<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarterly Period Ended Commission File Number:
July 31, 1996 0-23570
JUST FOR FEET, INC.
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(Exact name of registrant as specified in its charter)
Alabama 63-0734234
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
153 Cahaba Valley Parkway North, Birmingham, Alabama 35124
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (205) 403-8000
---------------------------
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(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 ___________
-----------
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date:
Common Stock, par value $.0001 per share 18,903,952 shares
- ------------------------------------------ ---------------------------------
Class Outstanding at September 5, 1996
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
JUST FOR FEET, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
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<TABLE>
<CAPTION>
JULY 31, JANUARY 31,
1996 1996
ASSETS (UNAUDITED)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 90,621,800 $ 96,854,200
Marketable securities available for sale 27,721,400 32,634,200
Accounts receivable, net 4,178,600 3,409,500
Merchandise inventories 94,590,200 56,637,900
Other current assets 7,262,400 4,166,100
------------ ------------
Total current assets 224,374,400 193,701,900
PROPERTY AND EQUIPMENT, NET 35,603,900 23,387,900
MARKETABLE SECURITIES AVAILABLE FOR SALE 9,581,600 22,647,400
FRANCHISE RIGHTS 3,203,000 3,293,200
OTHER ASSETS 67,600 549,500
------------ ------------
$272,830,500 $243,579,900
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term borrowings $ 55,000,000
Accounts payable - trade $ 43,515,600 22,268,600
Accrued expenses 5,192,100 2,777,200
Income taxes 19,200 3,552,000
Deferred income taxes 1,925,400 681,100
Obligations under capital leases and
long-term debt due within one year 1,171,800 1,119,500
------------ ------------
Total current liabilities 51,824,100 85,398,400
LONG-TERM DEBT 5,327,400 5,239,500
CAPITAL LEASE OBLIGATIONS 1,741,000 1,456,200
DEFERRED LEASE RENTALS 2,371,000 1,580,400
DEFERRED INCOME TAXES 358,700 635,600
------------ ------------
Total liabilities 61,622,200 94,310,100
------------ ------------
SHAREHOLDERS' EQUITY
Common stock - par value $.0001 per share; authorized
70,000,000 shares; 18,899,095 and 17,532,096 shares issued and
outstanding at July 31, 1996 and January 31, 1996, respectively 1,900 1,800
Paid-in capital 189,040,400 135,125,000
Retained earnings 22,166,000 14,143,000
------------ ------------
Total shareholders' equity 211,208,300 149,269,800
------------ ------------
$272,830,500 $243,579,900
============ ============
</TABLE>
The accompanying notes are an integral part of these unaudited condensed
financial statements.
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<PAGE>
JUST FOR FEET, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
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<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JULY 31, JULY 31,
--------------------------------- --------------------------------
1996 1995 1996 1995
<S> <C> <C> <C> <C>
NET SALES $58,379,200 $25,434,900 $107,529,400 $46,571,200
COST OF SALES 33,567,300 14,624,200 61,964,100 26,902,000
----------- ----------- ------------ -----------
GROSS PROFIT 24,811,900 10,810,700 45,565,300 19,669,200
----------- ----------- ------------ -----------
FRANCHISE FEES AND
ROYALTIES EARNED 112,600 111,000 234,300 216,000
----------- ----------- ------------ -----------
OPERATING EXPENSES:
Store operating 15,434,200 6,830,400 29,339,500 12,930,000
Pre-opening costs 1,571,900 531,600 2,616,300 1,040,800
General and administrative 1,866,600 868,300 3,387,200 1,635,100
----------- ----------- ------------ -----------
Total operating expenses 18,872,700 8,230,300 35,343,000 15,605,900
----------- ----------- ------------ -----------
OPERATING INCOME 6,051,800 2,691,400 10,456,600 4,279,300
INTEREST INCOME 1,263,400 603,700 2,384,300 1,164,600
INTEREST EXPENSE (257,500) (190,400) (420,400) (259,700)
----------- ----------- ------------ -----------
INCOME BEFORE INCOME
TAXES 7,057,700 3,104,700 12,420,500 5,184,200
PROVISION FOR INCOME
TAXES 2,507,700 1,048,500 4,397,500 1,669,500
----------- ----------- ------------ -----------
NET INCOME $ 4,550,000 $ 2,056,200 $ 8,023,000 $ 3,514,700
----------- ----------- ------------ -----------
NET INCOME PER COMMON
AND COMMON EQUIVALENT
SHARE $ 0.24 $ 0.13 $ 0.42 $ 0.22
----------- ----------- ------------ -----------
WEIGHTED AVERAGE NUMBER
OF COMMON AND COMMON
EQUIVALENT SHARES
OUTSTANDING 19,258,821 16,371,560 18,948,119 16,245,246
----------- ----------- ------------ -----------
</TABLE>
The accompanying notes are an integral part of these unaudited condensed
financial statements.
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<PAGE>
JUST FOR FEET, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
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<TABLE>
<CAPTION>
SIX MONTHS ENDED
JULY 31,
------------------------------------
1996 1995
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 8,023,000 $ 3,514,700
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization 1,605,100 598,000
Amortization of franchise rights 90,200 90,500
Deferred income taxes 967,400 355,000
Deferred lease rentals 790,600 257,600
Changes in assets and liabilities providing (using) cash:
Accounts receivable (769,100) (478,300)
Merchandise inventories (37,952,300) (27,828,500)
Other assets (2,614,400) (1,607,600)
Accounts payable - trade 21,247,000 18,988,600
Accrued expenses 2,414,900 306,300
Income taxes (3,532,800) 1,067,700
------------ ------------
Net cash used in operating activities (9,730,400) (4,736,000)
------------ ------------
INVESTING ACTIVITIES:
Purchases of marketable securities (21,743,300) (28,013,100)
Maturities and sales of marketable securities 39,721,900 9,548,500
Purchases of property and equipment (13,287,700) (3,460,600)
------------ ------------
Net cash provided by (used in) investing activities 4,690,900 (21,925,200)
------------ ------------
FINANCING ACTIVITIES:
Net short-term borrowings (repayments) (55,000,000) 6,336,400
Proceeds from long-term debt 350,000 686,700
Principal payments on long-term debt (289,600) (560,400)
Principal payments on capital lease obligations (168,800) (15,700)
Net proceeds from issuance of common stock 52,916,700
Exercise of stock options 998,800 144,100
------------ ------------
Net cash provided by (used in) financing activities (1,192,900) 6,591,100
------------ ------------
NET DECREASE IN CASH AND
CASH EQUIVALENTS (6,232,400) (20,070,100)
CASH AND CASH EQUIVALENTS:
BEGINNING OF PERIOD 96,854,200 36,353,300
------------ ------------
END OF PERIOD $ 90,621,800 $ 16,283,200
============ ============
</TABLE>
The accompanying notes are an integral part of these unaudited condensed
financial statements.
