<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): September 2, 1997
PROFFITT'S, INC.
----------------
(Exact Name of Registrant as Specified in Charter)
Tennessee 000-13113 82-0331040
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(State or Other (Commission (IRS Employer
Jurisdiction of File Number) Identification No.)
Incorporation)
3455 Highway 80 West, Jackson, Mississippi 39209
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(Addresses of Principal Executive Offices, including Zip Code)
(601) 968-4400
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(Registrant's Telephone Number, including Area Code)
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ITEM 5. OTHER EVENTS.
The Pro Forma Combined Statement of Income (Unaudited) of Proffitt's,
Inc. (the "Company"), which gives effect to the October 11, 1996 acquisition of
Parisian, Inc. ("Parisian") by the Company as if it had been consummated on
February 4, 1996, is attached as Exhibit 99.1 hereto. Such Pro Forma Combined
Statement of Income (Unaudited) also reflects the Company's acquisition of G.R.
Herberger's, Inc. ("Herberger's") on February 1, 1997, which was accounted for
under the pooling-of-interests method and thus required a restatement of the
Company's financial statements for all periods covered by such Pro Forma
Combined Statement of Income (Unaudited) to include the results of operations
and financial position of Herberger's.
Also attached hereto are (i) Exhibit 99.2, the Company's press
release, dated August 21, 1997, announcing the completion of a restructuring of
its private label credit card accounts receivable securitization facilities and
(ii) Exhibit 99.3, historical financial information of the Company reported in
the Company's press release, dated August 21, 1997, announcing its financial
results for the fiscal quarter ended August 2, 1997.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION, AND EXHIBITS.
(c) Exhibits.
The following exhibits are filed herewith:
Exhibit No. Description
----------- -----------
99.1 Pro Forma Combined Statement of Income
(Unaudited) of the Company for the fiscal year
ended February 1, 1997
99.2 Press release, dated August 21, 1997
99.3 Historical financial information reported in the
press release, dated August 21, 1997
-2-
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PROFFITT'S, INC.
(REGISTRANT)
/s/ Douglas E. Coltharp
--------------------------------------
Douglas E. Coltharp
Executive Vice President and
Chief Financial Officer
Date: September 2, 1997
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INDEX TO EXHIBITS
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<TABLE>
<CAPTION>
Exhibit
- -------
<S> <C>
99.1 Pro Forma Combined Statement of Income (Unaudited) of the
Company for the fiscal year ended February 1, 1997.
99.2 Press release, dated August 21, 1997.
99.3 Historical financial information reported in the press release,
dated August 21, 1997.
</TABLE>
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Exhibit 99.1
Pro Forma Combined Statement of Income (Unaudited) of the Company
for the fiscal year ended February 1, 1997
<PAGE> 2
PRO FORMA COMBINED STATEMENT OF INCOME (UNAUDITED)
The following Pro Forma Combined Statement of Income (Unaudited) has
been derived by the application of pro forma adjustments to the Consolidated
Financial Statements of Proffitt's, Inc. (the "Company") to reflect the
acquisition by the Company of Parisian, Inc. ("Parisian") on October 11, 1996,
which was accounted for as a purchase. The accompanying Pro Forma Combined
Statement of Income (Unaudited) for the fiscal year ended February 1, 1997
gives effect to the Parisian acquisition as if it had been consummated on
February 4, 1996. In addition, the Pro Forma Combined Statement of Income
(Unaudited) reflects the Company's acquisition of G.R. Herberger's, Inc.
("Herberger's") on February 1, 1997, which was accounted for under the
pooling-of-interests method and thus required a restatement of the Company's
financial statements for all periods covered by the Pro Forma Combined
Statement of Income (Unaudited) to include the results of operations and
financial position of Herberger's. The Pro Forma Combined Statement of Income
(Unaudited) is intended for informational purposes only and is not necessarily
indicative of future results of operations or financial position of the Company
had the Parisian acquisition occurred on the indicated date and does not
purport to indicate the results of operations that may be achieved in the
future. The Pro Forma Combined Statement of Income (Unaudited) and the
accompanying notes should be read in conjunction with the Consolidated
Financial Statements of the Company including the notes thereto.
