PROFFITT'S, INC.
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COMMON STOCK
405,833 SHARES
This Prospectus relates to up to 405,833 shares (the "Option
Shares") of the common stock, $0.10 par value share (the "Common Stock")
of Proffitt's, Inc., a Tennessee corporation (the "Company") issuable
upon exercise of certain outstanding options (the "Options") granted
pursuant to the Parisian, Inc. Management Incentive Plan (the "Incentive
Plan") or the Parisian, Inc. Stock Option Plan for Officers (the "Stock
Option Plan" and collectively with the Incentive Plan, the "Plans").
The Options originally represented rights to purchase common shares
of Parisian, Inc., an Alabama corporation ("Parisian"). Effective
October 11, 1996, Casablanca Merger Corp., a wholly owned subsidiary of
the Company, merged with and into Parisian (the "Merger"), with the
result that Parisian became a wholly owned subsidiary of the Company.
In connection with the Merger, each outstanding Option was converted
into an option to purchase a number of shares of Common Stock equal to
the number of Parisian common shares that could have been purchased
under such Option multiplied by .8, at a price per share of Common Stock
equal to the per share exercise price specified in the Option divided by
.8. The Options are otherwise subject to the same terms and conditions
as before the Merger.
The Common Stock is listed for trading on the Nasdaq Stock Market
under the symbol "PRFT." On November 15, 1996 the last reported sale
price for the Common Stock was $37 3/4.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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The date of this Prospectus is November 18, 1996.
NO PERSONS HAVE BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE
ANY REPRESENTATION OTHER THAN THOSE CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THE OFFERING OF
SECURITIES MADE HEREBY AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY
PROFFITT'S. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, ANY SECURITIES IN ANY JURISDICTION TO
OR FROM ANY PERSON TO WHOM IT IS NOT LAWFUL TO MAKE ANY SUCH OFFER IN
SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
DISTRIBUTION OF SECURITIES MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN
THE AFFAIRS OF PROFFITT'S SINCE THE DATE HEREOF OR THAT THE INFORMATION
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
TABLE OF CONTENTS
Page
AVAILABLE INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . .2
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE. . . . . . . . . . . .3
SUMMARY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
USE OF PROCEEDS. . . . . . . . . . . . . . . . . . . . . . . . . . . .8
INFORMATION ABOUT THE PLANS. . . . . . . . . . . . . . . . . . . . . .8
PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . 10
LEGAL OPINIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
EXPERTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other
information with the Securities and Exchange Commission (the
"Commission"). The reports, proxy statements and other information filed
by the Company with the Commission can be inspected and copied at the
public reference facilities maintained by the Commission at Room 1024,
450 Fifth Street, N.W., Washington, D.C. 20549, and should be available
at the following Regional Offices of the Commission: Northeast Regional
Office, 7 World Trade Center, 13th Floor, New York, New York 10048; and
Midwest Regional Office, CitiCorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661. Copies of such material can also be
obtained from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. In
addition, the Commission maintains a Web site (http://www.sec.gov) that
contains information regarding registrants that file electronically with
the Commission.
The Company has filed with the Commission a Registration Statement
on Form S-4 (together with any amendments thereto, the "Registration
Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the Option Shares. This Prospectus
does not contain all the information set forth in the Registration
Statement and the exhibits thereto. Such additional information may be
obtained from the Commission's principal office in Washington, D.C.
Statements contained in this Prospectus or in any document incorporated
in this Prospectus by reference as to the contents of any contract or
other document referred to herein or therein are not necessarily
complete, and in each instance reference is made to the copy of such
contract or other document filed as an exhibit to the Registration
Statement or such other document, each such statement being qualified in
all respects by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by the Company
(Commission File No. 0-15907) pursuant to the Exchange Act or the
Securities Act are incorporated by reference in this Prospectus:
1. The Company's Annual Report on Form 10-K for the fiscal year
ended February 3, 1996, and Amendment No. 1 thereto dated May
1, 1996;
2. The Company's Quarterly Reports on Form 10-Q for the quarters
ended May 4, 1996 and August 3, 1996;
3. The Company's Current Reports on Form 8-K filed with the
Commission on February 16, 1996, April 1, 1996, July 18, 1996,
August 12, 1996, August 30, 1996 and October 25, 1996,
respectively;
4. The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A dated May 27,
1987 and the Company's Registration Statement on Form S-3
dated October 19, 1993 (Registration No. 33-70000);
5. The Company's Registration Statement on Form 8-A dated April
3, 1995 in respect of the Company's Share Purchase Rights
Plan.