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<PAGE>
JUST FOR FEET, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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Note 1 - GENERAL
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions of Form 10-Q. Accordingly, they
do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. These
unaudited financial statements include all adjustments, consisting of normal,
recurring accruals, which Just For Feet, Inc. (the "Company") considers
necessary for a fair presentation of the financial position and the results of
operations for these periods.
The results of operations for the three month period and the six month period
ended July 31, 1996 are not necessarily indicative of the results of operations
to be expected for the full year ending January 31, 1997. For further
information, refer to the financial statements and footnotes thereto for the
fiscal year ended January 31, 1996 included in the Company's Form 10-K as filed
with the Securities and Exchange Commission.
NOTE 2 - LINE OF CREDIT
During July 1996, the Company renewed its line of credit agreement to now expire
on July 1, 1997. The line of credit permits the Company to borrow up to
$20,000,000 with interest payable at either the bank's prime rate or a rate
based on LIBOR. Borrowings under the line of credit, if any, are unsecured.
NOTE 3 - STOCKHOLDERS' EQUITY
On May 28, 1996, the Company's shareholders increased the authorized number of
common shares to 70,000,000 and the number of common shares reserved for
issuance under the employees incentive stock option plan to 3,000,000.
In June 1996, the Company completed an offering of common stock in which the
Company sold 1,092,500 shares of common stock at a price of $51.375 for which
net proceeds (after offering costs) to the Company totaled approximately
$52,916,700.
-5-
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
Just For Feet, Inc., was founded in 1977 by its current Chairman and Chief
Executive Officer, Harold Ruttenberg, with the opening of a small mall-based
store in Birmingham, Alabama. In 1988, Just For Feet opened its first superstore
adjacent to the Galleria Mall in Birmingham. As a result of the success and high
sales volume generated by the larger store format, since that time the Company
has focused on developing and refining its superstore concept.
As of July 31, 1996, there were 46 Just For Feet stores operating in 12
states, including seven stores operated by the Company's only franchisee. Of the
39 Company operated stores, 12 have been opened during fiscal 1996. The Company
expects to open a total of 27 new stores during fiscal 1996 and the first
quarter of fiscal 1997, with a total of approximately 17 new stores expected to
open in fiscal 1996 and approximately 10 new stores expected to open in the
first quarter of fiscal 1997. The Company intends to open 11 additional stores
prior to the end of fiscal 1997 for a total of 65 Company operated stores. The
Company may accelerate the opening of new stores in any one fiscal quarter.
In addition to its prototype stores, the Company has opened three high-
visibility, high-profile "flagship" stores, including its original Las Vegas
store. The Company has plans to open approximately an additional three flagship
stores in selected locations. Initial capital expenditures associated with
opening such flagship stores are higher than for prototype stores; however, the
Company believes that such increased costs will be offset by additional revenue
generated by the enhanced entertainment and visibility provided by such stores,
and that the overall profitability of such stores will be equivalent to that of
the Company's prototype stores.
In order to access markets too small to support a traditional Just For Feet
superstore, the Company is contemplating the introduction of a smaller store,
offering a more limited selection of athletic and outdoor footwear. Management
anticipates that, should it elect to pursue this new concept, it would be
developed either internally or through the acquisition of an existing footwear
retailer currently operating in the manner envisioned for the new stores.
Regardless of the means by which it may be developed, implementation of this new
concept could involve significant start-up costs.
In recent years, the Company has achieved positive comparable store sales
growth on an annual basis. During the first six months of fiscal 1996,
comparable store sales increased 36.0%. No assurance can be given that
comparable store sales will continue to increase.
For fiscal 1996, the Company adopted a bonus plan for all corporate level
employees. Under the plan, such employees are eligible to receive a year-end
bonus equal to a percentage of their annual salaries based on the Company's per
share operating results in excess of a target level. A maximum of $2.5 million
can be distributed to participants under the plan.
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<PAGE>
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, income statement
data expressed as a percentage of net sales:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
July 31, July 31,
-------------------- ------------------
1996 1995 1996 1995
--------- -------- -------- --------
<S> <C> <C> <C> <C>
NET SALES 100.0% 100.0% 100.0% 100.0%
COST OF SALES 57.5 57.5 57.6 57.8
----- ----- ----- -----
GROSS PROFIT 42.5 42.5 42.4 42.2
FRANCHISE FEES AND ROYALTIES
EARNED 0.2 0.4 0.2 0.5
OPERATING EXPENSES:
Store operating 26.4 26.8 27.3 27.8
Pre-opening costs 2.7 2.1 2.4 2.2
General and administrative 3.2 3.4 3.2 3.5
----- ----- ----- -----
OPERATING INCOME 10.4 10.6 9.7 9.2
INTEREST INCOME - NET 1.7 1.6 1.8 1.9
----- ----- ----- -----
INCOME BEFORE INCOME TAXES 12.1 12.2 11.5 11.1
PROVISION FOR INCOME TAXES 4.3 4.1 4.1 3.6
----- ----- ----- -----
NET INCOME 7.8% 8.1% 7.4% 7.5%
===== ===== ===== =====
</TABLE>
THREE MONTHS ENDED JULY 31, 1996 COMPARED TO THREE MONTHS ENDED JULY 31, 1995
Net Sales. Net sales increased $33.0 million or 130% to $58.4 million in
the second quarter of fiscal 1996 compared to net sales of $25.4 million for the
second quarter of fiscal 1995. This increase was primarily attributable to 18
new stores opened since July 31, 1995 and an increase in comparable store sales
of 30.4%. The calculation of comparable store sales included a total of 19
stores at July 31, 1996. The comparable store sales increase was due primarily
to a 44.0% increase in the number of footwear units sold.
Gross Profit. Gross profit as a percentage of net sales remained constant
in the second quarter of fiscal 1996 at 42.5%.
Store Operating Expenses. Store operating expenses increased $8.6 million
or 126% to $15.4 million from $6.8 million in the second quarter of fiscal 1995.
The increase was primarily attributable to the operating expenses of the 18
stores opened since July 31, 1995. As a percentage of net sales, store operating
expenses decreased to 26.4% in the second quarter of fiscal 1996 from 26.8% in
the second quarter of fiscal 1995.
Store Pre-opening Costs. Store pre-opening costs, which are amortized over
the 12 months following a store opening, increased to $1.6 million in second
quarter of fiscal 1996 from $531,600 in the second quarter of fiscal 1995 as a
result of new store openings and an increase in the dedicated corporate staff to
support such new store openings.
General and Administrative Expense. General and administrative expense
increased $998,300 or 115% but decreased as a percentage of net sales in the
second quarter of fiscal 1996 to 3.2% from 3.4% in the second quarter of fiscal
1995. The dollar increase was primarily due to increased personnel and
infrastructure costs associated with store operations and management information
systems, as well as the
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<PAGE>
accrual of amounts related to the corporate bonus plan. The percentage decrease
resulted from greater economies of scale in the Company's operations.
Operating Income. Operating income increased to $6.1 million in the second
quarter of fiscal 1996 from $2.7 million in the second quarter of fiscal 1995.
