 18,995 18,575 17,222
Net effect of
dilutive stock
options -- based
on the treasury
stock method
using average
market price 377 347 445
______ ______ ______
TOTAL 19,372 18,922 17,667
====== ====== ======
Income (loss) before
extraordinary loss
and cumulative
effect of changes
in accounting
methods ($6,399) $29,744 $19,245
________ _______ _______
Less Preferred
Dividends (1,950) (1,694)
Income (loss) avail-
able to common share-
holders before extra-
ordinary loss and
cumulative effect of
changes in accounting
methods (8,349) 28,050 19,245
Extraordinary Loss (2,060) (1,088)
Cumulative effect of
changes in
accounting methods 1,904
_________ _______ ________
Net income (loss)
available to
common shareholders ($10,409) $28,050 $20,061
========= ======= =======
Earnings (loss) per
common share before
extraordinary loss
and cumulative
effect of changes
in accounting
methods ($0.43) $1.48 $1.09
Extraordinary loss (0.11) (0.06)
Cumulative effect
of changes in
accounting methods 0.11
__________ ________ _______
Primary earnings
(loss) per share ($0.54) $1.48 $1.14
========= ======= =======
FULLY DILUTED:
Average shares
outstanding 18,995 18,575 17,222
Net effect of
dilutive stock
options - based
on the treasury
stock method using
year-end market
price if higher
than average price 386 347 445
Assumed conversion
of 8% subordinated
debenture 52
Assumed conversion
of 4.75% subordinated
debenture 2,020 2,020 512
Assumed conversion
of preferred stock 1,422 1,228
______ _______ ______
TOTAL 22,823 22,170 18,231
====== ====== ======
Income (loss) before
interest adjustments,
extraordinary loss,
and cumulative effect
of changes in
accounting methods ($6,399) $29,744 $19,245
Add 8% convertible
subordinated
debenture interest,
net of federal
income tax effect 41
Add 4.75% convertible
subordinated
debenture interest,
net of federal
income tax effect 2,500 2,500 633
_______ _______ _______
Adjusted net income
(loss) before extra-
ordinary loss and
cumulative effect
of changes in
accounting methods ($3,899) $32,244 $19,919
Extraordinary loss (2,060) (1,088)
Cumulative effect
of changes in
accounting methods 1,904
_______ _______ _______
Adjusted net income
(loss) ($5,959) $32,244 $20,735
======== ======= =======
Fully diluted
earnings (loss)
per common share
before extra-
ordinary loss and
cumulative effect
of changes in
accounting methods ($0.17) $1.45 $1.09
Extraordinary loss (0.09) (0.06)
Cumulative effect
of changes in
accounting methods 0.11
________ _______ _______
Fully diluted
earnings (loss)
per share ($0.26) $1.45 $1.14
Note/For each year shown, dilution is less than 3%; therefore, no
fully diluted presentation is needed.
TABLE OF CONTENTS
Financial Highlights 1
Report to Shareholders 2
Five-Year Financial Summary 4
Management's Discussion
and Analysis 5
Consolidated Financial
Statements 11
Notes to Consolidated
Financial Statements 16
Report of Independent
Accountants 28
Report of Management 29
Market Information 30
Commitment to Growth 31
Store Locations 33
Directors and Officers 34
Corporate
Information inside back cover
The production of this Proffitt's, Inc.
Annual Report was based on our commitment to provide accurate,
timely information about the Company while incurring only
modest production costs.
The financial statements of this report are printed on 100%
recycled paper.
Proffitt's, Inc. is one of the fastest growing specialty retailers
in the United States. The Company's stores offer a wide selection
of fashion apparel, accessories, cosmetics, and decorative home
furnishings, featuring assortments of premier brands and unique
specialty merchandise. Proffitt's commitment to quality, service,
integrity, and style is the cornerstone of the Company's culture
and provides the foundation for its future growth.
Financial Highlights
Fiscal Year Ended
February 3, January 28, January 29,
1996 1995 1994
(in thousands, except per share amounts)
Net sales $1,333,498 $1,216,498 $ 798,779
Net income
(loss)* $ (6,399) $ 29,744 $ 19,245
Net income before
special and
and non-recurring
charges* $ 31,380 $ 29,744 $ 19,245
Earnings (loss)
per common share* $ (.43) $ 1.48 $ 1.09
Earnings per
common share
before special and
non-recurring
charges* $ 1.52 $ 1.48 $ 1.09
Weighted average
common shares 19,372 18,922 17,667
Total assets $ 835,666 $ 878,393 $ 575,449
Shareholders'
equity $ 356,852 $ 360,611 $ 290,309
*Prior to extraordinary loss and cumulative effect of changes in
accounting methods.
TO OUR PARTNERS
We experienced another very eventful year in 1995. In
spite of the difficult retail environment, Proffitt's, Inc. posted
solid comparable store sales gains and earnings prior to non-
recurring and other special charges recorded in conjunction with
our business combination with Younkers, Inc. Our results for the
year reflect this transaction, effective just prior to our
February 3, 1996 fiscal year end.
The Younkers transaction and the April 1995 acquisition of
the Parks-Belk Company permitted us essentially to double the size
of the Company during the year. Our operations now consist of 103
department stores in 16 states with nearly 10 million feet of
retail space.
Our strong cash flow and the Younkers transaction
permitted us to substantially strengthen our balance sheet during
the year. Debt as a percentage of capitalization declined to
approximately 40% at year end from nearly 60% a year ago.
Our merchants at Proffitt's, McRae's, and Younkers are
focused on the many opportunities to enhance sales and gross
margins through strengthened vendor relationships, increased buying
power, and selected private label development. In addition, the
scheduled August conversion of the Younkers leased shoe operation
to an owned business should increase sales and margins at this
division.
In 1996, store productivity will be enhanced through
focused merchandising strategies, increased sales associate
productivity, the implementation of certain best practices at the
store level, and the recent closing of certain unproductive units.
Our associates have identified synergies and best
practices throughout the organization which will allow us to reduce
total operating expenses in excess of $10 million on an annualized
basis. We are well along in this process and expect to realize
savings of at least $6 million during the transition year of 1996.
Cost reductions are occurring in a variety of areas--the
elimination of duplicate corporate expenses, economies of scale,
implementation of best practices, and consolidations of certain
back office functions. Each of these changes will deliver
meaningful continued leverage on expenses and contribute to the
competitive cost structure required in today's retail environment.
We continue to see numerous growth opportunities for the
business. In March 1996, we opened a new McRae's store in Selma,
Alabama. We will open a new Proffitt's store in Morgantown, West
Virginia this fall, and in 1997, we are scheduled to open McRae's
stores in Biloxi and Meridian, Mississippi and a Proffitt's store
in Parkersburg, West Virginia. We have also identified and are
currently negotiating several other new unit opportunities. In
addition, several store renovations and expansions are planned for
1996. We are excited about each of these projects and believe these
demonstrate the internal growth opportunities available to the
Company.
We also see opportunities for more strategic acquisitions
enabling us to extend our presence to nearby markets or to enhance
our presence in existing markets. Our strong balance sheet and free
cash flow provide us substantial capability to fund such
opportunities.
Proffitt's, Inc. has a very clear and focused operating
strategy. The effective execution of that strategy, along with our
commitment to the four cornerstones of the Company--Style, Quality,
Service, and Integrity--will create more value for our shareholders
and increased opportunities for our associates. I believe we have
a very bright future.
Sincerely,
R. Brad Martin
Chairman of the Board and
Chief Executive Officer
We continue to see numerous growth opportunities for the business.
<TABLE>
<CAPTION>
FIVE-YEAR FINANCIAL SUMMARY
53 Weeks 52 Weeks 52 Weeks 52 Weeks 52 Weeks
Ended Ended Ended Ended Ended
February 3, January 28, January 29, January 30, February 1,
1996 1995 1994 1993 (a) 1992 (b)
<S> <C> <C> <C> <C> <C>
Consolidated Income
Statement Data:
Net sales, including
leased departments $1,333,498 $1,216,498 $ 798,779 $ 601,677 $ 435,284
Costs and expenses:
Cost of sales 873,218 795,353 520,987 362,620 273,040
Selling, general, and
administrative expenses 324,650 284,748 192,028 158,920 112,793
Other operating expenses 105,021 97,821 66,617 44,016 34,934
Expenses related to
hostile takeover
defense 3,182
Impairment of long-
lived assets 19,121
Merger, restructuring,
and integration costs 20,822
-------- -------- --------- -------- --------
Operating income (loss) (12,516) 38,576 19,147 36,121 14,517
Other income (expense):
Finance charge income,
net of allocation
to purchaser of
accounts receivab le 31,273 27,934 19,312 15,401 15,194
Interest expense (26,098) (20,781) (9,245) (9,445) (15,102)
Other income
(expense), net 2,848 3,865 2,923 (380) 1,817
------- -------- -------- -------- --------
Income (loss) before
provision for income
taxes, extraordinary
loss, and cumulative
effect of changes
in accounting methods (4,493) 49,594 32,137 41,697 16,426
Provision for
income taxes 1,906 19,850 12,892 15,567 7,045
------ ------ ------- ------ ------
Income (loss)
before extraordinary
loss and cumulative
effect of changes in
accounting methods (6,399) 29,744 19,245 26,130 9,381
Extraordinary loss
(net of tax) (2,060) (1,088)
Cumulative effect of
changes in
accounting methods
(net of tax) 1,904 (1,794)
------- ------- ------- ------- -------
Net income (loss) $ (8,459) $29,744 $20,061 $24,336 $ 9,381
Earnings (loss) per
common share before
extraordinary loss
and cumulative effect
effect of changes in
accounting methods $ (.43) $ 1.48 $ 1.09 $ 2.06 $ 1.07
Extraordinary loss (.11) (.06)
Cumulative effect of
changes in
accounting methods .11 (.14)
Earnings (loss) per
common share $ (.54) $ 1.48 $ 1.14 $ 1.92 $ 1.07
Weighted average
common shares 19,372 18,992 17,667 12,707 8,788
Consolidated BALANCE
SHEET Data:
Trade accounts
receivable, less
allowance for
doubtful accounts $ 44,878 $120,185 $143,520 $128,965 $ 93,011
Working capital $ 212,122 $283,162 $286,351 $180,091 $126,026
Total assets $ 835,666 $878,393 $575,449 $455,295 $274,441
Senior long-term
debt, less current
portion $ 134,255 $190,216 $ 95,777 $193,555 $106,066
Subordinated
debentures $ 100,505 $100,269 $ 86,250
Shareholders' equity $ 356,852 $360,611 $290,309 $143,107 $101,229 <>
(a) Includes 53 weeks for Younkers.
(b) Includes 52 weeks ended January 25, 1992 for Younkers.
</TABLE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
Proffitt's, Inc. is a leading regional department store company
primarily offering moderate to better brand name fashion apparel,
accessories, cosmetics, and decorative home furnishings. The
Company's stores are principally anchor stores in leading regional
or community malls. The Company operates three department store
divisions. The Proffitt's Division, headquartered in Knoxville,
Tennessee, operates 25 stores in Tennessee, Virginia, North
Carolina, Georgia, and Kentucky. The McRae's Division,
headquartered in Jackson, Mississippi, operates 29 stores in
Mississippi, Alabama, Louisiana, and Florida. The Younkers
Division, headquartered in Des Moines, Iowa, operates 49 stores in
Iowa, Wisconsin, Nebraska, Michigan, Illinois, Minnesota, and South
Dakota. On a combined basis, the Company currently operates 103
stores in 16 states.
