<PAGE> 1
Filed Pursuant to Rule 424(b)(5)
Registration No. 333-34961
PROSPECTUS
2,019,975 SHARES
PROFFITT'S, INC.
COMMON STOCK
(PAR VALUE $.10 PER SHARE)
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This Prospectus covers the issuance and sale of up to 2,019,975 shares of
Common Stock, par value $.10 per share (together with the accompanying Rights
(as defined herein), "Common Stock") of Proffitt's, Inc. (the "Company")
issuable either to holders of the Company's $86,250,000 aggregate principal
amount of outstanding 4 3/4% Convertible Subordinated Debentures Due 2003 (the
"Debentures") upon conversion of the Debentures or to Smith Barney Inc. (the
"Purchaser") under the standby arrangements described herein, and the resale to
the public by the Purchaser of any such shares of Common Stock (collectively,
the "Offering").
On September 5, 1997, the Company called for redemption on October 6, 1997
(the "Redemption Date"), all of its outstanding debentures at a redemption price
of 103.1667% of the principal amount thereof, plus interest accruing after May
1, 1997 to the Redemption Date, for a total price of $1,052.1184 for each $1,000
principal amount of Debentures (the "Redemption Price"). The Debentures (or any
portion thereof which is $1,000 or an integral multiple thereof) may be
converted into the Common Stock of the Company at a conversion price of $42.70
per share of Common Stock (equivalent to 23.42 shares of Common Stock for each
$1,000 principal amount of Debentures) at any time prior to 5:00 p.m. Eastern
Time on September 29, 1997 (the "Expiration Time"). Cash will be paid in lieu of
any fractional shares of Common Stock issuable upon conversion of the
Debentures. Debentures surrendered for conversion will not be entitled to
interest accrued to the date of conversion. See "Redemption of Debentures and
Alternatives to Redemption". ANY DEBENTURES NOT SO SURRENDERED FOR CONVERSION
PRIOR TO THE EXPIRATION TIME WILL BE REDEEMED FOR CASH ON THE REDEMPTION DATE
AND NO FURTHER INTEREST SHALL ACCRUE.
The Company has made arrangements with the Purchaser pursuant to which the
Purchaser has agreed, subject to certain conditions, to purchase from the
Company the total number of shares of Common Stock (the "Purchased Shares") that
would have been issuable upon conversion of those Debentures that are not duly
surrendered for conversion on or prior to the Expiration Time. The purchase
price for the Purchased Shares will be an amount equal to a price per share of
$44.92. The Purchaser may also purchase Debentures in the open market or
otherwise prior to the Expiration Time and has agreed to surrender for
conversion all Debentures so purchased by the Purchaser and any additional
Debentures beneficially owned by the Purchaser. See "Standby Arrangements" for a
description of the Purchaser's compensation and indemnification arrangements
with the Company.
On September 4, 1997, the closing price of the Common Stock as reported on
the New York Stock Exchange, Inc. ("NYSE") Composite Tape was $55.50 per share.
Based on such closing price, if a holder of $1,000 principal amount of
Debentures on that date had converted such principal amount, such holder would
have received Common Stock (and cash in lieu of a fractional share) having a
market value equal to $1,299.81. So long as the market price of the Common Stock
is greater than $44.92 per share at the time of conversion, a holder of
Debentures who exercises such holder's conversion rights will receive Common
Stock, plus cash in lieu of any fractional share, with a market value greater
than the amount of cash the holder would otherwise be entitled to receive upon
the redemption of the Debentures (before deducting any taxes, commissions and
other costs which would likely be incurred on sale of the Common Stock received
upon conversion of the Debentures). The market price of the Common Stock
received upon conversion is subject to fluctuation, and the holder may incur
various transaction costs if the Common Stock is sold.
Prior to, on or after the Redemption Date, the Purchaser may offer shares of
Common Stock, including shares acquired through the purchase and conversion of
Debentures, pursuant to this Prospectus directly to the public, at prices set
from time to time by the Purchaser. Prior to the Redemption Date, each such
price when set will not exceed the greater of the last sale or current asked
price of the Common Stock on the NYSE plus the amounts of any concession to
dealers, and an offering price on any calendar day will not be increased more
than once during such day. In effecting such transactions, the Purchaser may
realize profits or losses independent of the compensation referred to under
"Standby Arrangements." The Purchaser may also make sales to dealers at prices
which represent concessions from the prices at which such shares are then being
offered to the public. The amount of such concessions will be determined from
time to time by the Purchaser. Any Common Stock so offered is offered subject to
prior sale, when, as and if received by the Purchaser, and subject to the
Purchaser's right to reject orders in whole or in part. This Prospectus does not
constitute an offer to sell any securities other than the Common Stock offered
by the Purchaser.
The Common Stock and any shares acquired through conversion of Debentures
are listed, and application will be made for listing of the Purchased Shares, on
the NYSE. The Common Stock was traded on the Nasdaq National Market under the
symbol "PRFT" through July 3, 1997 and began trading on the NYSE on July 7, 1997
under the symbol "PFT."
SEE "RISK FACTORS" BEGINNING ON PAGE 9 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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SMITH BARNEY INC.
The date of this Prospectus is September 5, 1997.
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CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
INCLUDING OVERALLOTMENT, ENTERING STABILIZING BIDS, EFFECTING SYNDICATE COVERING
TRANSACTIONS AND IMPOSING PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES,
SEE "STANDBY ARRANGEMENTS."
---------------------
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
Commission. Such reports, proxy statements and other information may be
inspected at the public reference facilities maintained by the Commission at
Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and
at the following Regional Offices of the Commission: 7 World Trade Center, Suite
1300, New York, New York 10048 and Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661-2511. Copies may be obtained at the
prescribed rates from the Public Reference Section of the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549 or on
the Internet at http://www.sec.gov. Such reports and other information can also
be inspected at the offices of the NYSE, 20 Broad Street, New York, New York
10005.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (together with all amendments
and exhibits thereto, the "Registration Statement") under the Securities Act of
1933, as amended (the "Securities Act") with respect to the securities offered
hereby. This Prospectus does not contain all of the information set forth in the
Registration Statement and the exhibits and schedules thereto, as permitted by
the rules and regulations of the Commission. For further information with
respect to the Company and the Common Stock, reference is hereby made to the
Registration Statement, including the exhibits and schedules filed or
incorporated as a part thereof. Statements contained herein concerning the
provisions of any document are not necessarily complete and in each instance
reference is made to the copy of the document filed as an exhibit or schedule to
the Registration Statement. Each such statement is qualified in its entirety by
reference to the copy of the applicable document filed with the Commission.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed by the Company with the Commission under
Section 13(a) or 15(d) of the Exchange Act are hereby incorporated by reference
in this Prospectus:
(i) the Company's Annual Report on Form 10-K for the fiscal year ended
February 1, 1997 (including the portions of the Company's Annual Report to
Shareholders incorporated by reference therein);
(ii) the Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended May 3, 1997;
(iii) the Company's Current Reports on Form 8-K dated May 2, 1997 (as
amended by the Form 8-K/A filed on May 21, 1997), June 26, 1997, August 20,
1997, September 2, 1997 and September 4, 1997; and
(iv) the description of the Common Stock set forth in the Company's
registration statement filed pursuant to Section 12 of the Exchange Act,
and any amendment or report filed for the purpose of updating any such
description.
All reports and other documents filed by the Company pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the Offering shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
date of filing such documents. Any statement contained herein or 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 or is
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deemed to be incorporated by reference herein, modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
The Company will furnish, without charge, to each person to whom a
Prospectus is delivered, upon written or oral request, a copy of any or all of
the foregoing documents incorporated herein by reference other than exhibits to
such documents (unless such exhibits are specifically incorporated by reference
therein). Requests for such documents should be submitted in writing to
Proffitt's, Inc., 3455 Highway 80 West, P.O. Box 20080, Jackson, Mississippi
39289-0080. Telephone requests for such copies should be directed to (601)
968-4251.
CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS
CERTAIN OF THE MATTERS DISCUSSED AND INCORPORATED BY REFERENCE IN THIS
PROSPECTUS MAY CONSTITUTE FORWARD-LOOKING STATEMENTS FOR PURPOSES OF THE
SECURITIES ACT AND THE EXCHANGE ACT. ALL STATEMENTS, OTHER THAN STATEMENTS OF
HISTORICAL FACTS, INCLUDED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS THAT
ADDRESS ACTIVITIES, EVENTS OR DEVELOPMENTS THAT THE COMPANY EXPECTS OR
ANTICIPATES WILL OR MAY OCCUR IN THE FUTURE, INCLUDING SUCH THINGS AS FUTURE
CAPITAL EXPENDITURES (INCLUDING THE AMOUNT AND NATURE THEREOF), BUSINESS
STRATEGY AND MEASURES TO IMPLEMENT STRATEGY, COMPETITIVE STRENGTHS, GOALS,
EXPANSION AND GROWTH OF THE COMPANY'S AND ITS SUBSIDIARIES' BUSINESS AND
OPERATIONS, PLANS, REFERENCES TO FUTURE SUCCESS AND OTHER SUCH MATTERS ARE
FORWARD-LOOKING STATEMENTS. SUCH FORWARD-LOOKING STATEMENTS MAY INVOLVE
UNCERTAINTIES AND OTHER FACTORS THAT MAY CAUSE THE ACTUAL RESULTS AND
PERFORMANCE OF THE COMPANY TO BE MATERIALLY DIFFERENT FROM FUTURE RESULTS OR
PERFORMANCE EXPRESSED OR IMPLIED BY SUCH STATEMENTS. CAUTIONARY STATEMENTS
REGARDING THE RISKS ASSOCIATED WITH SUCH FORWARD-LOOKING STATEMENTS INCLUDE,
WITHOUT LIMITATION, THOSE STATEMENTS INCLUDED UNDER "RISK FACTORS," "SUMMARY"
AND ELSEWHERE HEREIN. AMONG OTHERS, FACTORS THAT COULD ADVERSELY AFFECT ACTUAL
RESULTS AND PERFORMANCE INCLUDE LOCAL AND REGIONAL ECONOMIC CONDITIONS IN THE
AREAS SERVED BY THE COMPANY, THE LEVEL OF CONSUMER SPENDING FOR APPAREL AND
OTHER CONSUMER GOODS, THE EFFECTS OF WEATHER CONDITIONS ON SEASONAL SALES IN THE
COMPANY'S MARKET AREAS, COMPETITION AMONG DEPARTMENT AND SPECIALTY STORES,
CHANGES IN MERCHANDISE MIXES, SITE SELECTION AND RELATED TRAFFIC AND DEMOGRAPHIC
PATTERNS, BEST PRACTICES AND MERCHANDISING, INVENTORY MANAGEMENT AND TURNOVER
LEVELS, REALIZATION OF PLANNED SYNERGIES AND COST SAVINGS, AND THE COMPANY'S
SUCCESS IN INTEGRATING RECENT AND POTENTIAL FUTURE ACQUISITIONS. SEE "RISK
FACTORS -- FORWARD-LOOKING STATEMENTS."
ALL WRITTEN OR ORAL FORWARD-LOOKING STATEMENTS ATTRIBUTABLE TO THE COMPANY
ARE EXPRESSLY QUALIFIED IN THEIR ENTIRETY BY THE FOREGOING CAUTIONARY STATEMENT.
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SUMMARY
The following is a summary of certain information contained or incorporated
by reference in this Prospectus. Reference is made to, and this summary is
qualified in its entirety by, the more detailed information contained or
incorporated by reference 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.
Reference in this Prospectus to the Company's fiscal year means the fiscal year
ended on the Saturday nearest January 31 of the following calendar year (e.g.,
"fiscal 1995" means the fiscal year ended February 3, 1996). Unless the context
otherwise requires, references in this Prospectus to "pro forma" financial
information reflect the acquisition by the Company of Parisian as if the
acquisition had occurred on February 4, 1996. Historical financial information
presented in this Prospectus includes the results of Parisian from and after
October 11, 1996, the date of its acquisition by the Company.
THE COMPANY
The Company is a leading regional department store chain operating 176
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 (30
stores), Younkers (50 stores), Parisian (40 stores) and Herberger's (37 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.
In recent years, the Company has grown primarily through the acquisition of
strong, regional department store chains such as McRae's, Younkers, Parisian and
Herberger's. The Company's philosophy has been to maintain existing chain names,
to retain merchandising and store personnel and to employ a "best practices"
approach to integrating acquired companies. Best practices is a process whereby
each acquired chain's operating procedures and policies are reviewed to
determine those practices which the Company believes will increase synergies
while minimizing business interruptions. The Company believes the implementation
of best practices throughout the Company's chains has resulted in improved
comparable store sales and increased operating margins through better and more
consistent inventory control and pricing, and other operating efficiencies. In
addition, the Company realizes scale economies in purchasing and distribution,
in administrative areas such as accounting, proprietary credit card
administration, and management information systems and in other
infrastructure-related areas.
The Company places a high priority on being a market leader in each of the
markets in which it operates. In smaller communities, such as Ames, Iowa and
Kalispell, Montana, the Company's stores are frequently the only branded name
department store catering to middle and upper income customers and offering an
array of brands that frequently are not otherwise available to shoppers in such
markets. In most larger metropolitan markets, such as Atlanta, Georgia and
Indianapolis, Indiana, the Company seeks to maximize its market share by
operating multiple stores in prime locations. The Company believes that its
geographic diversity and the demographic breadth of its target customer groups
may to some extent serve to insulate the Company from sales and earnings
volatility typically associated with poor weather conditions, or changes in
local or regional economic conditions.
BUSINESS STRATEGY
The Company's business objective is to maximize profitability and
shareholder value by (i) expanding its core business through comparable store
sales growth, new store openings and margin expansion, and
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(ii) monitoring acquisition opportunities while maintaining a strong capital
structure. Through the execution of this strategy under the leadership of R.
Brad Martin and an experienced senior management team, the Company has grown
from 11 stores and net sales of $94.8 million in fiscal 1989 to 173 stores and
pro forma net sales of $2.3 billion in fiscal 1996.
Comparable Store Sales Growth. The Company expects that comparable store
sales will benefit from a number of merchandising initiatives including (i)
implementing best practices, (ii) expanding sales of key brands, and (iii)
increasing sales of the Company's private brands. As part of best practices, the
Company benchmarks sales of product categories and brand assortments for each
store and identifies and targets opportunities to strengthen such sales by
altering the merchandise mix. As an example, the Company has successfully used
this strategy by applying the long history of strength in the cosmetics business
of McRae's and Proffitt's stores to increase the penetration and profitability
of Younkers stores' cosmetics business.
The Company's large scale and proven track record with vendors such as
Tommy Hilfiger, Liz Claiborne, Jones New York, Polo/Ralph Lauren, Calvin Klein,
Guess, and Nine West, among others, has enabled the Company to introduce certain
of these brands into acquired stores which, prior to combining with the Company,
did not have access to these vendors. Additionally, the Company plans to
increase sales of its private brand offerings within the apparel and housewares
categories from 6% of total net sales to 12% to 15% over the next two to three
years.
New Store Openings. The Company plans to open 15 to 20 new stores across
all chains over the next three years, including selective real estate
acquisitions in existing or new markets. The Company targets premier mall
locations principally based on favorable demographic profiles and trends, as
well as the compatibility and traffic draws of other tenants. High quality real
estate is a primary criterion for all new stores.
Margin Expansion. The Company has implemented the following strategies to
increase margins: (i) leveraging key vendor relationships; (ii) capitalizing on
purchasing economies of scale; (iii) extending key brands into certain acquired
stores; (iv) shifting the merchandise mix toward higher margin products; (v)
increasing private brand penetration; (vi) consolidating administrative and
support areas and eliminating redundant expenses; and (vii) realizing
efficiencies related to the re-engineering of certain operating activities.
The Company intends to further increase gross margins by increasing sales
of its private brand products, which typically generate higher margins and
enhance customer loyalty. Operating margins are also expected to benefit from
sales productivity enhancements across the Company's chains and from the
integration cost savings programs developed by management in conjunction with
the Younkers, Parisian, and Herberger's acquisitions. These programs reduced
operating expenses by a total of $6 million in fiscal 1996 (consistent with the
Company's announced target) and are expected to produce annualized expense
savings of $20 million in fiscal 1997 and $29 million in fiscal 1998 (compared
to the 1995 cost structure of the chains on an independent basis).
Monitor Acquisition Opportunities. The Company has an established record
of successfully acquiring and integrating regional department store chains. The
Company believes that its philosophy of retaining the local identity and
merchandising organization of acquired companies makes the Company an attractive
acquirer for regional department store companies. Although the Company currently
has no agreements, arrangements or understandings with respect to future
acquisitions, the Company expects the department store industry will continue to
consolidate, and the Company will regularly evaluate possible acquisition
opportunities as they arise.
Maintain Strong Capital Structure. The Company intends to maintain a
strong balance sheet to support its growth objectives. As part of the Company's
plan to improve its capital structure, the Company (i) issued and sold $125
million principal amount of its 8 1/8% Senior Notes due 2004 (the "Senior
Notes") on May 21, 1997, (ii) amended its credit facility (the "Credit
Facility") on June 26, 1997 to, among other things, increase the availability
thereunder to $400 million and (iii) on August 21, 1997, replaced its existing
asset-backed commercial paper conduit facility with a credit card master trust
to facilitate longer term, fixed-rate financing of private label credit card
receivables, as well as short-term variable-rate funding through asset-backed
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commercial paper conduit facilities. The Company believes that, absent any
additional acquisitions, future cash flows from operations (with seasonal needs
supplemented by borrowings under the Credit Facility and additional sales of
accounts receivable under its private label credit card securitization programs)
will be sufficient to service debt and lease payments, and to fund capital
expenditures and working capital requirements. See "Capitalization."
RECENT DEVELOPMENTS
Second Quarter Results. On August 21, 1997, the Company reported operating
results for the fiscal quarter ended August 2, 1997. Net sales for the quarter
were $492.3 million, compared to net sales of $343.4 million for the second
fiscal quarter of the prior year, an increase of 43%. On a comparable stores
basis (excluding Parisian), total Company sales increased 6% in the second
fiscal quarter of 1997 compared to the second fiscal quarter of the prior year.
