Item 1. Business.
General.
Founded in 1919, Proffitt's is a leading regional department store company primarily offering moderate to better brand name fashion apparel, accessories, cosmetics, and decorative home furnishings. The Company's stores are principally anchor stores in leading regional or community malls. The Company's objective is to be the dominant department store chain in its regions through a strategy which combines fashion leadership in branded and high quality private-label merchandise with opening or acquiring new stores and expanding and renovating existing stores.
The Company operates three department store divisions. The Proffitt's Division, headquartered in Knoxville, Tennessee, operates 25 stores in Tennessee (12), Virginia (8), Georgia (2), Kentucky (2), and North Carolina (1). The McRae's Division, headquartered in Jackson, Mississippi, operates 29 stores in Alabama (14), Mississippi (12), Florida (2), and Louisiana (1). The Younkers Division, headquartered in Des Moines, Iowa, operates 49 stores in Iowa (18), Wisconsin (18), Michigan (5), Nebraska (5), Illinois (1), Minnesota (1), and South Dakota (1).
The Company has experienced significant growth since 1992. During 1992 and 1993, the Company purchased certain real and personal property and assumed certain operating leases of eighteen store locations from Hess Department Stores, Inc. and Crown American Corporation. The acquired locations were in Tennessee, Virginia, Georgia, and Kentucky. These stores were renovated and placed in service as Proffitt's Division stores in 1992 and 1993.
In March 1994, Proffitt's, Inc. acquired all of the outstanding Common Stock of Macco Investments, Inc., a holding company for McRae's, Inc., a privately-owned retail department store chain with 28 stores headquartered in Jackson, Mississippi. The transaction was accounted for as a purchase.
In April 1995, the Company completed its purchase of Parks-Belk Company, the owner/operator of four Parks-Belk stores located in northeastern Tennessee. Three stores were renovated and opened as Proffitt's Division stores during 1995; one store was permanently closed. The transaction was accounted for as a purchase.
Effective February 3, 1996 (immediately preceding the Company's fiscal year end), Proffitt's, Inc. combined its business with Younkers, Inc., a 51 unit, publicly-owned retail department store chain, headquartered in Des Moines, Iowa. This combination was structured as a tax-free transaction and was accounted for as a pooling of interests. Each outstanding share of Younkers, Inc. Common Stock was converted into ninety-eight one-hundredths (.98) shares of Proffitt's, Inc. Common Stock, with approximately 8.8 million shares issued in the transaction.
The Company closed three unproductive units (one Proffitt's store and two Younkers stores) in January 1996. Two additional Younkers units were sold to a third party subsequent to February 3, 1996.
A new McRae's store in Selma, Alabama was opened in March 1996. The Company has announced the planned openings of new Proffitt's stores in Morgantown and Parkersburg, West Virginia in fall 1996 and 1997, respectively, and new McRae's stores in Biloxi and Meridian, Mississippi in 1997. The Company is currently negotiating several other new unit opportunities. In addition, several store renovations and expansions are planned for 1996.
During 1995, in order to improve efficiencies and reduce overhead costs, the Company centralized certain administrative and support functions, such as accounting, information systems, credit, store planning, and human resources, for the McRae's and Proffitt's Divisions. The Company is in the process of further consolidating these functions to include the Younkers Division, with the majority of this restructuring to be completed by fall 1996. Merchandising, stores, sales promotion/advertising, visual, and various support functions for the Proffitt's, McRae's, and Younkers Divisions will remain headquartered in Knoxville, Jackson, and Des Moines, respectively.
Merchandising.
The Company's merchandising strategy is to provide middle to upper income customers a wide assortment of quality fashion apparel, shoes, accessories, cosmetics, and decorative home furnishings at competitive prices. The Company's commitment to a branded merchandising strategy, enhanced by its merchandise presentation and high level of customer service, makes it a preferred distribution channel for premier brand-name merchandise. Key brands featured include Liz Claiborne, Marisa Christina, Susan Bristol, Polo/Ralph Lauren, Tommy Hilfiger, Nautica, Guess, Haggar, Levi's, Estee Lauder, Clinique, Lancome, Vanity Fair, and Nine West. The Company supplements its branded assortments with high- quality, private-label merchandise in selected areas. Private label offerings are intended to provide national brand quality at lower prices.
The Company has developed a thorough knowledge of each of its regional markets and customer bases. Such knowledge, in conjunction with frequent store visits by senior management and merchandising personnel and use of on-line merchandise information, enables the Company to tailor each store's merchandise assortments to the unique characteristics of its markets and respond to demographic and customer profiles.
Certain departments in the Company's stores are leased to independent companies in order to provide high quality service and merchandise where specialization and expertise are critical and economics do not justify the Company's direct participation in the business. The leased departments vary by store to complement the Company's own merchandising departments. Leased departments include shoe, fine jewelry, beauty salon, and maternity departments. The terms of the lease agreements typically are between one and three years and require the lessee to pay for fixtures and provide its own employees. Leased department sales are included in the Company's total sales. Management regularly evaluates the performance of the leased departments and requires compliance with established customer service guidelines.
