Rule 424(b)(1)
Registration No. 333-32257
PROFFITT'S, INC.
______________
COMMON STOCK
2, 300,000 SHARES
This Prospectus relates to up to 2,300,000 shares of the common
stock, $0.10 par value share (the "Shares") of Proffitt's, Inc., a
Tennessee corporation (the "Company") issuable pursuant to the
Proffitt's, Inc. 1997 Stock-Based Incentive Plan (the "Incentive
Plan").
The Common Stock is listed for trading on the New York Stock
Exchange under the symbol "PFT." On August 4, 1997 the last reported
sale price for the Common Stock was $53.375.
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.
The date of this Prospectus is August 5, 1997
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
the Company. 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. . . . . . . . . . . . . . . . . . . . . . . . . . . .6
INFORMATION ABOUT THE PLAN . . . . . . . . . . . . . . . . . . . . . .6
PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . 13
LEGAL OPINIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
EXPERTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
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 Common Stock is
listed on the New York Stock Exchange, and information regarding the
Company may also be inspected at the offices of the New York Stock
Exchange, 20 Broad Street, New York, New York 10005.
The Company has filed with the Commission a registration
statement on Form S-3 (together with any amendments thereto, the
"Registration Statement") under the Securities Act of 1933, as amended
(the "Securities Act"), with respect to the common Stock offered
pursuant to the Proffitt's, Inc. 1997 Stock-Based Incentive Plan
("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. 1-13113) 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 1, 1997;
2. The Company's Quarterly Report on Form 10-Q for the quarter
ended May 3, 1997;
3. The Company's Current Reports on Form 8-K filed with the
Commission on February 11, 1997, April 1, 1997, May 2, 1997,
May 22, 1997 (including Amendment No. 1 thereto filed May
22, 1997); and July 8, 1997;
4. The description of the Company's Common Stock contained in
the Company's Post-Effective Amendment No. 1 to Registration
Statement on Form S-4 dated January 15, 1997 (Registration
No. 333-17059) and incorporated by reference in the
Company's Registration Statement on Form 8-A filed June 18,
1997;
5. The Company's Registration Statement on Form 8-A filed June
18, 1997 in respect of the Company's Share Purchase Rights
Plan; and
6. Information under the Caption "Pro Forma Combined Statement
of Income (Unaudited)" and the Consolidated Financial
Statements of Parisian, Inc. included in the Company's
prospectus dated July 9, 1997, included in the Company's
Registration Statement on Form S-1 (Registration No. 333-29771).
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,
attention: Investor Relation (telephone number: (423) 983-7000).
SUMMARY
The following is a summary of certain information contained
elsewhere in this Prospectus. Reference is made to, and this summary
is qualified in its entirety by, the more detailed information
contained in this Prospectus. As used herein, unless the context
otherwise requires, "Company" means Proffitt's, Inc. and its
subsidiaries, and the terms "Proffitt's, " "McRae's," "Younkers,"
"Parisian" and "Herberger's" refer to the Company's five department
store chains, and the existing and predecessor entities that conduct
or conducted business under such names.
The Company
The Company is a leading regional department store chain
operating 175 stores in 24 states, primarily in the Southeast and
Midwest. The Company operates its stores under five chain names:
Proffitt's (19 stores), McRae's (29 stores), Younkers (48 stores),
Parisian (40 stores) and Herberger's (39 stores). Each chain operates
primarily as a leading branded traditional department store in its
communities, with Parisian serving as a better branded specialty
department store. Most of the stores are located in premier regional
malls in the respective trade areas served. The Company's stores
offer a wide selection of fashion apparel, accessories, cosmetics and
decorative home furnishings, featuring assortments of premier brands,
private brands and specialty merchandise. Each of the Company's
chains operates with its own merchandising, marketing and store
operations team in order to tailor regional assortments to the local
customer. At the same time, the Company coordinates merchandising
among the chains and consolidates administrative and support functions
to realize scale economies, to promote a competitive cost structure
and to increase margins.
The Company's principal executive offices are located at 3455
Highway 80 West, Jackson, Mississippi 39289, telephone number (601)
968-4400.
