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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
[X] ANNUAL REPORT PURSUANT TO SECTION 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
Commission file number 0-00000
RETIREMENT SAVINGS PLAN OF FRIEDMAN'S INC.
FRIEDMAN'S INC.
A Delaware Corporation
IRS Employer Identification Number 58-2058362
Four West State Street
Savannah, Georgia 31401
Telephone (912) 233-9333
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RETIREMENT SAVINGS PLAN OF FRIEDMAN'S INC.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page No.
<S> <C> <C>
Audited Financial Statements
Report of Independent Auditors ..........................................3
Statement of Net Assets Available for Benefits, With Fund
Information ...........................................................5
Statement of Changes in Net Assets Available for Benefits, With Fund
Information ...........................................................7
Notes to Financial Statements ...........................................9
Supplemental Schedules
Schedule of Assets Held for Investment Purposes ........................15
Schedule of Reportable Transactions ....................................16
Signature....................................................................17
</TABLE>
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Report of Independent Auditors
The Plan Committee
Retirement Savings Plan of
Friedman's Inc.
Savannah, Georgia
We have audited the accompanying statement of net assets available for
benefits of the Retirement Savings Plan of Friedman's Inc. (the Plan) as of
December 31, 1996, and the related statement of changes in net assets
available for benefits for the year then ended. These financial statements are
the responsibility of the Plan's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the Plan's net assets available for benefits at December
31, 1996, and the changes in its net assets available for benefits for the year
then ended, in conformity with generally accepted accounting principles.
Our audit was performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets
held for investment purposes as of December 31, 1996 and reportable
transactions for the year then ended, are presented for the purpose of
additional analysis and are not a required part of the basic financial
statements but are supplementary information required by the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income and Security Act of 1974. The
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supplemental schedules are the responsibility of the Plan's management. The
Fund Information in the statement of net assets available for benefits and the
statement of changes in net assets available for benefits is presented for
purposes of additional analysis rather than to present the net assets available
for benefits and changes in net assets available for benefits of each fund. The
supplemental schedules and Fund Information have been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, are fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
October 10, 1997
Jacksonville, Florida
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Retirement Savings Plan of Friedman's Inc.
Statement of Net Assets Available for Benefits, With Fund Information
December 31, 1996
<TABLE>
<CAPTION>
EVERGREEN EVERGREEN
TREASURY SHORT FIRST UNION
MONEY INTERMEDIATE ENHANCED FIDELITY
MARKET BOND STOCK MAGELLAN
-----------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Investments:
Mutual funds $299,365 $7,166 $43,924 $66,289
Loans to participants - - - -
-----------------------------------------------------------------------
299,365 7,166 43,924 66,289
Contributions receivable:
Participants 25,606 961 2,690 4,418
Employer 9,436 183 836 1,522
-----------------------------------------------------------------------
Net Assets Available for Benefits $334,407 $8,310 $47,450 $72,229
=======================================================================
</TABLE>
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<TABLE>
<CAPTION>
WEISS, PECK
WEISS, PECK AND GREER WEISS, PECK
AND GREER TOMORROW AND GREER
TOMORROW MEDIUM- TOMORROW FRIEDMAN'S LOAN
SHORT-TERM TERM LONG-TERM INC. STOCK FUND TOTAL
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$3,753 $27,734 $16,420 $35,814 $ - $500,465
- - - - 21,646 21,646
- ----------------------------------------------------------------------------------------------------------
3,753 27,734 16,420 35,814 21,646 522,111
313 1,976 1,331 2,809 - 40,104
114 604 341 837 - 13,873
- ----------------------------------------------------------------------------------------------------------
$4,180 $30,314 $18,092 $39,460 $21,646 $576,088
==========================================================================================================
</TABLE>
See Notes to Financial Statements.
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Retirement Savings Plan of Friedman's Inc.