Proffitt's, Inc. combined its business with Younkers, Inc., a
publicly-owned retail department store chain, effective February 3,
1996, immediately before the Company's fiscal year end. This
combination was structured as a tax-free transaction and has been
accounted for as a pooling of interests. Each outstanding share of
Younkers, Inc. Common Stock was converted into ninety eight one-
hundredths (.98) shares of Proffitt's, Inc. Common Stock, with
approximately 8.8 million shares issued in the transaction.
On April 12, 1995, the Company acquired the Parks-Belk Company, a
family-owned department store company with four stores in
northeastern Tennessee. Three stores were renovated and opened as
Proffitt's Division stores during 1995; one store was permanently
closed.
On March 31, 1994, the Company acquired all of the outstanding
Common Stock of Macco Investments, Inc., a holding company for
McRae's, Inc., a family-owned retail department store chain
headquartered in Jackson, Mississippi. The transaction was
accounted for as a purchase.
The Company closed three unproductive units (one Proffitt's store
and two Younkers stores) in January 1996. Two additional Younkers
units were sold to a third party subsequent to February 3, 1996.
Income statement information for each year presented has
been restated to reflect the Younkers merger, which was accounted
for as a pooling of interests. The operations of McRae's and Parks-
Belk have been included in the income statements subsequent to
their respective purchase dates. The following table sets forth,
for the periods indicated, certain items from the Company's
Consolidated Statements of Income, expressed as percentages of net
sales:
53 Weeks 52 Weeks 52 Weeks
Ended Ended Ended
February 3, January 28, January 29,
1996 ("1995") 1995 ("1994") 1994 ("1993")
Net sale 100.0% 100.0% 100.0%
Costs and expenses:
Cost of sales 65.5 65.4 65.2
Selling, general,
and administrative
expenses 24.3 23.4 24.0
Other operating
expenses 7.9 8.0 8.3
Expenses related
to hostile
takeover defense 0.2
Impairment of
long-lived assets 1.4
Merger,
restructuring, and
integration costs 1.6
---- ---- ----
Operating income
(loss) (0.9) 3.2 2.5
Other income
(expense):
Finance charge
income, net of
allocation
to purchaser of
accounts
receivable 2.3 2.3 2.4
Interest expense (2.0) (1.7) (1.2)
Other income
(expense), net 0.2 0.3 0.3
Income (loss)
before provision
for income taxes,
extraordinary
loss, and cumulative
effect of changes
in accounting
methods (0.4) 4.1 4.0
Provision for
income taxes (0.1) 1.6 1.6
Income (loss)
before extra-
ordinary loss]
and cumulative
effect of changes
in accounting
methods (0.5) 2.5 2.4
Extraordinary loss
(net of tax) (0.1) (0.1)
Cumulative effect of
changes in accounting
methods
(net of tax) 0.2
Net income (loss) (0.6)% 2.5% 2.5%
NET SALES
Total Company net sales increased by 10%, 52%, and 33% in 1995,
1994, and 1993, respectively. The 1995 sales increase was due to a
comparable store sales increase of 3%, revenues generated from the
Parks-Belk stores acquired in April 1995, and a full year of sales
generated from the McRae's stores acquired in March 1994. The 1995
sales performance was adversely affected by weak fourth quarter
sales due to a weak consumer climate and severe weather problems.
The 1994 sales increase was due to revenues of $379.1 million
generated from the McRae's stores acquired in March 1994, along
with a comparable store sales increase of 3% and volume generated
from new stores opened in 1994 not reflected in the comparable
stores sales gain.
GROSS MARGINS
Gross margins were 34.5%, 34.6%, and 34.8% in 1995, 1994, and 1993,
respectively. The Company uses a full-cost method to account for
inventories, which includes certain purchasing and distribution
costs. Costs related to obtaining merchandise and preparing it for
sale are included in cost of sales. The slight decrease in gross
margin percent from 34.8% in 1993 to 34.6% in 1994 and 34.5% in
1995 was primarily a result of increased markdowns over prior
years.
The Company is taking steps which may enhance gross margin
performance over time. The Younkers Division currently operates a
low margin, leased shoe business. The Company will convert the
Younkers shoe operation from leased to owned in August 1996. The
Company also intends, over time, to expand its higher margin
private label business, which currently represents approximately 5%
of total sales, to 10% or more of total sales. Management believes
the conversion of the leased shoe business and further private
label development, along with strengthened vendor relationships,
increased buying power, and appropriate inventory management, will
lead to enhancements in gross margins.
As of February 3, 1996, management believes the Company's
inventories were well balanced and appropriately assorted.
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES
Selling, general, and administrative expenses ("SG&A") were 24.3%
of net sales in 1995, 23.4% of net sales in 1994, and 24.0% of net
sales in 1993. In 1995, in conjunction with the Younkers business
combination, the Company revised certain estimates and recorded
other charges to SG&A in the fourth quarter totaling $13.7 million,
or 1.0% of net sales. The most significant components of these
charges were: (i) a $2.4 million charge for the conversion of the
Younkers leased shoe operation; (ii) a $2.0 million charge to
strengthen the Company's bad debt reserve, and (iii) a $5.0 million
reserve for various Younkers legal claims. Excluding these charges,
SG&A was flat with the prior year, as a percent of net sales.
The Company consolidated certain administrative support areas for
the Proffitt's and McRae's Divisions during 1995. The Company
anticipated leverage of selling, general, and administrative
expense in 1995 due to these consolidations and expense control
efforts. However, leverage was not achieved primarily due to lower
than planned sales in the fourth quarter of 1995.
1993 SG&A included $5.0 million, or 0.6% of net sales, of store
pre-opening expenses. These expenses were immaterial for 1994 and
1995.
In conjunction with the Younkers merger, tangible synergies and
best practices have been identified that management believes will
reduce total operating expense by more than $10 million on an
annualized basis. Management believes $6 million of reductions
should be realized in the transition year of 1996. Cost reductions
have been targeted in several areas--the elimination of duplicate
corporate expenses, economies of scale, implementation of best
practices, and consolidation of certain administrative support
functions. These changes should deliver leverage on expenses and
will also contribute to the Company's competitive cost structure.
OTHER OPERATING EXPENSES
Other operating expenses were 7.9% of net sales in 1995, compared
to 8.0% in 1994 and 8.3% in 1993. The percent decline in 1995 over
1994 and 1993 levels resulted from leverage of these expenses over
a larger sales base, primarily due to the addition of the McRae's
stores in 1994.
EXPENSES RELATED TO HOSTILE TAKEOVER DEFENSE
During 1995, the Company incurred expenses of approximately $3.2
million, or 0.2% of net sales, related to the defense of the
attempted hostile takeover of Younkers by Carson Pirie Scott & Co.
IMPAIRMENT OF LONG-LIVED ASSETS
In March 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed Of." The Company adopted the provision of this new
accounting standard in the fourth quarter of 1995. As a result of
adopting this new accounting standard and as a result of closing
certain stores and warehouses, the Company incurred impairment
charges totaling $19.1 million, or 1.4% of net sales. Of the total,
$15.9 million related to the write-down in carrying value of six
store properties currently in operation and $3.2 million related to
the write-down of abandoned property.
MERGER, RESTRUCTURING, AND INTEGRATION COSTS
In connection with the merger of Proffitt's, Inc. and Younkers,
Inc., the two companies incurred certain costs to effect the merger
and other costs to restructure and integrate the combined operating
companies. Those costs totaled $20.8 million, or 1.6% of net sales,
and are comprised of $8.8 million of merger transaction costs
(principally investment banking, legal, and other direct merger
costs); $3.2 million of severance and related benefits; $7.4
million for the write-off of duplicate administrative facilities;
and $1.4 million of miscellaneous costs. Management also expects to
incur certain additional integration costs in 1996, such as
transition payroll, training, and relocation expenses.
FINANCE CHARGE INCOME, NET
Net finance charge income was 2.3% of net sales in 1995 and 1994
compared with 2.4% in 1993. For 1995, gross finance charge income
(before allocation to the third party purchasers of accounts
receivable (see "Liquidity") of finance charges) increased to 3.0%
of net sales from 2.8% in 1994. This increase was due to increased
customer usage of the Company's proprietary charge cards, increased
finance charge rates charged in certain states (McRae's Division),
the October 1995 implementation of late fee penalties on past due
charge account balances for the McRae's and Proffitt's Divisions,
and a full year's benefit of the May 1994 implementation of late
fee penalties on past due charge account balances at the Younkers
Division. For 1994, gross finance charge income (before allocation
to the third party) increased to 2.8% of net sales from 2.4% in
1993. The increase was due to increased customer usage of the
Company proprietary charge cards and the May 1994 implementation of
late fee penalties on past due charge account balances at the
Younkers Division.
The allocation to the third party purchaser of accounts receivable
of finance charges totaled approximately $8.8 million, or 0.7% of
net sales, in 1995 and $5.6 million, or 0.5% of net sales, in 1994.
There was no such allocation in 1993.
INTEREST EXPENSE
Interest expense as a percentage of net sales was 2.0% for 1995,
1.7% for 1994, and 1.2% for 1993. Total interest expense was $26.1
million, $20.8 million, and $9.2 million in 1995, 1994, and 1993,
respectively. The increase in interest expense in 1995 over 1994
was attributable to higher borrowings associated with the purchase
and operation of the Parks-Belk stores acquired in April 1995 and
the acquisition of McRae's in March 1994, along with higher
interest rates. The significant increase in interest expense in
1994 over 1993 primarily was attributable to larger borrowings
associated with the purchase and operation of the McRae's stores in
March 1994 and new stores opened in 1993.
INCOME TAXES
For 1995, excluding the special and other non-recurring charges
(previously outlined) which resulted in the net loss, the effective
tax rate was 40.2%. For 1994 and 1993, effective income tax rates
were 40.0% and 40.1%, respectively.
NET INCOME
Net loss (prior to extraordinary item) was $6.4 million in 1995, or
0.5% of net sales; net income totaled $29.7 million, or 2.5% of net
sales, in 1994 and $19.2 million, or 2.4% of net sales, in 1993.
1995 earnings were negatively affected by such items as fourth
quarter charges to SG&A in conjunction with the Younkers
transaction, expenses related to the Younkers hostile takeover
attempt, charges for the impairment of long-lived assets, and
merger, restructuring, and integration costs previously discussed.
Without these items, 1995 net income would have totaled $31.4
million, or 2.4% of net sales. Net income in 1994 rose over 1993
due to incremental sales and gross margin dollars and SG&A
reductions previously discussed.
EXTRAORDINARY ITEM
On February 3, 1996, Younkers replaced its debt financing of
accounts receivable with sales of ownership interests in its
accounts receivable. In addition, Younkers cancelled its $150
million revolving credit agreement. As a result of these early
extinguishments of debt, certain deferred costs associated with the
debt facilities, such as loan origination costs and a loss from an
interest rate swap, were written off. This write-off of $3.4
million ($2.1 million net of income taxes) was recorded as an
extraordinary item in 1995.
INFLATION
Inflation affects the costs incurred by the Company in its purchase
of merchandise and in certain components of its selling, general,
and administrative expenses. The Company attempts to offset the
effects of inflation through price increases and control of
expenses, although the Company's ability to increase prices is
limited by competitive factors in its markets.
SEASONALITY
The Company's business, like that of most retailers, is subject to
seasonal influences, with a significant portion of net sales and
net income realized during the fourth quarter of each year, which
includes the Christmas selling season. In light of these patterns,
selling, general, and administrative expenses are typically higher
as a percentage of net sales during the first three quarters of
each year, and working capital needs are greater in the last
quarter of each year. The fourth quarter increases in working
capital needs have typically been financed with internally
generated funds, the sale of interests in the Company's accounts
receivable, and borrowings under the Company's revolving credit
facility. Generally, more than 30% of the Company's net sales and
over 50% of net income are generated during the fourth quarter.