The Plan
The Incentive Plan. The Incentive Plan is intended to enable
Proffitt's to attract and retain qualified personnel. All employees
and directors of Proffitt's are eligible to participate in the
Incentive Plan. The Board of Directors will select individuals to
receive awards. Awards will be in the form of stock options, stock
appreciation rights, restricted stock, performance units and stock
bonuses. See "Information About the Plan."
Selected Financial and Operating Data
The following table presents summary historical and pro forma
financial and operating data derived from the audited Consolidated
Financial Statements of the Company for the last five fiscal years and
the unaudited Condensed Consolidated Financial Statements for the
latest interim period. The historical financial data should be read
in conjunction with the Company's Consolidated Financial Statements
and Condensed Consolidated Financial Statements and the notes thereto
incorporated by reference herein. The summary historical pro forma
financial and operating data give effect to the purchase of Parisian
as if it had occurred on February 4, 1996, are based on certain
assumptions and are derived from, and should be read in conjunction
with the Pro Forma Combined Statement of Income (Unaudited)
incorporated by reference herein. The summary pro forma financial
data do not purport to present the actual financial position or
results of operations of the Company had the Parisian acquisition and
the events assumed therein in fact occurred on the dates specified,
nor are they necessarily indicative of the results of operations that
may be achieved in the future. See "Incorporation of Certain
Documents by Reference."
<TABLE>
<CAPTION>
Pro Forma
Two Months Ended Year Fiscal Year Ended (a)
------------------ Ended -------------------------------------------------------
5/3/97 5/4/96(a) 2/1/97 2/1/97 2/3/96 1/28/95 1/29/94 1/30/93
------ ------- ------- ------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Consolidated Income
Statement Data:
Net sales . . . . . $526,370 $365,179 $2,320,955 $1,889,779 $1,661,056 $1,513,444 $1,063,488 $858,754
Cost and expenses:
Cost of sales . . 335,882 237,201 1,511,802 1,230,454 1,087,619 986,028 690,083 523,444
Selling, general and
administrative
expenses. . . . 128,629 88,952 551,804 440,502 398,999 352,448 255,856 220,889
Depreciation and
amortization. . 10,898 9,811 48,471 41,037 43,013 40,305 26,693 19,586
Property and
equipment rentals. . 19,048 11,270 81,747 60,684 50,609 47,857 37,049 26,344
Taxes other than
income taxes. . 12,622 9,638 49,720 40,403 36,938 34,421 25,050 18,227
Merger, restructuring
and integration
costs(b). . . . 1,468 2,763 15,929 15,929 20,822 --- --- ---
Operating income. . 17,796 7,804 62,576 61,864 753 52,385 28,757 50,264
Other income (expense):
Finance charge income,
net(c) . . . . 10,878 7,160 37,883 32,305 31,273 27,934 19,312 16,151
Interest expense. (10,692) (4,706) (44,702) (26,756) (29,389) (23,286) (11,286) (11,701)
Other income, net . . 136 498 3,409 1,572 4,051 4,826 4,063 233
Income before provision
for income taxes, extra-
ordinary loss and cumu-
lative effect of changes
in accounting methods 18,118 10,756 59,166 68,985 6,688 61,859 40,846 54,947
Net income (loss) . 10,544 6,308 29,768 37,399 (1,419) 37,448 25,540 32,522
Earnings (loss) per
common share(s):
Primary . . . . . 0.37 0.25 0.94 1.31 (0.15)(d) 1.55 1.15 1.87
Fully diluted . . 0.37 0.25 1.05 1.41 (0.15)(d) 1.52 1.15 1.87
Weighted average
common shares:
Primary . . . . . 28,451 23,466 27.656 25,564 23,157 23,046 22,167 17,396
Fully diluted . . 30,539 27,655 28.276 28,204 23,166 26,031 22,167 17,396
Dividends per Share(s)(e): -0- -0- -0- -0- -0- -0- -0- -0-
Consolidated Balance
Sheet Data:
Working capital . . $ 375,348 $226,361 $344,410 $344,410 $235,194 $301,270 $306,853 $203,977
Total assets . . . 1,456,794 921,606 1,403,796 1,403,796 919,013 967,667 653,680 536,603
Long-term debt,
less current
portion . . . . . 505,108 247,537 502,577 502,577 269,442 325,501 203,838 216,985
Shareholders' equity . 555,159 334,394 539,898 539,898 327,371 337,007 275,104 122,582
</TABLE>
(a) Effective February 1, 1997 and February 3, 1996, Herberger's and
Younkers, respectively, were acquired by the Company. Such
acquisitions were accounted for under the pooling-of-interests
method. Accordingly, the Company's financial statements were
restated for all periods to include the results of operations and
financial position of Herberger's and Younkers. The pro forma
financial and operating data do not reflect the cost savings realized
by the Company from consolidation of administrative and operating
functions and other synergies following such acquisitions.