Statement of Changes in Net Assets Available for Benefits, With
Fund Information
Year ended December 31, 1996
<TABLE>
<CAPTION>
EVERGREEN EVERGREEN
TREASURY SHORT FIRST UNION
MONEY INTERMEDIATE ENHANCED FIDELITY
MARKET BOND STOCK MAGELLAN
-----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Additions:
Investment earnings (losses) $ 6,559 $ 212 $ 3,941 $ 4,155
Contributions:
Participants 290,288 5,586 33,141 59,963
Employer 92,485 1,215 7,945 13,272
-----------------------------------------------------------------------
389,332 7,013 45,027 77,390
Deductions:
Distributions to participants 4,581 - 125 120
Administrative expenses 4,325 51 300 444
-----------------------------------------------------------------------
8,906 51 425 564
Interfund transfers (46,019) 1,348 2,848 (4,597)
-----------------------------------------------------------------------
Net increase in net assets 334,407 8,310 47,450 72,229
Net assets available for benefits at
beginning of year - - - -
-----------------------------------------------------------------------
Net Assets Available for Benefits at End
of Year $334,407 $8,310 $47,450 $72,229
=======================================================================
</TABLE>
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<TABLE>
<CAPTION>
WEISS, PECK
WEISS, PECK AND GREER WEISS, PECK
AND GREER TOMORROW AND GREER
TOMORROW MEDIUM- TOMORROW FRIEDMAN'S LOAN
SHORT-TERM TERM LONG-TERM INC. STOCK FUND TOTAL
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 239 $ 1,629 $ 972 $(7,206) $ - $ 10,501
2,529 24,284 12,679 19,096 - 447,566
868 5,247 2,448 5,006 - 128,486
- ----------------------------------------------------------------------------------------------------------
3,636 31,160 16,099 16,896 - 586,553
- - - - 4,826
34 181 132 172 - 5,639
- ----------------------------------------------------------------------------------------------------------
34 181 132 172 - 10,465
578 (665) 2,125 22,736 21,646 -
- ----------------------------------------------------------------------------------------------------------
4,180 30,314 18,092 39,460 21,646 576,088
- - - - -
- ----------------------------------------------------------------------------------------------------------
$4,180 $30,314 $18,092 $39,460 $21,646 $576,088
==========================================================================================================
</TABLE>
See Notes to Financial Statements.
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Retirement Savings Plan of Friedman's Inc.
Notes to Financial Statements
December 31, 1996
1. SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accounting records of the Retirement Savings Plan of Friedman's Inc. (the
Plan) are maintained on the accrual basis. All securities transactions of the
Plan are recorded as of the trade date.
VALUATION OF INVESTMENTS
Investments in mutual funds are stated at fair values as determined by the Plan
trustee, First Union National Bank, using the unitization method of accounting.
Unit values are generally based upon quoted market prices and are adjusted to
reflect the impact of interest, dividends, realized and unrealized
gains/losses, and fund expenses. The investments in mutual funds and the
participants' ownership in such mutual funds are expressed in unit values which
are calculated daily based on the total market value of the unitized fund.
Loans to participants are carried at their outstanding principal balances plus
interest, which approximates fair value.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets, liabilities and other additions to
or deductions from net assets. Actual results could differ from those estimates.
2. DESCRIPTION OF THE PLAN
A complete description of Plan provisions including those relating to
contributions, vesting, withdrawals, loans and distributions is disclosed in
the Summary Plan Description and the Plan Document. Copies of these documents
are available from the Friedman's Inc. Benefits Department. The following
summary should be read in conjunction with the aforementioned documents.
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Retirement Savings Plan of Friedman's Inc.
Notes to Financial Statements (continued)
2. DESCRIPTION OF THE PLAN (CONTINUED)
GENERAL
The Plan is a defined contribution plan subject to the provisions of the
Employee Retirement Income Security Act of 1974 (ERISA) and covers
substantially all employees of Friedman's Inc. (the Company or the Employer).
The plan was established and became effective January 1, 1996.
INVESTMENT ALTERNATIVES
Participant contributions may be invested in one or more of the following
investment funds: (1) Evergreen Treasury Money Market Fund, consisting of a
mutual fund that invests in short-term U.S. Treasury securities primarily to
assure minimal credit risk; (2) Evergreen Short-Intermediate Bond Fund,
consisting of a mutual fund that invests in government and agency securities
selected primarily to attain high income with capital growth as a secondary
objective; (3) First Union Enhanced Stock Fund, consisting of a collective trust
fund which invests in common stocks and S&P 500 futures contracts selected
primarily to duplicate the return of the general market as measured by the S&P
500; (4) Fidelity Magellan Fund, consisting of a mutual fund that invests in
equity securities of domestic, foreign and multinational issuers for long-term
growth potential; (5) Weiss, Peck and Greer Tomorrow Retirement Funds --
Short-Term, Medium-Term, and Long-Term, which are a series of mutual funds which
invest in varying mixes of common stocks and bonds selected for long-term
capital appreciation; and (6) Friedman's Inc. Stock Fund, which invests in the
Class A common stock of Friedman's Inc.