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
--------------------------- ACQUISITION PRO FORMA
COMPANY (A) PARISIAN (B) ADJUSTMENTS (C) TOTAL
----------- ------------ --------------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
CONSOLIDATED INCOME STATEMENT DATA:
<S> <C> <C> <C> <C>
Net sales............................. $1,889,779 $ 431,176 $2,320,955
Costs and expenses:
Cost of sales..................... 1,230,454 279,699 $ 1,649 (d) 1,511,802
Selling, general, and
administrative expenses........ 440,502 112,390 (1,649) (d) 551,804
561 (e)
Other operating expenses......... 142,124 38,328 (1,845) (e) 179,938
1,331 (f)
Gains from long lived assets, net (1,094) (1,094)
Merger, restructuring and 15,929 15,929
integration costs............ ---------- ---------- --------- ----------
Operating income..................... 61,864 759 (47) 62,576
Other income (expense):
Finance charge income, net....... 32,305 5,578 37,883
Interest expense................. (26,756) (11,932) (6,014) (g) (44,702)
Other income, net................ 1,572 1,837 3,409
---------- ---------- --------- ----------
Income (loss) before provision for
income taxes..................... 68,985 (3,758) (6,061) 59,166
Provision for income taxes........... 31,586 (799) (1,389) (h) 29,398
---------- ---------- --------- ----------
Net income (loss).................... $ 37,399 $ (2,959) $ (4,672) $ 29,768
========== ========== ========= ==========
</TABLE>
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<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
--------------------------- ACQUISITION PRO FORMA
COMPANY (A) PARISIAN (B) ADJUSTMENTS (C) TOTAL
----------- ------------ -------------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Earnings per common share
Primary.............. $ 1.31 -- -- $ .94
Fully diluted........ 1.41 -- -- 1.05
Weighted average common shares
Primary.............. 25,564 -- -- 27,657
Fully diluted........ 28,204 -- -- 28,277
Earnings per share restated for the
October 27, 1997 2-for-1 stock split(i)
Primary.............. $ .66 -- -- $ .47
Fully diluted........ .71 -- -- .53
</TABLE>
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(a) The historical income statement of the Company does not reflect the
operating results of Parisian prior to the Company's acquisition of
Parisian on October 11, 1996.
(b) Includes information derived from Parisian's unaudited historical income
statement for the period from February 4, 1996 through October 10, 1996.
(c) Pro forma adjustments do not include any charges or benefits related to
the integration of the operations of the businesses of the Company and
Parisian.
(d) Adjustments have been made to conform Parisian's direct cost method of
accounting for inventory to the full cost method used by the Company and
to conform Parisian's presentation of certain expenses with that of the
Company.
(e) Adjustments have been made to conform Parisian's accounting method for
store preopening costs of deferral and amortization over twelve months to
the Company's accounting method of expensing such costs as incurred.
(f) Adjustments have been made to reflect the increase in depreciation and
amortization resulting from the purchase price allocation for the
Parisian acquisition.
(g) Adjustments have been made to reflect interest expense on acquisition
debt of approximately $119.0 million at 7.4% per annum for the period
ended October 10, 1996, assuming the debt was outstanding throughout the
period.
(h) Adjustments have been made to reflect the income tax impact of the pro
forma merger and acquisition adjustments using a combined federal and
state income tax rate of 40%.
(i) On August 21, 1997, the Company declared a two-for-one stock split in the
form of a 100% stock dividend payable on or about October 27, 1997 to
record holders of the Company's common stock at the close of business on
October 15, 1997.
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Exhibit 99.2
Press Release, dated August 21, 1997
<PAGE> 2
Proffitt's, Inc. Completes Restructuring of Private Label
Credit Card Accounts Receivable Securitization
August 21, 1997--Department store retailer Proffitt's, Inc. (NYSE:PFT) today
announced the completion of a restructuring of its private label credit card
accounts receivable securitization.
Under the restructured arrangement, the recently formed Proffitt's Credit Card
Master Trust issued a total of $200 million in Series 1997-2 five-year asset
backed securities supported by credit card receivables originated at the
Company's Proffitt's, McRae's, Herberger's, and Parisian Divisions. The
securities were issued in two classes: $180 million in AAA/Aaa rated Class A
Certificates priced at 99.587% with a coupon of 6.50% and $20 million in A/A1
rated Class B Certificates priced at 99.642% with a coupon of 6.69%. The Class
A Certificates were underwritten by NationsBanc Capital Markets, Inc.,
BancAmerica Securities, Inc., and J.P. Morgan & Co. The Class B Certificates
were underwritten by NationsBanc Capital Markets, Inc. Proceeds of the Series
1997-2 Certificates were used to repay outstanding borrowings and to terminate
the Company's previous securitization arrangement with an asset-backed
commercial paper conduit.