The shoe business is currently leased at the Younkers Division and owned at both the Proffitt's and McRae's Divisions. In August 1996, the Company will convert the leased shoe operation at the Younkers Division to owned. Management believes this has positive sales and gross margin implications for the Company.
During 1995, the Company's net sales by major merchandise category were as follows:
Proffitt's McRae's Younkers Merchandise Category: Division Division Division Total
Women's Apparel 32.5% 26.7% 31.9% 30.3% Men's Apparel 13.7 16.6 15.6 15.6 Home 10.6 14.9 15.7 14.4 Cosmetics 14.8 11.3 10.8 11.8 Children's Apparel 8.5 7.6 7.0 7.5 Accessories 6.8 6.7 6.3 6.6 Shoes 7.1 7.8 - 4.0 Intimate Apparel 4.4 3.9 4.6 4.3 Total Owned 98.4 95.5 91.9 94.5 Leased Departments 1.6 4.5 8.1 5.5 Total 100.0% 100.0% 100.0% 100.0%
Purchasing and Distribution.
The Company purchases merchandise from numerous suppliers. Management monitors the Company's profitability and sales history with each supplier and believes it has alternative sources available for each category of merchandise it purchases. Management believes it has a good relationship with its suppliers.
The 85,000 square foot distribution facility serving the Proffitt's Division is located in metropolitan Knoxville, Tennessee, and the 164,000 square foot distribution center for the McRae's Division is located in Jackson, Mississippi. The Younkers Division is served by two distribution facilities. A 182,000 square foot center in Green Bay, Wisconsin serves the Division's northern stores, and a 120,000 square foot facility in Ankeny, Iowa serves the Division's southern stores.
The distribution centers utilize certain latest technology. The Company utilizes UPC barcode technology which is designed to move merchandise onto the selling floor quicker and more cost- effectively by allowing vendors to deliver floor-ready merchandise to the distribution facilities. For example, high speed automated conveyor systems are capable of scanning bar coded labels and diverting cartons to the proper merchandise processing areas. Some types of merchandise are being processed in the receiving area and immediately "cross docked" to the shipping dock for delivery to the stores. Certain processing areas are staffed with personnel equipped with hand held radio frequency terminals that can scan a vendor's bar code and transmit the necessary information to a computer to check-in merchandise. This technology, when fully utilized, will create a nearly paperless environment for the distribution function.
Management Information Systems.
The Company's information systems provide information necessary for management operating decisions, cost reduction programs, and customer service enhancements. Individual data processing systems include point-of-sale and sales reporting, purchase order management, receiving, merchandise planning and control, payroll, general ledger, and accounts payable systems. Bar code ticketing is used, and scanning is utilized at all point-of-sale terminals. Information is made available on-line to merchandising staff and store management on a timely basis, thereby reducing the need for paper reports. The Company uses electronic data interchange technology (EDI) with its top vendors to facilitate timely merchandise replenishment.
The Company continually upgrades its information systems to improve operations and support future growth.
Advertising and Sales Promotion.
The Company's advertising and promotions are coordinated to reinforce its market position as a fashion department store selling quality merchandise at competitive prices. Advertising is balanced among fashion advertising, price promotions, and special events.
The Company uses a multi-media approach, including newspaper, television, radio, and direct mail. The Company's advertising and special events are produced by in-house sales promotion staffs in conjunction with outside advertising agencies, when needed. The Company utilizes data captured through the use of the Proffitt's, McRae's, and Younkers credit cards to develop segmented advertising and promotional events targeted at specific customers who have established purchasing patterns for certain brands, departments, and store locations. To promote its image as the fashion leader in its markets, the Company also sponsors fashion shows and in-store special events highlighting the Company's key brands.
Customer Service.
The Company believes that personal customer attention builds loyalty and that the Company's sales associates provide a level of customer service superior to its competitors. Each store is staffed with knowledgeable, friendly sales associates skilled in salesmanship and customer service. Sales associates maintain customer records, send personalized thank-you notes, and communicate personally with customers to advise them of special promotions and new merchandise offerings. Superior customer service is encouraged through the development and monitoring of sales/ productivity goals and through specific award and recognition programs.
Seasonality.
The Company's business, like that of most retailers, is subject to seasonal influences, with a significant portion of its net sales and net income realized during the fourth quarter of each year, which includes the Christmas selling season. Generally, more than 30% of the Company's sales and over 50% of its net income are generated during the fourth quarter.
Competition.
The retail department store business is highly competitive. The Company's stores compete with several national and regional department stores, specialty apparel stores, and other retail stores, some of which have greater financial and other resources than the Company. Management believes that its knowledge of the Company's regional markets and customer base, combined with providing superior customer service and a broad selection of quality fashion merchandise at competitive prices in prime store locations, provides a competitive advantage.
Associates
At March 31, 1996, the Company employed approximately 14,000 associates, of whom approximately 6,300 were employed on a part- time basis. The Company hires additional temporary employees and increases the hours of part-time employees during seasonal peak selling periods. Approximately twenty associates in the Younkers Division are covered by a collective bargaining agreement. The Company considers its relations with its employees to be good.
Item 2.