6. Information under the Caption "Unaudited Pro Forma Condensed
Combined Financial Statements" and the Consolidated Financial
Statements of Parisian, Inc. included in the Company's
prospectus dated August 16, 1996, included in the Registration
Statement.
All documents and reports filed by the Company pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
Prospectus shall be deemed to be incorporated by reference in this
Prospectus and to be a part hereof from the dates of filing of such
documents or reports. Any statement contained in a document incorporated
or deemed to be incorporated by reference herein shall be deemed to be
modified or superseded for purposes of this Prospectus to the extent
that a statement contained herein or in any other subsequently filed
document which also is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such document so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
This Prospectus incorporates documents by reference which are not
presented herein or delivered herewith. Such documents (other than
exhibits to such documents unless such exhibits are specifically
incorporated by reference) are available, without charge, to any person,
including any beneficial owner, to whom this Prospectus is delivered, on
written or oral request, within one business day of such request, to
Proffitt's, Inc., P.O. Box 9388, Alcoa, Tennessee 37701 (telephone
number: (423) 983-7000), attention: Investor Relations.
SUMMARY
THE COMPANY
The Company is a leading regional specialty department store
company offering a wide selection of fashion apparel, accessories,
cosmetics, and decorative home furnishings, featuring assortments of
premier brands and unique specialty merchandise. The Company's stores
are primarily anchor stores in leading regional malls. The Company's
principal executive offices are located at 115 North Calderwood, Alcoa,
Tennessee 37701, and its telephone number is (423) 983-7000.
THE OPTIONS
The Options originally represented rights to purchase common shares
of Parisian. As a result of the Merger, each outstanding Option was
converted into an option to purchase a number of shares of Common Stock
equal to the number of Parisian common shares that could have been
purchased under such Option multiplied by .8, at a price per share of
Common Stock equal to the per share exercise price specified in the
Option, divided by .8. The Options are otherwise subject to the same
terms and conditions as before the Merger.
THE PLANS
The Incentive Plan. The Incentive Plan is intended to enable
Parisian to attract and retain qualified management personnel. Eligible
participants include persons designated as "Managers" by the Board of
Directors of Parisian who have not previously served as officers of
Parisian. The exercise price per share of Common Stock of the Options
granted pursuant to the Incentive Plan is $22.50 or $25.50, depending on
whether the specified exercise price per Parisian common share in the
Option is $18.00 or $20.40, respectively. See "Information About the
Plans."
The Stock Option Plan. The Stock Option Plan is intended to enable
Parisian to attract and retain qualified executives. Participants
include persons holding the office of Vice President or higher of
Parisian. The exercise price per share of Common Stock is also $22.50
or $25.50, again depending on whether the specified exercise price per
Parisian common share in the Option is $18.00 or $20.40, respectively.
See "Information About the Plans."
<TABLE>
<CAPTION>
Selected Financial and Operating Data (1)
The selected financial and operating data below should be read in conjunction with the
Consolidated Financial Statements and Notes thereto of the Company and with Management's Discussion
and Analysis of Financial Condition and Results of Operations incorporated by reference in this
Prospectus. The selected financial and operating data as of and for the six months ended July 29,
1995 and August 3, 1996 are derived from unaudited financial statements as of such dates and for such
periods, but in the opinion of management, include all adjustments (consisting of only normal
recurring accruals) necessary for a fair presentation of such data.