(b) In connection with the acquisitions of Younkers and Herberger's, the
Company incurred certain merger, restructuring and integration costs,
including transaction costs, costs associated with severance and
related benefits, abandonment and elimination of duplicate
administrative office space, property, data processing equipment and
software, and other costs.
(c) Finance charge income includes finance charges and late payment fees
earned on the Company's proprietary credit cards, less the portion of
such income allocated to third party purchasers of such credit card
receivables.
(d) Losses per share attributable to extraordinary items were $.09 for
the year ended February 3, 1996 and $.05 for the year ended January
29, 1994. Earnings (loss) per share attributable to cumulative
effect of changes in accounting methods were $.08 for the year ended
January 29, 1994 and ($.10) for the year ended January 30, 1993.
(e) Prior to its merger with Proffitt's, Herberger's declared cash
dividends of $1,030, $1,046, $1,126, $1,066 and $1,401 in 1996, 1995,
1994, 1993 and 1992, respectively. Amounts above are shown as $0.00
per share to reflect Proffitt's policy of retained earnings.
USE OF PROCEEDS
The amount of net proceeds to the Company from the sale of the 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 PLAN
The principal features of the Proffitt's, Inc. 1997 Stock-Based
Incentive Plan (the "Incentive Plan") are summarized below. The summary is
qualified in its entirety by reference to the full text of the Incentive
Plan. Participants may contact the Company's Investor Relation Department,
Proffitt's, Inc., 115 North Calderwood, Alcoa, Tennessee 37701, telephone
(423) 983-7000 for additional information concerning the Incentive Plan and
its administrators.
What is the Purpose of the Plan?
The purpose of the Plan is to attract, retain and motivate employees and
directors of high caliber and potential.
How is the Incentive Plan Administered?
The Incentive Plan will be administered by a committee consisting of two or
more nonemployee directors selected by the Board of Directors (the
"Committee"). The Committee will serve at the pleasure of the Board.
The Committee has full and final authority to interpret the Incentive Plan
and to decide all questions of fact arising in its application. Subject to
the provisions of the Incentive Plan, the Committee's powers include, but are
not limited to, determining the employees and directors to receive awards
under the Incentive Plan, determining the type, amount and sizes of each such
award, determining the time when each such award will be granted, and
determining the provisions of each agreement evidencing an award.
What Stock is subject to the Incentive Plan?
The Committee may grant awards under the Incentive Plan with respect to not
more than a total of 2,300,000 shares of $.10 par value common stock of the
Company ("Shares"), subject to adjustment as provided in the Incentive Plan.
Such Shares may be authorized and unissued Shares or treasury Shares and may
be purchased on the open market or otherwise. Except as otherwise provided
in the Incentive Plan, Shares subject to an option or right which is
surrendered, expires or is terminated unexercised and Shares granted pursuant
to restricted stock awards which are forfeited will again become available
for the granting of awards under the Incentive Plan.
Who is eligible to receive Awards?
All employees and directors of the Company are eligible to receive awards
under the Incentive Plan. The number of individuals eligible to participate
in the Plan is determined by the Board of Directors of the Company.
What Awards are available under the Incentive Plan?