LIQUIDITY
The Company's primary needs for liquidity are to acquire, renovate,
or construct stores, to provide working capital for new and
existing stores, and to repay borrowings.
Net cash provided by operating activities was $55.1 million in 1995
and $131.7 million in 1994. In addition to the net loss,
depreciation and amortization charges, and the $19.1 million write-
down for impairment of long-lived assets, net cash provided in 1995
resulted from reduced working capital needs. In addition to net
income and depreciation and amortization charges, the net cash
provided in 1994 included $53.0 million generated from the sale of
ownership interests in the Company's accounts receivable (see
below) as well as a reduction in inventory levels over the prior
year.
Net cash used in investing activities for 1995 totaled $59.9
million, of which $49.5 million was for new store construction,
store renovations, systems enhancements, and other capital
expenditures, and $10.5 million was the cash portion of the Parks-
Belk acquisition purchase price. Net cash used in investing
activities for 1994 totaled $229.1 million, of which $184.1 million
was for the purchase of Macco Investments, Inc. and $43.3 million
was related to store renovation and construction, management
information systems enhancements, and other capital expenditures.
<Body text>Net cash provided by financing activities for 1995
totaled $15.8 million, which was primarily due to proceeds of $32.3
million from borrowings on long-term debt netted against payments
on long-term debt of $16.7 million. Net cash provided by financing
activities for 1994 totaled $85.7 million which was primarily a
result of proceeds from long-term borrowings of $91.0 million and
the issuance of a $30 million convertible preferred security netted
against debt payments of $33.5 million.
The Company utilizes a $175 million facility ("Accounts Receivable
Facility") with a financial institution for the sale of ownership
interests in accounts receivable (for the Proffitt's and McRae's
Divisions), which expires in September 1997. The Accounts
Receivable Facility requires a portion of finance charges earned be
allocated to the purchaser of the ownership interests in the
accounts receivable, sufficient to cover the yield on commercial
paper utilized by the purchaser to finance the transaction, plus
fees and expenses. As of March 27, 1996, the interest rate on the
Accounts Receivable Facility was 5.34%, and $134.1 million of
receivables were sold on the Accounts Receivable Facility at that
date. The maximum receivables sold on the Accounts Receivable
Facility during 1995 totaled $163.4 million. Amounts sold are
limited to between 94% and 96% of total accounts receivable.
Prior to February 3, 1996, Younkers utilized an accounts
receivable securitization program under which its receivables were
used as collateral for commercial paper issued by a wholly-owned
special purpose subsidiary. Effective with the February 3, 1996
merger, Younkers replaced amounts borrowed under the securitization
program with the sale of: (i) a fixed ownership interest of $75
million and (ii) a variable ownership interest of up to $50 million
in its trade receivables. The $75 million receivables sold under
this arrangement is from a pool of $91.5 million of trade
receivables and remains fixed until 2000 at which time a portion of
collections of outstanding receivables will be retained by the
purchaser until the $75 million is extinguished. The purchaser
retains an allocation of finance charges earned on the $75 million
of receivables in an amount sufficient to provide a return of
6.45%.
Additional sales of receivables up to $50 million are restricted on
the basis of the level of eligible receivables in excess of the
$91.5 million supporting the fixed pool and a minimum ownership
interest to be retained by Younkers. Younkers may obtain additional
proceeds by increasing the ownership interest transferred to the
purchaser or reduce the purchaser's interest by allowing a portion
of the collections to be retained by the purchaser. The purchaser
retains an allocation of finance charge income equal to a variable
rate based on commercial paper or Eurodollar rates. The agreement
expires in 2000. As of March 27, 1996, the interest rate was 5.42%,
and $8.0 million of Younkers' receivables were sold under this
facility at that date. No receivables were sold under this facility
during 1995.
The Company utilizes a $125 million revolving credit facility with
several banks ("Revolver"), which expires in 1999. The Revolver
provides various borrowing options, including prime rate and LIBOR-
based rates. As of March 27, 1996, the LIBOR-based interest rate on
the $125 million Revolver was 6.17%. Borrowings on the Revolver are
limited to 55% of merchandise inventories. As of March 27, 1996,
the Company had borrowings totaling $10.9 million outstanding under
the Revolver and unused availability of $114.1 million. The maximum
amount outstanding under the Revolver during 1995 was $112.0
million. At that time, the Company had unused availability on the
Revolver of $9.6 million.
During 1995, the maximum amount outstanding under the $150 million
Younkers revolving credit facility (cancelled on February 3, 1996;
see "Extraordinary Item") was $12 million. At that time, the
Company had unused availability on this facility of $59 million.
At February 3, 1996, total debt was 42% of total
capitalization, down from 47% at January 28, 1995. Excluding the
Company's $100 million of subordinated debentures, which the
Company treats as permanent capital, senior debt was 26% of total
capitalization, down from 32% at January 28, 1995. The Company
carries $97 million of real estate and mortgage debt related to its
21 owned store locations and other owned properties. Management
believes the market value of these properties significantly exceeds
the related indebtedness.
Due to the consummation of the Younkers transaction and the
resulting strengthened balance sheet, both Standard & Poor's and
Moody's Investors Service raised their corporate credit ratings on
the Company's $86.3 million 4.75% convertible subordinated
debentures to B+ and B1, respectively.
The Company estimates capital expenditures for the combined
organization in 1996 will be approximately $50 million, primarily
for the construction of two stores to be opened in 1996, initial
construction related to five to seven stores to be opened in 1997,
three store expansions, five store renovations, and enhancements to
management information systems.
The Company anticipates its capital expenditures and working
capital requirements relating to planned new and existing stores
will be funded through cash provided by operations, borrowings, and
cash reserves. The Company expects to generate adequate cash flows
from operating activities to sustain current levels of operations.
The Company maintains favorable banking relations and anticipates
the necessary credit agreements will be extended or new agreements
will be entered into in order to provide future borrowing
requirements as needed. The Company's goal is to continue to
maintain a strong balance sheet, providing the Company flexibility
to capitalize on attractive opportunities for growth, thereby
enhancing shareholder value.
RECENT ACCOUNTING PRONOUNCEMENTS
Financial Accounting Standards Board Statement of Financial
Accounting Standards No. 123, "Accounting for Stock Based
Compensation," was issued in 1995 to be effective beginning
February 4, 1996 for the Company. Management intends to comply with
the disclosure requirements of this statement. Accordingly, it is
the opinion of management that the statement will not have a
material impact on the Company's financial position or results of
operations.
CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share
amounts) Proffitt's, Inc. and Subsidiaries
Year Ended
February 3, January 28, January 29,
1996 1995 1994
NET SALES $ 1,333,498 $ 1,216,498 $ 798,779
COSTS AND EXPENSES
Cost of sales 873,218 795,353 520,987
Selling, general and
administrative expenses 324,650 284,748 192,028
Other operating expenses
Property and
equipment rentals 39,668 37,439 27,890
Depreciation and
amortization 35,709 32,802 19,816
Taxes other than
income taxes 29,644 27,580 18,911
Expenses related to
hostile takeover defense 3,182
Impairment of long-
lived assets 19,121
Merger, restructuring and
integration costs 20,822
________ ________ _______
OPERATING INCOME (LOSS) (12,516) 38,576 19,147
OTHER INCOME (EXPENSE)
Finance charge income 31,273 27,934 19,312
Interest expense (26,098) (20,781) (9,245)
Other income
(expense), net 2,848 3,865 2,923
------- ------ ------
INCOME (LOSS) BEFORE
PROVISION FOR INCOME
TAXES, EXTRAORDINARY
LOSS AND CUMULATIVE
EFFECT OF CHANGES IN
ACCOUNTING METHODS (4,493) 49,594 32,137
Provision for income taxes (1,906) (19,850) (12,892)
------- -------- --------
INCOME (LOSS) BEFORE
EXTRAORDINARY LOSS AND
CUMULATIVE EFFECT OF
CHANGES IN ACCOUNTING
METHODS (6,399) 29,744 19,245
Extraordinary loss on
early extinguishment
of debt (net of tax) (2,060) (1,088)
------- ------- -------
INCOME (LOSS) BEFORE
CUMULATIVE EFFECT
OF CHANGES IN
ACCOUNTING METHODS (8,459) 29,744 18,157
Cumulative effect of
changes in accounting
methods (net of tax) 1,904
------- ------- ------
NET INCOME (LOSS) (8,459) 29,744 20,061
Preferred stock dividends 1,950 1,694
------ ------ ------
NET INCOME (LOSS)
AVAILABLE TO
COMMON SHAREHOLDERS $(10,409) $28,050 $20,061
======= ====== ======
Earnings (loss) per
common share before
extraordinary loss
and cumulative effect
of changes in
accounting methods $ (0.43) $ 1.48 $ 1.09
Extraordinary loss (0.11) (0.06)
Cumulative effect of
changes in
accounting methods 0.11
--------- -------- -------
Earnings (loss)
per common share $ (0.54) $ 1.48 $ 1.14
======== ======== =======
Weighted average
common shares 19,372 18,922 17,667
The accompanying notes are an integral part of these consolidated
financial statements.
CONSOLIDATED BALANCE SHEETS (in thousands, except per share
amounts)
Proffitt's, Inc. and Subsidiaries
February 3, January 28,
1996 1995
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 26,157 $ 15,181
Trade accounts receivable,
less allowance for doubtful
accounts of $6,601 in
1995 and $4,723 in 1994 44,878 120,185
Accounts receivable - other 9,469 9,917
Merchandise inventory 286,474 275,357
Prepaid supplies and expenses 8,024 9,024
Deferred income taxes 3,750
---------- ----------
TOTAL CURRENT ASSETS 378,752 429,664
PROPERTY AND EQUIPMENT,
NET OF DEPRECIATION 381,839 376,461
GOODWILL, net of amortization 52,838 46,522
OTHER ASSETS 2,237 25,746
--------- ---------
TOTAL ASSETS $ 835,666 $ 878,393
The accompanying notes are an integral part of these consolidated
financial statements.