Item 2. Properties.
The Proffitt's Division's leased administrative offices are located in the Midland Shopping Center in metropolitan Knoxville, Tennessee and consist of approximately 44,000 square feet. The Division's owned distribution center is located in metropolitan Knoxville and contains approximately 85,000 square feet.
The McRae's Division owns its administrative office building in Jackson, Mississippi. This facility consists of 272,000 square feet of space, of which 168,000 square feet are corporate offices and 104,000 square feet are the Division's processing area for merchandise returns to vendors and a furniture warehouse. The 164,000 square foot distribution center in metropolitan Jackson is owned.
The Younkers Division leased administrative office space is located with the Downtown store in Des Moines, Iowa and consists of 127,000 square feet of space.
The 120,000 and 182,000 square foot distribution centers in Ankeny, Iowa and Green Bay, Wisconsin, respectively, are owned.
The following table summarizes all owned and leased store locations. Store leases generally require the Company to pay the greater of a fixed minimum rent or an amount based on a percentage of sales. Generally, the Company is responsible under its store leases for a portion of mall promotion and common area maintenance expenses and for certain utility, property tax, and insurance expenses. Typically, the Company contributes to common mall promotion, maintenance, property tax, and insurance expenses at its owned locations.
APPROX. YEAR GROSS YEAR RENOVATED SQUARE OWNED/ OPENED OR OR STORE LOCATIONS FOOTAGE LEASED ACQUIRED EXPANDED
PROFFITT'S DIVISION:
KNOXVILLE, TN METROPOLITAN MARKET: West Town 161,800 Leased 1972 1995 East Towne 102,000 Owned 1984 1992 Foothills (Maryville, TN)* 145,000 Owned 1983 1993 Oak Ridge (Oak Ridge, TN)* 111,000 Leased 1974 1993 Proffitt's Plaza (Athens, TN) 54,000 Leased 1965 1992 College Square (Morristown, TN) 50,000 Owned 1993 -
CHATTANOOGA, TN METROPOLITAN MARKET: Hamilton Place* 245,000 Owned 1988 1993 Walnut Square (Dalton, GA) 55,000 Owned 1988 1988 Northgate 94,500 Owned 1989 1993 Bradley Square (Cleveland, TN) 50,000 Leased 1992 1992 Mt. Berry Square (Rome, GA) 65,000 Leased 1993 1993
TRI-CITIES, TN/VA METROPOLITAN MARKET: Mall at Johnson City (Johnson City, TN)* 152,000 Leased 1992 1995 Fort Henry (Kingsport, TN)* 141,500 Leased 1992 1995 Bristol Mall (Bristol, VA) 46,000 Leased 1992 - Greeneville Commons (Greeneville, TN) 41,700 Leased 1995 -
ASHEVILLE, NC METROPOLITAN MARKET: Biltmore Square Mall 80,000 Owned 1989 -
NORFOLK/VA BEACH, VA METROPOLITAN MARKET: Coliseum (Hampton, VA)* 110,600 Leased 1993 1993 Patrick Henry (Newport News, VA) 65,000 Leased 1993 1993 Greenbrier (Chesapeake, VA) 79,600 Leased 1993 1993 Chesapeake Square (Chesapeake, VA) 80,000 Owned 1993 1993 Pembroke (Virginia Beach, VA) 65,000 Owned 1993 1993
RICHMOND, VA METROPOLITAN MARKET: Chesterfield 64,000 Leased 1993 1993 Virginia Commons 80,000 Leased 1993 1993
KENTUCKY: Towne Mall (Elizabethtown, KY) 50,000 Leased 1993 1993 Ashland Town Center (Ashland, KY) 65,000 Leased 1993 1993
TOTAL PROFFITT'S DIVISION 2,253,700
*Dual store operation.