Under the Incentive Plan, awards may be granted from time to time by the
Committee in the form of stock options, stock appreciation rights,
performance units, restricted stock, stock bonuses or any combination of the
above. Stock options will be options which are not intended to qualify as
incentive stock options within the meaning of Section 422(b) of the Internal
Revenue Code of 1986, as amended ("nonqualified stock options"). All awards
will be evidenced by written agreement in such form not inconsistent with the
Incentive Plan as the Committee may approve.
What is a stock option?
A stock option is the right to purchase Shares at a set price during a
stated period of time in the future. No cash consideration will be received
by the Company for the granting of any option. Under the Incentive Plan, an
optionee will receive a written agreement evidencing stock options. The
option agreement will identify the options represented thereby as
nonqualified stock options and specify the number of Shares subject to the
options. The maximum number of options which may be granted to one optionee
during any 12-month period is 125,000. The option exercise price per Share
will be determined by the Committee and cannot be less than 100% of the fair
market value of a share on the date of grant. The option agreement will
designate the periods of time within which the option may be exercised, in
whole or in part, provided that no nonqualified stock option will be
exercisable after ten years from the date of grant thereof. The purchase
price of Shares must be payable in full at the time of exercise in cash,
Shares at fair market value, or a combination thereof, as the Committee may
determine. If the purchase price is paid by tendering Shares, the Committee
in its discretion, may grant the optionee a new stock option for the number
of Shares used to pay the purchase price. The Committee may provide in the
option agreement circumstances under which the option will become immediately
exercisable, in whole or in part, and the Committee may accelerate the
exercisability of any option in whole or in part at any time.
What is a stock appreciation right?
Stock appreciation rights ("SARs") are rights to receive cash or Shares, or
a combination thereof, as the Committee may determine, in an amount equaling
the excess of (i) the fair market value at the time of exercise of Shares
with respect to which the SAR is exercised, over (ii) a specified price which
must not be less than 100% of the fair market of the Shares at the time the
SAR is granted, or, if the SAR is granted in connection with a previously
issued stock option, not less than 100% of the fair market value of Shares at
the time such option is granted. SARs may be granted in connection with a
previously or contemporaneously granted stock option, or independently of a
stock option. No cash consideration will be received by the Company for the
granting of any SAR. Upon exercise of an SAR, the number of Shares reserved
for issuance under the Incentive Plan will be reduced by the number of Shares
covered by the SAR. Shares covered by an SAR may not be used more than once
to calculate the amount to be received pursuant to the exercise of the SAR.
If an SAR is granted in relation to a stock option, (i) the SAR will be
exercisable only at such times and by such persons as the related option is
exercisable, and (ii) the grantee's right to exercise either the related
option or the SAR will be canceled to the extent that the other is exercised.
No SAR will be exercisable earlier than six months or later than ten years
after the date of grant. The Committee may provide in the SAR agreement
circumstances under which SARs will become immediately exercisable and may,
notwithstanding the foregoing restriction on time of exercise, accelerate the
exercisability of any SAR at any time.
What is a restricted stock award?
Restricted stock awards under the Incentive Plan are awards of Shares free
of any purchase price or for such purchase price as may be established by the
Committee. Such Shares are restricted against transfer, subject to
forfeiture and subject to such other terms and conditions as may be
determined by the Committee. The Committee will determine the period of
restrictions and will specify the terms and conditions upon which
restrictions will lapse. The Committee may provide in the agreement
circumstances under which the restricted stock will become immediately
transferable and nonforfeitable, or circumstances under which the restricted
stock will be forfeited. Notwithstanding the terms of any restricted stock
agreement executed under the Incentive Plan, the Committee may accelerate the
expiration of the restriction period imposed on any Shares at any time. Each
agreement will provide that during the period the Shares are restricted, the
grantee will have all the rights of a stockholder, including, but not limited
to the right to receive dividends or the right to vote such Shares, except
that such Shares may not be sold or transferred during the restriction period
applicable to such Shares. Upon the expiration, lapse or removal of
restrictions, Shares free of restrictive legend will be issued to the grantee
or his or her legal representative.
What is a performance unit?