February 3, January 28,
1996 1995
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Trade accounts payable $ 75,377 $ 68,203
Accrued expenses 48,597 28,599
Accrued compensation and
related items 10,920 12,629
Sales taxes payable 11,513 11,696
Income taxes payable 2,954 7,606
Deferred income tax liability 2,500
Current portion of long-term debt
and capital lease obligations 17,269 15,269
TOTAL CURRENT LIABILITIES 166,630 146,502
SENIOR DEBT 134,255 190,216
CAPITAL LEASE OBLIGATIONS 10,846 11,319
DEFERRED INCOME TAXES 52,250 58,400
OTHER LONG-TERM LIABILITIES 14,328 11,076
SUBORDINATED DEBENTURES 100,505 100,269
-------- --------
TOTAL LIABILITIES 478,814 517,782
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Preferred Stock, $1.00 par value,
10,000 total shares authorized:
Series A - 600 shares authorized,
issued and outstanding, $50 per
share liquidation preference 28,850 28,850
Common Stock, $.10 par value,
100,000 shares authorized,
19,120 and 18,760 shares issued
and outstanding at February 3,
1996 and January 28, 1995,
respectively 1,912 1,876
Additional paid-in capital 243,279 236,665
Retained earnings 82,811 93,220
------- -------
TOTAL SHAREHOLDERS' EQUITY 356,852 360,611
Total liabilities and
shareholders' equity $ 835,666 $ 878,393
========== =========
The accompanying notes are an integral part of these consolidated
financial statements.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (in thousands of
dollars)
<TABLE>
<CAPTION>
Proffitt's, Inc. and Subsidiaries
Additional Total
Preferred Stock Common Paid-In Retained Shareholders'
Series A Series B Stock Capital Earnings Equity
<S> <C> <C> <C> <C> <C> <C>
Balance at January 30, 1993 $ - $ - $ 1,282 $ 96,716 $ 45,109 $143,107
Net income 20,061 20,061
Issuance of Common Stock 525 125,833 126,358
Income tax benefits related to
exercised stock options 783 783
Balance at January 29, 1994 1,807 223,332 65,170 290,309
Net income 29,744 29,744
Issuance of Stock 28,850 3,296 53 9,941 42,140
Income tax benefits related
to exercised stock options 112 112
Conversion of Series B
Preferred Stock (3,296) 16 3,280
Preferred Dividends (1,694) (1,694)
Balance at January 28, 1995 28,850 1,876 236,665 93,220 360,611
Net loss (8,459) (8,459)
Issuance of Common Stock 36 6,241 6,277
Income tax benefits related to
exercised stock options 373 373
Preferred dividends (1,950) (1,950)
Balance at February 3, 1996 $28,850 $ - $1,912 $243,279 $82,811 $356,852
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands of dollars)
Proffitt's, Inc. and Subsidiaries
Year Ended
February 3, January 28, January 29,
1996 1995 1994
OPERATING ACTIVITIES
Net income (loss) $ (8,459) $ 29,744 $ 20,061
Adjustments to reconcile
net income (loss) to net
cash provided by (used in)
operating activities:
Extraordinary loss on
extinguishment of debt 3,433 1,832
Cumulative effect of
changes in
accounting methods (3,201)
Depreciation and
amortization 36,322 33,510 20,361
Deferred income taxes (13,319) 4,474 4,296
Impairment of long-
lived assets 19,121
Other 377 854 (821)
Changes in operating
assets and liabilities:
Trade accounts receivable 4,034 52,961 (19,593)
Merchandise inventory (8,097) 13,183 (47,346)
Prepaid expenses and
other current assets 1,797 (141) (3,267)
Accounts payable, accrued
expenses and income taxes
payable 20,917 (2,575) 6,004
Other (1,028) (347) (258)
------- ------- ------
NET CASH PROVIDED BY
(USED IN)
OPERATING ACTIVITIES 55,098 131,663 (21,932)
------ ------- --------
INVESTING ACTIVITIES
Purchases of property
and equipment, net (49,458) (43,289) (78,475)
Proceeds from sale-
lease back 31,138
Acquisition of Parks-Belk
(1995)/Macco (1994) (10,483) (184,067)
Collections of acquired
receivables 5,038
Other (1,719) (2,653)
-------- --------- --------
NET CASH USED IN
INVESTING ACTIVITIES (59,941) (229,075) (44,952)
FINANCING ACTIVITIES
Proceeds from long-
term borrowings 32,273 90,983 145,615
Payments on long-term
debt and capital
lease obligations (16,714) (33,544) (183,651)
Proceeds from issuance
of Stock 2,210 29,166 119,957
Dividends paid to
preferred shareholders (1,950) (888)
------- ------- -------
NET CASH PROVIDED
BY FINANCING ACTIVITIES 15,819 85,717 81,921
INCREASE (DECREASE) IN
CASH AND CASH
EQUIVALENTS 10,976 (11,695) 15,037
Cash and cash equivalents
at beginning of year 15,181 26,876 11,839
------- ------- ------
Cash and cash equivalents
at end of year $ 26,157 $ 15,181 $ 26,876
======== ======== ========
Noncash investing and financing activities are described in Notes
C, D, and F.
The accompanying notes are an integral part of these consolidated
financial statements.
Note A - Basis of Presentation
On February 3, 1996, Proffitt's, Inc. ("Proffitt's")
issued 8,816 shares of its Common Stock for all the outstanding
Common Stock of Younkers, Inc. ("Younkers") (collectively, "the
Company"). The merger has been accounted for as a pooling of
interests, and accordingly, these consolidated financial statements
have been restated for all periods to include the results of
operations and financial position of Younkers.
Separate results of the combined entities were as follows:
Year ended
February 3, January 28, January 29,
1996 1995 1994
Revenue:
Proffitt's $ 720,148 $ 617,363 $ 200,884
Younkers 613,350 599,135 597,895
---------- ---------- ---------
$1,333,498 $1,216,498 $ 798,779
========== ========== =========
Extraordinary item:
Proffitt's $ 0 $ 0 $ 0
Younkers (2,060) $ 0 $ (1,088)
---------- ----------- ---------
$ (2,060) $ 0 $ (1,088)
========== =========== =========
Cumulative effect of
changes in accounting
methods:
Proffitt's $ 0 $ 0 $ 333
Younkers 0 0 1,571
----------- ----------- ---------
$ 0 $ 0 $ 1,904
========== =========== =========
Net income (loss):
Proffitt's $ 5,181 $ 16,128 $ 6,063
Younkers (13,640) 13,616 13,998
----------- ----------- ---------
$ (8,459) $ 29,744 $ 20,061
========== =========== =========
Historically, Younkers' inventory costs consisted only of "direct
costs", principally invoice cost plus freight. Proffitt's followed
the same method until the year ended January 29, 1994 at which time
Proffitt's adopted the "full cost" method which includes the direct
costs plus certain purchasing and distribution costs. Additionally,
Younkers has included the cost of certain operating supplies, such
as shopping bags, in prepaid supplies and expenses. Proffitt's
policy is to expense such when issued to a store. Hence, Younkers'
financial statements have been restated to conform to Proffitt's
accounting methods, including adopting the change in inventory
costs with a "cumulative effect" adjustment in 1993. The restated
financial statements also reflect certain reclassifications without
any impact on previously reported income or shareholders' equity.
Note B - Description of Business and Summary of Significant
Accounting Policies
Description of business
At February 3, 1996, the Company operated the Proffitt's
Division with twenty-five department stores in the Southeast, the
McRae's Division with twenty-nine department stores in the
Southeast, and the Younkers Division with fifty-one department
stores in the Midwest. The Company's fiscal year ends on the
Saturday nearest January 31 and consisted of 53 weeks for the year
ended February 3, 1996 and 52 weeks for the years ended January 28,
1995 and January 29, 1994.
Consolidation
The financial statements include the accounts of
Proffitt's and its wholly-owned subsidiaries. All significant
intercompany balances and transactions have been eliminated.
Revenues
Retail sales are recorded on the accrual basis, and
profits on installment sales are recognized in full when the sales
are recorded. Sales are net of returns which are reflected as a
period cost at the time of return.
Trade accounts receivable
Trade accounts consist of revolving charge accounts with
terms which, in some cases, provide for payments exceeding one
year. In accordance with usual industry practice, such receivables
are included in current assets. Finance charge income is accrued
monthly based on a percentage of uncollected customer account
balances. A portion of finance charge income is earned by financial
institutions in connection with the sales of interests in accounts
receivable (see Note D).
Inventories
Inventories are valued at the lower of cost or market as
determined by the retail inventory method applied on the last-in,
first-out (LIFO) method for approximately 84% and 86% of the
inventories at February 3, 1996 and January 28, 1995, respectively,
and on the first-in, first-out (FIFO) method for the balance. Prior
to the fiscal year ended January 28, 1995, the Company used the
FIFO method for all inventories. As of February 3, 1996 and January
28, 1995, the LIFO value of inventory exceeded market, and as a
result, inventory was stated at the lower market amount.
Prior to January 31, 1993, inventory costs consisted
only of "direct costs," principally invoice cost plus freight.
Effective January 31, 1993, the Company adopted the "full cost"
method. Under the full cost method, inventory costs include the
direct costs plus certain purchasing and distribution costs. The
impact of this change is further discussed in Note N.
Property and equipment
Property and equipment are stated at cost less
accumulated depreciation. Depreciation is computed using the
straight-line method for financial reporting purposes over the
estimated useful lives of the assets, which are 45 years for
buildings and range from 4 to 20 years for fixtures, leasehold
improvements, and equipment.
Cash equivalents
The Company considers all highly liquid investments
purchased with maturities of three months or less to be cash
equivalents.
Leased department sales
The Company includes leased department sales as part of
net sales. Leased department sales were $73,977, $71,369, and
$49,266 for the years ended February 3, 1996, January 28, 1995, and
January 29, 1994, respectively.
Store pre-opening expenses
Prior to January 31, 1993, new store pre-opening costs
for Proffitt's were deferred and amortized over the 12 months
immediately following the individual store openings. Effective
January 31, 1993, Proffitt's changed its method to expense such
costs when incurred. The impact of this change is further discussed
in Note N. Younkers has historically expensed such costs when
incurred.
Income taxes
The Company accounts for income taxes under Statement of
Financial Accounting Standards No. 109. Deferred income taxes
reflect the impact of "temporary differences" between the amount of
assets and liabilities for financial reporting purposes and such
amounts as measured by enacted tax rules and regulations.
Earnings per common share
Earnings per common share have been computed based on
the weighted average number of common shares outstanding, including
common stock equivalents, after recognition of preferred stock
dividends of $1,950 and $1,694 for the years ended February 3, 1996
and January 28, 1995, respectively. There were no preferred
dividends in the prior year.
The Company's 4.75% convertible subordinated debentures
issued in October 1993 and 7.5% junior subordinated debentures
issued in March 1994 are not common stock equivalents, and
therefore, shares issuable upon their conversion are included only
in the computation of fully diluted earnings per share. The
difference between primary and fully diluted earnings per share was
not significant in any year.
Goodwill
The Company records goodwill for the cost in excess of
fair value of net assets acquired in purchase transactions.
Goodwill is being amortized on a straight-line method over 15 to 40
years, and the Company recognized amortization charges of $1,523,
$1,100 and $151 for the years ended February 3, 1996, January 28,
1995 and January 29,1994, respectively. At each balance sheet date,
the Company evaluates the realizability of goodwill based upon
expectations of nondiscounted cash flows and operating income.
Based upon its most recent analysis, the Company believes that no
impairment of goodwill exists at February 3, 1996.
New Accounting Pronouncement
Financial Accounting Standards Board Statement of
Financial Accounting Standards No. 123, "Accounting for Stock Based
Compensation," was issued in 1995 to be effective beginning
February 4, 1996 for the Company. Management intends to comply with
the disclosure requirements of this statement. Accordingly, it is
the opinion of management that the statement will not have a
material impact on the Company's financial position or results of
operations.
Note C - Acquisitions
On March 31, 1994, Proffitt's acquired all of the Common
Stock of Macco Investments, Inc. ("Macco"), a privately held
corporation and the parent company of McRae's, Inc. ("McRae's")
which operated 28 stores in the Southeast. The total acquisition
price of approximately $212 million consisted of a cash payment of
$176 million and the issuance of (i) 436 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) 33 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, the Company purchased, for $18.5
million, four regional mall stores owned by McRae family
partnerships and leased to McRae's. The operations of McRae's and
its subsidiaries are included in these consolidated financial
statements after March 31, 1994. The financing of the
acquisition included a $175 million accounts receivable financing
program through a financial institution; a $125 million bank
revolving credit facility; $20 million of mortgage financing on
certain Proffitt's and McRae's properties; and a private sale of
$30 million Series A Cumulative Convertible Exchangeable Preferred
Stock.