In addition, the Company realized net income of $5.3 million, or $.18 per share,
for the fiscal quarter ended August 2, 1997, compared to $3.5 million, or $.14
per share, for the second fiscal quarter of the prior year. Prior to certain
non-recurring and unusual items, net income for the fiscal quarter ended August
2, 1997 was $8.0 million, or $.28 per share, compared to $4.6 million, or $.18
per share, for the second fiscal quarter of the prior year.
For the six months ended August 2, 1997, net sales were $1,018.7 million,
compared to net sales of $708.5 million for the six months ended August 3, 1996,
an increase of 44%. On a comparable stores basis (excluding Parisian), total
Company sales increased 5% in the six months ended August 2, 1997, compared to
the first six months of the prior fiscal year. In addition, 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, for the first six months
of the prior fiscal year. Prior to certain non-recurring and unusual items, net
income for the six months ended August 2, 1997 was $20.0 million, or $.68 per
share, compared to $11.3 million, or $.45 per share, for the first six months of
the prior fiscal year.
The foregoing per share net income data does not give effect to the
Company's two-for-one stock split referred to below.
Two-for-One Stock Split. 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 Common Stock at the close of business on
October 15, 1997.
The Company was incorporated under the laws of the State of Tennessee in
1919. The principal executive offices of the Company are located at 3455 Highway
80 West, Jackson, Mississippi 39209, and its telephone number is (601) 968-4400.
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SUMMARY HISTORICAL AND PRO FORMA FINANCIAL AND OPERATING DATA
The following table presents summary historical and pro forma financial
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 three month periods ended May 3, 1997 and May 4,
1996. The historical financial data should be read in conjunction with the
Company's 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, Parisian's historical financial statements and the
notes thereto and the Company's pro forma financial statements and the notes
thereto 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. The data for the three
months ended May 3, 1997 and May 4, 1996 are not necessarily indicative of the
results that may be expected for the current fiscal year. See "Available
Information" and "Incorporation of Certain Information by Reference."
<TABLE>
<CAPTION>
THREE MONTHS ENDED PRO FORMA FISCAL YEAR ENDED(A)
--------------------- YEAR ENDED ---------------------------------------
MAY 3, MAY 4, FEBRUARY 1, FEBRUARY 1, FEBRUARY 3, JANUARY 28,
1997 1996(A) 1997 1997 1996 1995
---------- -------- ----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <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
Cost and expenses:
Cost of sales............. 335,882 237,201 1,511,802 1,230,454 1,087,619 986,028
Selling, general and
administrative
expenses................ 128,629 88,952 551,804 440,502 398,999 352,448
Depreciation and
amortization............ 10,898 9,811 48,471 41,037 43,013 40,305
Property and equipment
rentals................. 19,048 11,270 81,747 60,684 50,609 47,857
Taxes other than income
taxes................... 12,622 9,638 49,720 40,403 36,938 34,421
Merger, restructuring and
integration costs(b).... 1,468 2,763 15,929 15,929 20,822 --
Operating income, net....... 17,796 7,804 62,576 61,864 753 52,385
Other income (expense):
Finance charge income,
net(c).................. 10,878 7,160 37,883 32,305 31,273 27,934
Interest expense.......... (10,692) (4,706) (44,702) (26,756) (29,389) (23,286)
Other income, net......... 136 498 3,409 1,572 4,051 4,826
Income before provision for
income taxes,
extraordinary loss and
cumulative effect of
changes in accounting
methods................... 18,118 10,756 59,166 68,985 6,688 61,859
Net income (loss)........... 10,544 6,308 29,768 37,399 (1,419) 37,448
Net income available to
common shareholders....... 10,544 5,820 25,940 33,571 (3,369) 35,754
EARNINGS PER SHARE:
Earnings (loss) per common
share before extraordinary
loss and cumulative effect
of changes in accounting
methods
Primary................. .37 .25 .94 1.31 (0.06) 1.55
Fully diluted........... .37 .25 1.05 1.41 (0.06) 1.52
Earnings (loss) per common
share(d)
Primary................. .37 .25 .94 1.31 (0.15) 1.55
Fully diluted........... .37 .25 1.05 1.41 (0.15) 1.52
<CAPTION>
FISCAL YEAR ENDED(A)
-------------------------
JANUARY 29, JANUARY 30,
1994 1993
----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C>
CONSOLIDATED INCOME
STATEMENT DATA:
Net Sales................... $1,063,488 $858,754
Cost and expenses:
Cost of sales............. 690,083 523,444
Selling, general and
administrative
expenses................ 255,856 220,889
Depreciation and
amortization............ 26,693 19,586
Property and equipment
rentals................. 37,049 26,344
Taxes other than income
taxes................... 25,050 18,227
Merger, restructuring and
integration costs(b).... -- --
Operating income, net....... 28,757 50,264
Other income (expense):
Finance charge income,
net(c).................. 19,312 16,151
Interest expense.......... (11,286) (11,701)
Other income, net......... 4,063 233
Income before provision for
income taxes,
extraordinary loss and
cumulative effect of
changes in accounting
methods................... 40,846 54,947
Net income (loss)........... 25,540 32,522
Net income available to
common shareholders....... 25,540 32,522
EARNINGS PER SHARE:
Earnings (loss) per common
share before extraordinary
loss and cumulative effect
of changes in accounting
methods
Primary................. 1.12 1.97
Fully diluted........... 1.12 1.97
Earnings (loss) per common
share(d)
Primary................. 1.15 1.87
Fully diluted........... 1.15 1.87
</TABLE>
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<TABLE>
<CAPTION>
THREE MONTHS ENDED PRO FORMA FISCAL YEAR ENDED(A)
--------------------- YEAR ENDED ---------------------------------------
MAY 3, MAY 4, FEBRUARY 1, FEBRUARY 1, FEBRUARY 3, JANUARY 28,
1997 1996(A) 1997 1997 1996 1995
---------- -------- ----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
Weighted average common
shares
Primary................. 28,451 23,466 27,657 25,564 23,157 23,046
Fully diluted........... 30,539 23,655 28,277 28,204 23,166 26,301
EARNINGS PER SHARE RESTATED
FOR THE OCTOBER 27, 1997
2-FOR-1 STOCK SPLIT(E):
Earnings (loss) per common
share before extraordinary
loss and cumulative effect
of changes in accounting
methods
Primary................. .19 .13 .47 66 (0.03) .78
Fully diluted........... .19 .13 .53 .71 (0.03) .76
Earnings (loss) per common
share(d)
Primary................. .19 .13 .47 .66 (0.08) .78
Fully diluted........... .19 .13 .53 .71 (0.08) .76
CONSOLIDATED BALANCE SHEET
DATA:
Working capital............. $ 375,348 $226,361 $ 344,410 $ 344,410 $ 235,194 $ 301,270
Total assets................ 1,456,794 921,606 1,403,796 1,403,796 919,013 967,667
Long-term debt, less current
portion................... 505,108 247,537 502,577 502,577 269,442 325,501
Shareholders' equity........ 555,159 334,394 539,898 539,898 327,371 337,007
SELECTED STORE DATA(F):
Stores at beginning of
period.................... 173 144 181 144 146 115
Stores opened or acquired... 2 1 3 40 1 31
Stores closed or sold....... -- (2) (11) (11) (3) --
---------- -------- ---------- ---------- ---------- ----------
Stores at end of period..... 175 143 173 173 144 146
========== ======== ========== ========== ========== ==========
<CAPTION>
FISCAL YEAR ENDED(A)
-------------------------
JANUARY 29, JANUARY 30,
1994 1993
----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C>
Weighted average common
shares
Primary................. 22,167 17,396
Fully diluted........... 22,167 17,396
EARNINGS PER SHARE RESTATED
FOR THE OCTOBER 27, 1997
2-FOR-1 STOCK SPLIT(E):
Earnings (loss) per common
share before extraordinary
loss and cumulative effect
of changes in accounting
methods
Primary................. .56 .99
Fully diluted........... .56 .99
Earnings (loss) per common
share(d)
Primary................. .58 .94
Fully diluted........... .58 .94
CONSOLIDATED BALANCE SHEET
DATA:
Working capital............. $ 306,853 $203,977
Total assets................ 653,680 536,603
Long-term debt, less current
portion................... 203,838 216,985
Shareholders' equity........ 275,104 122,582
SELECTED STORE DATA(F):
Stores at beginning of
period.................... 106 77
Stores opened or acquired... 12 29
Stores closed or sold....... (3) --
---------- --------
Stores at end of period..... 115 106
========== ========
</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.
(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. Amounts after the Company's two-for-one
stock split are $.05 and $.03, respectively, for the extraordinary items,
and $.04 and ($.05), respectively, for the accounting changes. See " --
Recent Developments -- Two-For-One Stock Split."
(e) 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 Common Stock at the close of business on October 15, 1997.
(f) Where operations within a particular shopping mall are divided among two or
more locations but operate under the same chain, the combined operation is
counted as one store.
