EXHIBIT 99.1
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Proffitt's, Inc. and Carson Pirie Scott & Co. Announce Merger Agreement
NOTE: The management of Proffitt's, Inc. has scheduled
a conference call at 10:00 a.m. Eastern Time on
Thursday, October 30, 1997, to discuss the
proposed business combination of the two
companies. To participate, please call
816/650-0613 (10 minutes prior to the call).
The management of Proffitt's, Inc. will host a
luncheon in New York at the Pierre Hotel on
Monday, November 3, 1997, at 12:00 noon to
discuss the proposed merger. For luncheon
reservations, please call Julissa Gonzalez at
212/816-8329.
KNOXVILLE, Tenn. and MILWAUKEE, Wis. -- Oct. 29, 1997 --
Proffitt's, Inc. (NYSE:PFT) ("Proffitt's" or
the "Company") and Carson Pirie Scott & Co. (NYSE:CRP)
("Carson's"), two of the nation's leading regional department
store companies, jointly announced today that they have entered
into an agreement and plan of merger in which the two companies
will be combined, with Carson's, headquartered in Milwaukee,
Wisconsin, becoming an operating division of Proffitt's, Inc.
The Boards of Directors of Proffitt's and Carson's have
approved the merger.
Under the terms of the transaction, shareholders of
Carson's will receive between 1.7 and 1.8 shares of Proffitt's,
Inc. Common Stock for each share of Carson Pirie Scott & Co.
Common Stock. This exchange ratio reflects Proffitt's 2-for-1
Common Stock split which was effective October 15, 1997.
Proffitt's will issue approximately 29.7 million shares in the
transaction, representing a transaction equity value of
approximately $790 million, based upon Proffitt's October 24,
1997 closing stock price of $27.125 per share (which also
reflects the stock split). The merger is expected to be
completed in early 1998, subject to certain conditions,
including regulatory approval under the Hart-Scott-Rodino Anti-
Trust Act, regulatory approval under federal banking laws, an
effective registration statement filed with the Securities and
Exchange Commission, and approval by the shareholders of both
companies. The combination has been structured as a tax-free
transaction and will be accounted for as a pooling of
interests.
Proffitt's, Inc. is a leading regional department store
company currently operating five divisions - the Proffitt's
Division headquartered in Knoxville, Tennessee with 19 stores
in Tennessee, Georgia, Kentucky, North Carolina, Virginia, and
West Virginia; the McRae's Division headquartered in Jackson,
Mississippi with 31 stores in Alabama, Mississippi, Florida,
and Louisiana; the Younkers Division headquartered in Des
Moines, Iowa with 50 stores in Iowa, Wisconsin, Michigan,
Nebraska, Illinois, Minnesota, and South Dakota; the Parisian
Division headquartered in Birmingham, Alabama
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with 40 stores in Alabama, Georgia, Florida, Ohio, South Carolina,
Tennessee, Indiana, Michigan, and Mississippi; and the Herberger's
Division headquartered in St. Cloud, Minnesota with 37 stores
in Minnesota, Montana, Nebraska, North Dakota, South Dakota,
Wisconsin, Colorado, Illinois, Iowa, and Wyoming. The total
Company operates 177 stores in twenty-four states.
For the twelve months ended August 2, 1997, Proffitt's,
Inc. achieved record sales of $2.2 billion, net income before
non-recurring items of $67.3 million, and earnings per share
before non-recurring items of $2.32. Primarily as a result of
acquisitions, the Company has grown revenues and net earnings
at annual compound rates of 96% and 71%, respectively, over the
last four fiscal years.
Carson Pirie Scott & Co. is a leading regional department
store company with 52 department stores in Illinois, Wisconsin,
Indiana, and Minnesota operating under the names of Carson
Pirie Scott, Boston Store, and Bergner's. Carson's also
operates four free-standing furniture stores in Illinois and
Wisconsin. For the twelve months ended August 2, 1997,
Carson's achieved sales of $1.143 billion, net income of $31.6
million, and operating earnings per share of $2.43. The
Company has grown operating earnings per share at an annual
compound rate of 12% over the last four fiscal years.
Once the businesses are combined, Carson's will operate as
a separate department store division of Proffitt's, Inc., with
its divisional headquarters in Milwaukee. Merchandising, store
operations, sales promotion, management information systems
("MIS"), and various support functions for the Carson's
Division will remain in Milwaukee, and Carson's credit
operations center will remain in Chicago. Stanton J. Bluestone
will continue in his role as Chairman and Chief Executive
Officer of Carson's. The Carson's organization will report
through the Proffitt's, Inc. organizational structure.