The allocation of the purchase price was as follows:
Working capital $ 68,396
Property and equipment 176,907
Goodwill 45,574
Other assets 10,409
Long-term debt (32,877)
Capital lease obligations (11,695)
Deferred income taxes (42,432)
Other long-term liabilities (2,484)
-------
$ 211,798
In April 1995, Proffitt's acquired the Parks-Belk Company, the
owner and operator of four department stores in northeast
Tennessee. 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). Three of the Parks-Belk
locations were converted into Proffitt's Division stores, and one
was permanently closed.
Note D - Sale of Accounts Receivable
On April 1, 1994, Proffitt's began selling an undivided
ownership interest in its accounts receivable. Under the agreement
with the purchaser, which expires September 1997, Proffitt's may
obtain additional proceeds by increasing the ownership interest
transferred to the purchaser or reduce the purchaser's interest by
allowing a portion of the collections to be retained by the
purchaser. The ownership interest which may be transferred to the
purchaser is limited to $175,000 and is further restricted on the
basis of the level of eligible receivables and a minimum ownership
interest to be maintained by Proffitt's. Proffitt's sold $370,874
and $333,473 of its accounts receivable for the years ended
February 3, 1996 and January 28, 1995, respectively.
Prior to February 3, 1996, Younkers utilized an accounts
receivable securitization program under which its receivables were
used as collateral for commercial paper issued by a wholly-owned
special purpose subsidiary. Effective with the February 3, 1996
merger, Younkers replaced amounts borrowed under the securitization
program with the sale of (i) a fixed ownership interest of $75
million and (ii) a variable ownership interest of up to $50 million
in its trade receivables. The $75 million receivables sold under
this arrangement is from a pool of $91.5 million of trade
receivables and remains fixed until 2000 at which time a portion of
collections of outstanding receivables will be retained by the
purchaser until the $75 million is extinguished.
Additional sales of receivables up to $50 million are
restricted on the basis of the level of eligible receivables in
excess of the $91.5 million supporting the fixed pool and a minimum
ownership interest to be retained by Younkers. Younkers may obtain
additional proceeds by increasing the ownership interest
transferred to the purchaser or reduce the purchaser's interest by
allowing a portion of the collections to be retained by the
purchaser. The purchasers retain an allocation of
finance charge income equal to 6.45% on the Younkers $75 million
program and equal to a variable rate based on commercial paper or
Eurodollar rates on the Proffitt's $175 million and Younkers $50
million programs. The balance of finance charges is retained by the
Company. Finance charges retained by the purchaser were $8,809 and
$5,567 for the years ended February 3, 1996 and January 28, 1995,
respectively.
The Company is contingently liable for the collection of
the receivables sold. The ownership interest transferred to the
purchaser, which is reflected as a reduction of accounts
receivable, was $220,229 and $138,740 at February 3, 1996 and
January 28, 1995, respectively. Management believes that the
allowance for doubtful accounts of $6,601 at February 3, 1996 is
adequate for losses under this recourse provision. The agreements
contain certain covenants requiring the maintenance of various
financial ratios. If these covenants are not met or if an event of
default was to occur, the purchasers could be entitled to terminate
the agreement.
Note E - Property and Equipment
A summary of property and equipment was as follows:
February 3, January 28,
1996 1995
Land and land improvements $ 39,345 $ 39,192
Buildings 136,827 131,723
Leasehold improvements 80,543 80,122
Fixtures and equipment 242,911 246,813
Construction in progress 17,134 11,951
-------- --------
516,760 509,801
Accumulated depreciation (134,921) (133,340)
--------- ---------
$381,839 $376,461
======== ========
In March 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed Of." The Company adopted the provisions of this new
accounting standard in the fourth quarter of the year ended
February 3, 1996. As a result of adopting this new accounting
standard and as a result of closing certain stores and warehouses,
the Company incurred impairment charges as follows:
Write-down in carrying value of six operating stores
(3 Proffitt's, 1 McRae's and 2 Younkers)
due to recurring poor operating results and
adoption of SFAS No. 121 $ 15,897
Abandonment of duplicate warehouses and leasehold
improvements related to the Parks-Belk acquisition
and the Younkers merger 1,797
Loss on abandonment of leasehold improvements
related to closed stores 1,427
--------
$ 19,121
Note F - Income Taxes
The components of income tax expense were as follows:
Year Ended
February 3, January 28, January 29,
1996 1995 1994
Current:
Federal $ 10,940 $ 12,066 $ 7,280
State 2,912 3,310 1,868
--------- -------- --------
13,852 15,376 9,148
--------- -------- --------
Deferred:
Federal (10,834) 3,853 3,738
State (2,485) 621 558
--------- -------- --------
(13,319) 4,474 4,296
--------- -------- --------
$ 533 $ 19,850 $ 13,444
======== ======== ========
Components of the net deferred tax asset or liability recognized
in the consolidated balance sheets were as follows:
February 3, January 28,
1996 1995
Current:
Deferred tax assets:
Allowance for doubtful accounts $ 2,400 $ 1,700
Accrued expenses 9,900 3,000
Other 250 500
-------- ---------
12,550 5,200
-------- ---------
Deferred tax liabilities:
Inventory (8,300) (7,300)
Other (500) (400)
-------- ---------
(8,800) (7,700)
Net deferred tax asset (liability) $ 3,750 $(2,500)
======= ========
Noncurrent:
Deferred tax assets:
Capital leases $ 900 $ 1,000
Other long-term liabilities 3,800 4,000
Deferred compensation 950 1,000
-------- --------
5,650 6,000
-------- --------
Deferred tax liabilities:
Property and equipment (51,200) (57,000)
Other assets (5,400) (6,000)
Junior subordinated debentures (1,300) (1,400)
-------- --------
(57,900) (64,400)
Net deferred tax liability $ (52,250) $ (58,400)
Income tax expense varies from the amount computed by applying the
statutory federal income tax rate to income before taxes. The
reasons for this difference were as follows:
Year ended
February 3, January 28, January 29,
1996 1995 1994
Expected tax/rate
(benefit) $(2,774) (35.0%) 35.0% 35.0%
State income taxes,
net of federal
benefit (743) (9.4) 4.3 5.0
Nondeductible merger
transaction costs 2,997 37.8
Amortization of
goodwill 518 6.5
Other items, net 535 6.8 0.7 0.1
------ ----- ----- -----
Actual tax/rate
(benefit) $ 533 6.7% 40.0% 40.1%
====== ===== ===== =====
The Company made income tax payments, net of refunds received, of
$6,899, $13,507, and $8,365 during the years ended February 3,
1996, January 28, 1995 and January 29, 1994, respectively.
Note G - Senior Debt
A summary of senior debt was as follows:
February 3, January 28,
1996 1995
Real estate and mortgage notes,
interest ranging from
3.35% to 10.17%, maturing
1996 to 2008, collateralized
by property and equipment with
a carrying amount of approximately
$122,000 at February 3, 1996 $ 97,365 $ 73,791
Revolving credit agreements and
commercial paper notes 41,400 121,114
Notes payable, interest ranging
from 7.88% to 13.00%,
maturing 1996 to 1998 12,287 10,154
-------- --------
151,052 205,059
Current portion (16,797) (14,843)
-------- --------
$134,255 $190,216
======== ========
Prior to February 3, 1996, Younkers utilized an accounts
receivable securitization program under which its
receivables were used as collateral for commercial paper issued by
a wholly-owned special purpose subsidiary. At January 28, 1995,
borrowings of $76,114 were outstanding under this program at a
weighted average interest rate of 6.0%. Effective
February 3, 1996, Younkers replaced the debt financing of its
accounts receivable with sales of ownership interests in the
receivables (see Note D). At the same time, Younkers cancelled its
revolving credit facility. As a result of this early extinguishment
of debt, certain deferred costs associated with the debt financing
of receivables and the revolving credit facility, such as loan
origination costs and a loss from a related interest rate swap,
were written off. This write-off of $3,433 ($2,060 net of income
taxes) is reflected in the income statement as an extraordinary
item.
In conjunction with a real estate mortgage note
having a balance of $6,750 at February 3, 1996, Proffitt's entered
into an interest rate swap agreement for the management of interest
rate exposure. This agreement extends to June 30, 2003 and swaps
the variable rate for a fixed rate of 5.7%. The differential to be
paid or received is included in interest expense. The Company
continually monitors its position and the credit rating of the
interest rate swap counterparty. While the Company may be exposed
to credit losses in the event of nonperformance by the
counterparty, it does not anticipate such losses.
At February 3, 1996, the Company owed $41,400 under a revolving
credit agreement ("Revolver") with banks. Borrowings under the
Revolver are limited to 55% of merchandise inventories up to a
maximum borrowing of $125,000, and interest rate options include
LIBOR-based rates, prime rate and competitive bid rates. The
agreementexpires in 1999. In addition to certain general
requirements, the credit agreement requires the Company to meet
specific covenants related to current ratio, fixed charges, funded
debt, capitalization and tangible net worth. Certain other note
agreements also impose restrictions and financial maintenance
requirements.
Maturities of senior debt for the next five years, and
thereafter, giving consideration to lenders' call privileges, are
as follows:
Fiscal Year End
1997 $ 16,797
1998 13,495
1999 17,077
2000 68,678
2001 6,417
Thereafter 28,588
---------
$ 151,052
=========
The Company made interest payments of $25,601, $18,282 and $9,232
during the years ended February 3, 1996, January 28, 1995 and
January 29, 1994, respectively. Capitalized interest was $285, $467
and $787 for the years ended February 3, 1996, January 28, 1995 and
January 29, 1994, respectively.
Note H - Leases
The Company is committed under long-term leases primarily for the
rentals of certain retail stores. The leases generally provide for
minimum annual rentals (including executory costs such as real
estate taxes and insurance) and contingent rentals based on a
percentage of sales in excess of stated amounts. Generally, the
leases have primary terms ranging from 20 to 30 years and include
renewal options ranging from 10 to 15 years.
At February 3, 1996, minimum rental commitments under capital
leases and operating leases with terms in excess of one year are as
follows:
Capital Operating
Fiscal Year End Leases Leases
1997 $ 2,179 $ 24,621
1998 2,179 23,754
1999 2,179 23,050
2000 2,165 20,900
2001 2,009 19,116
Thereafter 19,209 157,776
-------- --------
Total minimum rental commitments 29,920 $ 269,217
=========
Estimated insurance, taxes,
maintenance and utilities (7,413)
Net minimum rental commitments 22,507
Imputed interest (rates ranging
from 8.00% to 17.80%) (11,189)
--------
Present value of net minimum
rental commitments 11,318
Less current installments of
capital lease obligations (472)
--------
Capital lease obligations,
excluding current installments $ 10,846
========
Contingent rentals on capital leases are insignificant.
Total rental expense for operating leases was
approximately $41,000, $39,000 and $30,000 for the years ended
February 3, 1996, January 28, 1995 and January 29, 1994,
respectively, including contingent rents of $5,000, $4,300 and
$3,100.
Note I - Subordinated Debentures
In October 1993, the Company issued $86,250 of 4.75%
convertible subordinated debentures, due November 1, 2003, with
interest due semi-annually. The debentures are convertible into the
Company's Common Stock at any time prior to maturity, unless
previously redeemed, at a conversion price of $42.70 per share. The
debentures are redeemable for cash at any time on or after November
15, 1996, at the option of the Company at specified redemption
prices.
In March 1994, the Company issued 7.50% junior
subordinated debentures with a face value of $17,500. The
debentures were discounted to reflect their fair value and have an
accreted carrying value of $14,255 at February 3, 1996.
During the year ended January 29, 1994, a $5,000 convertible
subordinated debenture was converted into Common Stock at a
conversion price of $16 per share.