8
<PAGE> 9
RISK FACTORS
Prospective investors should consider carefully the following factors in
addition to other information set forth in this Prospectus in evaluating an
investment in the shares of Common Stock offered hereby.
INDEBTEDNESS OF THE COMPANY
As of August 2, 1997, the Company had approximately $543.42 million of
indebtedness outstanding. A portion of the Company's cash flow from operations
will be dedicated to debt service, thereby reducing funds available for
operations, capital expenditures and distribution to shareholders. The
indebtedness and the restrictive covenants to which the Company is subject under
the terms of its indebtedness may make the Company more vulnerable to economic
downturns and competitive pressures, may hinder its ability to execute its
growth strategy, and may reduce its flexibility to respond to changing business
conditions. In addition, certain covenants to which the Company is subject under
the terms of its indebtedness restrict the ability of the Company to pay
dividends on its Common Stock. See "Capitalization."
COMPETITION
The department store business is highly competitive. The Company's stores
compete with national and regional department store chains, specialty apparel
stores and discount store chains, some of which are larger than the Company and
may be able to devote greater financial and other resources to marketing and
other competitive activities. The Company also competes with local stores that
carry similar categories of merchandise. The Company generally competes on the
basis of pricing, quality, merchandise selection, customer service and amenities
and store design. The Company's success also depends in part on its ability to
anticipate and respond to changing merchandise trends and customer preferences
in a timely manner. Accordingly, any failure by the Company to anticipate and
respond to changing merchandise trends and customer preferences could materially
adversely affect sales of the Company's private brands and product lines, which
in turn could materially adversely affect the Company's business, financial
condition or results of operations. There can be no assurance that the Company's
stores will continue to compete successfully with such other stores or that any
such competition will not have a material impact on the Company's financial
condition or results of operations.
GENERAL ECONOMIC CONDITIONS; SEASONALITY
The Company's future performance is subject to prevailing economic
conditions and to all operating risks normally incident to the retail industry.
The Company experiences seasonal fluctuations in sales and net income, with
disproportionate amounts typically realized during the fourth fiscal quarter of
each year. Sales and net income are generally weakest during the second fiscal
quarter.
INTEGRATION OF ACQUIRED COMPANIES
As part of its business strategy, the Company has consummated several
acquisitions and will regularly evaluate future acquisition opportunities
including acquisitions of other regional department store chains and individual
stores or locations. The Company's future operations and earnings will be
affected by its ability to continue to successfully integrate the operations of
any acquired businesses or store locations. While the Company has in the past
been successful at effectively integrating the operations of acquired
businesses, there can be no assurance that the Company will be able to continue
to do so. In addition, the successful integration of operations will be subject
to numerous contingencies, some of which are beyond the Company's control. The
failure to successfully integrate any such operations with those of the Company
could have a material adverse effect on the Company's financial position,
results of operations and cash flows.
ANTI-TAKEOVER PROVISIONS
Certain provisions of the Tennessee Business Corporation Act ("TBCA") and
of the Company's charter of incorporation (the "Charter") and by-laws (the
"By-laws") may have the effect of delaying or preventing transactions involving
a change of control of the Company, including transactions in which stockholders
might
9
<PAGE> 10
otherwise receive a substantial premium for their shares over then current
market prices. See "Description of Capital Stock -- Certain Provisions of
Tennessee Law Regarding Takeovers" and "Description of Capital
Stock -- Anti-Takeover Provisions in the Company's Charter and By-laws."
FORWARD-LOOKING STATEMENTS
This Prospectus contains and incorporates by reference certain
forward-looking statements concerning the Company's existing and contemplated
operations, economic performance and financial condition. These statements are
based upon a number of assumptions and estimates which are inherently subject to
uncertainties and contingencies, many of which are beyond the control of the
Company, including the level of consumer spending for apparel and other
merchandise carried by the Company, competition among department and specialty
stores, management's ability to predict consumer tastes, merchandise brands and
mix, the effectiveness of planned advertising, marketing and promotional
campaigns, appropriate inventory management, realization of planned synergies,
private brand sales and effective cost containment. See "Cautionary Notice
Regarding Forward-Looking Statements."
10
<PAGE> 11
USE OF PROCEEDS
The net proceeds from the sale of the Common Stock to the Purchaser
pursuant to the arrangements described under "Standby Arrangements" will be used
to redeem all outstanding Debentures not surrendered for conversion. The amount
of the proceeds to be received by the Company from the Purchaser is not
determinable at this time because the number of shares of Common Stock, if any,
that will be sold to the Purchaser cannot be determined at this time.
PRICE RANGE OF COMMON STOCK
The Common Stock began trading on the NYSE on July 7, 1997 under the symbol
"PFT." Through July 3, 1997, the Common Stock was traded on the Nasdaq National
Market under the symbol "PRFT." On August 21, 1997, the Company declared a
two-for-one stock split in the form of a stock dividend payable on or about
October 27, 1997 to record holders of Common Stock on October 15, 1997. The
following table sets forth on a per share basis, for the period indicated, the
high and low sales prices of the Common Stock as reported on the NYSE Composite
Tape and by the Nasdaq National Market, as applicable, and does not reflect the
effect of the two-for-one stock split. See "Summary -- Recent
Developments -- Two-for-One Stock Split."
<TABLE>
<CAPTION>
HIGH LOW
-------- --------
<S> <C> <C>
FISCAL 1995
First Quarter............................................... $26.5000 $20.7500
Second Quarter.............................................. 33.0000 24.0000
Third Quarter............................................... 34.2500 24.0000
Fourth Quarter.............................................. 29.0000 21.5000
FISCAL 1996
First Quarter............................................... $33.7500 $23.5000
Second Quarter.............................................. 40.0000 31.5000
Third Quarter............................................... 42.0000 35.5000
Fourth Quarter.............................................. 42.7500 32.6250
FISCAL 1997
First Quarter............................................... $41.3750 $31.2500
Second Quarter.............................................. 53.0625 36.6250
Third Quarter (through September 4, 1997)................... 55.6250 49.8750
</TABLE>
On September 4, 1997, the closing price of the Common Stock on the NYSE
Composite Tape was $55.50 per share. Prospective investors should obtain a
current quote on the shares of Common Stock. As of May 3, 1997, there were
approximately 1,351 holders of record of Common Stock.
DIVIDEND POLICY
Since its initial public offering, the Company has not paid a cash dividend
on its Common Stock. The Company expects to retain its earnings for the
development and expansion of its business and the repayment of indebtedness and,
therefore, does not intend to pay cash dividends on its Common Stock in the
foreseeable future. Any future determination to pay cash dividends will be at
the discretion of the Company's Board of Directors and will depend upon the
earnings of the Company, its financial condition, its capital requirements and
any other factors the Company's Board of Directors may deem relevant. In
addition, certain covenants to which the Company is subject under the terms of
its indebtedness restrict the ability of the Company to pay cash dividends on
its Common Stock.
11
<PAGE> 12
CAPITALIZATION
The following table sets forth the capitalization of the Company as of May
3, 1997, (a) on an actual basis, (b) on a pro forma basis giving effect to (i)
the issuance and sale by the Company of the Senior Notes and the application of
the net proceeds therefrom, (ii) an increase in the percentage of the Company's
private label credit card receivables sold to third parties under a restructured
asset securitization financing arrangement established on August 21, 1997 and
(iii) the purchase by the Company of approximately $28.4 million of Parisian's
9 7/8% Senior Subordinated Notes due 2003 (the "Senior Subordinated Notes"), and
(c) as further adjusted to reflect the assumed conversion of all of the
Debentures into shares of Common Stock. This table should be read in conjunction
with the Consolidated Financial Statements of the Company and the notes thereto
incorporated by reference herein. See "Available Information" and "Incorporation
of Certain Information by Reference."
<TABLE>
<CAPTION>
AS OF MAY 3, 1997
---------------------------------------
ACTUAL PRO FORMA AS ADJUSTED
---------- ---------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Long-term debt(a):
Credit facility(b)................................... $ 163,100 $ 115,358(c) $ 115,958
Real estate and mortgage notes....................... 113,578 49,547 49,547
Senior notes(d)...................................... -- 125,000 125,000
Other notes payable.................................. 3,754 -- --
Capital lease obligations............................ 10,706 10,706 10,706
Senior Subordinated Notes(e)......................... 125,000 96,597 96,597
Convertible subordinated debentures.................. 86,250 86,250 --
Junior subordinated debt............................. 14,590 14,590 14,590
---------- ---------- ----------
Total long-term debt......................... 516,978 498,048 412,398
Shareholders' equity(f)................................ 555,159 553,359 639,009
---------- ---------- ----------
Total capitalization......................... $1,072,137 $1,051,407 $1,051,407
========== ========== ==========
</TABLE>
- ---------------
(a) Includes current maturities of long-term debt.
(b) On June 26, 1997, the Company amended and restated the Credit Facility to,
among other things, (i) increase the availability thereunder from $275
million to $400 million, (ii) extend the maturity from October 1999 to June
2002, (iii) reduce the financial performance benchmarks at which more
favorable interest rates are made available to the Company, and (iv) lessen
in varying degrees the scope of the affirmative and negative covenants
applicable to the Company and its subsidiaries. Borrowings under the Credit
Facility are generally limited to 60% of eligible inventory.
