UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 30, 1999
-------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________ to ________________
Commission file number 0-19526
Goody's Family Clothing, Inc.
(Exact name of registrant as specified in its charter)
Tennessee 62-0793974
State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
400 Goody's Lane, Knoxville, Tennessee 37922
Address of principal executive offices) (Zip Code)
(865) 966-2000
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since
last report.)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock, no par value, 33,124,380 shares outstanding as of
December 9, 1999.
<PAGE>
Goody's Family Clothing, Inc.
Index to Form 10-Q
October 30, 1999
Part I - Financial Information:
Item 1 - Financial Statements
Consolidated Statements of Operations.......................... 3
Consolidated Balance Sheets.................................... 4
Consolidated Statements of Cash Flows.......................... 5
Notes to Consolidated Financial Statements..................... 6 - 8
Independent Accountants' Review Report.......................... 9
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations................................... 10 - 16
Item 3 - Quantitative and Qualitative Disclosures about Market Risk. 16
Part II - Other Information..............................................17 - 18
-----------------
Item 1. Legal Proceedings
Item 2. Changes in Securities and Use of Proceeds
Item 3. Defaults upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. (a) Exhibits
Item 6. (b) Reports on Form 8-K
Signatures................................................................ 19
<PAGE>
PART 1 - FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
Item 1 - Consolidated Financial Statements
Goody's Family Clothing, Inc. and Subsidiaries
Consolidated Statements of Operations - Unaudited
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Thirteen Thirty-nine
Weeks Ended Weeks Ended
October 30, October 31, October 30, October 31,
1999 1998 1999 1998
------------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
Sales $ 268,078 $ 251,335 $ 805,269 $ 727,538
Cost of sales and occupancy expenses 193,765 186,789 575,285 523,928
------------ ------------ ------- ------------
Gross profit 74,313 64,546 229,984 203,610
Selling, general and administrative
expenses 72,283 59,614 200,982 173,150
------------ ------------ ------------ ------------
Earnings from operations 2,030 4,932 29,002 30,460
Interest expense 51 99 157 280
Investment income 686 407 1,963 1,405
------------ ------------ ------------ ------------
Earnings before income taxes 2,665 5,240 30,808 31,585
Provision for income taxes 999 1,973 11,552 11,892
------------ ------------ ------------ ------------
Net earnings $ 1,666 $ 3,267 $ 19,256 $ 19,693
============ ============ ============ ============
Earnings per common share
Basic $ 0.05 $ 0.10 $ 0.58 $ 0.59
============ ============ ============ ============
Diluted $ 0.05 $ 0.10 $ 0.57 $ 0.57
============ ============ ============ ============
Weighted average common
shares outstanding
Basic 33,168 33,328 33,273 33,099
============ ============ ============ ============
Diluted 33,611 34,322 33,809 34,393
============ ============ ============ ============
</TABLE>
See accompanying Notes to Consolidated Financial Statements and Independent
Accountants' Review Report.
<PAGE>
Goody's Family Clothing, Inc. and Subsidiaries
Consolidated Balance Sheets
(Dollars in thousands)
<TABLE>
<CAPTION>
October 30, January 30, October 31,
1999 1999 1998
(unaudited) (unaudited)
<S> <C> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 28,269 $ 89,292 $ 27,371
Inventories 274,849 165,687 266,384
Accounts receivable and other current assets 20,093 14,195 21,458
------------ ------------ ------------
Total current assets 323,211 269,174 315,213
Property and equipment, net 116,571 104,789 104,193
Other assets 7,191 3,210 3,030
------------ ------------ ------------
Total assets $ 446,973 $ 377,173 $ 422,436
============ ============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 164,995 $ 122,776 $ 172,580
Accrued expenses 53,741 43,190 46,678
Income taxes payable 498 321 544
Current portion of long-term debt 289 289 263
------------ ------------ ------------
Total current liabilities 219,523 166,576 220,065
Long-term debt 318 318 608
Other long-term liabilities 3,695 3,782 3,476
Deferred income taxes 11,107 11,020 10,528
------------ ------------ ------------
Total liabilities 234,643 181,696 234,677
------------ ------------ ------------
Commitments and Contingencies
Shareholders' Equity
Preferred stock, $1.00 par value;
Authorized - 2,000,000 shares;
Issued and outstanding - none
Class B Common stock, no par value;
Authorized - 50,000,000 shares;
Issued and outstanding - none
Common stock, no par value;
Authorized - 50,000,000 shares;
Issued and outstanding - 33,086,380, 33,330,780
and 33,330,430 shares, respectively 25,667 28,102 28,063
Paid-in capital 9,481 9,449 9,764
Retained earnings 177,182 157,926 149,932
------------ ------------ ------------
Total shareholders' equity 212,330 195,477 187,759
------------ ------------ ------------
Total liabilities and shareholders' equity $ 446,973 $ 377,173 $ 422,436
============ ============ ============
</TABLE>
See accompanying Notes to Consolidated Financial Statements and Independent
Accountants' Review Report.
<PAGE>
Goody's Family Clothing, Inc. and Subsidiaries
Consolidated Statements of Cash Flows - Unaudited
(In thousands)
<TABLE>
<CAPTION>
Thirty-nine Weeks Ended
October 30, October 31,
1999 1998
------------ ------------
<S> <C> <C>
Cash Flows from Operating Activities
Net earnings $ 19,256 $ 19,693
Adjustments to reconcile net earnings to net cash
provided by (used in) operating activities:
Depreciation and amortization 12,099 10,140
Net loss on asset disposals and write-down 1,137 719
Changes in assets and liabilities:
Inventories (109,162) (114,717)
Accounts payable 59,718 42,983
Income taxes (181) (13,218)
Other assets and liabilities 2,512 3,617
------------- -------------
Cash (used in) operating activities (14,621) (50,783)
------------- -------------
Cash Flows from Investing Activities
Acquisitions of property and equipment (25,334) (17,622)
Proceeds from sale of property and equipment 316 38
------------- ------------
Cash (used in) investing activities (25,018) (17,584)
------------- ------------
Cash Flows from Financing Activities
Exercise of stock options 111 8,009
Purchase of common stock (2,513) -
Changes in cash management accounts (18,982) 23,555
-------------- ------------
Cash (used in) provided by financing activities (21,384) 31,564
------------ ------------
Cash and cash equivalents
Net decrease for the period (61,023) (36,803)
Cash and cash equivalents, beginning of period 89,292 64,174
----------- -----------
Cash and cash equivalents, end of period $ 28,269 $ 27,371
=========== ===========
Supplemental Disclosures
Income tax payments $ 14,422 $ 20,022
Interest payments 111 212
</TABLE>
See accompanying Notes to Consolidated Financial Statements and Independent
Accountants' Review Report.
<PAGE>
Goody's Family Clothing, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
(1) Basis of presentation
The accompanying condensed consolidated financial statements of Goody's Family
Clothing, Inc. and subsidiaries (the "Company") are unaudited and have been
prepared pursuant to the rules and regulations of the Securities and Exchange
Commission. Although certain information normally included in financial
statements prepared in accordance with generally accepted accounting principles
has been condensed or omitted, the Company believes that the disclosures are
adequate to make the information presented not misleading. In the opinion of the
Company's management, the accompanying unaudited condensed consolidated
financial statements include all adjustments, consisting primarily of normal and
recurring adjustments, necessary for a fair presentation of the Company's
financial position, results of operations and cash flows for the interim periods
presented. Due to the seasonal nature of the Company's business, the results of
operations for the interim periods are not necessarily indicative of the results
that may be achieved for the entire year. The condensed consolidated financial
statements should be read in conjunction with the audited consolidated financial
statements and the notes thereto contained in the Company's Annual Report on
Form 10-K for its fiscal year ended January 30, 1999.
(2) Related party transaction
Since 1987, the Company has, by agreement (the "Initial Agreement"), paid
premiums on certain split-dollar life insurance policies covering the life of
Robert M. Goodfriend, the Company's Chairman and Chief Executive Officer.
During the third quarter of fiscal 1999, the Compensation Committee of the Board
of Directors authorized the Company to enter into a new split-dollar agreement
(the "New Agreement") and, once in place, modify or terminate the Initial
Agreement (which is anticipated to occur during the fourth quarter of fiscal
1999). Under this New Agreement, the Company has agreed to pay the premiums for
certain second-to-die policies insuring the lives of Mr. and Mrs. Goodfriend,
which are owned by a trust for the benefit of the Goodfriend's children (the
"Trust"). The Company, however, has certain rights including the right to
terminate these policies at any time prior to the occurrence of the following
"restricting events": i) a change of control (as defined), ii) the termination
of Mr. Goodfriend's employment by the Company, or iii) unless certain conditions
are met, the death of Mr. Goodfriend. The Company will be reimbursed for all
premiums paid upon the policies' termination (subject to deficiencies in the
cash surrender value from the early termination of the policies prior to a
restricting event). The New Agreement also provides that one-half of the new
coverage would terminate should Mr. Goodfriend decrease his Company ownership
below 20%. The Trust has the right, but not the obligation, to purchase the
policies from the Company at any time at a purchase price equal to the
cumulative premiums paid by the Company on the policies; should the policies be
purchased, all the Company's future obligations would cease.
Through October 30, 1999, the Company paid premiums aggregating $4,195,000 on
the policies covered by the New Agreement. The cash surrender value of all
policies covered by the Initial Agreement and the New Agreement aggregated
$5,838,000 and $1,971,000 at October 30, 1999 and October 31, 1998,
respectively, and are included in "Other assets" in the accompanying balance
sheets.
(3) Credit arrangements
The Company has a credit agreement for an unsecured revolving line of credit
which provides for cash borrowings for general corporate purposes as well as for
the issuance of letters of credit of up to an aggregate of $130,000,000 and
which expires in May 2001. The Company is committed to pay (i) interest on the
cash borrowings at a fluctuating base rate or LIBOR plus an applicable margin,
(ii) letter of credit fees based on the number of days a letter of credit is
outstanding times an applicable fee and (iii) an annual commitment fee payable
quarterly in advance. The terms of this credit agreement require, among other
things, maintenance of minimum levels of shareholders' equity, compliance with
certain financial ratios and Mr. Robert M. Goodfriend remaining as Chairman of
the Board or Chief Executive Officer of the Company, and place restrictions on
additional indebtedness, asset disposals, investments and capital expenditures.
(4) Earnings per common share
Basic earnings per common share is computed by dividing net earnings by the
weighted average number of common shares outstanding. Diluted earnings per
common share is computed by dividing net earnings by the weighted average number
of common shares outstanding and potentially dilutive common shares. Weighted
average diluted shares outstanding differs from weighted average basic shares
outstanding solely from the effect of stock options.
(5) Stock repurchase and retirement program
In June 1999, the Company's Board of Directors authorized the Company to spend
up to $20 million to repurchase shares of its common stock. As a result, the
Company repurchased 160,300 shares of its common stock during the third quarter
of fiscal 1999 for $1,442,000 and has repurchased an aggregate of 260,300 shares
of its common stock for $2,513,000 since June 1999.
(6) Recent accounting pronouncements
Accounting for costs of computer software
At the beginning of the first quarter of fiscal 1999, the Company adopted
Statement of Position No. 98-1, "Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use" ("SOP No. 98-1") which requires that
certain costs incurred to develop or obtain software for internal use be
capitalized. The effect of the adoption of SOP No. 98-1 on the Company's
financial position or results of operations was not material.
Accounting for derivative instruments and hedging activities
In June 1998, the American Institute of Certified Public Accountants issued
Statement of Financial Accounting Standards No. 133 "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS No.133"). SFAS No. 133, as amended,
is now effective beginning with the Company's fiscal year 2001 and requires that
an entity recognize all derivatives as either assets or liabilities in its
statement of financial position and measure those instruments at fair value. The
Company has not yet completed its analysis of the effect of SFAS No. 133 on its
financial statements.
Revenue Recognition in Financial Statements
On December 3, 1999, the Securities and Exchange Commission issued its Staff
Accounting Bulletin: No. 101, "Revenue Recognition in Financial Statements." The
Company has just begun the process of evaluating the effect of this bulletin on
its financial reporting policies. The bulletin may affect the Company's
accounting for layaway sales and reporting of leased department operations (such
leased department operations will terminate by the end of fiscal 1999).
(7) Contingencies
In February 1999 a lawsuit was filed against the Company by nine individual
plaintiffs employed at one of the Company's retail stores, who generally allege
discrimination with respect to employment opportunities, including, among other
things, discrimination through their constructive discharge, failure to be
promoted and failure to be paid wages equal to white employees. Two plaintiffs
in this lawsuit have accepted nominal consideration from the Company and have
each filed motions to dismiss with prejudice; four other plaintiffs have filed
motions to dismiss with prejudice and the remaining three plaintiffs remain in
this action.