Performance unit awards under the Incentive Plan will entitle grantees to
future payments based upon the achievement of pre-established long-term
performance objectives. Under the Incentive Plan, a performance unit
agreement will establish with respect to each unit award (i) a performance
period of not fewer than two years, (ii) a value for each unit which will not
thereafter change, or which may vary thereafter pursuant to criteria
specified by the Committee, and (iii) maximum and minimum performance targets
to be achieved during the applicable performance period. Under each
agreement, the grantee will be entitled to full value of a unit award for
achievement of maximum targets and a portion of a unit award for performance
exceeding minimum targets and less than maximum targets. The performance
targets will relate to corporate, division or unit performance and may be
established in terms of growth in gross revenue, earnings per share, ratios
of earnings to equity assets, or such other measures or standards as may be
determined by the Committee. At any time prior to payment of a unit award,
the Committee may adjust previously established performance targets or other
terms and conditions to reflect major unforeseen events. Following the
conclusion of each performance period, the Committee will determine the
extent to which performance targets have been obtained and will as promptly
as practicable thereafter make payment in cash, Shares or a combination
thereof, in a lump sum or in installments as determined by the Committee,
unless deferred as prescribed by the Committee.
What is a stock bonus?
Stock bonuses are bonuses in the form of Company Shares granted in addition
to, or in lieu of cash bonuses. The Company may, in its sole discretion,
permit employees to receive a cash bonus in the form of Company Shares.
Does the Incentive Plan provide for loans and supplemental cash?
Yes. The Committee, to further the purposes of the Incentive Plan, may
provide for supplemental cash payments or loans to individuals in connection
with all or any part of an award under the Incentive Plan. The amount of
supplemental cash payments will not exceed (i) in the case of an option, the
excess of the fair market value of a Share on the date of exercise over the
option price multiplied by the number of Shares for which such option is
exercised, or (ii) in the case of an SAR, performance unit, or restricted
stock award, the value of the Shares and other consideration issued in
payment of such award. Any loan will be evidenced by a written loan
agreement.
What happens upon termination of employment?
With respect to stock options, if an optionee ceases to be an employee of
the Company for any cause other than retirement, death or disability, as
defined in the Incentive Plan, the optionee may exercise the option during
its term within three months after the termination to the extent that the
option was exercisable at the time of termination, or within such other
period specified by the Committee. If an optionee retires, dies or becomes
disabled prior to the expiration and full exercise of the employee's option,
the optionee or his or her beneficiary may exercise the option during its
term within a period of (i) one year after the termination of employment due
to retirement, death or disability, or (ii) one year after death if death
occurs either within one year after termination of employment due to
retirement or disability or within three months after termination of
employment for other reasons, to the extent that the option was exercisable
at the time of death or termination, or within such other period specified by
the Committee.
With respect to SARS, in the discretion of the Committee, an SAR may be made
exercisable for up to three months after the grantee's employment is
terminated for any reason other than retirement, death or disability, and for
up to one year after the grantee's employment is terminated because of
retirement, death or disability.
With respect to performance unit awards, in the event of termination due to
death, disability or retirement with the consent of the Company, any unit
award to the extent earned will be payable at the end of the performance
period according to the portion of the performance period during which the
grantee was employed, except that the Committee may provide an appropriate
settlement before the end of the period. Upon any other termination,
participation will immediately terminate and all outstanding unit awards will
be canceled.
Are the awards assignable?
Maybe. Award agreements may provide that vested awards may be transferred
to a spouse, lineal descendants who have obtained age 21 or trusts whose
beneficiaries comprise the aforementioned individuals. Otherwise, no award
under the Incentive Plan may be sold, assigned, transferred, exchanged,
pledged, hypothecated, or otherwise encumbered, other than by will or by the
laws of descent and distribution, or by such other means as the Committee may
approve. Except as otherwise provided in the Incentive Plan, during the life
of the recipient, such award will be exercisable only by such person or by
such person's guardian or legal representative.
What stockholder rights do award holders have?
