UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 2
FORM 10-K/A
(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.
<PAGE>
Item 8. Financial Statements and Supplemental Data
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 22,237 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. The
implementation 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" had no impact on the recorded
amount of goodwill.
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 $14,263 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
============
Note R - Hostile Takeover Defense
In 1995, prior to Proffitt's and Younkers' merger, Younkers was
subjected to a hostile takeover by Carson Pirie Scott. In
defending itself against the takeover, Younkers incurred legal fees
and investment banker advisory fees aggregating $3,182.
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.
Proffitt's, Inc.
_______________________________
Registrant
Date: December 31, 1996
/s/ Douglas Coltharp
________________________________
Douglas Coltharp
Executive Vice President and
Chief Financial Officer
Exhibit Index
Exhibit No. Description
23 Consent of Independent Auditors
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
December 30, 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
December 30, 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 LLP
Des Moines, Iowa
December 30, 1996