(c) On August 21, 1997, the Company completed a restructuring of its private
label credit card accounts receivable securitization facilities. Under the
restructured arrangement, the recently formed Proffitt's Credit Card Master
Trust issued $200 million aggregate principal amount of Series 1997-2
five-year term, asset backed securities representing an undivided ownership
interest in credit card receivables originated at the Company's Proffitt's,
McRae's, Herberger's, and Parisian chains. The securities were issued in
two classes, $180 million aggregate principal amount issued at 99.587% of
the face amount thereof with a per annum interest rate of 6.50%, and $20
million aggregate principal amount issued at 99.642% of the face amount
thereof with a per annum interest rate of 6.69%. Concurrent with the
issuance of the Series 1997-2 Certificates, Proffitt's Credit Card Master
Trust issued $125 million aggregate principal amount of Series 1997-1
Variable Funding Certificates. The Variable Funding Certificates will
provide the Company with funding for seasonal and expansion related growth
in the underlying receivables portfolio. The net proceeds from the issuance
and sale of the Series 1997-2 Certificates and the Variable Funding
Certificates were used to repay outstanding borrowings under the Credit
Facility and to terminate the Company's previous securitization
arrangement.
(d) On May 21, 1997, the Company issued and sold $125 million of the Senior
Notes at 99.427% of the face amount thereof and a per annum interest rate
of 8 1/8%. The net proceeds from the issuance and sale of the Senior Notes
were used to repay (i) approximately $64.0 million of real estate and
mortgage notes, (ii) approximately $3.8 million of unsecured notes payable,
and (iii) approximately $53.0 million of outstanding borrowings under the
Company's then existing credit facility.
(e) Since May 3, 1997, the Company has purchased approximately $28.4 million of
the Senior Subordinated Notes, which are guaranteed on a senior
subordinated basis by the Company. Amounts purchased, including any premium
and transaction fees, are assumed to have been funded under the Credit
Facility for purposes of the Pro Forma Capitalization as of May 3, 1997.
(f) Shareholders' equity has been adjusted to reflect a $1.8 million loss (net
of taxes) on early extinguishment of debt and for estimated fees and
expenses in connection with the Offering and the assumed conversion of all
of the Debentures.
12
<PAGE> 13
REDEMPTION OF DEBENTURES AND ALTERNATIVES TO REDEMPTION
On September 5, 1997, the Company called for redemption on October 6, 1997
(the "Redemption Date"), all of its outstanding Debentures. As of September 4,
1997, $86,250,000 aggregate principal amount of Debentures was outstanding.
The following alternatives are available to holders of Debentures:
1. Conversion into Common Stock. Holders may convert Debentures (or
any portion thereof which is $1,000 or an integral multiple thereof) into
the Common Stock of the Company at a conversion price of $42.70 per share
of Common Stock (equivalent to 23.42 shares of Common Stock for each $1,000
principal amount of Debentures). No fractional shares of Common Stock will
be issued upon conversion of Debentures. Instead, the Company will pay a
cash adjustment in respect of such fraction in an amount equal to the same
fraction of the Closing Price (as defined below) at the close of business
on the day of conversion (or, if such day is not a Trading Day (as defined
below), on the Trading Day immediately preceding such day). Debentures
surrendered for conversion will not be entitled to interest accrued to the
date of conversion. "Closing Price" means the last reported sales price
regular way or, in case no such reported sale takes place on such day, the
average of the reported closing bid and asked prices regular way, in either
case on the NYSE. "Trading Day" means each Monday, Tuesday, Wednesday,
Thursday and Friday, other than any day on which securities are generally
not traded on the NYSE. The Debentures will not be convertible after 5:00
P.M., Eastern Time, on September 29, 1997.
To convert Debentures into Common Stock, the holder thereof must
surrender such Debentures prior to 5:00 P.M. Eastern Time, on September 29,
1997 to Union Planters National Bank, as paying and conversion agent (the
"Paying and Conversion Agent"). Such surrender of any Debenture must be
accompanied by a duly executed notice of the holder's election to convert
in the form provided on the reverse side of such Debenture (the "Conversion
Notice"). The Conversion Notice must also state the name or names, together
with the address or addresses, in which the Common Stock shall be issuable
upon the conversion if different from the registered holder of the
Debentures surrendered. Each Debenture surrendered for conversion must be
accompanied by proper assignments thereof to the Company or in blank for
transfer and any requisite federal or state transfer tax stamps. The
Conversion Notice that must be given to the Paying and Conversion Agent may
be provided by surrendering Debentures accompanied by a properly completed
Letter of Transmittal in the form provided to all registered holders of
Debentures (each, a "Letter of Transmittal"). Each holder's signature in a
Letter of Transmittal or any other Conversion Notice must be guaranteed by
a commercial bank, trust company, a member firm of a national stock
exchange or the National Association of Securities Dealers, Inc. (each, an
"Eligible Institution") if shares of Common Stock are to be delivered other
than to and in the name of the registered holder of the Debentures
converted. Holders should inquire of such Eligible Institutions
sufficiently in advance of the Expiration Date whether there are any dollar
limitations on the principal amount of Debentures with respect to which
signatures may be guaranteed by such Eligible Institutions. A Letter of
Transmittal and any other Conversion Notice, once given to the Paying and
Conversion Agent, is not revocable. As promptly as practicable after the
surrender of a Debenture as aforesaid, the Company shall deliver to the
holder at the office of the Paying and Conversion Agent a certificate or
certificates for the number of full shares of Common Stock issuable upon
the conversion of such Debenture or portion thereof and a check in an
amount equivalent to the value of any fractional share otherwise issuable
upon such conversion. See "Paying and Conversion Agent and the Information
Agent."
Debenture holders wishing to convert their Debentures whose Debentures
are not immediately available or who cannot deliver their Debentures and
all other documents required by the Letter of Transmittal to the Paying and
Conversion Agent on or prior to 5:00 p.m., Eastern Time, on September 29,
1997 may elect to convert their Debentures pursuant to the following
procedures: (a) such election to convert must be made by or through an
Eligible Institution, (b) a properly completed and duly executed Notice of
Guaranteed Delivery in the form provided by the Company to all registered
holders of Debentures (each, a "Notice of Guaranteed Delivery") must be
received by the Paying and Conversion
13
<PAGE> 14
Agent on or prior to 5:00 p.m., Eastern Time, on September 29, 1997, and
(c) the Debentures in proper form for transfer, together with a properly
completed and duly executed Letter of Transmittal and all other documents
required thereby, must be received by the Paying and Conversion Agent
within five business days after the date such Notice of Guaranteed Delivery
is received by the Paying and Conversion Agent. Notwithstanding the
foregoing, shares of Common Stock will be issued in respect of Debentures
surrendered for conversion only after timely receipt by the Paying and
Conversion Agent of the surrendered Debentures, a properly completed and
duly executed Letter of Transmittal and any other documents required by the
Letter of Transmittal.
Each holder of Debentures that does not directly hold certificates for
its Debentures, but instead maintains its holdings indirectly in an account
with a broker or other intermediary (each, a "Beneficial Holder") must
comply with the procedures of such intermediary to convert such Beneficial
Holder's Debentures. Such an intermediary may maintain its holdings with
The Depository Trust Company (the "Depository"). In those instances, the
procedures of the Depository must also be followed for a Beneficial Holder
to convert its Debentures.
IT IS THE RESPONSIBILITY OF EACH BENEFICIAL HOLDER TO GIVE
INSTRUCTIONS TO ITS INTERMEDIARY IN SUFFICIENT TIME FOR THAT INTERMEDIARY,
ANY HIGHER INTERMEDIARIES AND THE RECORD HOLDER OF SUCH BENEFICIAL HOLDER'S
DEBENTURES (WHICH MAY BE THE DEPOSITORY) TO TAKE THE ACTIONS WHICH ARE
NECESSARY TO EFFECT CONVERSION OF SUCH BENEFICIAL HOLDER'S DEBENTURES PRIOR
TO 5:00 P.M., EASTERN TIME, ON SEPTEMBER 29, 1997.
The Company will decide, in its sole discretion, all questions as to
the form of documents and the validity, eligibility (including time of
receipt) and acceptance for conversion by the Company of any Debentures.
Any defect or irregularity in the surrender or delivery of any document in
connection with the conversion of Debentures may result in such Debentures
not being converted into Common Stock and, therefore, being redeemed on the
Redemption Date.
2. Sale in Open Market. Holders may sell the Debentures in the open
market. Holders of Debentures who wish to sell their Debentures in the open
market should consult with their own advisors regarding if and when they
should sell their Debentures and the tax consequences thereof. Holders may
incur various fees and expenses in connection with any such sale.