Also in February 1999, a lawsuit was filed by 20 named plaintiffs, who generally
allege that the Company discriminated against a class of African-American
employees at its retail stores through the use of discriminatory selection and
compensation procedures, and by maintaining unequal terms and conditions of
employment and that the Company maintained a racially hostile working
environment. The plaintiffs in this lawsuit also named Robert M. Goodfriend, the
Company's Chairman and Chief Executive Officer, as a defendant, and are seeking
to have this action certified as a class action. By way of damages, the
plaintiffs in this action are seeking, among other things, injunctive relief,
back pay and other monetary relief.
In addition, the Company has been named as the sole defendant in four separate
actions instituted between May 1999 and November 1999. Three of these actions
are brought by former employees who allege that the Company retaliated against
them for opposing unlawful discrimination and the fourth action was brought by a
current employee who alleges that the Company denied promotion opportunities to
her because of her race. Each of the plaintiffs seek monetary damages, including
lost pay and benefits, mental and emotional suffering and punitive damages. One
plaintiff has agreed in principle, subject to the execution of a definitive
agreement, to accept a payment from the Company in exchange for a release.
Another plaintiff has filed a motion to dismiss with prejudice.
The Company disputes the claims alleged in these lawsuits and intends to defend
the unresolved claims vigorously. The Company is unable to estimate the effect,
if any, these lawsuits may have on the Company's financial position or results
of operations.
The Company is a party to certain other legal proceedings arising in the
ordinary course of its business. Management currently believes that the ultimate
outcome of these other proceedings, individually and in the aggregate, will not
have a material adverse effect on the Company's financial position or results of
operations.
<PAGE>
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
Board of Directors and Shareholders
Goody's Family Clothing, Inc.
Knoxville, Tennessee:
We have reviewed the accompanying condensed consolidated balance sheets of
Goody's Family Clothing, Inc. and subsidiaries as of October 30, 1999 and
October 31, 1998 and the related consolidated statements of operations and cash
flows for the thirteen and thirty-nine week periods then ended. These financial
statements are the responsibility of the Company's management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and of making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that should
be made to such condensed consolidated financial statements for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Goody's Family Clothing, Inc. and
subsidiaries as of January 30, 1999 and the related consolidated statements of
operations, shareholders' equity, and cash flows for the year then ended (not
presented herein); and in our report dated March 17, 1999, we expressed an
unqualified opinion on those consolidated financial statements. In our opinion,
the information set forth in the accompanying condensed consolidated balance
sheet as of January 30, 1999 is fairly stated, in all material respects, in
relation to the consolidated balance sheet from which it has been derived.
/s/Deloitte & Touche LLP
Atlanta, Georgia
November 16, 1999
<PAGE>
Item 2. - Management's Discussion and Analysis of Financial Condition and
Results of Operations
Forward-looking Statements
This Quarterly Report contains certain forward-looking statements which are
based upon current expectations, plans and estimates and involve material risks
and uncertainties including, but not limited to, (i) weather conditions; (ii)
the timely availability of branded and private label merchandise in sufficient
quantities to satisfy customer demand; (iii) customer demand and trends in the
apparel, shoe and retail industry and to the acceptance of merchandise acquired
for sale by the Company; (iv) the effectiveness of advertising and promotional
events; (v) the impact of competitors' pricing and store expansion; (vi) the
ability to enter into leases for new store locations; (vii) the timing,
magnitude and costs of opening new stores; (viii) individual store performance,
including new stores; (ix) employee relations; (x) the Company's ability to
properly staff the new shoe departments on a timely basis; (xi) the general
economic conditions within the Company's markets; (xii) the Company's financing
plans; (xiii) trends affecting the Company's financial condition or results of
operations; (xiv) the Company's business and growth strategies; and (xv) the
effect of the Year 2000 issue on the Company and third parties who provide goods
and services to the Company. Any "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, which generally can be identified
by the use of forward-looking terminology such as "may," "will," "expect,"
"estimate," "anticipate," "believe," "target," "plan," "project" or "continue"
or the negatives thereof or other variations thereon or similar terminology, are
made on the basis of management's plans and current analysis of the Company, its
business and the industry as a whole. Readers are cautioned that any such
forward-looking statement is not a guarantee of future performance and involves
risks and uncertainties, and that actual results may differ materially from
those projected in the forward-looking statement as a result of various factors.
The Company does not undertake to publicly update or revise its forward-looking
statements even if experience or future changes make it clear that any projected
results expressed or implied therein will not be realized. Additional
information on risk factors that could potentially affect the Company's
financial results may be found in the Company's public filings with the
Securities and Exchange Commission. Certain of such filings may be accessed
through the Securities and Exchange Commission's web site, http://www.sec.gov.
Results of Operations
The following table sets forth unaudited results of operations, as a percent of
sales, for the periods indicated:
<TABLE>
<CAPTION>
Thirteen Thirty-nine
Weeks Ended Weeks Ended
October 30, October 31, October 30, October 31,
1999 1998 1999 1998
------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
Sales 100.0% 100.0% 100.0% 100.0%
Cost of sales and occupancy expenses 72.3 74.3 71.4 72.0
----- ----- ----- -----
Gross profit 27.7 25.7 28.6 28.0
Selling, general and administrative expenses 26.9 23.7 25.0 23.8
----- ----- ----- -----
Earnings from operations 0.8 2.0 3.6 4.2
Interest expense - 0.1 - 0.1
Investment income 0.2 0.2 0.2 0.2
----- ----- ----- -----
Earnings before income taxes 1.0 2.1 3.8 4.3
Provision for income taxes 0.4 0.8 1.4 1.6
----- ----- ----- -----
Net earnings 0.6% 1.3% 2.4% 2.7%
===== ===== ===== =====
</TABLE>
Thirteen Weeks Ended October 30, 1999 Compared with Thirteen Weeks Ended
October 31, 1998
Overview - During the third quarter of fiscal 1999, the Company opened 12 new
stores, relocated one store and closed one store, bringing the total number of
stores to 280 at October 30, 1999, compared with 246 at October 31, 1998. During
the corresponding period of the previous fiscal year, the Company opened 13 new
stores, relocated one store and remodeled one store. Net earnings for the third
quarter of fiscal 1999 were $1,666,000, or 0.6% of sales, compared with
$3,267,000, or 1.3% of sales, for the third quarter of fiscal 1998.
Sales - Sales for the third quarter of fiscal 1999 were $268,078,000, a 6.7%
increase over the $251,335,000 in sales for the third quarter of fiscal 1998.
This increase of $16,743,000 consisted of additional sales from new and
transition stores of $27,506,000, offset by a 4.7% decrease, or $10,763,000, in
comparable store sales. Management believes that this negative trend in
comparable store sales was due, in part, to the difficulty in balancing the
Company's strategies of margin expansion and inventory reduction and to the
Company's failure to identify certain emerging fashion trends on a timely basis.
From October 1993 to August 1999, Shoe Corporation of America, Inc. ("SCOA")
operated shoe departments in most of the Company's stores under a license
agreement with the Company and the resulting shoe sales were included in the
Company's reported sales. As previously reported, on June 14, 1999, SCOA filed
for bankruptcy protection under Chapter 11 in the United States Bankruptcy Court
for the Southern District of Ohio. Pursuant to the terms of an agreement, SCOA
removed its shoe inventory from the Company's stores during the first week of
August 1999 and subsequently, the Company began stocking its own shoe
departments. During the third quarter of fiscal 1999, the Company recorded net
sales of $37,000 from the licensed shoe departments and $7,192,000 from its own
shoe departments compared with $9,794,000 from the licensed shoe departments in
the third quarter of fiscal 1998. If all shoe sales were excluded from the third
quarter of fiscal 1999, the Company's overall comparable store sales would have
decreased 3.5% from the third quarter of fiscal 1998. It is not anticipated that
the Company will achieve an appropriate shoe inventory mix until February 2000,
the date when the SCOA agreement was originally set to expire.
Gross Profit - Gross profit for the third quarter of fiscal 1999 was
$74,313,000, or 27.7% of sales, a $9,767,000 increase over the $64,546,000 in
gross profit, or 25.7% of sales, generated for the third quarter of the previous
fiscal year. The 2.0% increase in gross profit, as a percent of sales, in the
third quarter of fiscal 1999 compared with the third quarter of fiscal 1998
resulted from a decrease in cost of sales of 2.7% which was offset by a 0.7%
increase in occupancy costs. The decrease in cost of sales was primarily the
result of (i) better inventory management and control, (ii) a shift from basic
denim to fashion denim products that carry higher margins, (iii) an increase in
basic denim margins, (iv) an increase in margins in the women's division offset
by decreases in margins in the men's and junior's divisions and (v) a decrease
in the licensed shoe department sales which carried lower margins combined with
the startup of the Company's own shoe departments which carried higher margins.
The increase in occupancy costs primarily resulted from higher rents associated
with new and relocated stores and a decrease in comparable store sales as
discussed above.
Selling, General and Administrative Expenses - Selling, general and
administrative expenses for the third quarter of fiscal 1999 were $72,283,000,
or 26.9% of sales, an increase of $12,669,000 from $59,614,000, or 23.7% of
sales, for the third quarter of fiscal 1998. The 3.2% increase in selling,
general and administrative expenses, as a percent of sales, for the third
quarter of fiscal 1999 compared with the third quarter of fiscal 1998 primarily
resulted from a 1.6% increase in payroll expenses primarily relating to the
staffing of the Company's own shoe departments and a 0.7% increase in
advertising and promotional expenses.
Interest Expense - Interest expense for the third quarter of fiscal 1999
decreased by $48,000 compared with the third quarter of the previous fiscal
year.
Investment Income - Investment income for the third quarter of fiscal 1999
increased by $279,000 compared with the third quarter of the previous fiscal
year primarily as a result of an increase in invested funds during the period.
Income Taxes - The provision for income taxes for the third quarter of fiscal
1999 was $999,000, an effective tax rate of 37.5% of earnings before income
taxes, compared with $1,973,000, an effective tax rate of 37.7% of earnings
before income taxes, for the third quarter of the previous fiscal year.
Thirty-Nine Weeks Ended October 30, 1999 Compared with Thirty-Nine Weeks Ended
October 31, 1998
Overview - During the thirty-nine weeks ended October 30, 1999, the Company
opened 24 new stores, relocated 13 stores, remodeled four stores and closed one
store, bringing the total number of stores to 280 at October 30, 1999, compared
with 246 at October 31, 1998. During the corresponding period of the previous
fiscal year, the Company opened 25 new stores, relocated five stores, remodeled
three stores and closed two stores. Net earnings for the thirty-nine weeks ended
October 30, 1999 were $19,256,000, or 2.4% as a percent of sales, compared with
$19,693,000, or 2.7% as a percent of sales, for the thirty-nine weeks ended
October 31, 1998.
Sales - Sales for the thirty-nine weeks ended October 30, 1999 were
$805,269,000, a 10.7% increase over the $727,538,000 in sales for the
corresponding period of the previous fiscal year. This increase of $77,731,000
consisted of additional sales from new and transition stores of $93,570,000
offset by a 2.3% decrease, or $15,839,000, in comparable store sales. During the
thirty-nine weeks ended October 30, 1999, the Company recorded net sales of
$16,751,000 from the licensed shoe departments and $7,196,000 from its own shoe
departments compared with $28,339,000 from the licensed shoe departments in the
third quarter of fiscal 1998. If all shoe sales are excluded from the
thirty-nine weeks ended October 30, 1999, the Company's overall comparable store
sales would have decreased 1.3% from the corresponding period of the previous
fiscal year.
Gross Profit - Gross profit for the thirty-nine weeks ended October 30, 1999 was
$229,984,000, or 28.6% of sales, a $26,374,000 increase over the $203,610,000 in
gross profit, or 28.0% of sales, generated for the corresponding period of the
previous fiscal year. The 0.6% increase in gross profit, as a percent of sales,
for the thirty-nine weeks ended October 30, 1999 compared with the thirty-nine
weeks ended October 31, 1998 resulted from a decrease in cost of sales of 1.0%
which was offset by a 0.4% increase in occupancy costs. The decrease in cost of
sales was primarily the result of better inventory management and control. The
increase in occupancy costs primarily resulted from higher rents associated with
new and relocated stores and a decrease in comparable store sales as discussed
above.
Selling, General and Administrative Expenses - Selling, general and
administrative expenses for the thirty-nine weeks ended October 30, 1999 were
$200,982,000, or 25.0% of sales, an increase of $27,832,000 from $173,150,000,
or 23.8% of sales, for the corresponding period of the previous fiscal year. The
1.2% increase in selling, general and administrative expenses, as a percent of
sales, for the thirty-nine weeks ended October 30, 1999 compared with the
thirty-nine weeks ended October 31, 1998 primarily resulted from a 0.7% increase
in payroll expenses primarily relating to the staffing of the Company's own shoe
departments and a 0.3% increase in advertising and promotional expenses.