Six Months
Fiscal Year Ended (2) Ended (3)
2/1/92 1/30/93 1/29/94 1/28/95 2/3/96 7/29/95 8/3/96
(Dollars in thousands, except per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Income Data:
Net Sales (4) . . . . . . . . $435,284 $601,677 $798,779 $1,216,498 $1,333,498 $565,923 $568,277
Costs and expenses:
Cost of sales . . . . . . . . 273,040 362,620 520,987 795,353 873,218 365,492 366,624
Selling, general and administrative
expenses. . . . . . . . . . . 112,793 158,920 192,028 284,748 324,650 142,885 141,485
Other operating expenses. . . 34,934 44,016 66,617 97,821 105,021 49,415 48,081
Expenses related to hostile takeover
defense (5) . . . . . . . . . 3,182 1,912
Impairment of long-lived assets (6). . . . 19,121
Merger, restructuring and integration
costs (7) . . . . . . . . . . 20,822 4,270
Gain on sale of assets (8). . (2,260)
Operating income (loss) . . . 14,517 36,121 19,147 38,576 (12,516) 6,219 10,077
Other income (expense):
Finance charge income, net of allocation to
purchasers of accounts
receivable (9). . . . . . . . 15,194 15,401 19,312 27,934 31,273 15,342 14,879
Interest expense. . . . . . . (15,102)(10) (9,445) (9,245) (20,781) (26,098) (12,576) (8,608)
Other income (expense), net . 1,817 (380)(11) 2,923 3,865 2,848 1,372 440
Income (loss) before provision for income
taxes, extraordinary loss and cumulative
effect of accounting changes. 16,426 41,697 32,137 49,594 (4,493) 10,357 16,788
Provision for income taxes. . 7,045 15,567 12,892 19,850 1,906 4,230 6,995
Income (loss) before extraordinary
loss and cumulative effect of accounting
changes . . . . . . . . . . . 9,381 26,130 19,245 29,744 (6,399) 6,127 9,793
Extraordinary loss on extinguishment of debt
(net of tax). . . . . . . . . (1,088) (2,060)
Cumulative effect of accounting changes
(net of tax) (12) . . . . . . (1,794) 1,904
Net income (loss) . . . . . . 9,381 24,336 20,061 29,744 (8,459) 6,127 9,793
Preferred stock dividends . . 1,694 1,950 975 796
Payment for early conversion of Preferred
Stock . . . . . . . . . . . . 3,032
Net income (loss) available to common
shares .. . . . . . . . . . . $9,381 $24,336 $20,061 $28,050 $(10,409) $5,152 $5,965
Earnings (loss) per common share before
extraordinary loss and cumulative effect of
accounting changes. . . . . . $1.07 $2.06 $1.09 $1.48 $(0.43) $0.27 $0.30
Extraordinary loss. . . . . . (0.06) (0.11)
Cumulative effect of accounting
changes . . . . . . . . . . . (0.14) 0.11
Earnings (loss) per common share . . . . $1.07 $1.92 $1.14 $1.48 $(0.54) $0.27 $0.30
Weighted average common shares outstanding
(in thousands) (13) . . . . . 8,788 12,707 17,667 18,922 19,372 19,316 29,186
Balance Sheet Data:
Working capital . . . . . . . $126,026 $180,091 $286,351 $283,162 $212,122 $204,467
Total assets. . . . . . . . . $274,441 $455,295 $575,449 $878,393 $835,666 $827,186
Senior long-term debt, less current
portion . . . . . . . . . . . $106,066 $193,555 $ 95,777 $190,216 $134,255 $120,822
Subordinated debt . . . . . . $ 86,250 $100,269 $100,505 $100,634
Shareholders' equity. . . . . $101,229 $143,107 $290,309 $360,611 $356,852 $365,120
</TABLE>
Notes to Selected Financial and Operating Data (In Thousands)
(1) Effective February 3, 1996, the Company combined its business with
Younkers, Inc., a publicly-owned retail department store chain. The
combination was structured as a tax-free transaction and has been
accounted for as a pooling of interests and accordingly, the financial
statements were restated for all periods to include the results of
operations and financial position of Younkers. Each share of
Younkers, Inc. Common Stock was converted into ninety eight
one-hundredths (.98) shares of the Company Common Stock, with
approximately 8,800 shares issued in the transaction.
(2) The Company's fiscal year ends on the Saturday nearest January 31.
Fiscal years presented consisted of 52 weeks except for the fiscal
year ended February 3, 1996 which consisted of 53 weeks (except for
the period ended January 30, 1993 which includes 53 weeks for
Younkers).
(3) The business of the Company is seasonal, and results for any period
within a fiscal year are not necessarily indicative of the results
that may be achieved for a full fiscal year.
(4) Net Sales include leased department sales, which represent sales by
retail vendors that lease store space. Leased department sales
accounted for approximately 6 to 7% of net sales for all periods
presented.
(5) Expenses incurred were related to the defense of the attempted hostile
takeover of Younkers by Carson Pirie Scott & Co.