Note J - Retirement and Savings Plan and Other Benefits
Proffitt's and Younkers sponsor profit sharing and savings plans
that cover substantially all full-time employees. Employees may
contribute a portion of their salary, subject to limitation, to the
plans. The Company contributed an additional amount, subject to
limitation, based on the voluntary contribution of the employee. In
addition, Younkers contributes to the plan an amount based on a
percentage of income or an amount authorized by the Board of
Directors. Company contributions charged to expense under these
plans, or similar predecessor plans, for the years ended February
3, 1996, January 28, 1995, and January 29, 1994 were $1,216, $1,106
and $1,905, respectively. As a part of a 1987
acquisition, Younkers assumed certain obligations under a frozen
defined benefit pension plan. Younkers' funding policy with respect
to the plan is consistent with the funding requirements of federal
laws and regulations. The following table sets forth the plan's
funded status and amounts recognized in the Company's consolidated
balance sheets:
February 3, January 28,
1996 1995
Accumulated benefit obligation,
entirely vested $ 5,204 $ 4,903
======== ========
Plan assets at fair value
(primarily funds on deposit
with a financial institution) $ 5,327 $ 4,903
Projected benefit obligation
for service rendered to date (5,204) (4,903)
-------- --------
Plan assets in excess of
projected benefit obligation 123 0
Unrecognized net loss from
past experience different from
that assumed and effects of
changes in assumptions 1,239 1,535
Prepaid pension cost $ 1,362 $ 1,535
======== ========
Net periodic cost (benefit) included in the Company's
operating results for the frozen plan is insignificant. The
weighted average discount rate used in determining the actuarial
present value of the projected benefit obligation was 8.5% for the
years ended February 3, 1996 and January 28, 1995 and 7.0% for the
year ended January 29, 1994. The expected long-term rate of return
on plan assets was 8.0% for each year.
Younkers provides certain health care benefits for eligible retired
employees who have 20 years of service with the Company and who
have been covered under the Company's active medical insurance
plan. In addition, another group of retirees, resulting from a 1987
acquisition, are eligible for certain life insurance benefits. The
plans are not funded. At February 3, 1996 and January 28, 1995, the
Company's accrued liability for such benefits was $3,225 and
$3,372, respectively, with approximately one-half representing the
accumulated postretirement benefit obligation for current retirees
and one-half representing unrecognized prior service cost and
unrecognized net gains. Net periodic postretirement benefit costs
included in the Company's operating results for these health care
benefits were insignificant.
The Company has certain deferred compensation plans
providing benefits to selected current and former employees. The
liability for deferred compensation was approximately $2.5 million
for the years ended February 3, 1996 and January 28, 1995.
Note K - Stock Transactions
During April 1993, Younkers issued 2,371 shares of
Common Stock through a public offering. The total proceeds received
from the sale of these shares were approximately $69.1 million
after offering expenses. Proceeds of the shares sold, along with
proceeds from the sale and lease back transaction, were used to
repay the remaining balance of term debt associated with the
acquisition of the department store division of the H.C. Prange
Company in September 1992 and to pay down the Younkers previous
revolving line of credit.
In February and March 1993, Proffitt's sold 2,395 shares of Common
Stock at $22.25 per share in a public offering. Net proceeds to the
Company were approximately $50.2 million after the underwriting
discount and offering expenses.
On March 31, 1994, Proffitt's issued 600 shares of Series A
Cumulative Convertible Exchangeable Preferred Stock in a private
offering. Net proceeds to the Company were approximately $28.9
million after offering expenses. Dividends are cumulative and are
paid in March and September at $3.25 per annum per share. The
Preferred Stock is convertible into Common Stock at a price of
$21.10 per share and has a liquidation preference of $50
per share. The Company may redeem the stock, in whole or in part,
at $52.50 per share after two years based on certain conditions,
and in any event after four years. The stock is exchangeable at the
Company's option in whole on any dividend payment date on the basis
of $50 of 6.50% exchange debentures for each share. The stock gains
voting rights when three semi-annual dividends are in arrears, and
at that time, the shareholder may appoint one representative to the
Company's Board of Directors.
In March 1995, the Board of Directors of Proffitt's, Inc. adopted
a shareholder rights plan. Each outstanding share of Common Stock
has one preferred stock purchase right attached. The rights
generally become exercisable ten days after an outside party
acquires, or makes an offer for, 20% or more of the Common Stock.
Each right entitles its holder to buy 1/100 share of Proffitt's,
Inc. Series C Junior Preferred Stock at an exercise price of $85.
Once exercisable, if the Company is involved in a merger or other
business combination or an outside party acquires 20% or more of
the Common Stock, each right will be modified to entitle its holder
(other than the acquiror) to purchase common stock of the acquiring
company or, in certain circumstances, Proffitt's, Inc. Common Stock
having a market value of twice the exercise price of the right. The
rights expire on March 28, 2005.
The Company has available 33 shares of authorized, unissued Series
B Preferred Stock.
Note L - Stock Option and Stock Purchase Plans
The Company's 1987 Stock Option Plan, as amended,
provided for the granting of options of Common Stock not to exceed
490 shares to officers, key employees and Directors. No additional
options are to be granted under the 1987 Plan. On March 1, 1994,
the Company's Board of Directors adopted the Proffitt's, Inc. 1994
Long-Term Incentive Plan pursuant to which stock options, stock
appreciation rights, restricted shares of Common Stock and
performance units may be awarded to officers, key employees and
Directors. The 1994 Plan, as amended, provides for granting of
2,911 shares of Common Stock of the Company. At February 3, 1996,
30 restricted shares of Common Stock have been awarded under the
1994 Plan. At February 3, 1996, the 1994 Plan has available for
grant 1,239 shares of Common Stock of the Company.
Stock option activity was as follows:
Shares Stock Option Price Range
Balance at January 30, 1993 951 $ 5.250 $ 23.470
Granted 213 23.625 34.950
Exercised (127) 5.250 12.000
Cancelled (7) 23.470 23.470
-----
Balance at January 29, 1994 1,030 5.250 34.950
Granted 783 14.540 24.500
Exercised (118) 5.250 23.625
Cancelled (43) 7.500 34.180
-----
Balance at January 28, 1995 1,652 5.250 34.950
Granted 455 17.470 32.250
Exercised (178) 5.250 25.375
Cancelled (89) 5.250 32.650
-----
Balance at February 3, 1996 1,840 7.500 34.950
=====
On February 3, 1996 (merger effective date), Younkers'
stock options were assumed by the Company using the conversion
number of .98. On this date, these stock options became fully
vested. The above stock option activity has been restated to
include Younkers' option activity for the fiscal years presented.
At February 3, 1996, incentive and nonqualified stock options for
1,143 shares were exercisable. All options were granted at not less
than fair market value at dates of grant, and the maximum term of
an option may not exceed ten years.
The Proffitt's, Inc. 1994 Employee Stock Purchase Plan
(the "Stock Purchase Plan") was adopted on November 12, 1994 by the
Board of Directors of the Company. The Stock Purchase Plan provides
that an aggregate of 350 shares of the Company's Common Stock is
available for purchase. Under the Stock Purchase Plan, an eligible
employee may elect to participate by authorizing payroll deductions
of not more than $2.4 per Plan year to be applied toward the
purchase of the Company's Common Stock. The purchase price per
share is 85% of the lesser of the closing price per share on the
last business day preceding (i) the Grant Date or (ii) the Exercise
Date. Thirteen shares of the Company's Common Stock were purchased
under the Stock Purchase Plan for the Plan year ending January 31,
1996. At January 31, 1996, the Stock Purchase Plan has available
for future offerings 337 shares of the Company's Common Stock.
Note M - Related Party Transactions
In February 1989, the Company entered into an agreement
with the Chairman of the Board and Chief Executive Officer for an
unsecured $500 interest-free loan due January 31, 1999. The loan
was made as a supplement to this individual's base compensation,
and interest was imputed on this loan at 5.54% for the year ended
February 3, 1996.
The Company is obligated under 6.50% second mortgage
real estate notes to a Director of the Company in the amount of
$1,580.
A Director of the Company owns $1,637 of the 7.50% junior
subordinated debentures.
Prior to the merger, Younkers issued shares through a
public offering which was managed by Goldman, Sachs & Co., an
officer of which served on Younkers Board of Directors. Younkers
also engaged Goldman, Sachs & Co. to serve as financial advisors in
connection with the hostile takeover defense matter and the
Proffitt's merger.
During June 1993, Younkers completed the sale and lease back of the
eight owned store properties acquired from H. C. Prange Company
("Prange") with net proceeds of approximately $31,000. This was
considered in the allocation of the original purchase price and
resulted in no gain or loss to Younkers. Younkers incurred sales
commissions of $800 on this transaction with a company whose
Chairman was on the Younkers Board of Directors.
In connection with the acquisition of the Prange
department stores, Younkers entered into agreements with Prange for
a transitional management information system and distribution
services for which it incurred $1,754 for the year ended January
29, 1994. The then-president of Prange became a Director of
Younkers subsequent to the acquisition. In June 1993, Younkers
purchased from Prange the Green Bay Distribution Center for $2,450
and, during the second quarter of the year ended January 29, 1994,
brought in-house the management information systems.
Note N - Changes in Accounting Methods
Effective January 31, 1993, Proffitt's changed its
method of accounting for inventory to include certain purchasing
and distribution costs. Previously, these costs were charged to
expense in the period incurred rather than in the period in which
the merchandise was sold. The cumulative effect of this change
(which includes the impact on Proffitt's and Younkers -see Note A)
for periods prior to January 31, 1993 was $2,273 (net of income
taxes of $1,532). The effect of this change on the fiscal year
ended January 29, 1994 was to increase net income before the
cumulative effect by $165, or $.01 per common share.
Effective January 31, 1993, Proffitt's also changed its method
of accounting for store pre-opening costs to expensing such costs
when incurred. Previously, these costs were amortized over the 12
months immediately following the individual store openings.
Younkers has historically expensed such costs when incurred. The
cumulative effect of this change for periods prior to January 31,
1993 was $369 (net of income taxes of $236). The effect of this
change on the fiscal year ended January 29, 1994 was to decrease
net income before cumulative effect by $1,665, or $.09 per common
share. Effective January 30, 1994, Proffitt's changed
its method of accounting for inventory to the last-in, first-out
(LIFO) method for approximately 76% of its inventories. Previously,
all inventories were valued using the first-in, first-out (FIFO)
method. Younkers has historically valued its inventories under the
LIFO method. The cumulative effect of this change is not presented
because it is not determinable.
Note O - Fair Values of Financial Instruments
The following methods and assumptions were used to
estimate the fair value of each class of financial instrument:
The fair values of cash and cash equivalents, accounts
receivable, and short-term debt approximates cost due to the
immediate or short-term maturity of these instruments.
For variable rate notes that reprice frequently, fair
value approximates carrying value. The fair value of fixed rate
notes are estimated using discounted cash flow analyses with
interest rates currently offered for loans with similar terms and
credit risk.
The fair values of convertible subordinated debentures are based on
quoted market prices. For junior subordinated debentures, the fair
values are estimated using discounted cash flow analyses with
interest rates currently offered for financial instruments with
similar terms and credit risk.
The fair value of the Preferred Stock is estimated at
the market price of Proffitt's, Inc. Common Stock into which the
Preferred Stock was convertible at February 3, 1996.