Except with respect to holders of restricted stock the recipient of any
award under the Incentive Plan, unless otherwise provided by the Incentive
Plan, will have no rights as a stockholder with respect thereto unless and
until certificates for Shares are issued to the recipient, and the issuance
of Shares will confer no retroactive right to dividends.
Does receipt of an award confer any right to employment?
Nothing in the Incentive Plan or in any agreement entered into pursuant to
the Incentive Plan will confer upon any person the right to continue in the
employment or services of the Company or affect any right which the Company
may have to terminate the employment or services of such person.
What withholding obligations exist?
Prior to the issuance or transfer of Shares under the Incentive Plan, the
recipient must remit to the Company an amount sufficient to satisfy any
federal, state or local withholding tax requirements. With the prior
approval of the Committee, the recipient may satisfy the withholding
requirement in whole or in part by electing, prior to the date that the
withholding amount is determined, to have the Company withhold Shares equal
in value to the withholding amount subject to applicable securities law and
other legal requirements. Whenever payments to a grantee under the Incentive
Plan are to be made in cash, such payments will be net of the amount
necessary to satisfy withholding tax requirements.
Must all award grants be uniform?
No. The Committee's determinations under the Incentive Plan need not be
uniform and may be made selectively among persons who receive, or are
eligible to receive, awards under the Incentive Plan, whether or not such
persons are similarly situated.
What happens upon a Change in Control?
In the event of (i) a Change in Control (as defined below) or (ii) a
Potential Change in Control (as defined below), but only if and to the extent
so determined by the Board of Directors at or after grant (subject to any
right of approval expressly reserved by the Board of Directors at the time of
such determination), the following acceleration and valuation provisions will
apply: (a) any SARs outstanding for at least six months and any stock options
awarded under the Incentive Plan not previously exercisable and vested will
become fully exercisable and vested; (b) any restrictions and deferral
limitations applicable to any restricted stock, performance units or other
stock-based awards, in each case to the extent not already vested under the
Incentive Plan, will lapse and such shares, performance units or other
stock-based awards will be deemed fully vested; and (iii) the value of all
outstanding stock options, SARS, restricted stock, performance units and
other stock-based awards, in each case to the extent vested, will, unless
otherwise determined by the Committee in its sole discretion at or after
grant but prior to any Change in Control, be cashed out on the basis of the
Change in Control Price (as defined) as of the date such Change in Control or
such Potential Change in Control is determined to have occurred or such other
date as the Committee may determine prior to the Change in Control.
As used in the Incentive Plan, the term "Change in Control" means the
happening of any of the following: (i) any person or entity, including a
"group" as defined in Section 13(d)(3) of the 1934 Act, other than the
Company, a subsidiary of the Company, or any employee benefit plan of the
Company or its subsidiaries, becomes the beneficial owner of the Company's
securities having 25% or more of the combined voting power of the then
outstanding securities of the Company that may be cast for the election for
directors of the Company (other than as a result of an issuance of securities
initiated by the Company in the ordinary course of business); (ii) as the
result of, or in connection with, any cash tender or exchange offer, merger
or other business combination, sale of assets or contested election, or any
combination of the foregoing transactions, less than a majority of the
combined voting power of the then outstanding securities of the Company or
any successor corporation or entity entitled to vote generally in the
election of directors of the Company or such other corporation or entity
after such transaction, are held in the aggregate by holders of the Company's
securities entitled to vote generally in the election of directors of the
Company immediately prior to such transactions; or (iii) during any period of
two consecutive years, individuals who at the beginning of any such period
constitute the Board of Directors cease for any reason to constitute at least
a majority thereof, unless the election, or the nomination for election by
the Company's stockholders, of each director of the Company first elected
during such period was approved by a vote of at least two-thirds of the
directors of the Company then still in office who were directors of the
Company at the beginning of any such period.
As used in the Incentive Plan, the term "Potential Change in Control" means
the happening of any of the following: (i) the approval by stockholders of an
agreement by the Company, the consummation of which would result in a Change
in Control of the Company; or (ii) the acquisition of beneficial ownership,
directly or indirectly, by any entity, person or group (other than the
Company, a wholly-owned subsidiary thereof or any employee benefit plan of
the Company or its subsidiaries (including any trustee of such plan acting as
such trustee)) of securities of the Company representing 5% or more of the
combined voting power of the Company's outstanding securities and the
adoption by the Board of Directors of a resolution to the effect that a
Potential Change in Control of the Company has occurred for purposes of the
Incentive Plan.