(6) The Company adopted the provisions of Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of" 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
related to the write-down in carrying value of six operating stores
due to poor operating results, abandonment of duplicate warehouse and
leasehold improvements related to the Parks-Belk acquisition and the
Younkers merger, and a loss on abandonment of leasehold improvements
related to closed stores.
(7) In connection with the merger of the Company and Younkers, the two
companies incurred certain costs to effect the merger and other costs
to restructure and integrate the combined operating companies. The
costs incurred were comprised of merger transaction costs, severance
and related benefits, abandonment of duplicate administrative office
space and property and duplicate data processing equipment and
software (including leases), and other costs.
During the six-month period ended August 3, 1996, the Company incurred
additional merger, restructuring and integration costs primarily
related to the termination of the Younkers pension plan, continued
conversion of systems and consolidation of administrative functions.
(8) During the six-month period ended August 3, 1996, Younkers sold two
stores to a third party.
(9) On April 1, 1994, the Company began selling an undivided ownership
interest in its accounts receivable, recognizing no gain or loss on
the transaction. The ownership interest which may be transferred to
the purchaser is limited to $175,000 and is further restricted on a
basis of the level of eligible receivables and a minimum ownership
interest to be maintained by the Company.
Effective with the February 3, 1996 merger, Younkers replaced amounts
borrowed under a securitization program with the sale of (i) a fixed
ownership interest of $75,000 and (ii) a variable ownership interest
of up to $50,000 in its trade receivables.
(10) Includes accruals for interest expense of $1,400 resulting from an
Internal Revenue Service audit of Younkers.
(11) Includes nonrecurring start-up costs of $1,210 connected with the
acquisition of the Prange stores by Younkers.
(12) Effective as of the beginning of the fiscal year ended January 30,
1993, Younkers recognized a cumulative effect adjustment of $1,794
(net of income taxes of $1,225) due to the adoption of SFAS 106, under
which employers recognize the cost of retiree health and life
insurance benefits over the employees' period of service. Effective
January 31, 1993, the Company 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 was to increase net income $2,273
(net of income taxes of $1,532).
Effective January 31, 1993, the Company also changed its method of
accounting for store preopening costs to expensing such costs when
incurred. The cumulative effect of this change was to decrease net
income $369 (net of income taxes of $236). Previously, these costs
were amortized over the twelve months immediately following the
individual store openings. Younkers has historically expensed such
costs as incurred.
In 1992, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard ("SFAS") No. 109, Accounting for Income
Taxes, which requires a change from the deferred method to the asset
and liability method of accounting for income taxes. The Company
adopted the new accounting standard effective January 31, 1993.
Adoption of the new standard had no effect on the Company financial
position or results of operations. There would have been no impact
on the year ended January 30, 1993 had the standard been applied
retroactively. Younkers adopted SFAS 109 prior to the years
presented.
Effective January 30, 1994, the Company changed its method of
accounting for inventory to the last-in, first-out (LIFO) method for
a substantial portion 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.
(13) In January 1992, April 1992, March 1993 and April 1993, the Company
and Younkers completed public offerings of 2,645, 6,047, 2,395, and
2,371 shares of Common Stock, respectively, the proceeds of which were
utilized, in part, to reduce long-term debt and fund capital
expenditures related to the renovation, acquisition and opening of new
stores.
In October 1993, the Company completed a public offering of $86,250
of Convertible Subordinated Debentures, the proceeds of which were
used to reduce outstanding bank debt, fund capital expenditures
related to the renovation and expansion of stores, and for working
capital and general corporate purposes.
USE OF PROCEEDS
The amount of net proceeds to the Company from the sale of the
Option Shares depends upon the number of Options exercised for
cash, which the Company cannot estimate. The Company will add any
net proceeds received to the Company's working capital and will use
such net proceeds for general corporate purposes.
INFORMATION ABOUT THE PLANS
The following questions and answers summarize certain
provisions of the Plans. The information provided below includes
the material terms of the Plans, but is not necessarily complete
and is qualified in its entirety by reference to the Plans.
Who is eligible to participate in the Plans?
Participants in the Incentive Plan include any employee of
Parisian who has been designated a "Manager" by the Board of
Directors of Parisian, or a former manager, who held Options as of
October 11, 1996, and any manager to whom an Option is granted
following forfeiture of an Option by a participant, as described
below.