APPROX. YEAR GROSS YEAR RENOVATED SQUARE OWNED/ OPENED OR OR STORE LOCATIONS FOOTAGE LEASED ACQUIRED EXPANDED
MCRAE'S DIVISION:
JACKSON, MS METROPOLITAN MARKET: Meadowbrook Mart 68,900 Leased 1955 1987 Metrocenter 231,400 Owned 1978 1992 Northpark (Ridgeland, MS) 207,200 Owned 1984 -
BIRMINGHAM, AL METROPOLITAN MARKET: Roebuck Plaza 65,600 Leased 1960 - Century Plaza 125,100 Leased 1980 1991 Brookwood Village 108,800 Leased 1975 1993 Western Hills (Fairfield, AL) 129,600 Leased 1980 1986 Riverchase Galleria (Hoover, AL) 136,200 Leased 1986 -
HUNTSVILLE, AL: Parkway City 75,700 Leased 1961 - Madison Square 99,700 Leased 1984 -
FLORIDA PANHANDLE: University (Pensacola, FL) 145,300 Owned 1974 1986 Santa Rosa (Mary Ester, FL) 83,900 Owned 1986 -
MOBILE, AL: Springdale 168,300 Owned 1984 -
OTHER MISSISSIPPI MARKETS: Greenville (Greenville, MS) 68,100 Leased 1973 - Village Fair (Meridian, MS) 78,700 Leased 1972 - Pemberton (Vicksburg, MS) 63,200 Owned 1970 1985 TurtleCreek (Hattiesburg, MS) 129,000 Owned 1973 1995 Barnes Crossing (Tupelo, MS) 100,200 Owned 1976 1990 Natchez (Natchez, MS) 67,300 Leased 1979 1993 Singing River (Gautier, MS) 89,300 Owned 1980 - Sawmill Square (Laurel, MS) 65,800 Owned 1981 - University (Columbus, MS) 75,700 Owned 1983 -
OTHER ALABAMA MARKETS: Eastdale (Montgomery, AL) 69,200 Leased 1977 - Gadsden (Gadsden, AL) 80,500 Leased 1974 1994 Regency Square (Florence, AL) 41,000 Leased 1978 - Selma Mall (Selma, AL) 74,000 Leased 1996 - University (Tuscaloosa, AL) 90,900 Leased 1980 - Wiregrass Commons (Dothan, AL) 96,200 Leased 1986 -
LOUISIANA: Pecanland (Monroe, LA) 106,500 Owned 1985 -
TOTAL MCRAE'S DIVISION 2,941,300
APPROX. YEAR GROSS YEAR RENOVATED SQUARE OWNED/ OPENED OR OR STORE LOCATIONS FOOTAGE LEASED ACQUIRED EXPANDED
YOUNKERS DIVISION:
DES MOINES, IA METROPOLITAN MARKET: Merle Hay 195,000 Leased 1959 1995 Valley West 164,000 Leased 1972 1995 Downtown 113,800 Leased 1900 1994 Southridge 105,000 Leased 1975 1994
CEDAR RAPIDS, IA: Lindale 100,000 Leased 1960 - Westdale 100,000 Leased 1980 1995
SIOUX CITY, IA: Sioux City Mall 90,000 Leased 1980 - Town Square Downtown 60,000 Leased 1986 -
QUAD CITIES, IA/IL METROPOLITAN MARKET: Southpark (Moline, IL) 100,000 Leased 1974 1990 Northpark (Davenport, IA) 100,000 Leased 1973 1994 Duck Creek Plaza (Bettendorf, IA) 60,000 Leased 1960 -
MILWAUKEE, WI: Southridge 204,400 Leased 1992 - Northridge 167,400 Leased 1992 -
MADISON, WI: West Towne 139,600 Leased 1992 - East Towne 138,400 Leased 1992 1994
OMAHA, NE: Crossroads 190,000 Leased 1987 - Westroads 172,000 Leased 1968 1994 Oakview 150,000 Leased 1991 -
OTHER IOWA MARKETS: North Grand (Ames, IA) 50,000 Leased 1987 - Westland (West Burlington, IA) 47,000 Leased 1977 1994 College Square (Cedar Falls, IA) 83,500 Leased 1986 1986 Kennedy Center (Dubuque, IA) 126,300 Leased 1968 1993 Crossroads Center (Fort Dodge, IA) 54,200 Leased 1979 1994 Old Capitol (Iowa City, IA) 60,000 Leased 1980 - Marshalltown Plaza (Marshalltown, IA) 40,000 Leased 1992 1994 Southbridge (Mason City, IA) 59,500 Leased 1984 1994
APPROX. YEAR GROSS YEAR RENOVATED SQUARE OWNED/ OPENED OR OR STORE LOCATIONS FOOTAGE LEASED ACQUIRED EXPANDED
YOUNKERS DIVISION (cont.):
OTHER WISCONSIN MARKETS: Fox River (Appleton, WI) 113,000 Leased 1992 - London Square (Eau Claire, WI) 98,800 Leased 1992 - Forest (Fond du Lac, WI) 78,400 Leased 1992 - Port Plaza (Green Bay, WI) 255,000 Leased 1992 - Edgewater Plaza (Manitowoc, WI) 44,300 Leased 1992 - Pine Tree (Marinette, WI) 43,300 Leased 1992 - Northway (Marshfield, WI) 44,400 Leased 1992 - Park Plaza (Oshkosh, WI) 98,600 Leased 1992 - Regency (Racine, WI) 113,600 Leased 1992 - Downtown (Sheboygan, WI) 136,900 Leased 1992 - Downtown (Sturgeon Bay, WI) 57,100 Leased 1992 - Mariner (Superior, WI) 43,300 Leased 1992 - Wausau Center (Wausau, WI) 98,900 Leased 1992 - Rapids (Wisconsin Rapids, WI) 44,400 Leased 1992 -
MICHIGAN MARKETS: Bay City (Bay City, MI) 67,700 Leased 1992 - West Shore (Holland, MI) 67,900 Leased 1992 - Marquette Plaza (Marquette, MI) 44,300 Leased 1992 - Birchwood (Port Huron, MI) 67,900 Leased 1992 - Cherryland (Traverse City, MI) 48,800 Leased 1992 -
MINNESOTA: Oak Park (Austin, MN) 45,000 Leased 1975 1993
SOUTH DAKOTA: The Empire Mall (Sioux Falls, SD) 105,000 Leased 1975 1989
NEBRASKA MARKETS: Conestoga (Grand Island, NE) 60,000 Leased 1974 1993 Gateway (Lincoln, NE) 103,000 Leased 1987 1989
TOTAL YOUNKERS DIVISION 4,749,700
GRAND TOTAL 9,944,700
Item 3.