Interest Expense - Interest expense for the thirty-nine weeks ended October
30, 1999 decreased by $123,000 compared with the corresponding period of the
previous fiscal year.
Investment Income - Investment income for the thirty-nine weeks ended October
30, 1999 increased by $558,000 compared with the corresponding period of the
previous fiscal year primarily as a result of an increase in invested funds
during the period.
Income Taxes - The provision for income taxes for the thirty-nine weeks ended
October 30, 1999 was $11,552,000, an effective tax rate of 37.5% of earnings
before income taxes, compared with $11,892,000, an effective tax rate of 37.7%
of earnings before income taxes, for the corresponding period of the previous
fiscal year.
Liquidity and Capital Resources
Financial Position - The Company's primary sources of liquidity are cash flows
from operations, including credit terms from vendors and borrowings under its
credit agreement. At October 30, 1999, the Company's working capital was
$103,688,000 compared with $95,148,000 at October 31, 1998. At the end of the
third quarter of fiscal 1999, compared with the third quarter of the previous
fiscal year, (i) cash and cash equivalents increased by $898,000, (ii) net
property and equipment increased by $12,378,000, (iii) inventories increased by
$8,465,000 and (iv) accounts payable decreased by $7,585,000. The net increase
in inventories was primarily due to inventories for new stores offset by lower
inventories on a store by store basis for existing stores. Trade payables, as a
percent of inventories, decreased to 60.0% at October 30, 1999 as compared with
64.8% at October 31, 1998.
The Company has a credit agreement for an unsecured revolving line of credit
which provides for cash borrowings for general corporate purposes as well as for
the issuance of letters of credit of up to an aggregate of $130,000,000 and
which expires in May 2001. The Company is committed to pay (i) interest on the
cash borrowings at a fluctuating base rate or LIBOR plus an applicable margin,
(ii) letter of credit fees based on the number of days a letter of credit is
outstanding times an applicable fee and (iii) an annual commitment fee payable
quarterly in advance. The terms of this credit agreement require, among other
things, maintenance of minimum levels of shareholders' equity, compliance with
certain financial ratios and Mr. Robert M. Goodfriend remaining as Chairman of
the Board or Chief Executive Officer of the Company, and place restrictions on
additional indebtedness, asset disposals, investments and capital expenditures.
At October 30, 1999, the Company had no cash borrowings and $57,296,000
outstanding for letters of credit compared with no cash borrowings and
$61,423,000 outstanding for letters of credit at October 31, 1998. Cash
borrowings averaged $13,000 (with the highest balance of $2,000,000 in March
1999) during the thirty-nine weeks ended October 30, 1999 compared with no cash
borrowings during the thirty-nine weeks ended October 31, 1998. Letters of
credit outstanding averaged $52,890,000 during the thirty-nine weeks ended
October 30, 1999 compared with $69,477,000 during the thirty-nine weeks ended
October 31, 1998. The highest balance of letters of credit outstanding during
the thirty-nine weeks ended October 30, 1999 was $76,941,000 (in September 1999)
compared with $84,090,000 (in September 1998) during the thirty-nine weeks ended
October 31, 1998.
Cash Flows - Operating activities used cash of $14,621,000 in the thirty-nine
weeks ended October 30, 1999 compared with $50,783,000 in the corresponding
period of the previous fiscal year. Cash used for increases in inventory during
the thirty-nine weeks ended October 30, 1999 and October 31, 1998 was
$109,162,000 and $114,717,000, respectively. Accounts payable provided cash of
$59,718,000 and $42,983,000 in the thirty-nine weeks ended October 30, 1999 and
October 31, 1998, respectively. Depreciation and amortization expenses were
$12,099,000 and $10,140,000 for the thirty-nine weeks ended October 30, 1999 and
October 31, 1998, respectively.
Cash flows from investing activities reflected a $25,018,000 and $17,584,000 net
use of cash for the thirty-nine weeks ended October 30, 1999 and October 31,
1998, respectively. Cash was used primarily to fund capital expenditures for
new, relocated and remodeled stores and for general corporate purposes.
Cash used by financing activities for the thirty-nine weeks ended October 30,
1999 was $21,384,000 compared with cash provided of $31,564,000 for the
corresponding period of the previous fiscal year. The Company's cash management
program used cash of $18,982,000 in the thirty-nine weeks ended October 30, 1999
compared with cash provided of $23,555,000 for the corresponding period of the
previous fiscal year. During the thirty-nine weeks ended October 30, 1999, the
Company received $79,000 in cash and realized a tax benefit of $32,000, compared
with $2,966,000 in cash and a tax benefit of $5,043,000 during the corresponding
period of the previous year, from the issuance of common stock upon the exercise
of stock options. In June 1999, the Company's Board of Directors authorized the
Company to spend up to $20 million to repurchase shares of its common stock.
Accordingly, the Company repurchased 160,300 shares of its common stock during
the third quarter of fiscal 1999 for $1,442,000 and has repurchased an aggregate
of 260,300 shares of its common stock for $2,513,000 since June 1999.
Outlook - For the month ended November 30, 1999, the Company's comparable store
sales decreased 5.8% compared with the same period of the prior year. In an
effort to maintain appropriate inventory levels, the Company's promotional
activities during November 1999 exceeded what had been provided for in the
Company's projected 1999 operating plan and as a result, the gross margin rate
was below plan and below November 1998. Based on this negative sales trend,
management is cautious about the Company's sales and earnings outlook for the
fourth quarter of fiscal 1999.
The Company plans to open eight new stores, relocate or remodel five stores and
close one store during the fourth quarter which will complete its store
expansion plans for fiscal 1999. Management estimates that capital expenditures
of approximately $10,000,000 will be required for (i) opening new stores, (ii)
upgrading existing stores, (iii) distribution center enhancements, (iv) computer
systems and equipment and (v) for general corporate purposes during the
remainder of fiscal 1999. The Company may repurchase shares of its common stock
from time to time in the open market or in privately negotiated transactions,
depending upon price, prevailing market conditions and other factors.
The Company's primary needs for capital resources are for the purchase of store
inventories, capital expenditures and for normal operating purposes. Based on
the Company's current growth plans, it is estimated that the existing Knoxville
distribution center can efficiently service its stores through fiscal 2000. In
order to meet the merchandise distribution requirements beginning in fiscal
2001, the Company plans to acquire or build a new distribution facility at a
cost of approximately $20,000,000 and is expected to be operational some time
during fiscal 2001.
Management believes that its existing working capital, together with cash flows
from operations, including credit terms from vendors, and the borrowings
available under the credit agreement will be sufficient to meet the Company's
operating and capital expenditure requirements through fiscal 2000.
In February 1999 a lawsuit was filed against the Company by nine individual
plaintiffs employed at one of the Company's retail stores, who generally allege
discrimination with respect to employment opportunities, including, among other
things, discrimination through their constructive discharge, failure to be
promoted and failure to be paid wages equal to white employees. Two plaintiffs
in this lawsuit have accepted nominal consideration from the Company and have
each filed motions to dismiss with prejudice; four other plaintiffs have filed
motions to dismiss with prejudice and the remaining three plaintiffs remain in
this action.
Also in February 1999, a lawsuit was filed by 20 named plaintiffs, who generally
allege that the Company discriminated against a class of African-American
employees at its retail stores through the use of discriminatory selection and
compensation procedures, and by maintaining unequal terms and conditions of
employment and that the Company maintained a racially hostile working
environment. The plaintiffs in this lawsuit also named Robert M. Goodfriend, the
Company's Chairman and Chief Executive Officer, as a defendant, and are seeking
to have this action certified as a class action. By way of damages, the
plaintiffs in this action are seeking, among other things, injunctive relief,
back pay and other monetary relief.
In addition, the Company has been named as the sole defendant in four separate
actions instituted during May 1999 and November 1999. Three of these actions are
brought by former employees who allege that the Company retaliated against them
for opposing unlawful discrimination and the fourth action was brought by a
current employee who alleges that the Company denied promotion opportunities to
her because of her race. Each of the plaintiffs seek monetary damages, including
lost pay and benefits, mental and emotional suffering and punitive damages. One
plaintiff has agreed in principle, subject to the execution of a definitive
agreement, to accept a payment from the Company in exchange for a release.
Another plaintiff has filed a motion to dismiss with prejudice.
The Company disputes the claims alleged in these lawsuits and intends to defend
the unresolved claims vigorously. The Company is unable to estimate the effect,
if any, these lawsuits may have on the Company's financial position or results
of operations.
The Company is a party to certain other legal proceedings arising in the
ordinary course of its business. Management currently believes that the ultimate
outcome of these other proceedings, individually and in the aggregate, will not
have a material adverse effect on the Company's financial position or results of
operations.
Impact of the Year 2000 Issue
The Year 2000 issue is the result of computer programs being written using two
digits rather than four to define the applicable year. Any of the Company's
computer programs that have date-sensitive software may recognize a date using
"00" as the year 1900 rather than the year 2000. This could result in system
failure or miscalculations causing disruptions of operations, including, among
other things, a temporary inability to process transactions or engage in similar
normal business activities.
State of readiness - During fiscal 1998, the Company established an oversight
committee, consisting of individuals from each of its functional areas, to
review all of the Company's computer systems and programs, as well as the
computer systems of the third parties upon whose data or functionality the
Company relies in any material respect, and to assess their ability to process
transactions in the year 2000. This committee meets regularly to review the
progress of the Company's Year 2000 compliance issues. At October 30, 1999, all
internal systems have been modified to be Year 2000 compliant. Throughout the
remainder of 1999 the Company plans to continue testing and monitoring its
internal systems for Year 2000 compliance. In addition, the oversight committee
will continue to meet throughout the remainder of 1999 and into the year 2000 to
review the progress of the Company's Year 2000 efforts and to address any
problems encountered with third parties.
In addition, the Company has contacted its significant suppliers and other
service providers to determine the extent to which the Company is vulnerable to
those third parties' failure to remediate their own Year 2000 issues. Although
most suppliers have responded that they expect to be in substantial compliance,
there can be no guarantee that the computer systems of these third parties on
which the Company's systems rely will be timely converted, or that a failure to
convert by another company, or a conversion that is incompatible with the
Company's systems, would not have a material adverse effect on the Company.
Costs to address Year 2000 issues - Through October 30, 1999, the costs incurred
by the Company for Year 2000 issues amounted to approximately $1,041,000 for
external and existing internal resources that were expensed as incurred. The
Company's remaining costs for Year 2000 issues are estimated at $239,000, which
primarily consist of (i) $170,000 for the purchase of software and hardware and
(ii) $69,000 representing external and existing internal resources that will be
expensed as incurred.
Risks of Year 2000 issues - The risks associated with failing to remediate the
Year 2000 issues include, among other things, temporary disruptions in (i) store
operations, (ii) ordering, receiving and distributing merchandise, (iii)
services provided by banks such as credit card processing and authorization,
(iv) communication services, (v) city and government services and (vi) utility
services as well as other vital and necessary operations.
Contingency plans - The oversight committee is currently in the process of
developing a contingency plan for each area within the organization that could
be affected by the Year 2000 issue. Although management currently anticipates
minimal business disruption, the failure of either the Company or one of its
major business partners to remediate the Year 2000 issue would have a materially
adverse impact on the Company's business, operations and financial condition.
Seasonality and inflation
The Company's business is seasonal by nature. The Christmas season (beginning
the Sunday before Thanksgiving and ending on the first Saturday after
Christmas), the back-to-school season (beginning approximately the first week of
August and continuing through the first week of September) and the Easter season
(beginning approximately two weeks before Easter Sunday and ending on the
Saturday preceding Easter) collectively accounted for approximately 33.7% of the
Company's annual sales based on the Company's last three fiscal years ended
January 30, 1999. In general, sales volume varies directly with customer
traffic, which is heaviest during the third and fourth quarters of a fiscal
year. Because of the seasonality of the Company's business, results for any
quarter are not necessarily indicative of the results that may be achieved for
the full year.
Inflation can affect the costs incurred by the Company in the purchase of its
merchandise, the leasing of its stores and certain components of its selling,
general and administrative expenses. During the last three fiscal years ended
January 30, 1999, inflation has not materially affected the Company's business,
although there can be no assurance that inflation will not have a material
adverse effect on the Company in the future.
Item 3 - Quantitative and Qualitative Disclosures about Market Risk
The Company has no material investments or risks in market risk sensitive
instruments.