As a percentage of net sales, operating income decreased slightly to 10.4% in
the second quarter of fiscal 1996 from 10.6% in the second quarter of fiscal
1995.
Net Interest Income. Net interest income increased $592,600 to $1.0
million in the second quarter of fiscal 1996 compared to $413,300 in the second
quarter of fiscal 1995. This increase was primarily attributable to investment
income realized from investing the proceeds of public offerings of the Company's
common stock in September 1995 and June 1996. See "-- Liquidity and Capital
Resources."
Net Income. As a result of the above factors, net income increased to $4.6
million in the second quarter of fiscal 1996 from $2.1 million in the second
quarter of fiscal 1995.
SIX MONTHS ENDED JULY 31, 1996 COMPARED TO SIX MONTHS ENDED JULY 31, 1995
Net Sales. Net sales increased $60.9 million or 131% for the first six
months fiscal 1996 to $107.5 million compared to net sales of $46.6 million for
the same period of fiscal 1995. This increase was primarily attributable to 18
new stores opened since July 31, 1995 and an increase in comparable store sales
of 36.0%. The calculation of comparable store sales included a total of 19
stores at July 31, 1996. The comparable store sales increase was due primarily
to a 49.0% increase in the number of footwear units sold.
Gross Profit. Gross profit as a percentage of net sales increased slightly
to 42.4% in the first six months of fiscal 1996 from 42.2% in the same period of
fiscal 1995.
Store Operating Expenses. Store operating expenses increased $16.4 million or
127% to $29.3 million in the first six months of fiscal 1996 from $12.9 million
in the first six months of fiscal 1995. This increase was primarily attributable
to the operating expenses of the 18 stores opened since July 31, 1995. As a
percentage of net sales, store operating expenses decreased to 27.3% in the
first six months of fiscal 1996 from 27.8% in the first six months of fiscal
1995.
Store Pre-opening Costs. Store pre-opening costs, which are amortized over
the 12 months following a store opening, increased to $2.6 million in the first
six months of fiscal 1996 from $1.0 million in the first six months of fiscal
1995 as a result of new store openings and an increase in the dedicated
corporate staff to support such new store openings.
General and Administrative Expense. General and administrative expense
increased $1.8 million or 107% but decreased as a percentage of net sales in the
first six months of fiscal 1996 to 3.2% from 3.5% in the first six months of
fiscal 1995. The dollar increase was primarily due to increased personnel and
infrastructure costs associated with store operations and management information
systems, as well as the accrual of amounts related to the corporate bonus plan.
The percentage decrease resulted from greater economies of scale in the
Company's operations.
Operating Income. Operating income increased 144% to $10.5 million in the
first six months of fiscal 1996 from $4.3 million in the first six months of
fiscal 1995 and increased as a percentage of net sales to 9.7% from 9.2% in the
comparable prior year period. This increase was primarily due to 18 new stores
opened since July 31, 1995.
Net Interest Income. Net interest income increased $1.1 million to $2.0
million in the first six months of fiscal 1996 compared to $904,900 in the first
six months of fiscal 1995. The increase was primarily
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<PAGE>
attributable to investment income realized from investing the proceeds of public
offerings, of the Company's common stock in September 1995 and June 1996. See
"-- Liquidity and Capital Resources."
Net Income. As a result of the above factors, net income increased to $8.0
million in the first six months of fiscal 1996 from $3.5 million in the first
six months of fiscal 1995.
LIQUIDITY AND CAPITAL RESOURCES
Just For Feet's primary sources of working capital are the proceeds of three
public offerings of common stock (January 1995, September 1995 and June 1996)
and the Company's ability to borrow under its line of credit. The Company had
working capital of $172.6 million and $108.3 million as of July 31, 1996 and
January 31, 1996, respectively. The principal use of working capital has been to
purchase inventory, equipment and fixtures. During the first six months of
fiscal 1996, the Company acquired property and equipment totaling $13.3 million
to open 12 new stores and to support its continued growth. The Company's short
term operational cash requirements are not highly seasonal. The Company had
$118.3 million in cash and short-term marketable securities as of July 31, 1996.
In September 1995, the Company completed a public offering of 2,100,000 shares
of common stock at $33.00 per share. Net proceeds of approximately $65.6 million
are being used to acquire fixed assets and inventory for the opening of new
stores. A portion of such net proceeds was also used to upgrade and expand the
Company's management information systems.
In June 1996, the Company completed a public offering of 1,092,500 shares of
common stock at $51.38 per share. Net proceeds of approximately $52.9 million
are being used to acquire fixed assets and inventory for the opening of new
stores and for general corporate purposes.
As of July 31, 1996, the Company had no borrowings under its revolving bank
line of credit. The line of credit, which expires July 1, 1997, permits the
Company to borrow up to $20.0 million for general working capital purposes.
Borrowings under such line of credit bear interest at either the bank's prime
rate (8.25% at July 31, 1996) or a rate based on LIBOR, and are unsecured. The
line of credit contains certain financial covenants and other restrictions. The
Company also has several lease arrangements with leasing companies that the
Company uses to finance certain store fixtures, point-of-sale equipment and
management information systems.
Just For Feet's primary capital requirements are for the openings of new
superstores. The Company estimates that the total cash required to open a new
15,000 to 20,000 square foot prototype superstore, including store fixtures and
equipment, leasehold improvements, net working capital and pre-opening costs,
typically ranges from $1.2 to $2.2 million, depending on the amount of vendor
and landlord assistance. During fiscal 1996 and the first quarter of fiscal
1997, the Company expects to open a total of 27 stores, with approximately 17
stores expected to open in fiscal 1996 and approximately 10 stores expected to
open in the first quarter of fiscal 1997. Twelve of such 27 stores have been
opened during fiscal 1996 to date. The Company intends to open 11 additional
stores prior to the end of fiscal 1997, for a total of 65 Company operated
stores. Of the new stores to be opened, approximately three are expected to be
flagship stores.
The Company is planning the construction of a new corporate headquarters
facility. The Company has closed the purchase of approximately 25 acres of land
in Birmingham, Alabama at a cost of approximately $1,150,000, financed
through its line of credit. The Company has very preliminary plans for the
construction of an approximately 40,000 to 50,000 square foot, three story
building. The Company currently estimates construction costs to be between $4
million and $8 million, which the Company may also finance with a loan from a
bank. The Company expects to commence construction in the third or fourth
quarter of the current fiscal year.
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<PAGE>
Although the Company has no current commitments or understanding with respect
to the acquisition of any entity, the Company has explored and continues to
explore acquisitions, including acquisitions of entities employing an
alternative format to that of Just For Feet. The Company may utilize an
acquisition to develop a new smaller store concept currently being considered by
management. Regardless of whether the Company utilizes an acquisition to
implement its new concept or develops the concept internally, the Company may
incur significant start-up costs. In addition, to support the Company's
continued growth, the Company plans to continue to invest in information systems
and personnel. Except as described above, the Company currently is not planning
any major expenditures other than new store openings and believes that the
proceeds of its public stock offerings, internally generated funds, cash on hand
and its line of credit will be adequate to fund its anticipated needs through at
least the end of fiscal 1997.