Item 3. Legal Proceedings
The Company is involved in several legal proceedings arising from its normal business activities. Management believes that none of these legal proceedings will have a material adverse effect on the financial condition or results of operations of the Company.
Item 4.

Item 4. Submission of Matters to a Vote of Security Holders.
A special meeting of the shareholders of Proffitt's, Inc. was held on February 2, 1996. 7,718,904, or 75.3%, of the 10,257,055 shares of Common Stock entitled to vote, were represented in person or by proxy at the meeting. The matters submitted to a vote of the shareholders and the vote on these matters were as follows:
1) Approval of the Agreement and Plan of Merger, dated as of October 22, 1995 (the "Merger Agreement") among Proffitt's, Inc. (the "Company"), Baltic Merger Corporation, a Delaware corporation and wholly-owned subsidiary of the Company ("Sub") and Younkers, Inc. ("Younkers"), pursuant to which Sub will merge with and into Younkers, which will result in Younkers becoming a wholly-owned subsidiary of the Company (the "Merger").
For - 7,708,535 Against - 5,794 Abstain - 4,575
2) Approval of the issuance of shares of the Company's Common Stock, par value $0.10 per share (the "Company Common Stock"), in connection with the Merger Agreement, including the issuance of shares of Company Common Stock in the Merger and upon the exercise of stock options of Younkers which, pursuant to the terms of the Merger Agreement, following the Merger will constitute options to purchase shares of Company Common Stock (the "Younkers Options").
For - 7,666,449 Against - 47,174 Abstain - 5,281
3) Approval and adoption of an amendment to the Company's 1994 Long-Term Incentive Plan (the "Incentive Plan") to increase the number of shares of Company Common Stock issuable under the Incentive Plan by 1,711,000 shares from 1,200,000 shares to 2,911,000 shares, 711,000 shares of which will be reserved for issuance upon exercise of Younkers Options.
For - 6,937,211 Against - 773,607 Abstain - 8,086
EXECUTIVE OFFICERS OF THE REGISTRANT.
The name, age, and position held with the Company of each of the executive officers of the Company are set forth below.
Name Age Position
Proffitt's, Inc. Corporate Officers:
R. Brad Martin 44 Chairman of the Board and Chief Executive Officer
W. Thomas Gould 49 Vice Chairman of the Board and Chairman of the Younkers Division of Proffitt's, Inc.
James A. Coggin 54 President and Chief Operating Officer
Tom R. Amerman 58 Executive Vice President of Special Projects
David W. Baker 59 Senior Vice President of Operations
Julia A. Bentley 37 Senior Vice President of Investor Relations and Planning and Secretary
James E. Glasscock 54 Executive Vice President, Chief Financial Officer, and Treasurer
Brian J. Martin 39 Senior Vice President of Human Resources and Law and General Counsel
Michael R. Molitor 36 Senior Vice President of Merchandise Planning and Analysis
James E. VanNoy 56 Senior Vice President of Systems Support
John J. White 45 Senior Vice President of Profit Improvement and Special Projects
William L. White, III 42 Senior Vice President of Systems Development
Proffitt's Division Officers:
Frederick J. Mershad 53 President and Chief Executive Officer
A. Coleman Piper 49 Executive Vice President of Stores
McRae's Division Officers:
Gary L. Howard 53 President and Chief Executive Officer
Robert Oliver 61 Executive Vice President of Stores
Younkers Division Officers:
Robert M. Mosco 47 President and Chief Executive Officer
Toni E. Browning 39 Senior Vice President of Stores
Proffitt's, Inc. Corporate Officers:
R. Brad Martin became Chairman of the Board in February 1987 and Chief Executive Officer in July 1989. Mr. Martin previously served as President from July 1989 until March 1994 and from September 1994 to March 1995.
W. Thomas Gould became Vice Chairman of the Board of the Company and Chairman of the Younkers Division in February 1996. Mr. Gould served with Younkers, Inc. as Chief Executive Officer from 1987 to January 1996, Chairman of the Board from 1992 to January 1996, and President from 1985 until 1992. Prior to joining Younkers, Mr. Gould served in various executive, management, and merchandising positions with Lazarus, Gimbel's, and Maas Brothers.
James A. Coggin was named President and Chief Operating Officer of Proffitt's, Inc. in March 1995 and served as Executive Vice President and Chief Administrative Officer of the Company from March 1994 to March 1995. From June 1978 to March 1994, Mr. Coggin served as Executive Vice President and Chief Administrative Officer of McRae's, Inc. Mr. Coggin joined McRae's, Inc. in 1971.
Tom R. Amerman was named Executive Vice President of Special Projects in February 1996. Mr. Amerman served as Senior Vice President of Human Resources for Younkers, Inc. from September 1994 to January 1996. Prior to joining Younkers, Inc., Mr. Amerman was Executive Vice President of Human Resources and Operations for Parisian from 1977 to 1994.