R. Brad Martin, Chairman and Chief Executive Officer of
Proffitt's, Inc., and Stan Bluestone expressed their enthusiasm
for the merger of the two companies. Mr. Martin stated, "We
are very excited about combining the two premier regional
department store companies in the country. This transaction
will create the fourth largest traditional department store
company in the United States, operating over 230 stores in 24
states with annual revenues in excess of $3.5 billion. This
combination will produce an enterprise which will provide
further opportunities for growth for our associates and our
shareholders."
Mr. Martin further commented, "Our Company has had a long-
standing respect for Carson's management, merchandising
strategies, customer service standards, and reputation in its
markets and throughout the vendor community. The contiguous
geographical relationship of our stores, with only limited
market overlap, makes this combination a great fit. The
addition of Carson's substantially strengthens our presence
throughout the important Midwest,
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particularly in the greater Chicago area, Milwaukee and central
Illinois."
Mr. Bluestone noted, "Proffitt's is indeed an ideal
partner for Carson's. Proffitt's has a terrific culture and an
exemplary reputation in the way it treats its associates,
customers, and business partners. Our combination with
Proffitt's will provide our associates and our shareholders
with a bright future and a substantial interest in the fastest
growing department store company in the country and in a
company with a proven record for creating shareholder value
through successful business combinations and solid financial
performance. Proffitt's operating structure and philosophy
will enable our organization to operate as a separate division
within Proffitt's, Inc., while enjoying the many benefits of
shared resources and economies of scale. We are confident that
Proffitt's growth orientation will create further opportunities
for our team."
Mr. Martin noted, "This transaction will lower the
financial leverage of Proffitt's, Inc., strengthening our
balance sheet and providing additional flexibility for future
growth opportunities. Upon the successful completion of the
transaction, we expect our total debt to total capitalization
will approximate 27% at year end, a decline from approximately
40% presently.
"We believe the addition of Carson's would be modestly
accretive to the earnings of Proffitt's, Inc. beginning in 1998
even without the realization of synergies. Based upon
achieving the 1998 synergies outlined below, we expect fully
diluted earnings per share to approximate $1.77, adjusted for
the 2-for-1 stock split, in 1998."
Mr. Martin also noted, "We expect to realize synergies of
approximately $10 million, $20 million, and $40 million, in
1998, 1999, and 2000, respectively, related to this
transaction. As soon as practical, designated teams of
managers from both Proffitt's and Carson's will begin their
work in identifying synergies and best practices that will
allow us to most effectively and efficiently operate our
existing business and to further position the Company for
additional growth."
Cost reductions related to the merger are expected to come
in several forms, such as through the elimination of certain
duplicate corporate expenses. Additionally, many best
practices of the two companies will be implemented throughout
the combined corporation. Examples include shared technology
and systems, enhanced logistics management at the distribution
facilities, and the expansion of Carson's national credit card
bank to the Company's other operating divisions. Savings will
also be recognized on a combined basis through the purchasing
power of increased scale in such areas as property and casualty
insurance, associate benefits, advertising media, and supply
purchasing.
Martin concluded, "Through this merger, we believe there
are opportunities to improve the merchandising operations of
the combined business through strengthened vendor
relationships,
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development of key businesses and key brands, and
further private brand development. Additionally, the
Carson's MIS and credit operations will increase capacity in
these important areas for the entire organization and will
provide a platform and infrastructure to support future
regional growth."
Upon closing the transaction, the Company will incur
certain non-recurring charges related to the business
combination.
In connection with executing the merger agreement, the
Board of Directors of Carson's has rescinded the $20 million
share repurchase program adopted in January 1997.
This announcement is neither an offer of securities nor a
solicitation of proxies. An offering will only be made by
means of a prospectus which is part of an effective
registration statement, and proxies will only be solicited
pursuant to a definitive proxy statement.
The forward-looking information presented in the press
release is premised on many factors, some of which are outlined
below. Actual consolidated results might differ materially
from projected forward-looking information if there are any
material changes in management's assumptions.
The forward-looking information and statements are based
on a series of preliminary projections and estimates, are
contingent upon the timely completion of the merger transaction
with Carson's, and involve certain risks and uncertainties.
Potential risks and uncertainties include such factors as the
level of consumer spending for apparel and other merchandise
carried by the Company, the competitive pricing environment
within the department and specialty store industries, the
effectiveness of planned advertising, marketing, and
promotional campaigns, appropriate inventory management,
realization of planned synergies, and effective cost
containment.
CONTACT: Proffitt's, Inc., Knoxville
Julia Bentley, 423/981-6243
or
Carson Pirie Scott & Co., Milwaukee
Ed Carroll, 414/347-5340 (media)
Darren Jackson, 414/278-5787 (investors)