SEASONALITY
The Company does not experience significant seasonal fluctuations in its
business. However, the highest sales periods for the Company are the spring,
back-to-school and Christmas selling seasons. The Company also generally
experiences lower gross margins during January and February due to retail
markdowns taken to clear seasonal merchandise. Quarterly results may fluctuate
materially depending on the timing of new store openings and related pre-opening
expenses, net sales contributed by new stores and increases or decreases in
comparable store sales.
IMPACT OF INFLATION
The Company does not believe that inflation has had a material, adverse effect
on net sales or results of operations. The Company has generally been able to
pass on increased costs through increases in selling prices.
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
- ------ ---------------------------------------------------
On May 28, 1996, the Company held its 1996 Annual Meeting of Shareholders.
At the meeting, the following persons were elected to serve on the Company's
Board of Directors for a term of one year and until their successors are elected
and have qualified: Harold Ruttenberg, Robert C. Wabler, Bart Starr, Sr. Michael
P. Lazarus, Randall L. Haines and David F. Bellet. The number of votes cast for
and against the election of each nominee for director was as follows:
<TABLE>
<CAPTION>
DIRECTOR FOR WITHHOLD AUTHORITY
-------- --- ------------------
<S> <C> <C>
Harold Ruttenberg........... 15,089,608 80,492
Robert C. Wabler............ 15,089,608 80,492
Bart Starr, Sr. ............ 15,089,508 80,592
Michael P. Lazarus.......... 15,089,808 80,292
Randall L. Haines........... 15,089,008 81,092
David F. Bellet............. 15,089,208 80,892
</TABLE>
In addition, the Company's shareholders approved an amendment to the
Company's Articles of Incorporation increasing the number of authorized shares
of stock from 25,002,667 shares to 75,000,000
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<PAGE>
shares, consisting of 70,000,000 shares of common stock and 5,000,000 shares of
preferred stock, and eliminating the authorized Series A Preferred Stock. The
number of votes cast in favor of the adoption of the amendment to the Articles
of Incorporation was 12,394,739 and the number of votes cast against the
amendment was 2,608,872. There were 72,720 abstentions and broker non-votes.
In addition, the Company's shareholders approved an amendment to the
Company's Articles of Incorporation giving the Board of Directors the power to
fill vacancies on the Board resulting from an increase in the number of
directors. The number of votes cast in favor of the adoption of the amendment
was 12,440,993 and the number of votes cast against the amendment was 2,619,110.
There were 72,203 abstentions and broker non-votes.
Finally, the Company's shareholders approved an amendment to the Company's
Employee Incentive Stock Option Plan, to increase the number of shares available
for issuance pursuant to such plan from 1,650,000 shares to 3,000,000 shares.
The number of votes cast in favor of adoption of the amendment to the Employee
Incentive Stock Option Plan was 11,953,312 and the number of votes cast against
adoption of the amendment was 2,146,030. There were 73,953 abstentions and
broker non-votes.
Item 6. Exhibits and Reports on Form 8-K.
- ------ --------------------------------
(a) Exhibits. The following exhibits are filed with this report:
10.50.1 Amended and Restated Master Revolving Promissory Note
dated July 1, 1996 in the principal amount of
$20,000,000 payable to Compass Bank
27 Financial Data Schedule
(b) Reports on Form 8-K. No report on Form 8-K was filed during the
quarter ended July 31, 1996.
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<PAGE>
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.
JUST FOR FEET, INC.
Dated: September 13, 1996 By: /s/ Harold Ruttenberg
------------------------------------------
Harold Ruttenberg
Chairman, President and Chief
Executive Officer
Dated: September 13, 1996 By: /s/ Robert C. Wabler
------------------------------------------
Robert C. Wabler
Executive Vice President and
Chief Financial Officer
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<PAGE>
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
Sequential
Exhibit Number Description Page Number
- -------------- ----------- -----------
<S> <C> <C>
10.50.1 Amended and Restated Master Revolving
Promissory Note dated July 1, 1996 in
the principal amount of $20,000,000
payable to Compass Bank
27 Financial Data Schedule
</TABLE>
<PAGE>
EXHIBIT 10.50.1
AMENDED AND RESTATED
MASTER REVOLVING PROMISSORY NOTE
--------------------------------
[JUST FOR FEET, INC., THE BORROWER UNDER THE MASTER REVOLVING PROMISSORY
NOTE IN THE PRINCIPAL AMOUNT OF $10,000,000 DATED OCTOBER 24, 1995
("NOTE"), AND COMPASS BANK, THE HOLDER OF THE NOTE, DESIRE TO, AND HEREBY
DO, AMEND AND RESTATE THE NOTE AS SET FORTH HEREIN EFFECTIVE JULY 1, 1996.]
$20,000,000.00 Birmingham, Alabama
July 1, 1996
FOR VALUE RECEIVED, the undersigned, JUST FOR FEET, INC., an Alabama
corporation (the "Borrower"), hereby promises to pay to the order of COMPASS
BANK (the "Lender", or together with any subsequent assignee, transferee or
holder of this Note, the "Holder"), at its office at 15 South 20th Street,
Birmingham, Alabama 35233, or at such other place as Lender may direct, in
lawful money of the United States of America constituting legal tender in
payment of all debts and dues, public and private, the principal amount of
TWENTY MILLION AND NO/100 DOLLARS ($20,000,000.00), or so much thereof as may
have been advanced or re-advanced from time to time, and outstanding hereunder,
together with interest thereon calculated at the rate and in the manner set
forth herein (and any charges and expenses provided for under this Note), all on
and in accordance with the terms and in the manner more particularly set forth
below:
1. REVOLVING LINE. Borrower has applied to Lender for a revolving line
--------------
of credit not to exceed an aggregate principal amount at any one time
outstanding of TWENTY MILLION AND NO/100 DOLLARS ($20,000,000.00) (the
"Revolving Line"), which Revolving Line is and shall be governed by this Note.
Holder is willing to extend such Revolving Line to Borrower on the terms and
subject to the conditions set forth herein. Accordingly, in consideration of the
foregoing, the credit to be made available hereunder, and other good and
valuable consideration, the receipt and sufficiency
<PAGE>
of which are hereby acknowledged, from the date hereof until July 1, 1997,
subject to the terms and conditions of this Note and so long as no event of
default shall have occurred hereunder, Holder shall make advances and re-
advances hereunder available to Borrower which Borrower agrees to use for
general corporate uses. Advances and re-advances shall be made from time to time
hereunder as requested by Borrower's Authorized Agent (as defined herein) and
payments shall be accepted from Borrower in accordance with and subject to the
provisions of this Note. The principal amount outstanding hereunder may vary
from time to time by increases of up to the maximum principal amount stated
above, plus accrued interest (and any other charges and expenses provided for
under this Note), and decreases down to no outstanding principal or accrued
interest (or any other charges or expenses provided for under this Note). In no
event shall Holder have any obligation to make, and Borrower shall not request,
any advances for principal which at any one time outstanding hereunder
collectively exceed the sum of TWENTY MILLION AND NO/100 DOLLARS
($20,000,000.00), or any advances hereunder after the first to occur of (i) the
occurrence of an event of default hereunder, or (ii) July 1, 1997.