David W. Baker was named Senior Vice President of Operations for the Company in March 1994. Mr. Baker joined McRae's, Inc. in February 1985 and served as Senior Vice President of Operations until March 1994.
Julia A. Bentley was named Senior Vice President of Investor Relations and Planning and Secretary of Proffitt's, Inc. in March 1994. In January 1993, Ms. Bentley became Senior Vice President, and in March 1989 became Vice President of Finance, Chief Financial Officer, Secretary, and Treasurer. Ms. Bentley joined the Company in 1987. Ms. Bentley is a Certified Public Accountant with several years of public accounting experience.
James E. Glasscock was appointed Executive Vice President, Chief Financial Officer, and Treasurer of the Company in March 1995. Mr. Glasscock served as Senior Vice President, Chief Financial Officer, and Treasurer between March 1994 and March 1995. From May 1985 to March 1994, Mr. Glasscock served as Senior Vice President of Finance for McRae's, Inc. Mr. Glasscock is a Certified Public Accountant with several years of public accounting and private industry experience.
Brian J. Martin was promoted to Senior Vice President of Human Resources and Law and General Counsel in August 1995 and served as Senior Vice President and General Counsel of the Company from March 1995 to August 1995. He joined Proffitt's, Inc. in 1994 as Vice President and General Counsel. From June 1990 to May 1994, Mr. Martin was affiliated with the Indianapolis, Indiana law firm of Barnes and Thornburg. Mr. Martin served as Assistant Solicitor General of the United States between January 1988 and June 1990.
Michael R. Molitor was appointed Senior Vice President of Merchandise Planning and Analysis in February 1996. Mr. Molitor served as Vice President of Merchandise Strategies at Younkers, Inc. between March 1994 and January 1996. Mr. Molitor held various merchandising and financial positions with Saks Fifth Avenue between September 1993 and February 1994 and with May Department Stores Company between January 1988 and August 1993.
James E. VanNoy was named Senior Vice President of Systems Support in February 1996. He became Senior Vice President and Chief Information Officer of the Company in March 1994. Mr. VanNoy joined McRae's, Inc. in February 1980 as Director of Management Information Systems and was promoted to Vice President of Management Information Systems in February 1982.
John J. White was named Senior Vice President of Profit Improvement and Special Projects for the Company in February 1996. Mr. White served as Vice President and Controller of Younkers, Inc. from July 1995 to January 1996. Prior to that, Mr. White served as Vice President and Controller from January 1987 to December 1994 with Broadway Stores. Mr. White obtained previous experience with Allied Stores and May Department Stores Company.
William L. White, III was appointed Senior Vice President of Systems Development in February 1996. Mr. White served as MIS (Management Information Systems) Director of Younkers, Inc. between June 1992 and January 1996. Before joining Younkers, Mr. White was with Maison Blanche for eighteen years, where he served in various MIS positions.
Proffitt's Division Officers:
Frederick J. Mershad was promoted to President and Chief Executive Officer of the Proffitt's Division of Proffitt's, Inc. in February 1996 and served as President of the Proffitt's Division between March 1995 and January 1996. Mershad joined the Company in May 1994 as Executive Vice President of Merchandising and Sales Promotion for the Proffitt's Division. Mr. Mershad had over 25 years of retail experience and has held executive merchandising positions with such retailers as Rich's, a division of Federated Department Stores, and McRae's.
A. Coleman Piper was named Executive Vice President of Stores for the Proffitt's Division in March 1995. He served with Proffitt's, Inc. as Executive Vice President for Human Resources and Proffitt's Division Stores from September 1994 to March 1995 and Executive Vice President of Operations and Real Estate from March 1994 to September 1994. He has been with the Company since 1972 and previously served as its Vice President of Operations.
McRae's Division Officers:
Gary L. Howard was promoted to President and Chief Executive Officer of the McRae's Division of Proffitt's, Inc. in February 1996 and served as President of the McRae's Division between March 1995 and January 1996. Between March 1994 and March 1995, Mr. Howard served as Executive Vice President for Merchandising and Marketing for the McRae's Division. Mr. Howard joined McRae's, Inc. in November 1993 as Executive Vice President of Merchandising and Marketing. Mr. Howard has over 30 years of prior experience in the retail industry, including service as Senior Vice President and General Merchandise Manager of Maas Brothers and Woodward and Lothrop.
Robert Oliver was promoted to Executive Vice President of Stores for the McRae's Division in March 1995. Mr. Oliver served as Vice President of Stores for the McRae's Division from March 1994 to March 1995. He joined McRae's, Inc. in 1991 as Vice President of Stores after gaining 33 years of merchandising and store management experience with Foley's.
Younkers Division Officers:
Robert M. Mosco was named President and Chief Executive Officer of the Younkers Division of Proffitt's, Inc. in February 1996. Mr. Mosco served as President and Chief Operating Officer of Younkers, Inc. between 1992 and January 1996. From 1989 to 1992, he held the position of Executive Vice President of Merchandising and Marketing for Younkers, Inc. Mr. Mosco joined Younkers, Inc. in 1987. Mr. Mosco began his retail career with Gimbel's and later worked for Rich's.