3. Redemption. Holders may allow the Debentures to be redeemed on
October 6, 1997. Pursuant to the terms of the Indenture between the Company
and Union Planters National Bank, as Trustee, dated as of October 26, 1993,
holders of the Debentures will be entitled to receive upon redemption
103.1667% of the principal amount thereof, plus interest accruing after May
1, 1997 to the Redemption Date (the "Redemption Price"). A holder of $1,000
principal amount of Debentures redeemed at the Redemption Price would
receive $1,052.1184 in cash. Payment of the Redemption Price will be made
by the Paying and Conversion Agent upon surrender of Debentures to the
Paying and Conversion Agent by holders of Debentures accompanied by a
properly completed Letter of Transmittal. Each holder's signature in a
Letter of Transmittal must be guaranteed by an Eligible Institution if the
Redemption Price for Debentures surrendered by such holder for redemption
is to be paid other than to the registered holder of such Debentures.
Holders should inquire of such Eligible Institutions sufficiently in
advance of the Redemption Date whether there are any dollar limitations on
the principal amount of Debentures with respect to which signatures may be
guaranteed by such Eligible Institutions. On and after the Redemption Date,
interest will cease to accrue and holders of Debentures will not have any
rights as such holders other than the right to receive the Redemption
Price. See "Paying and Conversion Agent and the Information Agent."
On September 4, 1997, the closing price of the Common Stock as
reported on the NYSE Composite Tape was $55.50 per share. Based on such
closing price, if a holder of $1,000 principal amount of Debentures on that
date had converted such principal amount, such holder would have received
Common Stock (and cash in lieu of a fractional share) having a market value
equal to $1,299.81, which amount is higher than the amount ($1,052.1184) to
be received upon redemption. The market price of the
14
<PAGE> 15
Common Stock received upon conversion, however, is subject to fluctuation,
and the holder may incur various transaction costs if such Common Stock is
sold. Holders of Debentures are urged to obtain current market quotations
for the Common Stock.
SO LONG AS THE MARKET PRICE OF THE COMMON STOCK IS GREATER THAN $44.92
PER SHARE AT THE TIME OF CONVERSION, A HOLDER WHO CONVERTS DEBENTURES INTO
COMMON STOCK WILL RECEIVE CONSIDERATION (COMMON STOCK, PLUS CASH IN LIEU OF
ANY FRACTIONAL SHARE) HAVING A MARKET VALUE GREATER THAN THE REDEMPTION
PRICE OF THE DEBENTURES. TAXES, COMMISSIONS AND OTHER COSTS WHICH WOULD
LIKELY BE INCURRED UPON SALE OF COMMON STOCK RECEIVED UPON CONVERSION OF
THE DEBENTURES WOULD REDUCE OR ELIMINATE THE ECONOMIC ADVANTAGE OF
CONVERSION OVER REDEMPTION. MOREOVER, THE MARKET VALUE OF THE COMMON STOCK
RECEIVED IS SUBJECT TO FLUCTUATION.
For a discussion of certain United States federal income tax
considerations, see "Certain Federal Income Tax Considerations."
PAYING AND CONVERSION AGENT AND THE INFORMATION AGENT
Union Planters National Bank has been appointed as Paying and Conversion
Agent for the redemption and conversion of the Debentures. The surrender of
Debentures for conversion or redemption should be accompanied by a properly
completed Letter of Transmittal and be delivered to the Paying and Conversion
Agent by hand delivery, overnight courier or mail as follows:
THE PAYING AND CONVERSION AGENT
<TABLE>
<S> <C>
BY HAND OR OVERNIGHT COURIER: BY MAIL:
(registered or certified mail recommended)
Union Planters National Bank Union Planters National Bank
Corporate Trust Department Corporate Trust Department
6200 Poplar Avenue P.O. Box 387
Third Floor Memphis, Tennessee 38147
Memphis, Tennessee 38119
</TABLE>
Beacon Hill Partners, Inc. has been retained by the Company as information
agent (the "Information Agent") to assist in connection with the redemption and
conversion of the Debentures. Questions and requests for assistance regarding
the redemption or the conversion of the Debentures and requests for additional
copies of this Prospectus, the Letter of Transmittal and the Notice of
Guaranteed Delivery may be directed to the Information Agent as follows:
THE INFORMATION AGENT
Beacon Hill Partners, Inc.
90 Broad Street
New York, New York 10004
Attention: Edward McCarthy
Telephone: (800) 755-5001
The Company will pay the Paying and Conversion Agent and the Information
Agent their reasonable and customary fees for their services and will reimburse
them for all of their reasonable out-of-pocket expenses in connection therewith.
15
<PAGE> 16
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a general summary of certain United States federal income
tax considerations relevant to the conversion, redemption or sale of Debentures
by a beneficial owner of Debentures. This summary is based on the Internal
Revenue Code of 1986, as amended (the "Code"), Treasury Regulations (including
Proposed Regulations and Temporary Regulations) promulgated thereunder, Internal
Revenue Service ("IRS") rulings, official pronouncements and judicial decisions,
all as in effect on the date hereof and all of which are subject to change,
possibly with retroactive effect, or different interpretations. This summary is
applicable only to holders who are United States persons for federal income tax
purposes and who hold Debentures as capital assets and who will hold any Common
Stock received on conversion of Debentures as capital assets. Additionally, this
summary is not applicable to non-United States persons who have an indirect
interest in Debentures or Common Stock through a United States partnership,
trust or estate, or other flow-through entity.
This summary does not discuss all the tax consequences that may be relevant
to a particular holder in light of the holder's particular circumstances and it
is not intended to be applicable in all respects to all categories of investors,
some of whom -- such as insurance companies, tax-exempt persons, financial
institutions, regulated investment companies, dealers in securities or
currencies, persons that hold the Debentures as a position in a "straddle," as
part of a "synthetic security," "hedge," "conversion transaction" or other
integrated investment, persons that enter into "short sales against the box" or
certain other "constructive sales" involving the Debentures or substantially
identical property, or persons whose functional currency is other than United
States dollars -- may be subject to different rules not discussed below. In
addition, this summary does not address any state, local or foreign tax
considerations that may be relevant to a particular holder.
HOLDERS OF DEBENTURES ARE ADVISED TO CONSULT THEIR OWN TAX ADVISORS
REGARDING THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF THE
CONVERSION, SALE OR REDEMPTION OF THE DEBENTURES IN LIGHT OF THEIR OWN
PARTICULAR CIRCUMSTANCES.
CONVERSION OF DEBENTURES
In general, no gain or loss will be recognized on conversion of Debentures
solely into Common Stock. The tax basis for the Common Stock received upon such
conversion will be equal to the tax basis of the Debentures converted (reduced
by the portion of such basis allocable to any fractional Common Stock interest
paid in cash). The holding period for the Common Stock generally will include
the holding period of the Debentures converted. A holder generally will
recognize gain (or loss) upon a conversion to the extent that any cash paid in
lieu of a fractional share of Common Stock exceeds (or is less than) its tax
basis in such fractional share.
SALE OR REDEMPTION OF DEBENTURES
Generally, the sale or redemption of a Debenture will result in taxable
gain or loss equal to the difference between the amount realized and the
holder's adjusted tax basis in the Debentures. Except as discussed below under
"Market Discount," such gain or loss will be capital gain or loss.
MARKET DISCOUNT
Special rules will apply to Debentures acquired with market discount. A
market discount note is, generally, a note the principal amount of which exceeds
the holder's basis in the note immediately after acquisition by more than a
specified de minimus amount. Generally, any gain recognized on the sale or
redemption of a market discount note will be treated as ordinary income to the
extent of the accrued market discount on such note not previously included in
income. In general, market discount accrues on a straight line basis or, at the
option of the holder, at a constant yield to maturity basis.
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Although the matter is not free from doubt, a holder of a Debenture with
market discount should not have to recognize income on the conversion of the
Debenture, even with respect to market discount that has accrued but has not
been taken into account. Market discount not recognized on conversion will carry
over to the Common Stock acquired upon conversion thereof and will be recognized
as ordinary income to the extent of gain recognized upon the disposition of such
Common Stock, including any deemed disposition of fractional shares of Common
Stock for cash at the time of conversion.
SALE OR DISPOSITION OF COMMON STOCK
A holder will recognize gain or loss on the sale or exchange of Common
Stock received upon conversion of a Debenture equal to the difference between
the amount realized on such sale or exchange and the holder's adjusted tax basis
in the Common Stock sold or exchanged.
BACKUP WITHHOLDING
A holder of a Debenture or Common Stock issued upon conversion of a
Debenture may be subject to backup withholding at a rate of 31% with respect to
dividends on, or the proceeds of a sale or redemption of, such Debenture or
Common Stock, as the case may be, unless (i) such holder is a corporation or
comes within certain other exempt categories and, when required, demonstrates
this fact, or (ii) provides a taxpayer identification number, certifies as to no
loss of exemption from backup withholding, and otherwise complies with
applicable backup withholding rules.
DESCRIPTION OF CAPITAL STOCK
GENERAL
As of the date hereof, the Company's authorized capital stock consists of
100,000,000 shares of Common Stock, par value $0.10 per share, and 10,000,000
shares of preferred stock, par value $1.00 per share (the "Preferred Stock"). As
of September 4, 1997, 28,739,212 shares of Common Stock and no shares of the
Series C Preferred Stock (as defined herein) were issued and outstanding. The
following summary description of the capital stock of the Company does not
purport to be complete and is qualified in its entirety by reference to the
Company's Charter and to the TBCA. See "Available Information" and
"Incorporation of Certain Information by Reference."