Participants in the Stock Option Plan include any employee of
Parisian who is the President or an Executive Vice President,
Senior Vice President or Vice President of Parisian or the Company,
or who formerly held one of such offices, and who held Options as
of October 11, 1996, or to whom an Option is granted following
forfeiture of an Option by a participant, as described below.
How do I exercise my Option?
To exercise your Option you must send to the Company: (i) a
written notice specifying (a) the number and the exercise price of
the Options you are exercising, (b) the date of exercise which may
not be earlier than the third business day after the Company
receives your notice, and (c) whether you are exercising by paying
cash for your Common Stock or by cashless exercise (as described
below) and (ii) if you are paying cash, a certified or cashier's
check, payable to the Company, for an amount equal to the aggregate
exercise price for the shares of Common Stock for which you are
exercising your option. If the Company maintains an employee stock
option plan at the time of your exercise which provides for
cashless exercise of employee stock options, you may elect to
exercise your options in accordance with the cashless exercise
provisions of such plan. The Company will issue to you a stock
certificate representing the number of shares of Common Stock you
purchase, and if any balance of shares not exercised remains
subject to your Option, a new Option of like tenor for the balance
of such shares.
You may not exercise your option at any time when exercise is
prohibited by the Company's insider trading policies then in
effect.
What is the exercise price of my Option?
The exercise price of your Option is equal to the per share
exercise price specified in your Option per Parisian common share
divided by .8. You will receive from the Company, in exchange for
your original Option, an option agreement representing your Option
and expressing the exercise price per share of Common Stock.
May I sell or transfer my Option?
Options granted pursuant to the Incentive Plan may not be
transferred without the written consent of the Administrator. The
"Administrator" shall be the Board of Directors of Parisian or a
committee of such Board designated to act as Administrator by the
Board. Options granted pursuant to the Stock Option Plan may be
transferred only in accordance with the provisions of the Stock
Option Plan discussed in the following paragraph.
An Option granted pursuant to the Stock Option Plan may only be
transferred to the spouse of the participant, his or her lineal
descendants who have attained the age of 21 years, and to certain
trusts whose beneficiaries may include only the participant, his or
her spouse and lineal descendants. The transferee must agree in
writing to be bound by the provisions of the Stock Option Plan. A
written notice of the transfer must be received by the Company ten
(10) days prior to the transfer. An Option holder who is not a
participant may transfer an Option only to the person who
transferred the Option to him or her, and only on the same terms
applicable to a transfer by a participant.
The trust instrument of any trust proposed as a transferee of
an Option must be approved by Parisian. Any modification to the
trust instrument not approved by Parisian will result in ownership
of the Option reverting to the person who transferred the Option to
the trust.
A participant in either of the Plans may designate a
beneficiary who will succeed to ownership of the participant's
Option upon the death of that participant. If no beneficiary is
designated, the beneficiary will be the participant's spouse, or if
none, the participant's estate.
May I sell the Option Shares I acquire on exercise of my Option?
You may sell the Option Shares you acquire on exercise of your
Option at any time permitted by the Company's insider trading
policies. However, if you are an "affiliate" of the Company within
the meaning of Rule 144 under the Securities Act, your sale of the
Option Shares is subject to the conditions of Rule 144. Generally,
under Rule 144 an affiliate is entitled to sell in "broker's
transactions" a number of shares that does not exceed the greater
of (i) one percent of the number of shares of Common Stock then
outstanding or (ii) the average weekly trading volume in the Common
Stock during the four calendar weeks preceding the required filing
with the Commission of Form 144 with respect to such sale.
Is my Option subject to forfeiture in any way?
Your Option will be forfeited if you have not exercised it in
full and your employment with Parisian is terminated on account of:
(i) proven dishonesty, theft, fraud or embezzlement; (ii) breach
of any fiduciary duty or duty of loyalty to Parisian; (iii)
involvement or participation (whether direct or indirect) in any
business competitive with the Company or Parisian without the prior
written consent of the Administrator; (iv) usurpation of any
business opportunity of the Company or Parisian without the prior
written consent of the Administrator; (v) conviction of a felony
or a crime involving moral turpitude; or (vi) divulgence to a
party unrelated to the Company or Parisian of any material
nonpublic confidential information concerning the Company or
Parisian or their respective businesses or activities. In
addition, any Options held by your designated beneficiary or
permitted transferee will also be forfeited.