As used in the Incentive Plan, the term "Change in Control Price" means the
highest price per share paid in any transaction reported on the New York
Stock Exchange, or paid or offered in any bona fide transaction related to a
Potential or actual Change in Control of the Company at any time during the
60 day period immediately preceding the occurrence of the Change in Control
(or, where applicable, the occurrence of the Potential Change in Control
event), in each case determined by the Committee.
Can awards be forfeited for competing with the Company?
Yes. Unless the award agreement relating to a stock option, SAR, restricted
stock, performance unit or stock bonus specifies otherwise, a grantee will
forfeit all unexercised, unearned and/or unpaid awards, including awards
earned but not yet paid, all unpaid dividends and dividend equivalents, and
all interest, if any, accrued on the foregoing if, (i) in the opinion of the
Committee, the grantee without the written consent of the Company, engages in
any business or activity competitive with the business conducted by the
Company or any of its subsidiaries; or (ii) the grantee performs any act or
engages in any activity which in the opinion of the Chief Executive Officer
of the Company is inimical to the best interests of the Company.
What adjustments will be made to the awards to reflect changes in the Company
Shares?
In the event of any change in the outstanding common stock of the Company by
reason of a stock dividend or distribution, recapitalization, merger,
consolidation, reorganization, split-up, combination, exchange of Shares or
the like, the Board of Directors, in its discretion, may adjust
proportionately the number of Shares which may be issued under the Incentive
Plan, the number of Shares subject to outstanding awards, and the option
exercise price of each outstanding option. The Board of Directors may also
make such other changes in outstanding options, SARs performance units and
restricted stock awards as it deems equitable in its absolute discretion to
prevent dilution or enlargement of the rights of grantees, provided that any
fractional Shares resulting from such adjustments will be eliminated.
How is the Incentive Plan amended or terminated?
The Board of Directors may terminate, amend, modify or suspend the Incentive
Plan at any time. No termination, modification, amendment or suspension of
the Incentive Plan will adversely affect the rights of any grantee or
beneficiary under an award previously granted, unless the grantee or
beneficiary consents thereto; but it will be conclusively presumed that any
adjustment to the Incentive Plan does not adversely affect any such right.
Will participation in the Incentive Plan affect a participant's eligibility
to participate in other plans?
No. Participation in the Incentive Plan will not affect a participant's
eligibility to participate in any other benefit or incentive plan of the
Company. Any award made pursuant to the Incentive Plan will not be used in
determining the benefits provided under any other plan of the Company unless
specifically provided therein.
What are the effective date and duration of the Incentive Plan?
The Incentive Plan became effective on April 9, 1997. Unless it is sooner
terminated in accordance with the Incentive Plan, the Incentive Plan will
remain in effect until all awards under the Incentive Plan have been
satisfied by the issuance of Shares or the payment of cash or have expired or
otherwise terminated, but no award will be granted after April 8, 2007.
Are there other general restrictions under the Incentive Plan?
Yes. The Incentive Plan provides that each award under the Incentive Plan
will be subject to certain general restrictions set forth in Paragraph 13 of
the Incentive Plan.
What are the federal tax consequences of options?
An optionee will realize no taxable income at the time an option or SAR is
granted under the Incentive Plan.
Generally, the tax treatment of transferable and nontransferable options is
the same. The exercise of an option will result in ordinary federal taxable
income to the optionee in an amount equal to the excess of the fair market
value of the Shares 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 the optionee. Upon a
subsequent disposition of the option Shares, the optionee will recognize a
short-term or long-term capital gain (or loss) equal to the difference of
the amount received and the tax basis of such Shares, depending upon the
holding period of the Shares.