CONTRIBUTIONS
Participants are allowed to make contributions to the Plan in accordance with
Section 401(k) of the Internal Revenue Code ranging from 1% to 15% of their
pre-tax compensation, as defined in the Plan document, up to a maximum of
$9,500 for 1996. Except for rollover contributions, participants may not make
additional contributions from after-tax salary. In addition, the Company makes
matching contributions on behalf of each participant equal to 50% of the first
4% of each participant's contribution to the Plan.
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Retirement Savings Plan of Friedman's Inc.
Notes to Financial Statements (continued)
2. DESCRIPTION OF THE PLAN (CONTINUED)
VESTING, WITHDRAWALS AND DISTRIBUTIONS
Participants are immediately vested in their contributions plus actual earnings
thereon. Vesting in any Employer contributions plus actual earnings thereon is
based on years of continuous service. A participant vests 20% in Employer
contributions after two years of service and an additional 20% each year
thereafter until they are 100% vested after six years of service. Withdrawals
and distributions are controlled in accordance with the provisions of the Plan.
LOANS TO PARTICIPANTS
The minimum amount participants are permitted to borrow under the loan
provisions of the Plan is $1,000. The maximum amount participants are permitted
to borrow under the loan provisions of the Plan is the lesser of $50,000 or 50%
of the participant's vested interest in the Plan. Participants may have only one
loan outstanding which must be repaid within five years unless the loan is for
the purchase of a primary residence, which must be repaid within ten years.
Borrowings are reflected as loans to participants and bear interest at the
prime rate plus 2% in effect at the beginning of the month in which the loan
originated.
PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's contributions,
the appropriate portion of the Employer's contributions and an allocation of
Plan earnings. The benefit to which a participant is entitled is the benefit
that can be provided from the participant's account. Participant contributions
and the related investment income are at all times 100% vested and
nonforfeitable. Participants become vested in Employer contributions and actual
earnings thereon according to the vesting schedule described above.
PLAN TERMINATION
Although it has not expressed any intent to do so, the Employer has the right
under the Plan to discontinue its contributions at any time and to terminate
the Plan subject to the provisions of ERISA. In the event of termination or
partial termination, the total amount in each participant's account will be
distributed to the participant or continue to be held in trust for his or her
benefit.
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Retirement Savings Plan of Friedman's Inc.
Notes to Financial Statements (continued)
3. INVESTMENTS
The Plan's investments are held by First Union National Bank. The investments
are more fully described below:
Evergreen Treasury Money Market Fund: Substantially all of the assets
held in the Evergreen Treasury Money Market Fund are invested in
short-term U.S. Treasury securities with average maturities of less
than 120 days.
Evergreen Short-Intermediate Bond Fund: Substantially all of the
assets held in the Evergreen Short-Intermediate Bond Fund are invested
in fixed income investments consisting of U.S. Government and Agency
securities, corporate bonds, cash equivalents and other instruments
with an average maturity of 5 years or less.
First Union Enhanced Stock Fund: Substantially all of the assets held
in the First Union Enhanced Stock Fund are invested in common stocks
or S&P 500 futures contracts selected primarily to duplicate the
return of the S&P 500.
Fidelity Magellan Fund: Substantially all of the assets held
in the Fidelity Magellan Fund are invested in equity securities of
domestic, foreign and multinational issuers.
Weiss, Peck and Greer Tomorrow Short-Term, Medium-Term, and Long-Term
Retirement Funds: Substantially all of the assets held in the Tomorrow
Retirement Funds are invested in common stocks and bonds with varying
mix proportions which are customized for specific age groups and grow
more conservative over time.
Friedman's Inc. Stock Fund: Substantially all of the assets held in
the Friedman's Inc. Stock Fund are invested in the Class A common
stock of Friedman's Inc. (see note below).
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Retirement Savings Plan of Friedman's Inc.
Notes to Financial Statements (continued)
3. INVESTMENTS (CONTINUED)
The Plan's investments are held by a trustee and are invested in any of eight
investment options. Investments that represent 5 percent or more of the Plan's
net assets at December 31, 1996 are as follows:
<TABLE>
<S> <C>
Investments at fair value as determined by unitization:
Units of registered investments companies:
Evergreen Treasury Money Market Fund, 24,262 units $299,365
Fidelity Magellan, 631 units 66,289
Weiss, Peck and Greer Tomorrow Medium-Term Fund,
3,396 units 27,734
Units of collective trust:
First Union Enhanced Stock Fund, 1,047 units 43,924
Units of corporate common stock:
Friedman's Inc. Stock Fund, 5,990 units 35,814
</TABLE>
Effective October 10, 1997, the Company instructed the trustee of the Plan to
freeze all activity in any investment alternatives which include the Company's
Class A common stock. Such investment alternatives are subject to prior
registration of the Plan interest and the Company's Class A common stock with
the Securities and Exchange Commission, which registration had not, as of
October 10, 1997, been completed. The Company and its counsel are investigating
the steps necessary to restore investments in the Company's Class A common
stock as an investment alternative under the Plan, which may include a recision
offer to all participants who invested in the Company's Class A common stock
through the Plan, as well as registration of the Plan interests and the
Company's Class A common stock subject to the Plan.