<PAGE>
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings
In February 1999 a lawsuit was filed against the Company by nine individual
plaintiffs employed at one of the Company's retail stores, who generally allege
discrimination with respect to employment opportunities, including, among other
things, discrimination through their constructive discharge, failure to be
promoted and failure to be paid wages equal to white employees. The plaintiffs'
claims were brought under the Civil Rights Act of 1866. Two plaintiffs in this
lawsuit have accepted nominal consideration from the Company and have each filed
motions to dismiss with prejudice; four other plaintiffs have filed motions to
dismiss with prejudice and the remaining three plaintiffs remain in this action.
Also in February 1999, a lawsuit was filed by 20 named plaintiffs, who generally
allege that the Company discriminated against a class of African-American
employees at its retail stores through the use of discriminatory selection and
compensation procedures, and by maintaining unequal terms and conditions of
employment and that the Company maintained a racially hostile working
environment. The plaintiffs' claims were brought under Title VII of the Civil
Rights Act of 1964, as amended, and under the Civil Rights Act of 1866. The
plaintiffs in this lawsuit also named Robert M. Goodfriend, the Company's
Chairman and Chief Executive Officer, as a defendant, and are seeking to have
this action certified as a class action. By way of damages, the plaintiffs in
this action are seeking, among other things, injunctive relief, back pay and
other monetary relief.
In addition, the Company has been named as the sole defendant in four separate
actions arising under Title VII of the Civil Rights Act of 1964, and 42 U.S.C.
Section 1981, which were instituted during May 1999 and November 1999. Three of
these actions are brought by former employees who allege that the Company
retaliated against them for opposing unlawful discrimination and the fourth
action was brought by a current employee who alleges that the Company denied
promotion opportunities to her because of her race. Each of the plaintiffs seek
monetary damages, including lost pay and benefits, mental and emotional
suffering and punitive damages. One plaintiff has agreed in principle, subject
to the execution of a definitive agreement, to accept a payment from the Company
in exchange for a release. Another plaintiff has filed a motion to dismiss with
prejudice.
The Company disputes the claims alleged in these lawsuits and intends to defend
the unresolved claims vigorously. The Company is unable to estimate the effect,
if any, these lawsuits may have on the Company's financial position or results
of operations.
The Company is a party to certain other legal proceedings arising in the
ordinary course of its business. Management currently believes that the ultimate
outcome of these other proceedings, individually and in the aggregate, will not
have a material adverse effect on the Company's financial position or results of
operations.
Item 2. - Changes in Securities - None
Item 3. - Defaults Upon Senior Securities - None
Item 4. - Submission of Matters to a Vote of Security Holders None
Item 5. - Other Information - None
Item 6. - Exhibits and Reports on Form 8-K
a) Exhibits -
10.72 Split-Dollar Life Insurance Agreement between the
Registrant, Robert and Wendy Goodfriend Irrevocable
Trust, and Robert M. Goodfriend.
11 Statement re: Computation of Per Share Earnings
15 Accountants' Awareness Letter
27 Financial Data Schedule
b) Reports on Form 8-K - None
<PAGE>
GOODY'S FAMILY CLOTHING, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
GOODY'S FAMILY CLOTHING, INC.
(Registrant)
Date: December 9, 1999 /s/ Robert M. Goodfriend
------------------------ ----------------------------
Robert M. Goodfriend
Chairman of the Board and
Chief Executive Officer
Date: December 9, 1999 /s/ Harry M. Call
------------------------ ----------------------------
Harry M. Call
Director, President and
Chief Operating Officer
Date: December 9, 1999 /s/ Edward R. Carlin
------------------------ ----------------------------
Edward R. Carlin
Executive Vice President,
Chief Financial Officer
and Secretary
(Principal Financial
Officer)
Date: December 9, 1999 /s/ David G. Peek
------------------------ ----------------------------
David G. Peek
Vice President, Corporate
Controller and Chief
Accounting Officer
(Principal Accounting
Officer)
<PAGE>
Exhibit - 10.72
SPLIT DOLLAR LIFE INSURANCE AGREEMENT
THIS AGREEMENT is entered into to be effective as of the 1st
day of July, 1999, by and between GOODY'S FAMILY CLOTHING, INC., a corporation
organized and existing under the laws of the State of Tennessee (hereinafter
referred to as the "Corporation"); Jeffrey A. Goodfriend, Stacey A. Goodfriend
and Harold I. Apolinsky, as Trustees of the ROBERT AND WENDY GOODFRIEND
IRREVOCABLE TRUST, dated the 20th day of January, 1999 (hereinafter referred to
as the "Policy Owner") and ROBERT M. GOODFRIEND (hereinafter referred to as the
"Employee").
W I T N E S S E T H:
WHEREAS, Employee is employed by the Corporation; and
WHEREAS, the Employee has performed his duties ably and well, and to the
satisfaction of the Corporation; and
WHEREAS, the Policy Owner wishes to obtain life insurance protection
payable on the death of the last to die of the Employee and his wife, Wendy S.
Goodfriend; and
WHEREAS, the Corporation wishes to participate in the obtaining of life
insurance protection payable on the death of the second to die of the Employee
and the Employee's wife, Wendy S. Goodfriend; and
WHEREAS, the parties desire to have a separate agreement setting forth
their rights and obligations with respect to such insurance.
NOW, THEREFORE, in consideration of the mutual promises and obligations set
forth hereinafter, the parties agree as follows:
ARTICLE ONE
INSURANCE POLICIES
Policy Owner is the owner of five life insurance policies on the joint
lives of the Employee and the Employee's wife as listed by policy number and
designated as policies A through E on Exhibit A, attached hereto. All references
herein to the "Policies" shall mean each and every policy listed on Exhibit A.
All references to a "Policy" shall mean any of the policies listed on Exhibit A.
Policy Owner is a validly formed irrevocable trust under the laws of the State
of Tennessee and has capacity to enter into this Agreement and to perform its
obligations hereunder.
ARTICLE TWO
POLICY OWNERSHIP
Each Policy is the exclusive property of the Policy Owner, who may exercise
all rights of ownership with respect thereto notwithstanding anything to the
contrary in the policy, or endorsement, and riders thereto, except as otherwise
provided in this Agreement.
ARTICLE THREE
ADVANCES
3.1 After the execution of this Agreement, the Corporation shall be
responsible for the remittance of all premiums due on the Policies. Each such
payment shall be referred to as an "Advance". Each such payment shall be made on
or before the date the premium is due or within the grace period allowed by the
respective Policy for the payment of premiums and, if requested, the Corporation
shall give proof of timely payment of each premium to the Policy Owner.
3.2 Within thirty (30) days after payment by the Corporation of the premium
due on the Policy, the Policy Owner shall reimburse to the Corporation the cost
of insurance coverage in the amount of the proceeds the Policy Owner is
designated to receive under the Policy. The rate used to determine such cost on
the joint lives of the Employee and the Employee's wife shall be based on the
so-called "Table 38" rates set forth in that certain Internal Revenue Service
Information Release dated August 10, 1983. The rate used to determine such cost
on the single life of the Employee or the Employee's wife (after the death of
the Employee or the Employee's wife) shall be based on the so-called "P.S. 58"
rates set forth in Revenue Ruling 55-747, as amended, or the currently published
rates of the issuer of the Policy for one year term life insurance available to
all standard risks, whichever is less. If the Policy Owner does not timely remit
to the Corporation the amount required under this Article Three, such amount
shall be treated as compensation to the Employee, or if the Employee is not
living, shall be treated as compensation of the Employee which is payable to the
Employee's wife.
3.3 The Policy Owner shall have the right to remit additional sums to the
Corporation. The Corporation shall apply such sums to reduce the amount of
outstanding Advances, in respect of such Polices as directed by the Policy
Owner.
ARTICLE FOUR
COLLATERAL ASSIGNMENT
The Policy Owner shall collaterally assign each Policy to the Corporation
pursuant to the terms of this Agreement as security for the reimbursement of its
Advances. The security interest of the Corporation shall be limited to an amount
equal to the cash surrender value of the Policy (computed as if no policy loans
had been taken by the Policy Owner), not to exceed the aggregate unreimbursed
Advances, taking into account any additional sums remitted to the Corporation
pursuant to 3.3 above, less any policy loans taken by the Corporation with
respect to such Policy (the "Net Advances").
ARTICLE FIVE
RESTRICTING EVENTS
5.1 Until the occurrence of a "Restricting Event", as defined in 5.2 below,
the Corporation is granted exclusively all rights in each Policy including, but
not limited to, the following rights:
5.1.1 The right to surrender the Policy.
5.1.2 The right to change the beneficiary of the Policy.
5.1.3 The right to select dividend options.
5.1.4 The right to select optional methods of settlement with regard to the
death benefit payable thereunder.
5.1.5 The right to assign its rights in the Policy.
5.1.6 The right to obtain a policy loan or loans on the Policy. The amount
of such loans together with the interest thereon shall at no time exceed the
cash surrender value of the Policy as of the date to which the premiums on the
Policy have been paid.
5.1.7 The right to withdraw or borrow against the cash value of the Policy.
5.1.8 All other rights contained in the Policy.
5.2 A "Restricting Event" shall mean the occurrence of any of the following
events:
5.2.1 A change of control of the Corporation, as defined in 5.3 below;
5.2.2 The death of Employee while his wife is still living if there is no
single life insurance coverage on the life of Employee then in force and owned
by Policy Owner, as described in Article Ten below; or
5.2.3 The termination of Employee's employment by the Corporation.
5.3 A change of control of the Corporation shall mean and shall be deemed
to have occurred if (i) any person or group (within the meaning of Rule 13d-3 of
the rules and regulations promulgated under the Securities Exchange Act of 1934,
as amended), other than Employee, members of his immediate family, his
affiliates, trusts or private foundations established by or on his behalf, and
the heirs, executors or administrators of Employee shall acquire in one or a
series of transactions, whether through sale of stock or merger, more than 50%
of the outstanding voting securities of Corporation or any successor entity of
Corporation, (ii) all or substantially all of Corporation's assets are sold, or
(iii) the shareholders of Corporation shall approve a complete liquidation or
dissolution of Corporation.
5.4 Upon the occurrence of a Restricting Event, all of the Corporation's
rights in the Policies under this Article Five shall cease and shall be
possessed exclusively by the Policy Owner, subject to the limitations set forth
in Article Seven.
ARTICLE SIX
OPTION UPON POLICY SURRENDER
6.1 Prior to a Restricting Event or upon the Termination Event described in
8.1.4, the Corporation shall provide Policy Owner written notice of its intent
to surrender a Policy and, for a period of fifteen days after such notice,
Policy Owner shall have the option of obtaining the release of the collateral
assignment of the Policy to the Corporation by payment in full to the
Corporation of the unreimbursed Net Advances with respect to such Policy.
6.2 Said amount shall be paid in full by cash, certified check or other
immediate funds and must be delivered to the Corporation by 5:00 pm Eastern
Standard Time on or before the fifteenth day of the option period.
6.3 Under receipt of such payment the Corporation shall release its rights
in accordance with paragraph 9.1.
ARTICLE SEVEN
LIMITATIONS ON POLICY OWNER
7.1 Prior to a Restricting Event, the Policy Owner may not borrow against
the cash surrender value of the Policies. After a Restricting Event and
notwithstanding any other provision of this Agreement, Policy Owner agrees that
it shall not transfer, pledge, hypothecate or take any other action in respect
of a Policy which shall impair the Corporation's security interest in any
Policy, including taking any loans which shall cause the cash surrender value of
any Policy to be less than the unreimbursed Net Advances in respect of such
Policy, without the consent of the Corporation.
7.2 Notwithstanding any other provision of this Agreement, Policy Owner
agrees that it shall not surrender a Policy when the cash surrender value of the
Policy is less than the unreimbursed Net Advances, without the consent of the
Corporation.
7.3 Policy Owner agrees that it shall not make distributions under its
dispositive provisions until the Corporation shall have been reimbursed in full
for all outstanding Net Advances, subject to paragraph 9.4.
7.4 Policy Owner agrees that it shall apply, with respect to a surrendered
Policy, any cash surrender value it receives in excess of the amount due the
Corporation as follows:
(A) Policy Owner may, within forty-five days, reinvest such excess cash
surrender value in the remaining Policies which are subject to this Agreement;
provided that (i) any amounts so reinvested shall not be used to purchase
additional death benefit above the aggregate amount of death benefit initially
put into place through the Policies under this Agreement and (ii) the
Corporation shall not be obligated to make premium payments on a Policy in which
such sums have been reinvested in excess of the premium payments required to
maintain the amount of death benefit initially put into place for such Policy
under this Agreement.
(B) Policy Owner shall remit any portion of any remaining sums which are
not reinvested in accordance with paragraph 7.4(A) above to the Corporation, to
be applied to reimburse the Corporation for its Advances in respect of any
remaining Policies in accordance with paragraph 3.3.