COMMON STOCK
Holders of Common Stock are entitled to one vote for each share held on all
matters submitted to a vote of shareholders of the Company and do not have
cumulative voting rights. Accordingly, holders of a majority of the shares of
Common Stock entitled to vote in any election of directors of the Company may
elect all of the directors standing for election. The Company's Charter requires
that its Board of Directors be staggered, consisting of three classes of
directors which are as nearly equal in number as possible. Holders of Common
Stock are entitled to receive ratably such dividends, if any, as may be declared
by the Board of Directors of the Company out of funds legally available
therefor, subject to any preferential dividend rights of outstanding Preferred
Stock. Upon the liquidation, dissolution or winding up of the Company, the
holders of Common Stock are entitled to receive ratably the net assets of the
Company available after payment of all debts and other liabilities and subject
to the prior rights of outstanding Preferred Stock. Holders of Common Stock have
no preemptive, subscription, redemption or conversion rights. All outstanding
shares of Common Stock are duly authorized, validly issued, fully paid and
nonassessable. The rights, preferences and privileges of holders of Common Stock
are subject to, and may be adversely affected by, the rights of the holders of
any series of Preferred Stock, whether currently outstanding or designated and
issued in the future. See "Price Range of Common Stock," "Dividend Policy,"
"-- Preferred Stock" and "-- Anti-Takeover Provisions in the Company's Charter
and By-laws."
The transfer agent and registrar for the Common Stock is Union Planters
National Bank.
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PREFERRED STOCK
The Board of Directors of the Company has the authority to issue the
Preferred Stock in one or more classes or series and to fix the designations,
powers, preferences and rights of the shares of each class or series, including
dividend rates, conversion rights, terms of redemption and liquidation
preferences and the number of shares constituting each such class or series,
without any further vote or action by the shareholders of the Company. The
ability of the Board of Directors of the Company to issue Preferred Stock, while
providing flexibility in connection with possible acquisitions and other
corporate purposes, could have the effect of making it more difficult for a
third party to acquire, or of discouraging a third party from acquiring, a
majority of the outstanding voting stock of the Company.
As of September 4, 1997, 1,000,000 shares of the Preferred Stock were
designated as Series C Junior Preferred Stock ("Series C Preferred Stock"). The
Series C Preferred Stock will be issued upon exercise of the Rights. Each share
of the Series C Preferred stock, if issued, would bear a dividend rate of 100
times the aggregate amount per share of any dividend declared on the Common
Stock. After any such dividend on the Series C Preferred Stock becomes payable
and is in arrears, the Company may not declare or pay dividends or other
distributions on any shares of stock ranking junior to, or on parity with, the
Series C Preferred Stock (including the Common Stock), or redeem, purchase or
acquire for value any such shares of stock. Each share of Series C Preferred
Stock would also entitle the holder to 100 votes on all matters submitted to a
vote of the shareholders of the Company. In addition, upon a liquidation,
dissolution or winding up of the Company, (i) no distribution can be made to
holders of shares of stock ranking junior to the Series C Preferred Stock
(including holders of Common Stock) unless, prior thereto, a distribution of
$1.00 per share is made to the holders of the Series C Preferred Stock and (ii)
holders of the Series C Preferred Stock are entitled to receive, for each share
of Series C Preferred Stock held, 100 times the aggregate amount to be
distributed per share to holders of Common Stock. No shares of Series C
Preferred Stock have been issued, and management is aware of no facts suggesting
that issuance of such shares may be imminent. See "-- Rights Plan."
RIGHTS PLAN
On March 28, 1995, the Board of Directors of the Company declared a
dividend distribution of one right (a "Right") for each share of Common Stock.
Each Right entitles the holder to purchase from the Company one one-hundredth
( 1/100) of a share of Series C Preferred Stock at a price of $85 per one
one-hundredth ( 1/100) of a share. Initially, the Rights are not exercisable.
However, they will become exercisable if, without the prior approval of the
Board of Directors of the Company, any person either acquires 20% or more of the
shares of Common Stock then outstanding or commences a tender or exchange offer
which, if successfully consummated, would result in such person's acquisition of
20% or more of the shares of Common Stock then outstanding. The Rights are
generally designed to deter coercive takeover tactics and to encourage all
persons interested in potentially acquiring control of the Company to treat each
shareholder on a fair and equal basis. See "-- Preferred Stock."
CERTAIN PROVISIONS OF TENNESSEE LAW REGARDING TAKEOVERS
As a Tennessee corporation, the Company is subject to certain provisions of
Tennessee law which may discourage or render more difficult an unsolicited
takeover of the Company. These provisions include Tennessee's Business
Combination Act, Control Share Acquisition Act, Investor Protection Act and
Greenmail Act.
Business Combination Act. Tennessee's Business Combination Act (the
"Business Combination Act") provides that a party owning 10% or more of stock in
a "resident domestic corporation" (such party is called an "interested
shareholder") cannot engage in a business combination with the resident domestic
corporation unless the combination (i) takes place at least five years after the
interested shareholder first acquired 10% or more of the resident domestic
corporation, and (ii) either (A) is approved by at least 2/3 of the
noninterested voting shares of the resident domestic corporation or (B)
satisfies certain fairness conditions specified in the Business Combination Act.
These provisions apply unless one of two events occurs. A business
combination with an entity can proceed without delay when approved by the target
corporation's board of directors before that entity becomes
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an interested shareholder, or the resident corporation may enact a charter
amendment or bylaw to remove itself entirely from the Business Combination Act.
This charter amendment or by-law must be approved by a majority of the
shareholders who have held shares for more than one year prior to the vote. It
may not take effect for at least two years after the vote. The Company has not
adopted a provision in its Charter or By-laws removing the Company from coverage
under the Business Combination Act.
The Business Combination Act further provides an exemption from liability
for officers and directors of resident domestic corporations who do not approve
proposed business combinations or charter amendments and by-laws removing their
corporations from the Business Combination Act's coverage as long as the
officers and directors act in "good faith belief" that the proposed business
combination would adversely affect their corporation's employees, customers,
suppliers, or the communities in which their corporation operates and such
factors are permitted to be considered by the board of directors under the
charter.
Control Share Acquisition Act. The Tennessee Control Share Acquisition Act
("TCSAA") strips a purchaser's shares of voting rights any time an acquisition
of shares in a covered Tennessee corporation brings the purchaser's voting power
to one-fifth, one-third or a majority of all voting power. The purchaser's
voting rights can be reestablished only by a majority vote of the other
shareholders. The purchaser may demand a special meeting of shareholders to
conduct such a vote. The purchaser can demand such a meeting before acquiring a
control share only if it holds at least 10% of outstanding shares and announces
a good faith intention to make the control share acquisition. A target
corporation may or may not redeem the purchaser's shares if the shares are not
granted voting rights. The TCSAA applies only to a corporation that has adopted
a provision in its charter or by-laws expressly declaring that the TCSAA will
apply. The Company has not adopted any provision in its Charter or By-laws
electing protection under the TCSAA.
Investor Protection Act. Tennessee's Investor Protection Act ("TIPA")
applies to tender offers directed at corporations (called "offeree companies")
that have "substantial assets" in Tennessee and that are either incorporated in
or have a principal office in Tennessee. The TIPA requires an offeror making a
tender offer for an offeree company to file with the Commissioner of Commerce
and Insurance (the "Commissioner") a registration statement. When the offeror
intends to gain control of the offeree company, the registration statement must
indicate any plans the offeror has for the offeree. The Commissioner may require
additional information material to the takeover offer and may call for hearings.
The TIPA does not apply to an offer that the offeree company's board of
directors recommends to shareholders.
In addition to requiring the offeror to file a registration statement with
the Commissioner, the TIPA requires the offeror and the offeree company to
deliver to the Commissioner all solicitation materials used in connection with
the tender offer. The TIPA prohibits "fraudulent, deceptive, or manipulative
acts or practices" by either side, and gives the Commissioner standing to apply
for equitable relief to the Chancery Court of Davidson County, Tennessee, or to
any other chancery court having jurisdiction whenever it appears to the
Commissioner that the offeror, the offeree company, or any of its respective
affiliates has engaged in or is about to engage in a violation of the TIPA. Upon
proper showing, the Chancery Court may grant injunctive relief. The TIPA further
provides civil and criminal penalties for violations.
Greenmail Act. The Tennessee Greenmail Act ("TGA") applies to any
corporation (including the Company) chartered under the laws of Tennessee which
has a class of voting stock registered or traded on a national securities
exchange or registered with the Commission pursuant to Section 12(g) of the
Exchange Act. The TGA provides that it is unlawful for any corporation or
subsidiary to purchase, either directly or indirectly, any of its shares at a
price above the market value, as defined in the TGA, from any person who holds
more than 3% of the class of the securities purchased if such person has held
such shares for less than two years, unless either the purchase is first
approved by the affirmative vote of a majority of the outstanding shares of each
class of voting stock issued or the corporation makes an offer of at least equal
value per share to all holders of shares of such class.