2. CERTAIN DEFINITIONS. The following terms shall, for purposes of
-------------------
this Note, have the following meanings:
"AUTHORIZED AGENT" shall mean the President or Chief Financial Officer of
----------------
the Borrower or any other agent of Borrower from time to time designated by
Borrower as authorized to request advances and to make the interest rate
elections provided for hereunder.
"BUSINESS DAY" shall mean any day, Monday through Friday, on which Holder
------------
is open for the conduct of its general banking business.
<PAGE>
"COMPASS BANK PRIME", as used herein, is a reference rate established by
------------------
Holder for use in computing and adjusting interest, is subject to increase,
decrease or change at Holder's discretion, and is only one of the reference
rates or indices that Holder uses. Holder may lend to others at rates of
interest at, or greater or less than, Compass Bank Prime or the rate(s) provided
herein. Any change in the applicable rate under this Note resulting from a
change in Compass Bank Prime shall take effect on the day of such change.
"INTEREST PAYMENT DATE" shall be the first day of each calendar month. If
---------------------
any Interest Payment Date would otherwise be a day which is not a Business Day,
such Interest Payment Date shall be extended to the end of the next succeeding
Business Day.
"LIBOR RATE" means, at the time of any computation required under this
----------
Note, an interest rate equal to (i) Holder's reasonable estimate of the offering
rate in United States dollars as shown on page 3750 of the Telerate Service at
which United States dollar deposits in the amount of the then unpaid principal
amount of this Note would be, at Holder's request, offered to Holder by brokers
or other intermediaries trading in the London Interbank Market for a period of
one month at approximately 11:00 A.M. (London Time), on the date on which the
LIBOR Rate is to be set and the monthly interest period is to apply; plus (ii)
any then-applicable reserve requirements imposed upon Holder by the Federal
Reserve System or then-applicable assessment rate required to be paid by Holder
from time to time to the Federal Deposit Insurance Corporation (or any
successor) for such corporation's insuring Holder's deposits in the United
States (as additional percentage points); plus (iii) one and one-half percentage
points (1 1/2%).
3. INTEREST PAYMENTS AND MATURITY. Interest, calculated as set forth
------------------------------
below, on the unpaid principal amount hereof shall be paid on each Interest
Payment Date (as herein defined), beginning on
<PAGE>
July 1, 1996 with the first interest payment due on August 1, 1996, and monthly
thereafter until the maturity date. The entire unpaid principal balance
outstanding hereunder plus accrued interest (and any charges and expenses
provided for under this Note) shall be due and payable in full on July 1, 1997,
which is the maturity date of this Note, unless such amounts are due sooner
pursuant to the terms of this Note.
4. APPLICABLE INTEREST RATE. Unless Compass Bank Prime is applicable
------------------------
pursuant to Section 4 or Section 19 of this Note, the outstanding principal
balance of this Note shall bear interest at a rate equal to the LIBOR Rate which
shall be effective for a period of one month, and then changed and reset on the
first day of each month to the then effective LIBOR Rate. During any period when
Compass Bank Prime is applicable, the applicable interest rate shall be the
greater of (a) Compass Bank Prime from time to time prevailing, such rate to
change as Compass Bank Prime changes, or (b) six percent (6%). Any principal
amounts outstanding hereunder after maturity shall bear interest at a rate equal
to Compass Bank Prime plus two percentage points (2%), calculated in a manner
set forth herein.
5. LIBOR RATE. Unless Compass Bank Prime is applicable pursuant to
----------
Section 4 or Section 19 of this Note, all of the unpaid principal balance of
this Note shall bear interest at a rate equal to the then applicable LIBOR Rate,
which shall be determined as follows:
5.1 On the first day of each month, Holder shall (subject to
availability) determine the LIBOR Rate (as defined herein). The LIBOR Rate so
determined shall be the LIBOR Rate applicable to this Note until the first day
of the next month, at which time Holder shall determine and reset the then
effective LIBOR Rate.
<PAGE>
5.2 Notwithstanding the fact that the interest rate hereof is based upon
the London Interbank Market, Borrower agrees that Holder shall not be required
actually to obtain funds from such source at any time.
5.3 Interest shall be paid by Borrower on each respective Interest
Payment Date.
6. 360-DAY YEAR. Irrespective of which rate is the applicable interest
------------
rate under this Note, interest from date on the outstanding unpaid principal
balance of this Note shall be calculated by multiplying the product of the
relevant principal amount and the applicable interest rate by the actual number
of days elapsed, and dividing by 360.
7. NON-USAGE FEE. In consideration of the Holder's commitment to make
-------------
the Revolving Line available, set aside funds sufficient to make advances
thereunder and incurring certain administrative expenses, Borrower agrees to and
shall pay to Holder quarterly (or more often as may be required by the terms
below), in arrears, a contingent commitment fee (calculated as set forth below
on the basis of a 360-day year) beginning to accrue on the date hereof, with the
payment of such fee being the first day of March, June, September, and December,
beginning March 1, 1996, with a final fee payment being due on the maturity date
of this Note (or on any other date when advances under the Revolving Line are
terminated). Such fee shall be in an amount equal to the product of (a) 1/4% of
the average Unused Availability under the Revolving Line for the applicable
quarter or portion thereof preceding the due date for the payment of such fee,
and (b) the number of days elapsed since the latter of the date hereof or the
date of the last such fee payment (if any), divided by 360. For purposes of this
section, "Unused Availability" shall mean and refer to the amount by which
$20,000,000 exceeds the average balance of Borrower's loan account for the
quarters ending January 31, April 30, July 31 and October 31 of any year.
<PAGE>
8. TRANSACTION STATEMENTS. Subject to the terms and conditions of this
----------------------
Note, advances shall be made at the request of the Authorized Agent. All
advances, payments and appropriate entries and charges hereunder shall be
recorded as debits and credits upon records maintained by Holder. On a monthly
basis, Holder shall render to Borrower a statement showing all transactions
during the immediately preceding month.
9. PREPAYMENTS. Borrower may prepay without penalty from time to time
-----------
the outstanding principal balance of this Note, or any part thereof, bearing
interest at the LIBOR Rate, or, if applicable, Compass Bank Prime.
10. INDEMNITY. Borrower hereby agrees to indemnify Holder, its
---------
officers, employees, and agents from any cost or loss arising from their actions
taken or omitted to be taken in good faith based upon communications between
Borrower and Holder. The obligations of Borrower under this Section shall
survive payment of this Note.