Toni E. Browning was named Senior Vice President of Stores in February 1996 for the Younkers Division of Proffitt's, Inc. She served as Senior Vice President of Stores for Younkers, Inc. from February 1994 to January 1996. She joined Younkers, Inc. in February 1993 as Vice President, Regional Director of the Western Stores and was promoted to Senior Vice President of Southern Stores that same year. Ms. Browning was in store management with Dayton Hudson Department Stores from 1989 to January 1993 and gained prior experience with Federated-Allied Stores.
PART II
Item 5.

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.
The information set forth under the caption "Market Information," appearing on page 30 of the Proffitt's, Inc. Annual Report to Shareholders for the Fiscal Year Ended February 3, 1996 (the "Annual Report"), is incorporated herein by reference.
Item 6.

Item 6. Selected Financial Data.
The information set forth under the caption "Five-Year Financial Summary" appearing on page 4 of the Annual Report is incorporated herein by reference.
Item 7.

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.
The information set forth under the caption "Management's Discussion and Analysis" appearing on pages 5 through 10 of the Annual Report is incorporated herein by reference.
Item 8.

Item 8. Financial Statements and Supplementary Data.
The Consolidated Financial Statements and the Report of Independent Accountants appearing on pages 11 through 28 of the Annual Report are incorporated herein by reference.
Item 9

Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None.
PART III
Item 10.

Item 10. Directors and Executive Officers of the Registrant.
The information set forth under the caption "Election of Directors" contained on pages 5 through 7 of the Proffitt's, Inc. Proxy Statement dated May 1, 1996 (the "Proxy Statement"), with respect to Directors of the Company, is incorporated herein by reference.
The information required under this item with respect to the Company's Executive Officers is incorporated by reference from Part I of this report under "Executive Officers of the Registrant."
The information set forth under the caption "Section 16(a) of the Securities Exchange Act of 1934" contained on page 14 of the Proxy Statement, with respect to Director and Executive Officer compliance with Section 16(a), is incorporated herein by reference.
Item 11.

Item 11. Executive Compensation.
The information set forth under the caption "Executive Compensation" contained on pages 8 through 12 of the Proxy Statement with respect to executive compensation and the information set forth under the caption "Directors' Fees" on page 7 of the Proxy Statement is incorporated herein by reference.
Item 12.

Item 12. Security Ownership of Certain Beneficial Owners and Management.
The information set forth under the caption "Outstanding Voting Securities" contained on pages 3 through 5 of the Proxy Statement with respect to security ownership of certain beneficial owners and management is incorporated herein by reference.
Item 13

Item 13 Certain Relationships and Related Transactions.
The information set forth under the captions "Further Information Concerning Directors" and "Certain Transactions" contained on pages 7 and 13 and 14, respectively, of the Proxy Statement with respect to certain relationships and related transactions is incorporated herein by reference.
PART IV
Item 14.

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a) (1) and (2)--The response to this portion of Item 14 is submitted as a separate section of this report.
(3)--The response to this portion of Item 14 is submitted as a separate section of this report.
(b) Reports on Form 8-K filed during the fourth quarter.
A report on Form 8-K was filed with the Commission on January 16, 1996 regarding fourth quarter and year-end performance updates for Proffitt's, Inc. and Younkers, Inc.
A report on Form 8-K was filed with the Commission on February 16, 1996 regarding the consummation of the business combination between Proffitt's, Inc. and Younkers, Inc.
(c) Exhibits--The response to this portion of Item 14 is submitted as a separate section of this report.
(d) Financial statement schedules--The response to this portion of Item 14 is submitted as a separate section of this report.