The fair values of the Company's aforementioned
financial instruments at February 3, 1996 were as follows:
Carrying Estimated
Amount Fair Value
Cash and cash equivalents $ 26,157 $ 26,157
Accounts receivable 44,878 44,878
Fixed rate notes payable 7,887 8,327
Variable rate notes payable 45,800 45,800
Fixed rate real estate
and mortgage notes 77,410 77,224
Variable rate real estate
and mortgage notes 19,955 19,955
Convertible subordinated debentures 86,250 75,900
Junior subordinated debentures 14,255 14,255
Convertible exchangeable
Preferred Stock 28,850 34,834
Note P - Merger, Restructuring and Integration Costs
In connection with the merger of Proffitt's and
Younkers, the two companies incurred certain costs to effect the
merger and other costs to restructure and integrate the combined
operating companies. Those costs were comprised of the following:
Merger transaction costs, principally
investment banking, legal and
other direct merger costs $ 8,778
Severance and related benefits 3,235
Abandonment of duplicate administrative
office space and property and duplicate
data processing equipment and software
(including leases) 7,422
Other costs 1,387
-----------
$ 20,822
===========
Included in the February 3, 1996 balance sheet caption "accrued
expenses" is $26,247 representing amounts expected to be disbursed
in 1996 for merger transaction, severance and other costs. Included
in the balance sheet caption "other long-term liabilities" is
$2,695 representing the present value of remaining lease payments
allocable to the Younkers administrative office space being
permanently vacated in 1996. These lease payments will be disbursed
through August 2005.
Note Q - Quarterly Financial Information
In the following summary of quarterly financial
information, all adjustments necessary for a fair presentation of
each period were included.
<TABLE>
<CAPTION>
(Unaudited)
First Second Third Fourth
Quarter Quarter Quarter Quarter
<S> <C> <C> <C> <C>
Fiscal year ended February 3, 1996
Net sales $ 287,125 $ 278,798 $ 322,972 $444,603
Gross margin 100,117 100,314 114,145 145,704
Income (loss)
before extraordinary items 3,648 2,479 6,922 (19,448)
Net income (loss) 3,648 2,479 6,922 (21,508)
Earnings (loss) per common share:
Before extraordinary item 0.16 0.10 0.33 (1.02)
Extraordinary item (0.11)
Earnings (loss) per common share 0.16 0.10 0.33 (1.13)
Fiscal year ended January 28, 1995
Net sales 211,715 267,622 310,022 427,099
Gross margin 69,425 93,105 110,976 147,639
Net income 625 1,737 5,598 21,784
Earnings per common share 0.02 0.06 0.27 1.12
</TABLE>
In addition to the extraordinary loss on the early
extinguishment of debt, the impairment of long-lived assets and the
merger, restructuring and integration charges recorded in the
fourth quarter for the year ended February 3, 1996, the Company
also revised certain estimates and recorded other charges in the
fourth quarter as follows:
Provision for bad debts $ 2,000
Depreciation 700
Litigation 5,000
Vendor chargebacks 800
Conversion of Younkers'
leased shoe operations 2,400
------------
$ 10,900
============
REPORT OF INDEPENDENT ACCOUNTANTS
Board of Directors
Proffitt's, Inc.
We have audited the accompanying consolidated balance sheets of
Proffitt's, Inc. and Subsidiaries as of February 3, 1996 and
January 28, 1995, and the related consolidated statements of
income, shareholders' equity and cash flows for each of the three
years in the period ended February 3, 1996. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audits. The consolidated financial
statements give retroactive effect to the merger with Younkers,
Inc., which has been accounted for as a pooling of interests as
described in Note A to the consolidated financial statements. We
did not audit the financial statements of Younkers for the years
ended January 28, 1995 and January 29, 1994. Such statements
reflect aggregate total assets constituting 38.3% and 54.7% in 1994
and 1993, respectively, and aggregate total revenues constituting
49.3% and 74.9% in 1994 and 1993, respectively, of the related
consolidated totals. Those statements were audited by other
auditors, whose reports have been furnished to us, and our opinion,
insofar as it relates to the amounts included for Younkers, Inc. is
based solely on the respective reports of the other auditors.
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 and
the respective reports of the other auditors provide a reasonable
basis for our opinion.
In our opinion, based on our audits and the respective reports of
the other auditors, the consolidated financial statements referred
to above present fairly, in all material respects, the consolidated
financial position of Proffitt's, Inc. and Subsidiaries as of
February 3, 1996 and January 28, 1995 and the consolidated results
of their operations and their cash flows for each of the three
years in the period ended February 3, 1996, in conformity with
generally accepted accounting principles.
As described in Note N to the financial statements, the Company
changed its method of costing inventory, accounting for store
pre-opening expenses and accounting for income taxes in the year
ended January 29, 1994 and changed its method of valuing inventory
in the year ended January 28, 1995.
Atlanta, Georgia
March 15, 1996 /s/ COOPERS & LYBRAND, L.L.P.
REPORT OF MANAGEMENT
The accompanying consolidated financial statements, including the
notes thereto, and the other financial information presented in the
Annual Report have been prepared by management. The financial
statements have been prepared in accordance with generally accepted
accounting principles and include amounts that are based upon our
best estimates and judgements. Management is responsible for the
consolidated financial statements, as well as the other financial
information in this Annual Report.
The Company maintains an effective system of internal accounting
control. We believe that this system provides reasonable assurance
that transactions are executed in accordance with management
authorization and that they are appropriately recorded in order to
permit preparation of financial statements in conformity with
generally accepted accounting principles and to adequately
safeguard, verify, and maintain accountability of assets.
Reasonable assurance is based on the recognition that the
cost of a system of internal control should not exceed the benefits
derived.
The consolidated financial statements and related notes have been
audited by independent certified public accountants. Management has
made available to them all of the Company's financial records and
related data and believes all representations made to them during
their audits were valid and appropriate. Their reports provide an
independent opinion upon the fairness of the financial statements.
The Audit Committee of the Board of Directors is composed of four
independent Directors. The Committee is responsible for
recommending the independent certified public accounting firm to be
retained for the coming year, subject to shareholder approval. The
Audit Committee meets periodically with the independent auditors,
as well as with management, to review accounting, auditing,
internal accounting control, and financial reporting matters. The
independent auditors have unrestricted access to the Audit
Committee.
/s/ R. Brad Martin /s/ James E. Glasscock
R. Brad Martin James E. Glasscock
Chairman of the Board and Executive Vice President, Chief
Chief Executive Officer Financial Officer,
and Treasurer
MARKET INFORMATION
The Company's Common Stock trades on the NASDAQ Stock Market under
the symbol PRFT. As of March 15, 1996, there were approximately
1,054 shareholders of record. Below is a summary of the high and
low bid quotations for the Company's Common Stock for each
quarterly period for the prior two years. The source of these
quotations is the Monthly Statistical Report of the National
Association of Securities Dealers, Inc. These quotations represent
inter-dealer prices for actual transactions, without adjustment for
retail markup, markdown, or commission.
The Company presently follows the policy of retaining
earnings to provide funds for the operation and expansion of the
business and has no present intention to declare cash dividends in
the foreseeable future. Future dividends, if any, will be
determined by the Board of Directors of the Company in light of
circumstances then existing, including the earnings of the Company,
its financial requirements, and general business conditions. The
Company declared no dividends to common shareholders in either 1995
or 1994.
Fiscal Year Ended
February 3, 1996 January 28, 1995
Price Range Price Range
Quarter High Low High Low
First 26 1/2 20 3/4 25 3/4 16 1/2
Second 33 24 19 3/4 14 3/4
Third 34 1/4 23 1/8 21 3/4 14 3/4
Fourth 29 21 1/2 25 1/4 17 3/4
COMMITMENT TO GROWTH
Since becoming a public company in 1987, Proffitt's, Inc.
has experienced tremendous growth. At that time, the Company
operated only five stores, all located in metropolitan Knoxville,
Tennessee, with annual revenues of $40 million. The successful
completion of the Lovemans, Hess, McRae's, Parks-Belk, and Younkers
transactions, coupled with the construction of several new units,
has allowed us to become one of the fastest growing department
store companies in the United States. The Company now operates 103
stores in sixteen states and generates annual sales in excess of
$1.3 billion.
We are committed to and have the resources for continued
expansion. Through future acquisitions and new store construction,
combined with sales gains in existing stores, particularly in cases
where we have made substantial capital investments, Proffitt's,
Inc. should continue to grow at an attractive rate and produce the
returns expected for our shareholders.
HISTORY OF ACQUISITIONS
Company Date Stores Gross Square Feet Locations
Lovemans 1988 5 340,000 GA, TN
Hess 1992 8 526,000 TN, VA
Hess 1993 10 674,000 GA, KY, VA
McRae's 1994 28 2,806,000 AL, FL, LA,
MS
Parks-Belk 1995 3 225,000 TN
Younkers 1996 51 4,961,400 IA, IL, MI,
MN, NE, SD,
WI
STORE LOCATIONS
PROFFITT'S STORES
<States>GEORGIA
<Cities>Dalton
<Malls>Walnut Square
<Cities>Rome
<Malls>Mt. Berry Square
<States>KENTUCKY
<Cities>Ashland
<Malls>Ashland Town Center
<Cities>Elizabethtown
<Malls>Towne Mall
<States>NORTH CAROLINA
<Cities>Asheville
<Malls>Biltmore Square
<States>TENNESSEE
<Cities>Athens
<Malls>Proffitt's Plaza
<Cities>Chattanooga
<Malls>Hamilton Place Mall
<Malls>Northgate Mall
<Cities>Cleveland
<Malls>Bradley Square
<Cities>Greeneville
<Malls>Greeneville Commons
<Cities>Johnson City
<Malls>The Mall at Johnson City
<Cities>Kingsport
<Malls>Fort Henry Mall
<Cities>Knoxville
<Malls>East Towne Mall
<Malls>West Town Mall
<Cities>Maryville
<Malls>Foothills Mall
<Cities>Morristown
<Malls>College Square
<Cities>Oak Ridge
<Malls>Oak Ridge Mall
<States>VIRGINIA
<Cities>Bristol
<Malls>Bristol Mall
<Cities>Chesapeake
<Malls>Chesapeake Square
<Malls>Greenbrier Mall
<Cities>Hampton
<Malls>Coliseum Mall
<Cities>Newport News
<Malls>Patrick Henry Mall
<Cities>Richmond
<Malls>Chesterfield Town Center
<Malls>Virginia Center Commons
<Cities>Virginia Beach
<Malls>Pembroke Mall
<sub1>McRAE'S STORES
<States>alabama
<Cities>Birmingham
<Malls>Brookwood Village
<Malls>Century Plaza
<Malls>Riverchase Galleria
<Malls>Roebuck Plaza
<Malls>Western Hills Mall
<Cities>Dothan
<Malls>Wiregrass Commons
<Cities>Florence
<Malls>Regency Square
<Cities>Gadsden
<Malls>Gadsden Mall
<Cities>Huntsville
<Malls>Madison Square
<Malls>Parkway City Mall
<Cities>Mobile
<Malls>Springdale Mall
<Cities>Montgomery
<Malls>Eastdale Mall
<Cities>Selma
<Malls>Selma Mall
<Cities>Tuscaloosa
<Malls>University Mall
<States>Florida
<Cities>Mary Esther
<Malls>Santa Rosa Mall
<Cities>Pensacola
<Malls>University Mall
<States>Louisiana
<Cities>Monroe
<Malls>Pecanland Mall
<States>Mississippi
<Cities>Columbus
<Malls>University Mall
<Cities>Gautier
<Malls>Singing River Mall
<Cities>Greenville
<Malls>Greenville Mall
<Cities>Hattiesburg
<Malls>TurtleCreek Mall
<Cities>Jackson
<Malls>Meadowbrook Mart
<Malls>Metrocenter Mall
<Malls>Northpark Mall
<Cities>Laurel
<Malls>Sawmill Square
<Cities>Meridian
<Malls>Village Fair Mall
<Cities>Natchez
<Malls>Natchez Mall
<Cities>Tupelo
<Malls>Barnes Crossing
<Cities>Vicksburg
<Malls>Pemberton Mall
<sub1>YOUNKERS STORES
<States>Iowa
<Cities>Ames
<Malls>North Grand Mall
<Cities>Bettendorf
<Malls>Duck Creek Plaza
<Cities>Cedar Falls
<Malls>College Square Mall
<Cities>Cedar Rapids
<Malls>Lindale Mall
<Malls>Westdale Mall
<Cities>Davenport
<Malls>Northpark Mall
<Cities>Des Moines
<Malls>Downtown
<Malls>Merle Hay Mall
<Malls>Southridge Mall
<Malls>Valley West Mall
<Cities>Dubuque
<Malls>Kennedy Center
<Cities>Fort Dodge
<Malls>Crossroads Center
<Cities>Iowa City
<Malls>Old Capitol Mall
<Cities>Marshalltown
<Malls>Marshalltown Plaza
<Cities>Mason City
<Malls>Southbridge Mall
<Cities>Sioux City
<Malls>Southern Hills Mall
<Malls>Town Square Downtown
<Cities>West Burlington
<Malls>Westland Mall
<States>Illinois
<Cities>Moline
<Malls>Southpark Mall
<States>Michigan
<Cities>Bay City
<Malls>Bay City Mall
<Cities>Holland
<Malls>West Shore Mall
<Cities>Marquette
<Malls>Marquette Plaza
<Cities>Port Huron
<Malls>Birchwood Mall
<Cities>Traverse City
<Malls>Cherryland Mall
<States>Minnesota
<Cities>Austin
<Malls>Oak Park Mall
<States>Nebraska
<Cities>Grand Island
<Malls>Conestoga Mall
<Cities>Lincoln
<Malls>Gateway Shopping Center
<Cities>Omaha
<Malls>Crossroads Mall
<Malls>Oakview Mall
<Malls>Westroads Mall
<States>South Dakota
<Cities>Sioux Falls
<Malls>The Empire Mall
<States>Wisconsin
<Cities>Appleton
<Malls>Fox River Mall
<Cities>Eau Claire
<Malls>London Square
<Cities>Fond du Lac
<Malls>Forest Mall
<Cities>Green Bay
<Malls>Port Plaza Mall
<Cities>Madison
<Malls>East Towne Mall
<Malls>West Towne Mall
<Cities>Manitowoc
<Malls>Edgewater Plaza
<Cities>Marinette
<Malls>Pine Tree Mall
<Cities>Marshfield
<Malls>Northway Mall
<Cities>Milwaukee
<Malls>Northridge Mall
<Malls>Southridge Mall
<Cities>Oshkosh
<Malls>Park Plaza
<Cities>Racine
<Malls>Regency Mall
<Cities>Sheboygan
<Malls>Downtown
<Cities>Sturgeon Bay
<Malls>Downtown
<Cities>Superior
<Malls>Mariner Mall
<Cities>Wausau
<Malls>Wausau Center
<Cities>Wisconsin Rapids
<Malls>Rapids Mall
DIRECTORS AND OFFICERS
PROFFITT'S, INC.