11. EXPENSES. Holder shall be entitled to recover all expenses incurred
--------
in collecting or attempting to collect this Note, including, without limitation,
court costs and attorneys' fees. The obligations of Borrower under this Section
shall survive payment of this Note.
12. CERTAIN COVENANTS. (a) Borrower shall not cause or allow its Total
-----------------
Debt-to-Tangible Net Worth ratio to exceed 1.0 - to - 1.0 at any time. As used
in this paragraph 12(a), "Tangible Net Worth" shall mean Borrower's net worth
(determined in accordance with generally accepted accounting principles) less
(A) any and all loans and other advances to and investments in Borrower's
affiliates, subsidiaries, owners, parent, employees, officers, shareholders,
directors or other related entities, (B) notes, notes receivable, accounts,
accounts receivable, intercompany receivables, and other amounts owing from
Borrower's affiliates, subsidiaries, owners, parent, employees, officers,
shareholders,
<PAGE>
directors or other related entities; and (C) any and all intangibles. As used in
this paragraph 12(a), "Total Debt" shall mean all of Borrower's indebtedness and
liabilities owing to Holder or to any other person or entity, howsoever and
whensoever created or arising, absolute or contingent, and joint or several.
(b) Borrower shall maintain a minimum Fixed Charge Coverage Ratio of 1.5
to - 1. Borrower's Fixed Charge Coverage Ratio shall be defined as the quotient
of (I) the sum of (i) Borrower's earnings before interest expenses and taxes,
plus (ii) lease expenses; divided by (II) the sum of Borrower's interest
expenses plus lease expenses.
(c) If at any time the amount outstanding under this Note exceeds
$20,000,000, then Borrower shall immediately remit to Holder good funds
sufficient to eliminate such excess.
(d) Borrower shall submit or cause to be submitted to Holder (i) for the
first three (3) quarters during each fiscal year, Borrower's internal unaudited
quarterly financial statements within forty-five (45) days after the close of
each such quarter in each fiscal year including balance sheets as of the close
of such period, income statements, and reconciliations of surplus for such
period, prepared and analyzed in accordance with generally accepted accounting
principles; (ii) Borrower's audited fiscal year-end financial statements within
one hundred twenty (120) days after the close of each fiscal year, including
balance sheets as of the close of such period, income statements, and
reconciliations of stockholders' equity audited by an independent certified
public accountant and analyzed in accordance with generally accepted accounting
principles; and (iii) such other financial and related information which Holder
reasonably shall request regarding Borrower when and as requested by Holder. In
addition, Borrower shall notify Holder immediately in writing if any event has
occurred which constitutes an event of default or would constitute an event of
default but for the requirement that notice be given,
<PAGE>
or time elapse or both, under any of Borrower's loans, notes, debentures or
bonds then outstanding, accompanied by a description of the nature of such
event.
(e) Borrower shall at all times comply with all laws, ordinances, rules
and regulations of any governmental authority or entity governing or affecting
Borrower or any of its property, and shall immediately notify Holder of any and
all actual, alleged or asserted violations of any such laws, ordinances, rules
or regulations which could materially impact Borrower's ability to perform under
this Note.
(f) Promptly after the same shall have become known to Borrower,
Borrower shall notify Holder in writing of any action, suit or proceeding at law
or in equity or by or before any governmental instrumentality or other agency,
if adversely determined, might impair the ability of Borrower to perform its
obligations under this Note.
(g) Borrower shall not (i) liquidate, discontinue or materially reduce
its normal operations with intention to liquidate; or (ii) cause, allow or
suffer to occur (a) the merger or consolidation of or involving Borrower with or
into any corporation, partnership, or other entity, or (b) the sale, lease,
transfer or other disposal of all or any substantial part of its assets.
(h) Borrower shall pay all fees and expenses, including, without
limitation, legal fees and expenses, filing fees, insurance premiums and
expenses, appraisal fees, recording costs and taxes actually incurred by Holder
from time to time in connection with the preparation of and closing on this Note
and any related documents. Borrower shall pay to Holder on demand any and all
such fees and expenses together with any and all fees, expenses and costs (i) of
collection or (ii) otherwise incurred or paid by Holder in amending, modifying,
extending or administering this Note or the transactions contemplated hereby or
in protecting or enforcing its rights upon or with respect to this Note.
<PAGE>
(i) Borrower shall pay any and all taxes, with the exception of taxes
measured by income, charges and expenses of every kind or description paid or
incurred by Holder under or with respect to this Note, any advances hereunder or
any collateral therefor or the collection of or realization upon the same.
13. REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants as
------------------------------
follows:
(a) Borrower is a duly organized Alabama corporation, validly existing,
and in good standing under the laws of the State of Alabama and is qualified to
do business and is in good standing in all other jurisdictions where such
qualification is necessary. Borrower (i) has all necessary licenses and
corporate powers and authority to own its assets and conduct its business as now
conducted or presently proposed to be conducted; and (ii) is duly qualified and
in good standing (and will remain so qualified and in good standing) in every
jurisdiction in which it is or shall be doing business or in which the failure
to qualify and remain in good standing would or could have an adverse effect on
its business or properties.
(b) The execution, delivery, and performance of this Note are within
Borrower's corporate powers, have been duly and validly authorized and are not
in contravention of the law or the terms of its charter, by-laws, or other
incorporation papers, or of any indenture, agreement, or undertaking or any law,
regulation or order to which Borrower is a party or by which Borrower or any of
its property is or may be bound. Upon execution and delivery, this Note will be
a valid and binding obligation of Borrower enforceable in accordance with its
terms.
(c) Subject to any limitations stated therein or in connection
therewith, all balance sheets, earnings statements and other financial data
which have been or may hereafter be furnished to Holder in connection herewith,
do or shall fairly represent the financial condition of Borrower (or other
person
<PAGE>
or entity, as applicable) as of the dates and results of operations for the
periods for which the same are furnished in accordance with generally accepted
accounting principles consistently applied, and all other information, reports
and other papers and data furnished to Holder shall be accurate, as of the
relevant date, and correct in all material respects and complete insofar as
completeness may be necessary to give Holder a true and accurate knowledge of
the subject matter.
(d) Borrower's name is as set forth on the first page of this Note.
Borrower will promptly advise Holder in writing of any change in Borrower's
name, chief executive office or principal place of business.
(e) Borrower is not now in default under any agreement evidencing an
obligation for the payment of money, performance of a service or delivery of
goods, demand for performance under which, or acceleration of the maturity of
which, would render Borrower insolvent or unable to meet its other debts as they
become due or conduct its business as usual.
(f) In the event (i) any of Borrower's warranties or representations
shall prove to be false or misleading, or (ii) anyone in judicial proceedings
shall assert against Holder a claim or defense arising out of any transaction
between itself and Borrower, Borrower agrees to indemnify and hold Holder
harmless against any liability, judgment, cost, attorneys' fees or other expense
whatsoever arising therefrom.