ARTICLE EIGHT
TERMINATION OF AGREEMENT
8.1 This Agreement shall be terminated upon the occurrence of any of the
following events ("Termination Events"):
8.1.1 Surrender of a Policy, in which case paragraph 8.2 below shall apply;
provided, however, this Agreement shall terminate only with respect to such
Policy;
8.1.2 The death of Employee, in which case paragraph 8.3 below shall apply;
provided, however, that if Employee shall die while his wife is still living,
the Agreement shall terminate only if the Policy Owner shall be the owner of one
or more additional life insurance policies on the life of Employee which are in
force at the time of Employee's death, as described in Article Ten;
8.1.3 The death of the second to die of Employee and his wife, in which
case paragraph 8.4 below shall apply;
8.1.4 With respect solely to the policies listed as policies A, B and C on
Exhibit A, a reduction in Employee's ownership percentage below twenty percent
(20%) of the outstanding common stock of Corporation (exclusive of dilution as a
result of any merger or consolidation), in which case paragraph 8.5 below shall
apply; or
8.1.5 Reimbursement in full by Policy Owner to the Corporation of the Net
Advances; provided, however, this Agreement shall terminate only with respect to
the Policy for which such reimbursement is made.
8.2 With respect to a surrender of a Policy pursuant to paragraph 8.1.1,
the insurance company shall pay:
(A) To the Corporation, an amount equal to the lesser of (1) the
unreimbursed Net Advances with respect to the surrendered Policy or (2) the cash
surrender value of such surrendered Policy; and
(B) To the Policy Owner, any balance of cash surrender value remaining
after payment of (A).
In the case of a surrender following a Restricting Event, if the cash
surrender value of the surrendered Policy is insufficient to reimburse the
Corporation for the full amount of its unreimbursed Net Advances with respect to
such Policy, any outstanding balance shall be paid as provided in paragraph 9.3.
Simultaneously with the receipt of the amounts described above, the Corporation
shall release its rights in accordance with paragraph 9.1.
8.3 With respect to a termination due to the death of Employee pursuant to
paragraph 8.1.2:
8.3.1 If the death benefit proceeds of the single life coverage on the life
of the Employee (the "Term Proceeds") are greater than or equal to the
unreimbursed Net Advances, then the insurance company shall pay the following:
(A) To the Corporation, an amount equal to the unreimbursed Net Advances in
respect of the Policies; and
(B) To the Policy Owner, any balance of Term Proceeds remaining after
payment of (A). Simultaneously with the receipt of the amounts described above,
the Corporation shall release its rights in accordance with paragraph 9.1.
8.3.2 If the Term Proceeds are less than the unreimbursed Net Advances,
then:
(A) the insurance company shall pay to the Corporation, an amount equal to
the Term Proceeds; and,
(B) the Policy Owner shall reimburse the Corporation for any remaining
unreimbursed Net Advances by cash, check or promissory note. Simultaneously with
the receipt of the amounts described above, the Corporation shall release its
rights in accordance with paragraph 9.1.
8.4 With respect to a termination by the death of the second to die of
Employee and his wife pursuant to paragraph 8.1.3, the insurance company shall
pay, subject to paragraph 9.4:
(A) To the Corporation, an amount equal to the unreimbursed Net Advances
with respect to the Policies then in force;
(B) To the Corporation, an amount equal to the unreimbursed Net Advances
with respect to previously surrendered Policies;
(C) To the Corporation, an amount equal to any amounts outstanding under a
promissory note; and,
(D) The balance to the remaining beneficiary or beneficiaries designated to
receive such balance in accordance with the terms of the respective Policies.
Simultaneously with the receipt of the amounts described above, the Corporation
shall release its rights in accordance with paragraph 9.1.
8.5 With respect to a termination due to a decline in the Employee's
ownership percentage pursuant to paragraph 8.1.4:
8.5.1 If the Policy Owner exercises its option under paragraph 6.1, then
the Policy Owner shall reimburse the Corporation its unreimbursed Net Advances
with respect to such Policies. Simultaneously with the receipt of the amounts
described above, the Corporation shall release its rights in accordance with
paragraph 9.1.
8.5.2 If the Policy Owner does not exercise its option under paragraph 6.1,
then the insurance company shall pay the cash surrender value of such Policies
to the Corporation; provided, however, that, following a Restricting Event, if
the cash surrender value of such Policies is insufficient to reimburse the
Corporation the full amount of its unreimbursed Net Advances with respect to
such Policies, any outstanding balance shall be paid as provided in paragraph
9.3. Simultaneously with the receipt of the amounts described above, the
Corporation shall release its rights in accordance with paragraph 9.1.
ARTICLE NINE
SETTLEMENT PROCEDURES
9.1 Simultaneously with receipt of an amount that is due and payable to the
Corporation with respect to a Policy or Policies under any paragraph of this
Agreement, the Corporation shall release the collateral assignment with respect
to such Policy or Policies and its rights in such Policy or Policies under this
Agreement. In the case of a Termination Event, within 45 days of such
Termination Event, the Corporation shall provide the insurance company with a
written statement confirming the sum to which it is entitled and, if requested
by the insurance company, a written release of all its interest with respect to
the proceeds or cash surrender value, as the case may be, in excess of such
amount. The Corporation shall pay to the Policy Owner (or its designated
beneficiary or beneficiaries) any amount received by the Corporation in excess
of the amount due it.
9.2 If, under the terms of this Agreement, the Policy Owner issues a
promissory note to the Corporation, such promissory note shall:
(A) bear interest at the applicable federal rate;
(B) be secured, up to the face amount of the note, by the cash surrender
value and death benefit proceeds of the Policies in force; and
(C) be payable as provided in paragraph 9.3.
9.3 Any unreimbursed Net Advances or promissory note outstanding after
payment to the Corporation as described in Article Eight shall be paid by the
Policy Owner to the Corporation upon the earlier of: (A) the death of the second
to die of Employee and his spouse, or (B) surrender of the last Policy in force
under this Agreement, subject to paragraph 9.4.
9.4 Notwithstanding the foregoing, however, if the amount of (A) death
benefit proceeds received by the Policy Owner upon such second death, or (B) the
cash surrender value of the last Policy surrendered shall be less than the
amount due to the Corporation under paragraph 9.3, then the Policy Owner shall
satisfy the amount due hereunder by paying to the Corporation the amount of such
death benefit proceeds it receives or the sum it receives in respect of such
surrendered Policy.
9.5 Upon a Termination Event, the Policy Owner agrees that it shall pay to
the Corporation any amount received by the Policy Owner in excess of the amount
due it under the terms of this Agreement.
ARTICLE TEN
SINGLE LIFE INSURANCE COVERAGE ON EMPLOYEE
10.1 The parties agree that they shall cooperate in the purchase of one or
more policies of single life insurance coverage on the life of Employee. The
purpose of such single life insurance coverage shall be to allow the Policy
Owner to reimburse the Corporation upon the death of Employee, while his wife is
still living, for the Net Advances.
10.2 Any such single life insurance policies on Employee purchased for the
purpose described in 10.1 above shall be owned by the Policy Owner. The
Corporation shall be responsible for the remittance of the entire premium due on
each such policy.
10.3 The Policy Owner shall assign all rights in such polices to the
Corporation. No Restricting Event shall apply to any such policies described in
this Article Ten.
10.4 The Policy Owner shall execute an irrevocable beneficiary designation
for each such single life insurance policy showing the Corporation's right to
receive from the Term Proceeds the unreimbursed Net Advances and the Policy
Owner's right to receive the balance of the Term Proceeds, if any.
10.5 Policy Owner agrees that if Employee dies while any such single life
polices are in force, it shall first apply the Term Proceeds to the
reimbursement of the amounts due to the Corporation under this Agreement, up to
the entire amount thereof. Any balance of Term Proceeds remaining after full
reimbursement to the Corporation of the amount due it under the terms of this
Agreement shall be retained by the Policy Owner.
10.6 Policy Owner shall instruct the insurance company to send premium
notices for such single life policies directly to the Corporation and to send
duplicate policy statements to the Policy Owner and the Corporation.
ARTICLE ELEVEN
ERISA PROVISIONS
11.1 For purposes of meeting the requirements of the Employee Retirement
Income Security Act of 1974 (hereinafter called "ERISA"), the Corporation is
hereby designated as the "Named Fiduciary" under this Agreement. The Named
Fiduciary shall have authority to control and manage the operation and
administration of this Agreement in compliance with ERISA, and it shall be
responsible for establishing and carrying out a policy funding method consistent
with the requirements of ERISA and the objectives of this Agreement.
11.2 The Corporation shall make all determinations concerning rights
granted under ERISA to benefits under this Agreement. Any decision by the
Corporation denying a claim by a claimant for benefits under this Agreement
shall be stated in writing and delivered or mailed to the claimant. Such
decision shall set forth specific reasons for denial, written to the best of the
Corporation's ability in a manner that may be understood without legal or
actuarial counsel. In addition, the Corporation shall afford a reasonable
opportunity to the claimant for a full and fair review of the decision denying
such claim.
ARTICLE TWELVE
MISCELLANEOUS PROVISIONS
12.1 The parties agree to execute any documents necessary or proper to
carry out the purpose and intent of this Agreement, including, but not limited
to, beneficiary designations.
12.2 This Agreement shall be binding upon and shall inure to the benefit of
the parties hereto, their heirs, legal representatives, successors, and assigns.
12.3 This Agreement embodies all agreements made with respect to the
Policy, and no change, alteration, or modification may be made except in writing
by all parties hereto.
12.4 This Agreement shall be governed by the laws of the State of New York,
notwithstanding any rule or principle of conflicts of law, including those of
the State of New York.
12.5 The Policy Owner shall promptly furnish to the Corporation and its
designees copies of all documents filed with or received from each respective
insurance company, including but not limited to beneficiary designations,
premium notices, policy statements, and any changes or revisions to such
documents.
12.6 All notices or other communications required or permitted under this
Agreement shall be in writing and shall be deemed to have been duly given when
(i) delivered by hand, (ii) sent by facsimile (with receipt confirmed), provided
that a copy is mailed (on the same date) by certified or registered mail,
postage prepaid, return receipt requested, or (iii) received by the addressee,
if sent by Express Mail, FedEx, or other reputable express delivery service
(receipt requested), or by first class certified or registered mail, first class
postage prepaid, return receipt requested, addressed as set forth below:
12.6.1 If to Corporation:
Goody's Family Clothing, Inc.
By Delivery Service:
400 Goody's Lane
Knoxville, Tennessee 37922
By Mail:
P.O. Box 22000
Knoxville, TN 37933-2000
Attention: President
With a copy to:
Regis Hebbeler, General Counsel
By Delivery Service:
400 Goody's Lane
Knoxville, Tennessee 37922
By Mail:
P.O. Box 22000
Knoxville, TN 37933-2000
12.6.2 If to Policy Owner:
Harold I. Apolinsky, Trustee of the Robert
and Wendy Goodfriend
Irrevocable Trust, dated January 20, 1999
P.O. Box 55727
Birmingham, Alabama 35255-5727
With a copy to:
Robert M. Goodfriend
400 East Fox Den Drive
Knoxville, Tennessee 37922
Any party may change the address or addresses to which communications or copies
are to be sent by giving notice of such change of address in conformity with the
provisions of this paragraph 12.6 for the giving of notice.
12.7 All interest charges with respect to any Policy loan shall be paid by
the party taking the loan.
IN WITNESS WHEREOF, the parties hereto have set their hands
and seals effective as of the 22nd day of October, 1999.
GOODY'S FAMILY CLOTHING, INC.,
a Tennessee corporation
By:___/s/ Harry M. Call____________________
Harry M. Call
Its President
(CORPORATION)
ATTEST:
By:__/s/ Regis Hebbeler_________
Regis Hebbeler
Its Assistant Secretary to the Board
ROBERT AND WENDY GOODFRIEND
IRREVOCABLE TRUST
dated January 20, 1999
..................................By:_____/s/ Jeffrey A. Goodfriend________
Jeffrey A. Goodfriend
Its Trustee
..................................By:____/s/ Stacey A. Goodfriend______________
Stacey A. Goodfreind
Its Trustee
................................By:__/s/ Harold I. Apolinsky__________________
Harold I. Apolinsky
Its Trustee
(POLICY OWNER)
___/s/ Robert M. Goodfriend________
Robert M. Goodfriend
(EMPLOYEE)
<PAGE>
EXHIBIT "A"
1. Pacific Life MVP Variable Universal Life Insurance Policy No. VP60849130
B. John Hancock Life Insurance Company Majestic Variable Universal Life
Insurance Policy No. 20037032
C. John Hancock Life Insurance Company Majestic Universal Life Insurance
Policy No. 5700570
D. John Hancock Life Insurance Company Majestic Universal Life Insurance
Policy No. 5700588
E. Northwest Mutual Life Insurance Company Policy No. 15067219
<PAGE>
COLLATERAL ASSIGNMENT
THIS ASSIGNMENT is made to be effective as of the 1st day of
July, 1999 by JEFFREY A. GOODFRIEND, STACEY A. GOODFRIEND and HAROLD I.