DIRECTORS
Bernard E. Bernstein
Partner in the Knoxville,
Tennessee law firm of
Bernstein, Stair & McAdams
Edmond D. Cicala
President of Edmond Enterprises, Inc.
Retired Chairman and
Chief Executive Officer of the
Goldsmith's Division of Federated
Department Stores
Ronald de Waal
Chairman of We International, B.V.,
the Netherlands
Gerard K. Donnelly
Chairman of Princeton
Middletown Partners, Inc.
Former President and Chief
Executive Officer of
H. C. Prange Company
Donald F. Dunn
Retired Senior Vice President of Allied Stores Corporation
Michael S. Gross
Vice President of Apollo Capital
Management, Inc.
G. David Hurd
Emeritus Chairman and retired
Chief Executive Officer of
The Principal Financial Group
Richard D. McRae
Former Chairman, President,
and Chief Executive Officer of
McRae's, Inc.
C. Warren Neel
Dean of the College of Business Administration at the
University of Tennessee, Knoxville
Harwell W. Proffitt
Former Chairman, President,
and Chief Executive Officer of
Proffitt's, Inc.
Gerald Tsai, Jr.
Chairman, President, and
Chief Executive Officer of
Delta Life Corporation
PROFFITT'S, INC.
OFFICERS
R. Brad Martin
Chairman of the Board of Directors
and Chief Executive Officer
W. Thomas Gould
Vice Chairman of the Board of
Directors and Chairman of the
Younkers Division of Proffitt's, Inc.
James A. Coggin
President and Chief Operating Officer
Tom R. Amerman
Executive Vice President of
Special Projects
David W. Baker
Senior Vice President of Operations
Julia A. Bentley
Senior Vice President of Investor Relations and Planning
and Secretary
James E. Glasscock
Executive Vice President,
Chief Financial Officer,
and Treasurer
Brian J. Martin
Senior Vice President of
Human Resources and Law
General Counsel
Michael R. Molitor
Senior Vice President of
Merchandise Planning and Analysis
James E. VanNoy
Senior Vice President of
Systems Support
John J. White
Senior Vice President of Profit Improvement and Special
Projects
William L. White, III
Senior Vice President of
Systems Development
PROFFITT'S DIVISION OFFICERS
Frederick J. Mershad
President and Chief Executive Officer
A. Coleman Piper
Executive Vice President of Stores
Don M. Alexander
Vice President of Sales Promotion
Linda Kerr Gannaway
Vice President and
General Merchandise Manager
Max W. Jones
Vice President and
General Merchandise Manager
McRAE'S DIVISION OFFICERS
Gary L. Howard
President and Chief Executive Officer
Robert Oliver
Executive Vice President of Stores
Thomas M. Ford
Vice President of Sales Promotion
H. R. Harvey
Vice President and
General Merchandise Manager
Sharron Williams
Senior Vice President and
General Merchandise Manager
YOUNKERS DIVISION OFFICERS
Robert M. Mosco
President and Chief Executive Officer
Toni E. Browning
Senior Vice President of Stores
Robert H. Ferguson
Senior Vice President of Marketing and
Sales Promotion
Frank E. Kulp
Senior Vice President and
General Merchandise Manager
Alan E. Miller
Senior Vice President and General Merchandise Manager
John T. Parros
Senior Vice President and General Merchandise Manager
JoAnn R. Sauvageau
Senior Vice President and General Merchandise Manager
Our Corporate Mission
Our Company will provide opportunities for its associates and will
create value for its shareholders through the exceptional operation
of retail enterprises. Our stores will feature outstanding
assortments of premier merchandise and will delight our guests with
superior and personalized customer service. Our associates will
follow the highest level of ethical standards in conducting our
business affairs.
Corporate Information
Form 10-K Report
A copy of the Form 10-K Annual Report, including financial
statements and schedules, as filed with the Securities and Exchange
Commission, will be furnished without charge on written request to:
Senior Vice President of Investor Relations
Proffitt's, Inc.
P.O. Box 9388
Alcoa, Tennessee 37701
Legal Counsel
Sommer & Barnard, PC
Indianapolis, Indiana
Waring Cox
Memphis, Tennessee
Independent Accountants
Coopers & Lybrand L.L.P.
Atlanta, Georgia
Transfer Agent
and Registrar
Union Planters National Bank
Memphis, Tennessee
(901) 383-6980
PROFFITT'S DIVISION
HOME OFFICES
115 North Calderwood
Alcoa, Tennessee 37701
(423) 983-7000
PROFFITT'S DIVISION
MAILING ADDRESS
P.O. Box 9388
Alcoa, Tennessee 37701-9388
McRAE'S DIVISION
HOME OFFICES
3455 Highway 80 West
Jackson, Mississippi 39209
(601) 968-4400
McRAE'S DIVISION
MAILING ADDRESS
P.O. Box 20080
Jackson, Mississippi 39289-0080
YOUNKERS DIVISION
HOME OFFICES
701 Walnut Street
Des Moines, Iowa 50397
(515) 244-1112
YOUNKERS DIVISION
MAILING ADDRESS
P.O. Box 1495
Des Moines, Iowa 50397
EXHIBIT 21.1
SUBSIDIARIES OF THE REGISTRANT
PROFFITT'S, INC. AND SUBSIDIARIES
Name of Subsidiary State of Incorporation
McRae's, Inc. Mississippi
McRae's of Alabama, Inc. Alabama
Parks Enterprises, Inc. Tennessee
PDS Agency, Inc. Tennessee
Proffitt's Investments, Inc. Tennessee
Proffitt's of Tri-Cities, Inc. Tennessee
Younkers Credit Corporation Delaware
Younkers Funding Corporation Delaware
Younkers, Inc. Delaware
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration
Statement of Proffitt's, Inc. on Form S-8 of our report dated March
15, 1996, on our audits of the consolidated financial statements of
Proffitt's, Inc. as of February 3, 1996 and January 28, 1995, and
for each of the three years in the period ended February 3, 1996,
and our report dated March 15, 1996 on our audit of the financial
statement schedule listed in Item 14(a)2 of Form 10-K, which
reports are incorporated by reference in this Form 10-K.
/s/COOPERS & LYBRAND L.L.P.
Atlanta, Georgia
April 22, 1996
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in the Registration
Statement No. 33-88390 of Proffitt's, Inc. on Form S-8 of our
report dated March 3, 1995, with respect to the consolidated
financial statements of Younkers, Inc. and subsidiary for the year
ended January 28, 1995 not separately presented, appearing in this
Annual Report of Form 10-K of Proffitt's, Inc. for year ended
February 3, 1996.
/s/Deloitte & Touche LLP
Des Moines, Iowa
April 22, 1996
Consent of Independent
Auditors
We consent to the incorporation by reference in the Registration
Statement of Proffitt's, Inc. (Form S-8 No. 33-88390) pertaining to
the Proffitt's, Inc. 1994 Employee Stock Purchase Plan of our
report dated March 3, 1994 (with respect to the consolidated
statements of earnings, shareholders' equity, and cash flows of
Younkers, Inc. for the year ended January 29, 1994, not separately
presented), appearing in the Annual Report (Form 10-K) of
Proffitt's, Inc. for the year ended February 3, 1996.
/s/ERNST & YOUNG
Des Moines, Iowa
April 22, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-3-1996
<PERIOD-END> FEB-3-1996
<CASH> 26,157
<SECURITIES> 0
<RECEIVABLES> 44,878
<ALLOWANCES> 0
<INVENTORY> 286,474
<CURRENT-ASSETS> 378,752
<PP&E> 381,839
<DEPRECIATION> 0
<TOTAL-ASSETS> 835,666
<CURRENT-LIABILITIES> 166,630
<BONDS> 312,184
0
28,850
<COMMON> 1,912
<OTHER-SE> 326,090
<TOTAL-LIABILITY-AND-EQUITY> 835,666
<SALES> 1,333,498
<TOTAL-REVENUES> 1,367,619
<CGS> 873,213
<TOTAL-COSTS> 873,213
<OTHER-EXPENSES> 148,146
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 26,098
<INCOME-PRETAX> (4,493)
<INCOME-TAX> (1,906)
<INCOME-CONTINUING> (6,399)
<DISCONTINUED> 0
<EXTRAORDINARY> (2,060)
<CHANGES> 0
<NET-INCOME> (8,459)
<EPS-PRIMARY> (0.54)
<EPS-DILUTED> 0