If a participant to whom an option was granted transfers the option to a
permitted transferee in an arms-length transaction, the participant to whom
an option was transferred in a permitted transfer will recognize ordinary
federal taxable income equal to the consideration received from the
transferee at the time of the transfer, and thereafter will have no further
income tax effect. If the optionee transfers the option in a non-arms-length
transaction, he will recognize ordinary federal taxable 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 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 an option.
A transferee of an option will recognize a short-term or long-term capital
gain (or loss) when he resells the option, or when he sells the option Shares
after exercise of the option. There will be no income tax effect on exercise
of the option.
How will I be taxed with respect to my Award?
With respect to SARs, a grantee will realize ordinary income upon the
exercise of the SAR equaling the amount of cash received or the current fair
market value of stock acquired, and the Company will receive a corresponding
deduction. Upon subsequent disposition of any Shares received, any gain or
loss will be a long- or short-term capital gain or loss depending upon the
applicable holding period.
With respect to restricted stock awards, the federal income tax consequences
will depend on the facts and circumstances of each restricted stock award,
and in particular, the nature of the restrictions imposed with respect to the
Shares which are the subject of the award. In general, if the Shares are
subject to a "substantial risk of forfeiture," i.e., if rights to full
enjoyment of the benefit of ownership of the Shares are conditioned upon the
future performance of substantial services by the grantee, a taxable event
occurs only when the risk of forfeiture ceases. At such time, the grantee
will realize ordinary income to the extent of the excess of the fair market
value of the Shares on the date the risk ceases over the grantee's cost for
such Shares, and the Company will be entitled to a deduction in the same
amount at the same time. Under certain circumstances, the grantee, by making
an election under Code section 83(b), can accelerate the taxable event with
respect to the Shares, in which event the ordinary income amount and the
Company's deduction will be measured as of the date Shares are deemed for
section 83(b) purposes to have been transferred to the grantee. If the
restrictions with respect to Shares which are the subject of a restricted
stock award do not subject the grantee to a "substantial risk of forfeiture"
of the Shares, then the grantee will realize ordinary income with respect to
the Shares to the extent of the difference at the time of the transfer of the
Shares to the grantee between the fair market value of the Shares and the
grantee's cost therefor, and the Company will be entitled to a deduction in
the same amount at such time. Subsequent to the determination and
satisfaction of the ordinary income tax consequences, any further gain or
loss realized on the subsequent disposition of such Shares will be a long- or
short-term capital gain or loss depending upon the applicable holding period.
With respect to performance unit awards, a grantee will realize ordinary
income upon receipt equaling the amount of cash or the current market value
of the stock received, and the Company will receive a corresponding
deduction. Upon subsequent disposition of any Shares received, any gain or
loss will be a longer short-term gain or loss depending upon the applicable
holding period.
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.
The Incentive Plan is not subject to or qualifiable under Section 401(a) of
the Code or any of the provisions of the Employee Retirement Income Security
Act of 1974.
PLAN OF DISTRIBUTION
A copy of this Prospectus will be delivered by the Company to each
participant in the Plan upon grant of an option, stock appreciation right,
performance unit or restricted Share.
LEGAL OPINIONS
Certain legal matters in connection with the Shares will be passed upon for
the Company by Sommer & Barnard, Attorneys at Law, PC, Indianapolis, Indiana.
EXPERTS
The consolidated financial statements appearing in the Company's Form 10-K
as of February 1, 1997 and February 3, 1996 and for each of the three years
in the period ended February 1, 1997, 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. 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,
incorporated by reference herein , have been audited by Coopers & Lybrand
L.L.P., independent accountants, as set forth in their report thereon and
incorporated by reference therein. Such consolidated financial statements
are incorporated by reference herein in reliance upon such report given upon
the authority of such firm as experts in accounting and auditing.
The consolidated financial statements incorporated in this prospectus by
reference from the Company's Annual Report on Form 10-K for the year ended
February 1, 1997 as it related to Younkers, Inc. and subsidiary for the year
ended January 28, 1995, not separately presented, have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their report, which
is incorporated herein by reference, and have been so incorporated in
reliance upon the report of such firm given upon their authority as experts
in accounting and auditing.