APOLINSKY, as Trustees (collectively with all successors, the "Trustees" or the
"Assignor") of the ROBERT AND WENDY GOODFRIEND IRREVOCABLE TRUST (the "Trust"),
as owner and beneficiary of a certain policy of insurance on the lives of ROBERT
M. GOODFRIEND and WENDY S. GOODFRIEND (the "Insureds"), and GOODY'S FAMILY
CLOTHING, INC., a Tennessee corporation (the "Assignee").
WHEREAS, the Assignor and the Assignee are contemporaneously
entering into a Split Dollar Life Insurance Agreement (the "Agreement"); and
WHEREAS, the Assignor has agreed to furnish to Assignee
collateral security for payments to be made by Assignor to Assignee under the
Agreement;
NOW, THEREFORE, the Assignor hereby assigns to the Assignee,
its successors, and assigns certain rights to the extent described in Article 3
below under Insurance Policy No. 20037032, issued by John Hancock Life Insurance
Company (hereinafter called the "Insurer"), and any supplementary contracts
issued in connection therewith (such policy and contracts hereinafter
collectively called the "Policy), under which ROBERT M.GOODFRIEND and WENDY S.
GOODFRIEND are the insureds, such that the Assignee shall have the rights of a
revocable creditor beneficiary of the Policy, subject to all the terms of the
Policy.
The Assignor agrees, and the Assignee, by the acceptance hereof, agrees
to the following conditions:
1. Liabilities secured. This assignment is made and the Policy is to be held as
collateral security for certain liabilities of the Assignor to the Assignee,
either now existing with respect to the Policy or that may hereafter arise with
respect to the Policy, as and to the extent set forth in the Agreement.
2. Representation of solvency. The Assignor declares that no proceedings in
bankruptcy are pending against the Assignor and that the Trust property is not
subject to any assignment for the benefit of creditors.
3. Specific rights assigned. Without detracting from the generality of the
foregoing, Assignor hereby grants the following specific rights to the Assignee
in this assignment:
a. Until the occurrence of a Restricting Event (as defined in the
Agreement), Assignee is granted exclusively the following rights: (i) the right
to surrender the Policy; (ii) the right to change the beneficiary of the Policy;
(iii) the right to select dividend options; (iv) the right to select optional
methods of settlement with regard to the death benefits payable under the
Policy; (v) the right to assign its rights in the Policy; (vi) the right to
obtain a policy loan or loans on the Policy, provided that the amount of such
loans together with the interest therein shall at no time exceed the cash
surrender value of the Policy as of the date to which the premiums on the Policy
have been paid; and (vii) the right to withdraw or borrow against the cash value
of the Policy as described in and subject to the terms of the Agreement.
b. Upon the death of the latter to die of the Insureds, whether or not a
Restricting Event (as defined in the Agreement) has occurred, the Assignee shall
have the right to receive, and the Insurer shall pay to the Assignee, an amount
equal to the aggregate unreimbursed premiums paid by Assignee in respect of the
Policy less the amounts, if any, that have been received by Assignee as a
beneficiary of the Policy, and less any outstanding Policy loans taken by
Assignee.
c. In the event the Policy is surrendered or canceled by the Trustees,
Assignee shall have the right to be repaid all unreimbursed amounts paid by the
Assignee for the premiums on the Policy, taking into account any additional sums
remitted to Assignee pursuant to Section 3.3 of the Agreement less (i) any
amounts received in respect of the Policy by Assignee from the insurance company
and (ii) less any outstanding Policy loans taken by Assignee. Any balance of any
cash surrender value received shall be retained by the Trustees.
d. The Assignee shall have no other rights, options, privileges or powers
in and to the Policy as a result of this Assignment.
4. Covenants of Assignee. The Assignee covenants as follows:
a. Any balance of sums that may be received hereunder from the Insurer
remaining after payment to the Assignee as provided in the Agreement in the
event the Agreement is terminated will be paid by the Assignee to the persons
who would be entitled thereto under the terms of the Policy had this Assignment
not been executed.
b. Following the occurrence of a Restricting Event, the Assignee will, upon
request, forward the Policy without unreasonable delay to the Insurer for
endorsement of any designation or change of beneficiary, or any election of an
optional mode of settlement.
5. Authorization to Insurer. Unless the Insurer has been given written notice by
the Assignor and the Assignee to the contrary, the Insurer is hereby authorized
to recognize the Assignee's claims to rights hereunder without investigating the
reason for any action taken by the Assignee, or the validity or amount of the
liabilities, or the existence of any default therein, or the application to be
made by the Assignee of any amounts to be paid to the Assignee. The signature of
the Assignee shall be sufficient for the exercise of its rights under the
Policy, and the receipt of the Assignee for any sums received shall be a full
discharge and release therefor to the Insurer. Checks for all or any part of the
sums payable under the Policy shall be drawn to the exclusive order of the
Assignee, if so requested by the Assignee.
6. Exercise of Rights. The exercise of any right given herein to the Assignee
shall be at the option of the Assignee, but the Assignee may exercise any such
right without notice to, or assent by the Assignor, without affecting the
liability of, or releasing any interest hereby assigned by the Assignor.
7. Termination and Amendment of Assignment. This Assignment may not be altered
or changed without the consent of the Assignee and the Assignor. As long as this
Agreement is in force, the Assignee may not, without the prior written consent
of the Assignor, exercise any right under this Assignment that would reduce or
compromise the death benefit payable under the Agreement.
8. Insurer Protected. The Insurer shall be fully protected in recognizing any
request made by the Assignor with respect to the exercise of any incident of
ownership in and to the Policy, with or without the consent of the Assignee, and
upon surrender of the Policy, the Policy shall be terminated and be of no
further force or effect.
9. Construction. In the event of any conflict between the provisions of
this Assignment and the provisions of the Agreement, the provisions of the
Agreement shall control.
10. Payment of Assignee's Obligation. Upon the full payment to the Assignee of
the Assignor's obligation under the Agreement, the Assignee shall release this
Assignment, and the ownership of the Policy shall be free of all provisions and
restrictions of this Assignment.
IN WITNESS WHEREOF, the Assignor and Assignee have duly
executed this Assignment on the day and year first set forth above.
_ /s/ Jeffrey A. Goodfriend__________
JEFFREY A. GOODFRIEND, as Trustee of
THE ROBERT AND WENDY GOODFRIEND
IRREVOCABLE TRUST
__ /s/ Stacey A. Goodfriend
STACEY A. GOODFRIEND, as Trustee of
THE ROBERT AND WENDY GOODFRIEND
IRREVOCABLE TRUST
__ /s/ Harold I. Apolinsky
HAROLD APOLINSKY, as Trustee of
THE ROBERT AND WENDY GOODFRIEND
IRREVOCABLE TRUST
GOODY'S FAMILY CLOTHING, INC.
By:_/s/ Harry M. Call_______________
Harry M. Call
Its:__President______________________
<PAGE>
COLLATERAL ASSIGNMENT
THIS ASSIGNMENT is made to be effective as of the 1st day of
July, 1999 by JEFFREY A. GOODFRIEND, STACEY A. GOODFRIEND and HAROLD I.
APOLINSKY, as Trustees (collectively with all successors, the "Trustees" or the
"Assignor") of the ROBERT AND WENDY GOODFRIEND IRREVOCABLE TRUST (the "Trust"),
as owner and beneficiary of a certain policy of insurance on the lives of ROBERT
M. GOODFRIEND and WENDY S. GOODFRIEND (the "Insureds"), and GOODY'S FAMILY
CLOTHING, INC., a Tennessee corporation (the "Assignee").
WHEREAS, the Assignor and the Assignee are contemporaneously
entering into a Split Dollar Life Insurance Agreement (the "Agreement"); and
WHEREAS, the Assignor has agreed to furnish to Assignee
collateral security for payments to be made by Assignor to Assignee under the
Agreement;
NOW, THEREFORE, the Assignor hereby assigns to the Assignee,
its successors, and assigns certain rights to the extent described in Article 3
below under Insurance Policy No. 5700570, issued by John Hancock Life Insurance
Company (hereinafter called the "Insurer"), and any supplementary contracts
issued in connection therewith (such policy and contracts hereinafter
collectively called the "Policy), under which ROBERT M.GOODFRIEND and WENDY S.
GOODFRIEND are the insureds, such that the Assignee shall have the rights of a
revocable creditor beneficiary of the Policy, subject to all the terms of the
Policy.
The Assignor agrees, and the Assignee, by the acceptance hereof,
agrees to the following conditions:
1. Liabilities secured. This assignment is made and the Policy is to be held as
collateral security for certain liabilities of the Assignor to the Assignee,
either now existing with respect to the Policy or that may hereafter arise with
respect to the Policy, as and to the extent set forth in the Agreement.
2. Representation of solvency. The Assignor declares that no proceedings in
bankruptcy are pending against the Assignor and that the Trust property is not
subject to any assignment for the benefit of creditors.
3. Specific rights assigned. Without detracting from the generality of the
foregoing, Assignor hereby grants the following specific rights to the Assignee
in this assignment:
a. Until the occurrence of a Restricting Event (as defined in the
Agreement), Assignee is granted exclusively the following rights: (i) the right
to surrender the Policy; (ii) the right to change the beneficiary of the Policy;
(iii) the right to select dividend options; (iv) the right to select optional
methods of settlement with regard to the death benefits payable under the
Policy; (v) the right to assign its rights in the Policy; (vi) the right to
obtain a policy loan or loans on the Policy, provided that the amount of such
loans together with the interest therein shall at no time exceed the cash
surrender value of the Policy as of the date to which the premiums on the Policy
have been paid; and (vii) the right to withdraw or borrow against the cash value
of the Policy as described in and subject to the terms of the Agreement.
b. Upon the death of the latter to die of the Insureds, whether or not a
Restricting Event (as defined in the Agreement) has occurred, the Assignee shall
have the right to receive, and the Insurer shall pay to the Assignee, an amount
equal to the aggregate unreimbursed premiums paid by Assignee in respect of the
Policy less the amounts, if any, that have been received by Assignee as a
beneficiary of the Policy, and less any outstanding Policy loans taken by
Assignee.
c. In the event the Policy is surrendered or canceled by the Trustees,
Assignee shall have the right to be repaid all unreimbursed amounts paid by the
Assignee for the premiums on the Policy, taking into account any additional sums
remitted to Assignee pursuant to Section 3.3 of the Agreement less (i) any
amounts received in respect of the Policy by Assignee from the insurance company
and (ii) less any outstanding Policy loans taken by Assignee. Any balance of any
cash surrender value received shall be retained by the Trustees.
d. The Assignee shall have no other rights, options, privileges or powers in
and to the Policy as a result of this Assignment.
4. Covenants of Assignee. The Assignee covenants as follows:
a. Any balance of sums that may be received hereunder from the Insurer
remaining after payment to the Assignee as provided in the Agreement in the
event the Agreement is terminated will be paid by the Assignee to the persons
who would be entitled thereto under the terms of the Policy had this Assignment
not been executed.
b. Following the occurrence of a Restricting Event, the Assignee will, upon
request, forward the Policy without unreasonable delay to the Insurer for
endorsement of any designation or change of beneficiary, or any election of an
optional mode of settlement.
5. Authorization to Insurer. Unless the Insurer has been given written notice
by the Assignor and the Assignee to the contrary, the Insurer is hereby
authorized to recognize the Assignee's claims to rights hereunder without
investigating the reason for any action taken by the Assignee, or the validity
or amount of the liabilities, or the existence of any default therein, or the
application to be made by the Assignee of any amounts to be paid to the
Assignee. The signature of the Assignee shall be sufficient for the exercise of
its rights under the Policy, and the receipt of the Assignee for any sums
received shall be a full discharge and release therefore to the Insurer. Checks
for all or any part of the sums payable under the Policy shall be drawn to the
exclusive order of the Assignee, if so requested by the Assignee.
6. Exercise of Rights. The exercise of any right given herein to the Assignee
shall be at the option of the Assignee, but the Assignee may exercise any such
right without notice to, or assent by the Assignor, without affecting the
liability of, or releasing any interest hereby assigned by the Assignor.
7. Termination and Amendment of Assignment. This Assignment may not be altered
or changed without the consent of the Assignee and the Assignor. As long as this
Agreement is in force, the Assignee may not, without the prior written consent
of the Assignor, exercise any right under this Assignment that would reduce or
compromise the death benefit payable under the Agreement.
8. Insurer Protected. The Insurer shall be fully protected in recognizing any
request made by the Assignor with respect to the exercise of any incident of
ownership in and to the Policy, with or without the consent of the Assignee, and
upon surrender of the Policy, the Policy shall be terminated and be of no
further force or effect.