FORM 10-K--ITEM 14(a)(1) AND (2) AND (d) PROFFITT'S, INC. AND SUBSIDIARIES LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
(a) The following documents are filed as a part of this report:
(1) Consolidated Financial Statements
The following consolidated financial statements of Proffitt's, Inc. and subsidiaries and the Report of Independent Accountants, included on pages 11 through 28 of the Proffitt's, Inc. Annual Report to Shareholders for the Fiscal Year Ended February 3, 1996, are incorporated by reference in Item 8:
Consolidated Balance Sheets as of February 3, 1996 and January 28,
Consolidated Statements of Income for Fiscal Years Ended February 3, 1996, January 28, 1995, and January 29, 1994
Consolidated Statements of Shareholders' Equity for Fiscal Years Ended February 3, 1996, January 28, 1995, and January 29, 1994
Consolidated Statements of Cash Flows for Fiscal Years Ended February 3, 1996, January 28, 1995, and January 29, 1994
Notes to Consolidated Financial Statements
Report of Independent Accountants (2) Schedules to Financial Statements
The following consolidated financial statement schedules of Proffitt's, Inc. and subsidiaries are included in item 14(d):
Report of Independent Accountants for the Fiscal Year Ended February 3, 1996
Schedule II - Valuation and Qualifying Accounts and Reserves
All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and therefore have been omitted.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Proffitt's, Inc. __________________________ Registrant
Date: May 1, 1996 /s/ James E. Glasscock ___________________________ James E. Glasscock Executive Vice President, Chief Financial Officer, and Treasurer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
/s/ R. Brad Martin /s/ Michael S. Gross ___________________________ ______________________________ R. Brad Martin Michael S. Gross Chairman of the Board Director and Chief Executive Officer
/s/ W. Thomas Gould /s/ G. David Hurd __________________________ ______________________________ W. Thomas Gould G. David Hurd Vice Chairman of the Board Director
/s/ James A. Coggin /s/ Richard D. McRae __________________________ ______________________________ James A. Coggin Richard D. McRae President and Chief Director Operating Officer
/s/ Bernard E. Bernstein /s/ C. Warren Neel _________________________ _______________________________ Bernard E. Bernstein C. Warren Neel Director Director
/s/ Edmond D. Cicala /s/ Harwell W. Proffitt ___________________________ _______________________________ Edmond D. Cicala Harwell W. Proffitt Director Director
/s/ Ronald de Waal /s/ Gerald Tsai, Jr. ___________________________ _______________________________ Ronald de Waal Gerald Tsai, Jr. Director Director
/s/ Gerard K. Donnelly /s/ Julia A. Bentley __________________________ ________________________________ Gerard K. Donnelly Julia A. Bentley Director Senior Vice President and Secretary /s/ Donald F. Dunn __________________________ Donald F. Dunn Director
REPORT OF INDEPENDENT ACCOUNTANTS
Board of Directors Proffitt's, Inc.
We have audited the accompanying consolidated balance sheets of Proffitt's, Inc. and Subsidiaries as of February 3, 1996 and January 28, 1995, and the related consolidated statements of income, shareholders' equity and cash flows for each of the three years in the period ended February 3, 1996. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. The consolidated financial statements give retroactive effect to the merger with Younkers, Inc., which has been accounted for as a pooling of interests as described in Note A to the consolidated financial statements. We did not audit the financial statements of Younkers for the years ended January 28, 1995 and January 29, 1994. Such statements reflect aggregate total assets constituting 38.3% and 54.7% in 1994 and 1993, respectively, and aggregate total revenues constituting 49.3% and 74.9% in 1994 and 1993, respectively, of the related consolidated totals. Those statements were audited by other auditors, whose reports have been furnished to us, and our opinion, insofar as it related to the amounts included for Younkers, Inc., is based solely on the respective reports of the other auditors.
We conducted our audits 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 audits and the respective reports of the other auditors provide a reasonable basis for our opinion.
In our opinion, based on our audits and the respective reports of the other auditors, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Proffitt's, Inc. and Subsidiaries as of February 3, 1996 and January 28, 1995 and the consolidated results of their operations and their cash flows for each of the three years in the period ended February 3, 1996, in conformity with generally accepted accounting principles.
As described in Note N to the financial statements, the Company changed its method of costing inventory, accounting for store pre- opening expenses and accounting for income taxes in the year ended January 29, 1994 and changed its method of valuing inventory in the year ended January 28, 1995.
/s/ COOPERS & LYBRAND, L.L.P.
Atlanta, Georgia March 15, 1996
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders Younkers, Inc.
We have audited the accompanying consolidated balance sheet of Younkers, Inc. and subsidiary as of January 28, 1995, and the related consolidated statements of earnings, shareholders' equity, and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. The Company's financial statements as of January 29, 1994 and January 30, 1993 were audited by other auditors whose report, dated March 3, 1994, expressed an unqualified opinion on those financial statements.
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 1995 consolidated financial statements present fairly, in all material respects, the consolidated financial position of Younkers, Inc. and subsidiary at January 28, 1995, and the consolidated results of their operations and their cash flows for the year then ended, in conformity with generally accepted accounting principles.
/s/ Deloitte & Touch LLP
Des Moines, Iowa March 3, 1995
Report of Independent Auditors
The Shareholder Younkers, Inc.
We have audited the consolidated statements of earnings, shareholders' equity, and cash flows of Younkers, Inc. for the year ended January 29, 1994 (not separately presented herein), prior to the adjustments relating to the changes in methods of accounting for certain items as described in Note N to the financial statements of Proffitt's, Inc. for the year ended February 3, 1996.
These financial statements are the responsibility of the Company'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 consolidated financial statements, prior to restatement for changes in methods of accounting, referred to above present fairly, in all material respects the consolidated results of their operations and their cash flows for the year ended January 29, 1994, in conformity with generally accepted accounting principles.
/s/ ERNST & YOUNG LLP
Des Moines, Iowa March 3, 1994
REPORT OF INDEPENDENT ACCOUNTANTS
Our report on the consolidated financial statements of Proffitt's, Inc. has been incorporated by reference in this Form 10-K from page 32 of the 1995 Annual Report to Shareholders of Proffitt's, Inc. In connection with our audits of such financial statements, we have also audited the related financial statement schedule listed in Item 14(a)2 of this Form 10-K.
In our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information required to be included therein.
/s/ COOPERS & LYBRAND L.L.P.
Atlanta, Georgia March 15, 1996