(g) There are no judgments, actions, suits, claims, proceedings or
investigations existing, outstanding, pending, or to the best of Borrower's
knowledge after due inquiry, threatened or in prospect, before any court, agency
or tribunal, or governmental authority against or involving Borrower or any
guarantor which do or could materially affect the ability of Borrower to perform
its obligations under this Note.
<PAGE>
14. EVENTS OF DEFAULT. Upon the occurrence or existence of any one or
-----------------
more of the following events of default:
(a) failure by Borrower to make any payment of principal, interest or
charges and expenses provided for under this Note as and when the
same is due and payable;
(b) failure by Borrower to pay or perform any other loan, indebtedness,
liability or obligation to Holder as and when due;
(c) failure by Borrower or any other person or entity to observe or
comply with any covenant, obligation, agreement, term or provision
contained or referenced in this Note or in any other document,
agreement or instrument executed in connection with or securing this
Note;
(d) the occurrence or continuation of any default or event of default
contained, specified or referenced in any other document, agreement
or instrument executed in connection with or securing this Note;
(e) the occurrence or continuation of any default or event of default
under any of Borrower's notes, loans, debentures or bonds or related
agreements with or in favor of any other creditor of or lender to
Borrower;
(f) if any warranty or representation contained herein shall prove false
or misleading in any material respect or if Borrower made or makes
any other material misrepresentation to Holder for the purpose of
obtaining credit or any extension of credit;
(g) issuance by an injunction or attachment against property of, the
general assignment by, judgment against or filing of petition in
bankruptcy by or against Borrower; the filing of an application in
any court for a receiver for Borrower; or the dissolution or
<PAGE>
liquidation of Borrower (provided, however, Borrower shall have
sixty (60) days to have dismissed of record any involuntary
bankruptcy petition filed against it); or
(h) calling of a meeting of creditors, appointment of a committee of
creditors or liquidation agents, or offering of a composition or
extension to creditors by, for or of Borrower;
then, or at any time thereafter, Holder may, with or without notice to Borrower,
declare this Note to be forthwith due and payable, as to principal and interest
and related charges and expenses provided for under this Note, without
presentment, demand, protest, or other notice of any kind, all of which are
hereby expressly waived, anything contained herein or in any other instrument
executed in connection with or securing this Note to the contrary
notwithstanding.
15. WAIVERS. With respect to the amounts due under this Note and
-------
Borrower's obligations hereunder, Borrower waives the following:
(a) All rights of exemption of property from levy or sale under
execution or other process for the collection of debts under the Constitution or
laws of the United States or any state thereof; and
(b) Demand, presentment, protest, notice of protest or dishonor, notice
of nonpayment, suit against any party, diligence in collection, and all other
requirements necessary to charge or hold the undersigned liable on any
obligations hereunder.
Holder may accept partial payment, or (if this Note is hereafter secured or
collateralized) release or exchange any security or any collateral without
discharging or releasing any of the obligations evidenced hereby or any
unreleased security or collateral.
16. COMPLIANCE WITH LAWS. It is the intention of Holder and Borrower to
--------------------
conform strictly to any applicable usury laws. Accordingly, if the transactions
contemplated hereby would be usurious under any applicable law, then, in that
event, notwithstanding anything to the contrary in this Note or
<PAGE>
any agreement entered into in connection with or as security for or guaranteeing
this Note, it is agreed as follows: (a) the aggregate of all consideration which
constitutes interest under applicable law that is contracted for, taken,
reserved, charged, or received by Holder under this Note or under any agreement
entered into in connection with or as security for this Note shall under no
circumstances exceed the Highest Lawful Rate (as defined below), and any excess
shall be canceled automatically and, if theretofore paid, shall, at the option
of Holder, be credited by Holder on the principal amount of any indebtedness
owed to Holder by Borrower or refunded by Holder to Borrower, and (b) in the
event that the payment of this Note is accelerated or in the event of any
required or permitted prepayment, then such consideration that constitutes
interest under law applicable to Holder may never include more than the Highest
Lawful Rate and excess interest, if any, to Holder provided for in this Note or
otherwise shall be canceled automatically as of the date of such acceleration or
prepayment and, if theretofore paid, shall, at the option of Holder, be credited
by Holder on the principal amount of any indebtedness owed to Holder by Borrower
or refunded by Holder to Borrower.
"Highest Lawful Rate" means the maximum non-usurious interest rate that at
any time or from time to time may be contracted for, taken, reserved, charged,
or received on amounts due to Holder, under laws applicable to Holder with
regard to this Note that are presently in effect or, to the extent allowed by
law, under such applicable laws that allow a higher maximum non-usurious rate
than applicable laws now allow.
17. GENERAL. Holder shall not by any act, delay, omission or otherwise
-------
be deemed to have waived any of its rights or remedies, and no waiver of any
kind shall be valid unless in writing and signed by Holder. All rights and
remedies of Holder under the terms of this Note, and applicable statutes or
rules of law, shall be cumulative and may be exercised successively or
concurrently.
<PAGE>
Borrower agrees that there are no defenses, equities or setoffs in respect to
the obligations set forth herein. The obligations of Borrower hereunder shall be
binding upon and enforceable against Borrower and its successors and assigns.
BORROWER AGREES THAT THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED UNDER THE LAWS
OF THE STATE OF ALABAMA (WITHOUT REGARD TO CHOICE OF LAW CONSIDERATIONS),
INCLUDING, WITHOUT LIMITATION, APPLICABLE USURY LAWS. THE TERMS OF THIS NOTE
HAVE BEEN NEGOTIATED, AND IS BEING EXECUTED AND DELIVERED IN THE STATE OF
ALABAMA, OR IF EXECUTED ELSEWHERE, SHALL BECOME EFFECTIVE UPON HOLDER'S RECEIPT
AND ACCEPTANCE OF THE EXECUTED ORIGINAL OF THIS NOTE IN THE STATE OF ALABAMA;
PROVIDED, HOWEVER, THAT HOLDER SHALL HAVE NO OBLIGATION TO GIVE, NOR SHALL
BORROWER BE ENTITLED TO RECEIVE, ANY NOTICE OF SUCH ACCEPTANCE FOR THIS NOTE TO
BECOME A BINDING OBLIGATION OF BORROWER. IT IS INTENDED, AND BORROWER AND HOLDER
SPECIFICALLY AGREE, THAT THE LAWS OF THE STATE OF ALABAMA GOVERNING INTEREST
SHALL APPLY TO THIS NOTE AND THIS TRANSACTION. NOTWITHSTANDING THE FOREGOING,
NOTHING CONTAINED IN THIS PARAGRAPH SHALL PREVENT HOLDER FROM BRINGING ANY
ACTION OR EXERCISING ANY RIGHTS AGAINST BORROWER, ANY GUARANTOR, ANY SECURITY
FOR THIS NOTE OR ANY OF BORROWER'S OR ANY GUARANTOR'S PROPERTIES IN ANY OTHER
COUNTY, STATE OR JURISDICTION. INITIATING SUCH ACTION OR PROCEEDING OR TAKING
ANY SUCH ACTION IN ANY OTHER STATE OR JURISDICTION SHALL IN NO EVENT CONSTITUTE
A WAIVER BY HOLDER OF ANY OF THE FOREGOING. As used herein, the terms
"Borrower", "Lender", "guarantor" and "Holder" shall be deemed to include their
respective successors, legal representatives and assigns, whether by voluntary
action of the parties or by operation of law. This Note is given under the seal
of all parties hereto and it is intended that this Note shall constitute and
have the effect of a sealed instrument according to law. Any provision in this
Note which may be unenforceable or invalid under applicable law shall be
ineffective to the extent of
<PAGE>
such unenforceability or invalidity without affecting the enforceability or
validity of any other provision hereof.