9. Construction. In the event of any conflict between the provisions of
this Assignment and the provisions of the Agreement, the provisions of the
Agreement shall control.
10. Payment of Assignee's Obligation. Upon the full payment to the Assignee of
the Assignor's obligation under the Agreement, the Assignee shall release this
Assignment, and the ownership of the Policy shall be free of all provisions and
restrictions of this Assignment.
IN WITNESS WHEREOF, the Assignor and Assignee have duly
executed this Assignment on the day and year first set forth above.
__ /s/ Jeffrey A. Goodfriend_________
JEFFREY A. GOODFRIEND, as Trustee of
THE ROBERT AND WENDY GOODFRIEND
IRREVOCABLE TRUST
__ /s/ Stacey A. Goodfriend
STACEY A. GOODFRIEND, as Trustee of
THE ROBERT AND WENDY GOODFRIEND
IRREVOCABLE TRUST
__ /s/ Harold I. Apolinsky
HAROLD APOLINSKY, as Trustee of
THE ROBERT AND WENDY GOODFRIEND
IRREVOCABLE TRUST
GOODY'S FAMILY CLOTHING, INC.
By:___/s/ Harry M. Call __________
Harry M. Call
Its:__President ____________
COLLATERAL ASSIGNMENT
THIS ASSIGNMENT is made to be effective as of the 1st day of
July, 1999 by JEFFREY A. GOODFRIEND, STACEY A. GOODFRIEND and HAROLD I.
APOLINSKY, as Trustees (collectively with all successors, the "Trustees" or the
"Assignor") of the ROBERT AND WENDY GOODFRIEND IRREVOCABLE TRUST (the "Trust"),
as owner and beneficiary of a certain policy of insurance on the lives of ROBERT
M. GOODFRIEND and WENDY S. GOODFRIEND (the "Insureds"), and GOODY'S FAMILY
CLOTHING, INC., a Tennessee corporation (the "Assignee").
WHEREAS, the Assignor and the Assignee are contemporaneously
entering into a Split Dollar Life Insurance Agreement (the "Agreement"); and
WHEREAS, the Assignor has agreed to furnish to Assignee
collateral security for payments to be made by Assignor to Assignee under the
Agreement;
NOW, THEREFORE, the Assignor hereby assigns to the Assignee,
its successors, and assigns certain rights to the extent described in Article 3
below under Insurance Policy No. 5700588, issued by John Hancock Life Insurance
Company (hereinafter called the "Insurer"), and any supplementary contracts
issued in connection therewith (such policy and contracts hereinafter
collectively called the "Policy), under which ROBERT M.GOODFRIEND and WENDY S.
GOODFRIEND are the insureds, such that the Assignee shall have the rights of a
revocable creditor beneficiary of the Policy, subject to all the terms of the
Policy.
The Assignor agrees, and the Assignee, by the acceptance hereof, agrees
to the following conditions:
1. Liabilities secured. This assignment is made and the Policy is to be held as
collateral security for certain liabilities of the Assignor to the Assignee,
either now existing with respect to the Policy or that may hereafter arise with
respect to the Policy, as and to the extent set forth in the Agreement.
2. Representation of solvency. The Assignor declares that no proceedings in
bankruptcy are pending against the Assignor and that the Trust property is not
subject to any assignment for the benefit of creditors.
3. Specific rights assigned. Without detracting from the generality of the
foregoing, Assignor hereby grants the following specific rights to the Assignee
in this assignment:
a. Until the occurrence of a Restricting Event (as defined in the
Agreement), Assignee is granted exclusively the following rights: (i) the right
to surrender the Policy; (ii) the right to change the beneficiary of the Policy;
(iii) the right to select dividend options; (iv) the right to select optional
methods of settlement with regard to the death benefits payable under the
Policy; (v) the right to assign its rights in the Policy; (vi) the right to
obtain a policy loan or loans on the Policy, provided that the amount of such
loans together with the interest therein shall at no time exceed the cash
surrender value of the Policy as of the date to which the premiums on the Policy
have been paid; and (vii) the right to withdraw or borrow against the cash value
of the Policy as described in and subject to the terms of the Agreement.
b. Upon the death of the latter to die of the Insureds, whether or not a
Restricting Event (as defined in the Agreement) has occurred, the Assignee shall
have the right to receive, and the Insurer shall pay to the Assignee, an amount
equal to the aggregate unreimbursed premiums paid by Assignee in respect of the
Policy less the amounts, if any, that have been received by Assignee as a
beneficiary of the Policy, and less any outstanding Policy loans taken by
Assignee.
c. In the event the Policy is surrendered or canceled by the Trustees,
Assignee shall have the right to be repaid all unreimbursed amounts paid by the
Assignee for the premiums on the Policy, taking into account any additional sums
remitted to Assignee pursuant to Section 3.3 of the Agreement less (i) any
amounts received in respect of the Policy by Assignee from the insurance company
and (ii) less any outstanding Policy loans taken by Assignee. Any balance of any
cash surrender value received shall be retained by the Trustees.
d. The Assignee shall have no other rights, options, privileges or powers
in and to the Policy as a result of this Assignment.
4. Covenants of Assignee. The Assignee covenants as follows:
a. Any balance of sums that may be received hereunder from the Insurer
remaining after payment to the Assignee as provided in the Agreement in the
event the Agreement is terminated will be paid by the Assignee to the persons
who would be entitled thereto under the terms of the Policy had this Assignment
not been executed.
b. Following the occurrence of a Restricting Event, the Assignee will, upon
request, forward the Policy without unreasonable delay to the Insurer for
endorsement of any designation or change of beneficiary, or any election of an
optional mode of settlement.
5. Authorization to Insurer. Unless the Insurer has been given written notice
by the Assignor and the Assignee to the contrary, the Insurer is hereby
authorized to recognize the Assignee's claims to rights hereunder without
investigating the reason for any action taken by the Assignee, or the validity
or amount of the liabilities, or the existence of any default therein, or the
application to be made by the Assignee of any amounts to be paid to the
Assignee. The signature of the Assignee shall be sufficient for the exercise of
its rights under the Policy, and the receipt of the Assignee for any sums
received shall be a full discharge and release therefor to the Insurer. Checks
for all or any part of the sums payable under the Policy shall be drawn to the
exclusive order of the Assignee, if so requested by the Assignee.
6. Exercise of Rights. The exercise of any right given herein to the Assignee
shall be at the option of the Assignee, but the Assignee may exercise any such
right without notice to, or assent by the Assignor, without affecting the
liability of, or releasing any interest hereby assigned by the Assignor.
7. Termination and Amendment of Assignment. This Assignment may not be altered
or changed without the consent of the Assignee and the Assignor. As long as this
Agreement is in force, the Assignee may not, without the prior written consent
of the Assignor, exercise any right under this Assignment that would reduce or
compromise the death benefit payable under the Agreement.
8. Insurer Protected. The Insurer shall be fully protected in recognizing any
request made by the Assignor with respect to the exercise of any incident of
ownership in and to the Policy, with or without the consent of the Assignee, and
upon surrender of the Policy, the Policy shall be terminated and be of no
further force or effect.
9. Construction. In the event of any conflict between the provisions of
this Assignment and the provisions of the Agreement, the provisions of the
Agreement shall control.
10. Payment of Assignee's Obligation. Upon the full payment to the Assignee of
the Assignor's obligation under the Agreement, the Assignee shall release this
Assignment, and the ownership of the Policy shall be free of all provisions and
restrictions of this Assignment.
IN WITNESS WHEREOF, the Assignor and Assignee have duly
executed this Assignment on the day and year first set forth above.
______/s/ Jeffrey A. Goodfriend________________
JEFFREY A. GOODFRIEND, as Trustee of
THE ROBERT AND WENDY GOODFRIEND
IRREVOCABLE TRUST
_____ /s/ Stacey A. Goodfriend _____
STACEY A. GOODFRIEND, as Trustee of
THE ROBERT AND WENDY GOODFRIEND
IRREVOCABLE TRUST
____ /s/ Harold I. Apolinsky
HAROLD APOLINSKY, as Trustee of
THE ROBERT AND WENDY GOODFRIEND
IRREVOCABLE TRUST
GOODY'S FAMILY CLOTHING, INC.
By:____/s/ Harry M. Call _______
Harry M. Call
Its:___President___________
<PAGE>
COLLATERAL ASSIGNMENT
THIS ASSIGNMENT is made to be effective as of the 1st day of
July, 1999 by JEFFREY A. GOODFRIEND, STACEY A. GOODFRIEND and HAROLD I.
APOLINSKY, as Trustees (collectively with all successors, the "Trustees" or the
"Assignor") of the ROBERT AND WENDY GOODFRIEND IRREVOCABLE TRUST (the "Trust"),
as owner and beneficiary of a certain policy of insurance on the lives of ROBERT
M. GOODFRIEND and WENDY S. GOODFRIEND (the "Insureds"), and GOODY'S FAMILY
CLOTHING, INC., a Tennessee corporation (the "Assignee").
WHEREAS, the Assignor and the Assignee are contemporaneously
entering into a Split Dollar Life Insurance Agreement (the "Agreement"); and
WHEREAS, the Assignor has agreed to furnish to Assignee
collateral security for payments to be made by Assignor to Assignee under the
Agreement;
NOW, THEREFORE, the Assignor hereby assigns to the Assignee,
its successors, and assigns certain rights to the extent described in Article 3
below under Insurance Policy No. VP60849130, issued by Pacific Life Insurance
Company (hereinafter called the "Insurer"), and any supplementary contracts
issued in connection therewith (such policy and contracts hereinafter
collectively called the "Policy), under which ROBERT M.GOODFRIEND and WENDY S.
GOODFRIEND are the insureds, such that the Assignee shall have the rights of a
revocable creditor beneficiary of the Policy, subject to all the terms of the
Policy.
The Assignor agrees, and the Assignee, by the acceptance hereof, agrees
to the following conditions:
1. Liabilities secured. This assignment is made and the Policy is to be held as
collateral security for certain liabilities of the Assignor to the Assignee,
either now existing with respect to the Policy or that may hereafter arise with
respect to the Policy, as and to the extent set forth in the Agreement.
2. Representation of solvency. The Assignor declares that no proceedings in
bankruptcy are pending against the Assignor and that the Trust property is not
subject to any assignment for the benefit of creditors.
3. Specific rights assigned. Without detracting from the generality of the
foregoing, Assignor hereby grants the following specific rights to the Assignee
in this assignment:
a. Until the occurrence of a Restricting Event (as defined in the
Agreement), Assignee is granted exclusively the following rights: (i) the right
to surrender the Policy; (ii) the right to change the beneficiary of the Policy;
(iii) the right to select dividend options; (iv) the right to select optional
methods of settlement with regard to the death benefits payable under the
Policy; (v) the right to assign its rights in the Policy; (vi) the right to
obtain a policy loan or loans on the Policy, provided that the amount of such
loans together with the interest therein shall at no time exceed the cash
surrender value of the Policy as of the date to which the premiums on the Policy
have been paid; and (vii) the right to withdraw or borrow against the cash value
of the Policy as described in and subject to the terms of the Agreement.
b. Upon the death of the latter to die of the Insureds, whether or not a
Restricting Event (as defined in the Agreement) has occurred, the Assignee shall
have the right to receive, and the Insurer shall pay to the Assignee, an amount
equal to the aggregate unreimbursed premiums paid by Assignee in respect of the
Policy less the amounts, if any, that have been received by Assignee as a
beneficiary of the Policy, and less any outstanding Policy loans taken by
Assignee.
c. In the event the Policy is surrendered or canceled by the Trustees,
Assignee shall have the right to be repaid all unreimbursed amounts paid by the
Assignee for the premiums on the Policy, taking into account any additional sums
remitted to Assignee pursuant to Section 3.3 of the Agreement less (i) any
amounts received in respect of the Policy by Assignee from the insurance company
and (ii) less any outstanding Policy loans taken by Assignee. Any balance of any
cash surrender value received shall be retained by the Trustees.
d. The Assignee shall have no other rights, options, privileges or powers
in and to the Policy as a result of this Assignment.
4. Covenants of Assignee. The Assignee covenants as follows:
a. Any balance of sums that may be received hereunder from the Insurer
remaining after payment to the Assignee as provided in the Agreement in the
event the Agreement is terminated will be paid by the Assignee to the persons
who would be entitled thereto under the terms of the Policy had this Assignment
not been executed.
b. The Assignee will, upon request, forward the Policy without unreasonable
delay to the Insurer for endorsement of any designation or change of
beneficiary, or any election of an optional mode of settlement.