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<PAGE> 20
ANTI-TAKEOVER PROVISIONS IN THE COMPANY'S CHARTER AND BY-LAWS
Certain provisions of the Company's Charter and By-laws may discourage or
render more difficult an unsolicited takeover of the Company.
Removal of Directors. The Company's Charter and By-laws provide that any
or all directors may be removed only for cause (as defined in the TBCA) by a
vote of a majority of the stockholders entitled to vote thereon.
Staggered Board of Directors. The Company's Charter requires that its
Board of Directors be staggered, consisting of three classes of directors which
are as nearly equal in number as possible. The initial terms of the Class I,
Class II and Class III directors expire at the Company's annual meeting of
shareholders in the years 1998, 1999 and 2000, respectively. Thereafter,
directors of each class are elected for terms of three years. The Company's
Charter also provides that the affirmative vote of the holders of at least 80%
of the voting power of the then outstanding capital stock is required to amend
or repeal, or adopt any provision inconsistent with, the provision of the
Company's Charter requiring a staggered Board of Directors.
Required Shareholder Vote for Authorization of Certain Actions. The TBCA
provides that the approval of the Company's Board of Directors and of a majority
of the outstanding shares of the Company's Common Stock entitled to vote thereon
would generally be required to approve a merger or to sell, lease, exchange or
otherwise dispose of substantially all of the Company's assets. However, the
Company's Charter provides that, except under specified circumstances, the
affirmative vote of the holders of at least 80% of the voting power of the then
outstanding shares of capital stock entitled to vote in the election of
directors is required for the approval of (i) certain mergers or consolidations,
(ii) certain sales, leases, exchanges, mortgages, pledges or other dispositions
of the assets of the Company, (iii) the adoption of a plan for the liquidation
of the Company, (iv) certain reclassifications of the Company's securities and
certain recapitalizations and (v) any agreement providing for the foregoing.
No Shareholder Action by Written Consent. The Company's Charter and
By-laws require that any shareholder action must be effected at a duly called
annual or special meeting and may not be effected by written consent.
STANDBY ARRANGEMENTS
Under the terms and subject to the conditions of a Standby Agreement (the
"Standby Agreement"), the Purchaser has agreed, subject to certain conditions,
to purchase the Purchased Shares from the Company. The purchase price for the
Purchased Shares will be equal to a price per share of $44.92. The Purchaser
also may acquire Debentures in the open market or otherwise on or prior to the
Expiration Date in such amounts and at such prices as the Purchaser may deem
advisable. The Purchaser has agreed to surrender for conversion all Debentures
so purchased and any additional Debentures beneficially owned by them.
Prior to, on or after the Redemption Date, the Purchaser may offer shares
of Common Stock pursuant to this Prospectus directly to the public, at prices
set from time to time by the Purchaser, including shares acquired through
conversion of Debentures acquired by the Purchaser. Prior to the Redemption
Date, each such price when set will not exceed the greater of the last sale or
current asked price of the Common Stock on the NYSE plus the amounts of any
concession to dealers, and an offering price on any calendar day will not be
increased more than once during such day. In effecting such transactions, the
Purchaser may realize profits or losses independent of the compensation referred
to below. The Purchaser may also make sales to dealers at prices which represent
concessions from the prices at which such shares are then being offered to the
public. The amount of such concessions will be determined from time to time by
the Purchaser. Any Common Stock so offered is offered subject to prior sale,
when, as and if received by the Purchaser, and subject to the Purchaser's right
to reject orders in whole or in part.
Pursuant to the Standby Agreement, the Company has agreed to pay the
Purchaser for the commitments undertaken by the Purchaser under the Standby
Agreement an amount equal to (i) $362,949 as a standby fee and (ii) in the event
that the Purchaser acquires Acquired Shares (as defined below) in excess of
100,999
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<PAGE> 21
shares of Common Stock, an amount equal to $2.02 per Acquired Share for all
Acquired Shares; provided, however, that if the closing market price of the
Common Stock (as reported on the NYSE Composite Tape) at the Expiration Time is
greater than $44.92 per share, the Company is not required to pay any amounts
due under clause (ii) above with respect to any shares of Common Stock acquired
by the Purchaser upon the conversion of Debentures held by the Purchaser.
"Acquired Shares" means (i) the Purchased Shares and (ii) shares of Common Stock
acquired by the Purchaser upon the conversion of Debentures. The Company has
agreed to reimburse the Purchaser for all of the Purchaser's out-of-pocket
costs, including the reasonable fees and disbursements of the Purchaser's
counsel.
In connection with the Offering and in compliance with the applicable law,
the Purchaser may overallot (i.e., sell more shares of Common Stock than the
total amount shown on the cover page of this Prospectus) and may effect
transactions which stabilize, maintain or otherwise affect the market price of
the Common Stock at levels above those which might otherwise prevail in the open
market. Such transactions may include placing bids for the Common Stock or
effecting purchases of the Common Stock for the purpose of pegging, fixing or
maintaining the price of the Common Stock or for the purpose of reducing a short
position created in connection with the Offering. A short position may be
covered by exercise of the option described above rather than by open market
purchases. The Purchaser is not required to engage in any of these activities
and any such activities, if commenced, may be discontinued at any time.
During the period beginning on the date of this Prospectus and continuing
to and including the Redemption Date, and, if the Purchaser purchases any
Purchased Shares, further continuing and including the date ending 90 days after
the date of this Prospectus, the Company has agreed not to offer, sell, contract
to sell or otherwise dispose of, any shares of Common Stock of the Company, any
securities of the Company substantially similar to the Common Stock or any
securities convertible into or exchangeable for shares of Common Stock or any
such substantially similar security (except for any securities issued, offered,
sold or disposed of by the Company pursuant to its stock option and other
benefit plans maintained for, or employment agreements with, its officers,
directors and employees or Common Stock issued or distributed in connection with
the conversion or exercise of any security of the Company outstanding on the
date of this Prospectus) without the Purchaser's prior written consent. The
Company's directors and executive officers have entered into similar
arrangements with the Purchaser.
The Company has agreed to indemnify the Purchaser against certain
liabilities, including liabilities under the Securities Act.
The Purchaser may assist in the solicitation of conversions by holders of
Debentures but will receive no commission or other compensation therefor.
The Purchaser performs investment banking and financial advisory and other
financial services for the Company and its affiliates from time to time.
LEGAL MATTERS
The validity of the shares of Common Stock have been passed upon for the
Company by Alston & Bird LLP, Atlanta, Georgia, and for the Purchaser by Cahill
Gordon & Reindel (a partnership including a professional corporation), New York,
New York.
EXPERTS
The consolidated financial statements of the Company as of February 1, 1997
and February 3, 1996 and for each of the three years in the period ended
February 1, 1997, all incorporated by reference herein, have been audited by
Coopers & Lybrand L.L.P., independent accountants, as set forth in their report
thereon, which is incorporated by reference herein. Such consolidated financial
statements are so incorporated in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
The consolidated financial statements for the year ended January 28, 1995
as it relates to Younkers, Inc. and subsidiary, which are incorporated by
reference herein, have been audited by Deloitte & Touche LLP,
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<PAGE> 22
independent auditors, as stated in their report, which is incorporated by
reference herein, and are so incorporated in reliance upon the report of such
firm given upon their authority as experts in accounting and auditing.
The consolidated financial statements of Parisian, Inc. as of February 3,
1996 and January 28, 1995, and for each of the three years in the period ended
February 3, 1996, all incorporated by reference herein, have been audited by
Coopers & Lybrand L.L.P., independent accountants, as set forth in their report
thereon, which is incorporated by reference herein. Such consolidated financial
statements are so incorporated in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
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NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER CONTAINED HEREIN, AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR BY THE PURCHASER. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER OF ANY SECURITIES OTHER THAN THOSE TO WHICH IT RELATES OR AN
OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THOSE TO WHICH IT RELATES
IN ANY STATE TO ANY PERSON TO WHOM IT IS NOT LAWFUL TO MAKE SUCH OFFER IN SUCH
STATE. THE DELIVERY OF THIS PROSPECTUS AT ANY TIME DOES NOT IMPLY THAT THE
INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................. 2
Incorporation of Certain Information
by Reference........................ 2
Cautionary Notice Regarding Forward-
Looking Statements.................. 3
Summary............................... 4
Risk Factors.......................... 9
Use of Proceeds....................... 11
Price Range of Common Stock........... 11
Dividend Policy....................... 11
Capitalization........................ 12
Redemption of Debentures and
Alternatives to Redemption.......... 13
Paying and Conversion Agent and the
Information Agent................... 15
Certain Federal Income Tax
Considerations...................... 16
Description of Capital Stock.......... 17
Standby Arrangements.................. 20
Legal Matters......................... 21
Experts............................... 21
</TABLE>
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2,019,975 SHARES
PROFFITT'S, INC.
COMMON STOCK
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PROSPECTUS
SEPTEMBER 5, 1997
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SMITH BARNEY INC.
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