Concurrent with the issuance of the Series 1997-2 Certificates, Proffitt's
Credit Card Master Trust issued $125 million in Series 1997-1 Variable Funding
Certificates. The Variable Funding Certificates will provide the Master Trust
with borrowing capacity based on commercial paper rates for seasonal and
expansion-related growth in the underlying receivables portfolio. Co-purchasers
of the Variable Funding Certificate were Enterprise Funding Corporation and
Receivables Capital Corporation.
Proffitt's, Inc. Executive Vice President and Chief Financial Officer, Douglas
E. Coltharp, commented, "We are extremely pleased by the attractive terms which
we were able to realize in the securitization market. The favorable advance
rates and interest rates are both indicative of the quality in the underlying
receivables portfolio. The restructuring of the accounts receivable facility,
together with our recently completed issuance of Senior Notes and the increase
and amendment of our Revolving Credit Facility, completes the implementation of
a comprehensive capital structure strategy. This strategy, which was initiated
in the spring of this year, was intended to provide Proffitt's with greater
operating flexibility by reducing the level of secured indebtedness, increasing
the percentage of fixed vs. floating rate obligations, and lengthening the
duration of our financing commitments."
Proffitt's, Inc. operates 176 stores in twenty-four states under the names of
Proffitt's, McRae's, Younkers, Parisian, and Herberger's. The Company's annual
revenues exceed $2.3 billion.
Contact:
Proffitt's, Inc., Birmingham
Julia Bentley, 423/981-6243
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Exhibit 99.3
Historical Financial Information Reported in the Press Release, dated
August 21, 1997
<PAGE> 2
Proffitt's, Inc. Reports Record Operating Results for the
Second Quarter Ended August 2, 1997
August 21, 1997--Department store retailer Proffitt's, Inc. (NYSE:PFT) today
announced record results for the second quarter and six months ended August 2,
1997.
Proffitt's, Inc. ("Proffitt's" or the "Company") acquired Parisian, Inc.
("Parisian") on October 11, 1996, in a transaction accounted for as a purchase.
Results below include Parisian beginning on the October 11, 1996 transaction
date, due to the purchase accounting treatment. Proffitt's merged with G.R.
Herberger's, Inc. ("Herberger's") on February 1, 1997, immediately before the
Company's prior fiscal year end. Results below have been restated to include
Herberger's for the prior year, due to the pooling of interests accounting
treatment. Earnings per share numbers below assume full dilution.
As previously announced, for the second quarter ended August 2, 1997, total
Company sales were $492.3 million compared to $343.4 million last year, a 43%
increase. On a comparable stores basis (excluding Parisian), total Company
sales increased 6% for the quarter over last year.
Prior to the non-recurring items outlined below, net income for the second
quarter ended August 2, 1997 totaled $8.0 million, or $.28 per share, compared
to $4.6 million, or $.18 per share, in the prior year, a 74% increase. The
current quarter earnings performance included a $.01 charge for store
pre-opening expenses and a $.06 charge for the amortization of goodwill and
tradenames. For the quarter, weighted average shares outstanding totaled 29.2
million this year compared to 25.1 million last year.
As previously announced, certain non-recurring items, principally charges
related to the integration of the Parisian, Herberger's, and Younkers
businesses and ESOP-related charges were incurred for the second quarter ended
August 2, 1997. On a pre-tax basis, these charges totaled $2.4 million ($1.7
million after tax, or $.06 per share). In addition, the Company incurred an
extraordinary loss on the early extinguishment of debt during the quarter
totaling $1.8 million on a pre-tax basis ($1.1 million after tax, or $.04 per
share). For the quarter ended August 3, 1996, non-recurring items, including
charges related to the integration of Younkers and ESOP charges, totaled $1.7
million ($1.0 million after tax, or $.04 per share).
After recognition of the non-recurring items outlined above, the Company
realized net income of $5.3 million, or $.18 per share, for the quarter ended
August 2, 1997, compared to $3.5 million, or $.14 per share, last year.