5. Authorization to Insurer. Unless the Insurer has been given written notice
by the Assignor and the Assignee to the contrary, the Insurer is hereby
authorized to recognize the Assignee's claims to rights hereunder without
investigating the reason for any action taken by the Assignee, or the validity
or amount of the liabilities, or the existence of any default therein, or the
application to be made by the Assignee of any amounts to be paid to the
Assignee. The signature of the Assignee shall be sufficient for the exercise of
its rights under the Policy, and the receipt of the Assignee for any sums
received shall be a full discharge and release therefor to the Insurer. Checks
for all or any part of the sums payable under the Policy shall be drawn to the
exclusive order of the Assignee, if so requested by the Assignee.
6. Exercise of Rights. The exercise of any right given herein to the Assignee
shall be at the option of the Assignee, but the Assignee may exercise any such
right without notice to, or assent by the Assignor, without affecting the
liability of, or releasing any interest hereby assigned by the Assignor.
7. Termination and Amendment of Assignment. This Assignment may not be altered
or changed without the consent of the Assignee and the Assignor. As long as this
Agreement is in force, the Assignee may not, without the prior written consent
of the Assignor, exercise any right under this Assignment that would reduce or
compromise the death benefit payable under the Agreement.
8. Insurer Protected. The Insurer shall be fully protected in recognizing any
request made by the Assignor with respect to the exercise of any incident of
ownership in and to the Policy, with or without the consent of the Assignee, and
upon surrender of the Policy, the Policy shall be terminated and be of no
further force or effect.
9. Construction. In the event of any conflict between the provisions of
this Assignment and the provisions of the Agreement, the provisions of the
Agreement shall control.
10. Payment of Assignee's Obligation. Upon the full payment to the Assignee of
the Assignor's obligation under the Agreement, the Assignee shall release this
Assignment, and the ownership of the Policy shall be free of all provisions and
restrictions of this Assignment.
IN WITNESS WHEREOF, the Assignor and Assignee have duly
executed this Assignment on the day and year first set forth above.
___ /s/ Jeffrey A. Goodfriend
JEFFREY A. GOODFRIEND, as Trustee of
THE ROBERT AND WENDY GOODFRIEND
IRREVOCABLE TRUST
___ /s/ Stacey A. Goodfriend
STACEY A. GOODFRIEND, as Trustee of
THE ROBERT AND WENDY GOODFRIEND
IRREVOCABLE TRUST
___ /s/ Harold I. Apolinsky
HAROLD APOLINSKY, as Trustee of
THE ROBERT AND WENDY GOODFRIEND
IRREVOCABLE TRUST
GOODY'S FAMILY CLOTHING, INC.
By:___/s/ Harry M. Call______________
Harry M. Call
Its:_President________________________
<PAGE>
COLLATERAL ASSIGNMENT
THIS ASSIGNMENT is made to be effective as of the 1st day of
July, 1999 by JEFFREY A. GOODFRIEND, STACEY A. GOODFRIEND and HAROLD I.
APOLINSKY, as Trustees (collectively with all successors, the "Trustees" or the
"Assignor") of the ROBERT AND WENDY GOODFRIEND IRREVOCABLE TRUST (the "Trust"),
as owner and beneficiary of a certain policy of insurance on the lives of ROBERT
M. GOODFRIEND and WENDY S. GOODFRIEND (the "Insureds"), and GOODY'S FAMILY
CLOTHING, INC., a Tennessee corporation (the "Assignee").
WHEREAS, the Assignor and the Assignee are contemporaneously
entering into a Split Dollar Life Insurance Agreement (the "Agreement"); and
WHEREAS, the Assignor has agreed to furnish to Assignee
collateral security for payments to be made by Assignor to Assignee under the
Agreement;
NOW, THEREFORE, the Assignor hereby assigns to the Assignee,
its successors, and assigns certain rights to the extent described in Article 3
below under Insurance Policy No. 15067219, issued by Northwest Mutual Life
Insurance Company (hereinafter called the "Insurer"), and any supplementary
contracts issued in connection therewith (such policy and contracts hereinafter
collectively called the "Policy), under which ROBERT M.GOODFRIEND and WENDY S.
GOODFRIEND are the insureds, such that the Assignee shall have the rights of a
revocable creditor beneficiary of the Policy, subject to all the terms of the
Policy.
The Assignor agrees, and the Assignee, by the acceptance hereof, agrees
to the following conditions:
1. Liabilities secured. This assignment is made and the Policy is to be held as
collateral security for certain liabilities of the Assignor to the Assignee,
either now existing with respect to the Policy or that may hereafter arise with
respect to the Policy, as and to the extent set forth in the Agreement.
2. Representation of solvency. The Assignor declares that no proceedings in
bankruptcy are pending against the Assignor and that the Trust property is not
subject to any assignment for the benefit of creditors.
3. Specific rights assigned. Without detracting from the generality of the
foregoing, Assignor hereby grants the following specific rights to the Assignee
in this assignment:
a. Until the occurrence of a Restricting Event (as defined in the
Agreement), Assignee is granted exclusively the following rights: (i) the right
to surrender the Policy; (ii) the right to change the beneficiary of the Policy;
(iii) the right to select dividend options; (iv) the right to select optional
methods of settlement with regard to the death benefits payable under the
Policy; (v) the right to assign its rights in the Policy; (vi) the right to
obtain a policy loan or loans on the Policy, provided that the amount of such
loans together with the interest therein shall at no time exceed the cash
surrender value of the Policy as of the date to which the premiums on the Policy
have been paid; and (vii) the right to withdraw or borrow against the cash value
of the Policy as described in and subject to the terms of the Agreement.
b. Upon the death of the latter to die of the Insureds, whether or not a
Restricting Event (as defined in the Agreement) has occurred, the Assignee shall
have the right to receive, and the Insurer shall pay to the Assignee, an amount
equal to the aggregate unreimbursed premiums paid by Assignee in respect of the
Policy less the amounts, if any, that have been received by Assignee as a
beneficiary of the Policy, and less any outstanding Policy loans taken by
Assignee.
c. In the event the Policy is surrendered or canceled by the Trustees,
Assignee shall have the right to be repaid all unreimbursed amounts paid by the
Assignee for the premiums on the Policy, taking into account any additional sums
remitted to Assignee pursuant to Section 3.3 of the Agreement less (i) any
amounts received in respect of the Policy by Assignee from the insurance company
and (ii) less any outstanding Policy loans taken by Assignee. Any balance of any
cash surrender value received shall be retained by the Trustees.
d. The Assignee shall have no other rights, options, privileges or powers
in and to the Policy as a result of this Assignment.
4. Covenants of Assignee. The Assignee covenants as follows:
a. Any balance of sums that may be received hereunder from the Insurer
remaining after payment to the Assignee as provided in the Agreement in the
event the Agreement is terminated will be paid by the Assignee to the persons
who would be entitled thereto under the terms of the Policy had this Assignment
not been executed.
b. Following the occurrence of a Restricting Event, the Assignee will, upon
request, forward the Policy without unreasonable delay to the Insurer for
endorsement of any designation or change of beneficiary, or any election of an
optional mode of settlement.
5. Authorization to Insurer. Unless the Insurer has been given written notice
by the Assignor and the Assignee to the contrary, the Insurer is hereby
authorized to recognize the Assignee's claims to rights hereunder without
investigating the reason for any action taken by the Assignee, or the validity
or amount of the liabilities, or the existence of any default therein, or the
application to be made by the Assignee of any amounts to be paid to the
Assignee. The signature of the Assignee shall be sufficient for the exercise of
its rights under the Policy, and the receipt of the Assignee for any sums
received shall be a full discharge and release therefor to the Insurer. Checks
for all or any part of the sums payable under the Policy shall be drawn to the
exclusive order of the Assignee, if so requested by the Assignee.
6. Exercise of Rights. The exercise of any right given herein to the Assignee
shall be at the option of the Assignee, but the Assignee may exercise any such
right without notice to, or assent by the Assignor, without affecting the
liability of, or releasing any interest hereby assigned by the Assignor.
7. Termination and Amendment of Assignment. This Assignment may not be altered
or changed without the consent of the Assignee and the Assignor. As long as this
Agreement is in force, the Assignee may not, without the prior written consent
of the Assignor, exercise any right under this Assignment that would reduce or
compromise the death benefit payable under the Agreement.
8. Insurer Protected. The Insurer shall be fully protected in recognizing any
request made by the Assignor with respect to the exercise of any incident of
ownership in and to the Policy, with or without the consent of the Assignee, and
upon surrender of the Policy, the Policy shall be terminated and be of no
further force or effect.
9. Construction. In the event of any conflict between the provisions of
this Assignment and the provisions of the Agreement, the provisions of the
Agreement shall control.
10. Payment of Assignee's Obligation. Upon the full payment to the Assignee of
the Assignor's obligation under the Agreement, the Assignee shall release this
Assignment, and the ownership of the Policy shall be free of all provisions and
restrictions of this Assignment.
IN WITNESS WHEREOF, the Assignor and Assignee have duly
executed this Assignment on the day and year first set forth above.
___ /s/ Jeffrey A. Goodfriend
JEFFREY A. GOODFRIEND, as Trustee of
THE ROBERT AND WENDY GOODFRIEND
IRREVOCABLE TRUST
____ /s/ Stacey A. Goodfriend
STACEY A. GOODFRIEND, as Trustee of
THE ROBERT AND WENDY GOODFRIEND
IRREVOCABLE TRUST
____ /s/ Harold I. Apolinsky
HAROLD APOLINSKY, as Trustee of
THE ROBERT AND WENDY GOODFRIEND
IRREVOCABLE TRUST
GOODY'S FAMILY CLOTHING, INC.
By:___/s/ Harry M. Call_____________
Harry M. Call
Its:__President_____________________
<PAGE>
EXHIBIT 11
GOODY'S FAMILY CLOTHING, INC.
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
Thirteen Thirty-nine
Weeks Ended Weeks Ended
October 30, October 31, October 30, October 31,
1999 1998 1999 1998
------------ ------------ ------------- -----------
<S> <C> <C> <C> <C>
Net earnings $ 1,666,000 $ 3,267,000 $ 19,256,000 $ 19,693,000
=========== ============ =========== ============
Weighted average common shares
outstanding - Basic 33,168,000 33,328,000 33,273,000 33,099,000
Common equivalent shares for outstanding stock
options 443,000 994,000 536,000 1,294,000
----------------------------------------------------------------
Weighted average common shares
outstanding - Diluted 33,611,000 34,322,000 33,809,000 34,393,000
============ =========== =========== ==========
Earnings per common share
Basic $ 0.05 $ 0.10 $ 0.58 $ 0.59
================================================================
Diluted $ 0.05 $ 0.10 $ 0.57 $ 0.57
================================================================
</TABLE>
<PAGE>
Exhibit 15
Goody's Family Clothing, Inc.
Knoxville, Tennessee
We have made a review, in accordance with standards established by the American
Institute of Certified Public Accountants, of the unaudited interim consolidated
financial information of Goody's Family Clothing, Inc. and subsidiaries for the
periods ended October 30, 1999 and October 31, 1998 as indicated in our report
dated November 16, 1999; because we did not perform an audit, we expressed no
opinion on that information.
We are aware that our report referred to above, which is included in your
Quarterly Report on Form 10-Q for the quarter ended October 30, 1999, is
incorporated by reference in Registration Statements Nos. 333-32357, 33-51210,
33-68520, 333-00052 and 333-09595 on Form S-8.
We also are aware that the aforementioned report, pursuant to Rule 436(c) under
the Securities Act of 1933, is not considered a part of the Registration
Statements prepared or certified by an accountant or a report prepared or
certified by an accountant within the meaning of Sections 7 and 11 of that Act.
/s/ Deloitte & Touche LLP
Atlanta, Georgia
December 9, 1999
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AS OF OCTOBER 30, 1999 AND THE RELATED CONSOLIDATED
STATEMENT OF OPERATIONS FOR THE THIRTY-NINE WEEKS ENDED ON OCTOBER 30, 1999 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000879123
<NAME> Goody's Family Clothing, Inc.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-29-2000
<PERIOD-START> JAN-31-1999
<PERIOD-END> OCT-30-1999
<CASH> 28,269
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 274,849
<CURRENT-ASSETS> 323,211
<PP&E> 189,303
<DEPRECIATION> 72,732
<TOTAL-ASSETS> 446,973
<CURRENT-LIABILITIES> 219,523
<BONDS> 318
0
0
<COMMON> 25,667
<OTHER-SE> 186,663
<TOTAL-LIABILITY-AND-EQUITY> 212,330
<SALES> 805,269
<TOTAL-REVENUES> 805,269
<CGS> 575,285
<TOTAL-COSTS> 200,982
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 157
<INCOME-PRETAX> 30,808
<INCOME-TAX> 11,552
<INCOME-CONTINUING> 19,256
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 19,256
<EPS-BASIC> 0.58
<EPS-DILUTED> 0.57
</TABLE>