18. INTENTIONALLY DELETED.
---------------------
19. YIELD PROTECTION.
----------------
19.1 GENERAL. With respect to LIBOR Rate advances, if any future law,
-------
rule, regulation or directive, or any future judicial or administrative
interpretation of any existing law, rule, regulation or directive
(a) subjects Holder to any tax, duty, charge or withholding on or from
payments due from Borrower (excluding taxation of the overall net
income of Holder or taxation which may be treated as an offset
against such taxation of overall net income), or
(b) imposes or increases any reserve, special deposit or similar
requirement against Holder, or
(c) imposes any other condition, the result of which is to increase the
cost to Holder of making, funding or maintaining loans or reduces
any amount receivable by Holder in connection with loans, or
requires Holder to make any payment calculated by reference to the
amount of loans held or interest received by it,
then, upon demand by Holder, Borrower shall pay to Holder that portion of such
increased expense incurred or reduced amount received which Holder determines is
attributable to making, funding and maintaining LIBOR Rate advances hereunder.
Holder promptly shall notify Borrower upon its becoming aware of any such
increased expense or reduced amount received.
<PAGE>
19.2 SURVIVAL OF INDEMNITY. Determination of amounts payable under
---------------------
Section 19.1 above in connection with the LIBOR Rate shall be calculated as
though Holder funded the amount of the principal to which the LIBOR Rate applies
through the purchase of a deposit of the type, amount and maturity corresponding
to the deposit used as a reference in determining the applicable LIBOR Rate for
such principal amount. The obligations of Borrower under Section 19 hereof shall
survive payment of this Note.
19.3 ILLEGALITY AFFECTING LIBOR RATE ADVANCES. If Holder, in its sole
----------------------------------------
discretion, determines that maintenance of any LIBOR Rate would violate any
applicable law, rule, regulation, or directive applicable to Holder, then Holder
may suspend the availability of the LIBOR Rate, including the amount of
principal then outstanding to which the LIBOR Rate then applies, upon notice to
Borrower. In the event of suspension of the LIBOR Rate, the applicable rate
shall be Compass Bank Prime.
19.4 AVAILABILITY OF INTEREST RATE. If Holder, in its reasonable
-----------------------------
discretion, determines that (a) deposits of a type and maturity appropriate to
match the LIBOR Rate to the amount of the unpaid principal under this Note are
not available to Holder, or (b) that the LIBOR Rate does not accurately reflect
the cost to Holder of making the corresponding advance, Holder may suspend the
availability of the LIBOR Rate with respect to future advances and future
interest periods. In the event of suspension of the LIBOR Rate, the applicable
rate shall be Compass Bank Prime.
20. GENERAL. The effective date of this Amended and Restated Master
-------
Revolving Promissory Note is July 1, 1996. This Amended and Restated Note shall
govern all actions under this Note after its effective date. Borrower represents
that this Amended and Restated Note is enforceable against Borrower in
accordance with its terms and that Borrower has no offsets or claims against
<PAGE>
Holder arising, related to or connected with this Note, as amended and restated,
or this Note prior to this amendment and restatement.
IN WITNESS WHEREOF, Borrower has caused this Amended and Restated Note to
be executed and delivered by its duly authorized officer in Alabama as of the
1st day of July, 1996, but actually executed on the 25 day of July, 1996.
--
BORROWER:
---------
ATTEST: JUST FOR FEET, INC.
By_____________________________ By___________________________________________
Its______________________ Its____________________________________
(CORPORATE SEAL)
STATE OF [SIGNATURE ILLEGIBLE]
---------------------
COUNTY OF /s/ Jefferson
------------------
I, /s/ Janet Brock, a notary public in and for said county in said state,
---------------
hereby certify that [SIGNATURE ILLEGIBLE] whose name [SIGNATURE ILLEGIBLE] as of
--------------------- ---------------------
JUST FOR FEET, INC., a corporation, is signed to the foregoing instrument and
who is known to me, acknowledged before me on this day that, being informed of
the contents of such instrument, he, as such officer and with full authority,
executed the same voluntarily for and as the act of said corporation.
Given under my hand and official seal this the 15 day of July, 1996.
--
/s/ Janet Brock
---------------------------------------------
[NOTARIAL SEAL] Notary Public
MY COMMISSION EXPIRES SEPTEMBER 25,1968
My Commission Expires:_____________
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 6-MOS
<FISCAL-YEAR-END> JAN-31-1996 JAN-31-1995
<PERIOD-START> FEB-01-1996 FEB-01-1995
<PERIOD-END> JUL-31-1996 JUL-31-1995
<CASH> 90,621,800 96,854,200
<SECURITIES> 37,303,000 55,281,600
<RECEIVABLES> 4,178,600 3,409,500
<ALLOWANCES> 0 0
<INVENTORY> 94,590,200 56,637,900
<CURRENT-ASSETS> 224,374,400 193,701,900
<PP&E> 40,003,100 26,182,000
<DEPRECIATION> 4,399,200 2,794,100
<TOTAL-ASSETS> 272,830,500 243,579,900
<CURRENT-LIABILITIES> 51,824,100 85,398,400
<BONDS> 0 0
0 0
0 0
<COMMON> 1,900 1,800
<OTHER-SE> 211,206,400 149,268,000
<TOTAL-LIABILITY-AND-EQUITY> 272,830,500 243,579,900
<SALES> 107,529,400 46,571,200
<TOTAL-REVENUES> 110,148,000<F1> 47,951,800<F1>
<CGS> 61,964,100 26,902,000
<TOTAL-COSTS> 93,919,900 40,872,800
<OTHER-EXPENSES> 3,387,200 1,635,100
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 420,400 259,700
<INCOME-PRETAX> 12,420,500 5,184,200
<INCOME-TAX> 4,397,500 1,669,500
<INCOME-CONTINUING> 8,023,000 3,514,700
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 8,023,000 3,514,700
<EPS-PRIMARY> $0.42 $0.22
<EPS-DILUTED> $0.42 $0.22
<FN>
<F1>Total Revenues: Total revenues include interest income of $2,384,300 and
$1,164,600 for the six (6) month periods ended July 31, 1996 and 1995,
respectively.
</FN>
</TABLE>