As previously announced, on a year-to-date basis, total Company sales were
$1,018.7 million compared to $708.5 million last year, a 44% increase. On a
comparable stores basis (excluding Parisian), year-to-date total Company sales
increased 5% over last year.
Prior to the non-recurring items outlined below, net income for the six months
ended August 2, 1997 totaled $20.0 million, or $.68 per share, compared to
$11.3 million, or $.45 per share, in the prior year, a 77% increase. The
current year earnings performance included a $.03 charge for store pre-opening
expenses and a $.12 charge for the amortization of goodwill and tradenames.
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For the six months, weighted average shares outstanding totaled 31.0 million
this year compared to 25.1 million last year.
For the six months, non-recurring items (including the extraordinary loss)
totaled $6.5 million before tax ($4.2 million after tax, or $.13 per share).
For the prior year period ended August 3, 1996, non-recurring items totaled
$2.4 million before tax ($1.5 million after tax, or $.06 per share).
After recognition of the non-recurring items outlined above, the Company
realized net income of $15.8 million, or $.55 per share, for the six months
ended August 2, 1997, compared to $9.8 million, or $.39 per share, last year.
Second quarter and year-to-date current and prior year fully diluted earnings
per share performance is summarized as follows:
<TABLE>
<CAPTION>
QUARTER ENDED SIX MONTHS ENDED
8/2/97 8/3/96 8/2/97 8/3/96
<S> <C> <C> <C> <C>
Net income before non-recurring items,
amortization of goodwill and
trade-names, and store pre-opening costs $ .35 $ .20 $ .83 $ .49
Amortization of goodwill and tradenames (.06) (.02) (.12) (.03)
Store pre-opening costs (.01) --- (.03) (.01)
-------- -------- -------- --------
Net income before non-recurring items .28 .18 .68 .45
Non-recurring items:
Merger, restructuring, and
integration costs (.04) (.04) (.06) (.10)
Gain on long-lived assets --- --- --- .05
ESOP (.02) --- (.03) (.01)
Extraordinary loss on extinguishment of
debt (.04) --- (.04) ---
-------- -------- -------- --------
Net income after non-recurring items $ .18 $ .14 $ .55 $ .39
</TABLE>
Earnings per share numbers above do not give effect to the Company's 2-for-1
common stock split which will be effective October 15, 1997.
R. Brad Martin, Chairman and Chief Executive Officer of Proffitt's, Inc.,
commented, "We are pleased with our strong operating results for the quarter.
Prior to non-recurring items, goodwill amortization, and pre-opening costs, we
earned $.35 per share, which was a 75% increase over $.20 on the same basis in
the prior year."
Mr. Martin continued, "We experienced a solid increase of 6% in comparable
store sales for the quarter, and as expected, we realized meaningful
improvement in our merchandising margin and in our expense leverage. We begin
this fall season with our inventories appropriately balanced and assorted and
lower than one year ago on a comparable stores basis. We continue to be
well-positioned to achieve our operating plans as we enter the fall season."
Mr. Martin further commented, "We were most pleased with our August 6 opening
of our new McRae's store in Biloxi, Mississippi, and we look forward to four
other store openings scheduled this fall."
<PAGE> 4
Proffitt's also announced today that in conjunction with the merger of the
Company's benefit plans, it will terminate Herberger's ESOP on December 31,
1997. As a result, the Company expects to incur a non-recurring third quarter
1997 after-tax, charge of between $6.5 million and $9.5 million (or $.21 to
$.31 per share). All but approximately $1.0 million of this charge will be
non-cash. Certain unallocated common shares of the Company held by the ESOP,
with a value of between $6.5 to $9.5 million, will be allocated to the ESOP
participants and will result in the aforementioned non-cash charge. However,
upon terminating the ESOP, the Company will receive approximately $10.0 million
in cash representing payment of a note receivable from the ESOP. Subsequent to
this one-time charge, the Company will incur no future ESOP-related charges.
Proffitt's, Inc. operates five divisions - the Proffitt's Division with 19
stores; the McRae's Division with 30 stores; the Younkers Division with 50
stores; the Parisian Division with 40 stores; and the Herberger's Division with
37 stores. The Company operates 176 stores in twenty-four states with
annualized revenues in excess of $2.3 billion.
Contact:
Proffitt's, Inc., Knoxville
Julia Bentley, 423/981-6243