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Retirement Savings Plan of Friedman's Inc.
Notes to Financial Statements (continued)
4. INCOME TAX STATUS
The Internal Revenue Service ruled September 2, 1997 that the Plan qualifies
under Section 401(a) of the Internal Revenue Codes (IRC) and, therefore, is not
subject to tax under present income tax law. Once qualified, the Plan is
required to operate in conformity with the IRC to maintain its qualification.
The Plan's Administrative Committee is not aware of any event or series of
events that have occurred that might adversely affect the Plan's qualified
status.
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Retirement Savings Plan of Friedman's Inc.
Schedule of Assets Held for Investment Purposes
December 31, 1996
Schedule 27a
<TABLE>
<CAPTION>
DESCRIPTION OF
INVESTMENT
INCLUDING
MATURITY DATE,
RATE OF
INTEREST, PAR OR
IDENTITY OF ISSUE, BORROWER, LESSOR, OR SIMILAR MATURITY CURRENT
PARTY VALUE COST VALUE
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Mutual Funds:
Evergreen Treasury Money Market Fund 24,262 units $293,633 $299,365
Evergreen Short-Intermediate Bond Fund 671 units 6,961 7,166
Fidelity Magellan Fund 631 units 62,011 66,289
Weiss, Peck and Greer Tomorrow Short-Term 407 units 3,515 3,753
Retirement Fund
Weiss, Peck and Greer Tomorrow Medium-Term 3,396 units 26,107 27,734
Retirement Fund
Weiss, Peck and Greer Tomorrow Long-Term 2,315 units 15,446 16,420
Retirement Fund
Collective Trust Fund:
First Union Enhanced Stock Fund 1,047 units 39,992 43,924
Common stock:
Friedman's Inc. Stock Fund 5,990 units 42,516 35,814
---------------------------------
490,181 500,465
Participant loans 8.25% - 9.00% _ 21,646
---------------------------------
$490,181 $522,111
=================================
</TABLE>
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Retirement Savings Plan of Friedman's Inc.
Schedule of Reportable Transactions
Year ended December 31, 1996
Schedule 27d
<TABLE>
<CAPTION>
DESCRIPTION OF TRANSACTION EXPENSES CURRENT VALUE
INCLUDING MATURITY DATE, RATE INCURRED OF ASSET ON
IDENTITY OF PARTY OF INTEREST, COLLATERAL, PAR OR PURCHASE SELLING LEASE WITH COST OF TRANSACTION NET GAIN
INVOLVED MATURITY VALUE PRICE PRICE RENTAL TRANSACTION ASSET DATE (LOSS)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Category (i) - Single transaction in excess of 5% of Plan assets:
Evergreen Treasury Money Mutual Fund, 2,449 units $ 29,588 _ _ _ $29,588 $29,588 _
Market Fund
Category (iii) - Series of transactions in excess of 5% of Plan assets:
Evergreen Treasury Money Mutual Fund, 31,423 units 379,555 _ _ _ 379,555 379,555 _
Market Fund 7,162 units _ $85,922 _ _ 85,922 86,748 $826
First Union Enhanced Collective Trust Fund, 1,280 units 48,379 _ _ _ 48,379 48,379 _
Stock Fund
Fidelity Magellan Fund Mutual Fund, 862 units 84,080 _ _ _ 84,080 84,080 _
Friedman's Inc. Stock Corporate common stock, 6,474 46,970 _ _ _ 46,970 46,970 -
Fund units
</TABLE>
There were no category (ii) or (iv) reportable transactions during the year
ended December 31, 1996.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
administrative committee members have duly caused this annual report to be
signed on its behalf by the undesigned hereunto duly authorized.
RETIREMENT SAVINGS PLAN OF FRIEDMAN'S INC.
By: /s/ Victor M. Suglia
-------------------------------------
Victor M. Suglia
Senior Vice President and
Chief Financial Officer
Date: October 15, 1997
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