Any Option granted under the Incentive Plan and so forfeited
will be granted by the Company to an eligible Manager of Parisian
designated by "Participant Representatives" who will be Parisian's
chief executive officer from time to time, D. Warren Bailey and
Steven B. Corenblum or, if such two individuals are at any time not
participants in the Stock Option Plan their respective successors
elected by the participants in the Stock Option Plan (the
"Participant Representatives"). With respect to forfeited Options
granted under the Stock Option Plan, the Option will be granted pro
rata to the other participants in the Stock Option Plan (not
including the Participant Representatives) provided such grant is
approved by the Board of Directors of Parisian.
When does my Option expire?
If not sooner exercised, your Option will expire in increments
on the fifteenth anniversary of each date on which it became
exercisable with respect to a portion of the shares that could be
purchased thereunder. All Options became fully exercisable on or
before October 11, 1996, and will fully expire not later than
October 10, 2011.
How will I be taxed with respect to my Option?
The Options are not incentive stock options under the Internal
Revenue Code. Generally, if you are the participant to whom the
Option was granted, the exercise of an Option by you will result in
ordinary federal taxable income to you in an amount equal to the
excess of the fair market value of the shares of Common Stock
purchased over the exercise price thereof. A deduction from
federal taxable income will be allowed to the Company in an amount
equal to the amount of ordinary income recognized by you. Upon a
subsequent disposition of your Option Shares, you will recognize a
short-term or long-term capital gain (or loss) equal to the
difference to the amount received and the tax basis of such shares,
usually the fair market value at the time of exercise.
If you are the participant to whom the Option was granted and
you transfer your Option to a permitted transferee in an arms-length
transaction, you will recognize ordinary federal taxable
income equal to the consideration received from your transferee at
the time of the transfer, and thereafter will have no further
income tax effect. If you transfer your Option in a non-arms-length
income equal to the consideration received at the time of the
transfer and, at the time of exercise by the transferee, in an
amount equal to the excess of the fair market value of the shares
of Common Stock purchased over the exercise price, minus the amount
of income recognized at the time of transfer. Examples of non-arms-length
transactions include gifts to family members and sales
at less than the fair market value of your Option.
If you are a transferee of an Option, you will recognize a
short-term or long-term capital gain (or loss) when you resell your
Option, or when you sell the Option Shares after exercise of your
Option. You will have no income tax effect on exercise of the
Option.
The federal income tax consequences described above are based
on the laws and regulations in effect on the date of this
Prospectus and future changes in those laws and regulations may
affect the tax consequences described. No discussion of state
income tax is included. YOU ARE URGED TO CONSULT WITH YOUR OWN TAX
ADVISER CONCERNING THE TAX CONSEQUENCES OF THE PLANS. NOTHING
CONTAINED IN THE FOREGOING DISCUSSION SHOULD BE CONSTRUED AS
INDIVIDUAL TAX ADVICE TO YOU.
PLAN OF DISTRIBUTION
A copy of this Prospectus will be delivered by the Company to
each holder of an Option as of the date of this Prospectus and to
each holder exercising an Option upon receipt by the Company of a
notice of exercise.
LEGAL OPINIONS
Certain legal matters in connection with the Option Shares will
be passed upon for the Company by Sommer & Barnard, Attorneys at
Law, PC.
EXPERTS
The consolidated financial statements appearing in the
Company's Form 10-K as of February 3, 1996 and January 28, 1995 and
for each of the three years in the period ended February 3, 1996,
have been audited by Coopers & Lybrand L.L.P., independent
accountants, as set forth in their report thereon and included
therein and incorporated by reference herein. Such report, as it
relates to the amounts included for Younkers, Inc., for the years
ended January 28, 1995 and January 29, 1994, is based solely on the
reports of Deloitte & Touche, LLP, and Ernst & Young, LLP,
independent accountants, respectively, included in such Form 10-K
and incorporated herein by reference. Such consolidated financial
statements are incorporated by reference herein in reliance upon
such reports given upon the authority of such firms as experts in
accounting and auditing.
The consolidated financial statements of Parisian as of
February 3, 1996 and January 28, 1995, and for each of the three
years in the period ended February 3, 1996, appearing in the
Registration Statement have been audited by Coopers & Lybrand
L.L.P., independent accountants, as set forth in their report
thereon appearing in the Registration Statement. Such consolidated
financial statements are included in the Registration Statement in
reliance upon such report given upon the authority of such firm as
experts in accounting and auditing.
