SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (mark one) * Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended August 31, 1997 Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 ____________________ Commission file number: 0-21192 ____________________ CAMPO ELECTRONICS, APPLIANCES AND COMPUTERS, INC. (Exact name of registrant as specified in its charter) Louisiana 72-0721367 (State or other jurisdiction (I.R.S. Employer Identification No.) of incorporation or organization) 109 Northpark Blvd., Covington, Louisiana 70433 (Address of principal executive offices) (zip code) Registrant's telephone number, including area code: (504) 867-5000 ____________________ SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: None SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: Common Stock, $.10 par value (Title of class) ____________________ 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 by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. _____ ____________________ The aggregate market value of the voting stock held by nonaffiliates (affiliates being considered, for purposes of this calculation only, directors, executive officers and 5% shareholders) of the Registrant as of November 25, 1997 was approximately $4,098,985. ____________________ The number of shares of the Registrant's Common Stock, $.10 par value per share outstanding, as of November 28, 1997 was 5,766,906. -------------------- ITEMS SUBJECT TO FORM 12B-25 The following items of this Form 10-K are the subject of a Form 12b-25 report filed with the Commission of December 1, 1997, and are not included herein: Items 6, 7, 8 and 14(a)(1). PART I ITEM 1. BUSINESS Overview General. The Company is a leading specialty retailer of name brand consumer electronics, major appliances, computers and home office products with 20 stores in Louisiana, Mississippi, Alabama and Florida. Campo's merchandising strategy is to emphasize top name brand products with the highest name recognition among consumers, and to carry a relatively broad range of product offerings within those brands. The Company uses high profile, aggressive advertising to communicate its guaranteed low prices and frequent price promotions, and also executes a number of store-level operating strategies designed to promote quality service and customer satisfaction, including guaranteed next-day delivery, home installation and extended warranty plans for most products sold. Customer awareness and loyalty are enhanced by the Company's issuance of private label credit cards, of which there are over 300,000 holders. In recent years, the Company developed and implemented a Campo Concept store format to meet higher consumer expectations. Campo Concept stores feature well-lit, open selling areas, informative signage, an attractive interior and exterior design, hands-on merchandise displays and an interactive environment for the consumer. Chapter 11 Bankruptcy Proceedings. On June 4, 1997, the Company filed a voluntary petition in the U. S. Bankruptcy Court for the Eastern District of Louisiana for reorganization under Chapter 11 of the U. S. Bankruptcy Code (the "Bankruptcy Code"), and is currently operating its business as debtor-in-possession under the supervision of the Bankruptcy Court (the "Court"). As of the petition date, actions to collect pre-petition indebtedness are stayed and other contractual obligations may not be enforced against the Company. In addition, under the Bankruptcy Code, the Company may reject executory contracts, including lease obligations. Parties affected by these rejections may file claims with the Court in accordance with the reorganization process. Substantially all liabilities as of the petition date are subject to settlement under a plan of reorganization to be voted upon by creditors and equity security holders and approved by the Court. The Company has not yet prepared or submitted a plan of reorganization. As provided by the Bankruptcy Code, the Company has the exclusive right for a period of time to submit a plan of reorganization. This period has been extended by the Court to January 15, 1998, and further extensions may be sought and may be granted or rejected by the Court. The Company has obtained the approval of the Court to continue to pay for utility services, certain consumer practices (including the continuation of service on existing extended warranty contracts), payroll and employee benefits, and property and liability insurance coverage. These items are recorded as accrued expenses not subject to compromise. The Company is also allowed to continue normal business practices, including purchasing inventory and payment of normal operating expenses incurred after the filing of the bankruptcy petition. As part of the reorganization process, the Company closed nine stores and one distribution center in July 1997. It also had previously closed two stores in January 1997, located in Huntsville, Alabama and in Jackson, Mississippi. The facilities that were closed in July 1997 were: (i) one store each in Tuscaloosa, Alabama; Longview, Texas; Texarkana, Texas; Jackson, Mississippi; Chattanooga, Tennessee; Alexandria, Louisiana; and Lafayette, Louisiana, (ii) two stores in Memphis, Tennessee and (iii) the Bessemer, Alabama warehouse. The Shreveport, Louisiana warehouse was closed subsequent to fiscal year-end in October 1997. Inventory at the Shreveport warehouse was moved to a smaller warehouse leased beginning in October 1997 that is adjacent to the Company's remaining warehouse located in Harahan, Louisiana. In connection with these closures, the Company recorded non- recurring charges in the aggregate of $5,338,000 to write off leasehold improvements and furniture, fixtures and equipment. A lease rejection liability of $3,100,000 related to the closed stores and warehouses was established using the Bankruptcy Code rules for the calculation. A non-recurring charge of $792,000 was also recorded with respect to the liquidation of inventory below cost at the closed locations. In addition, the goodwill associated with the Company's July 1993 acquisition of Shreveport Refrigeration, Inc. was reduced by $640,000 due to the closure of two locations that were part of that acquisition. Recent Industry Conditions. During fiscal 1997, Campo experienced steady declines in comparable store sales, continuing a trend that began in the third quarter of fiscal 1995. This negative sales trend was consistent with the weak overall performance of all sectors of the retail industry, as consumers burdened with high consumer debt levels generally reduced their overall levels of non-essential consumer spending. This downturn has had a particularly severe impact on the consumer electronics retail segment due to a reduced demand for the core electronics products sold by the Company, which was compounded by a slow down in the bringing to market of new consumer electronics products. As a result of the weak market for consumer electronics and appliances, the Company participates in a highly competitive and promotional climate, with retailers focusing primarily on protecting market share. This highly competitive environment has exerted considerable pressure on the Company's gross profit margins, which have been adversely affected not only by constant, intense price competition, but also by a decrease in vendor rebates and other programs that have contributed to the Company's profitability in prior years. In addition, those product lines for which there has been an increasing demand, such as computers and home office equipment, are generally lower margin items, thus further increasing the pressure on the Company's gross profit margins. Finally, industry research indicates that today's consumers are spending less time shopping in stores and instead are learning about product pricing and features and alternatives prior to entering a store. This usually means that a consumer purchases a product from the first store he or she visits. In the present competitive environment, it is increasingly important that a retailer have "top of mind" awareness among consumers, so that it is the first place shopped, and then to have the skills, training and operational efficiencies in place to enable the sales associates to close sales as quickly as possible. Campo was vulnerable to the weakened performance of the consumer electronics industry because the current downturn began at a time when Campo had embarked on an expansion program. Campo opened 14 new stores in fiscal 1995, taking the Company from a small, family-run business with 12 stores in two markets at the end of fiscal 1992 to a regional chain with 31 stores in 21 markets by the end of fiscal 1995. During its expansion, the effects of the industry downturn were obscured by sales boosts attributable to new store grand openings as well as to a severe flood in the Company's New Orleans market in May 1995 (which stimulated a short-term inflated demand for the Company's products); however, as the negative industry conditions continued, the Company slowed the pace of its new store openings and the severity of the industry downturn became more fully apparent. In addition, the Company's rapid expansion outpaced certain of the Company's management and operational systems which, in turn, significantly impaired the Company's ability to maintain adequate training and supervision of its expanding sales force and managers, to track and effectively manage its inventory and to respond quickly to changing industry conditions. The Company's ability to respond effectively to its management and infrastructure problems was hampered by its declining financial performance. When Campo opened its most recent new Campo Concept store in August 1995, it announced at that time that it would curtail further expansion and focus on improving its infrastructure until such time as the industry conditions improved. As previously disclosed, the poor performance of the retail industry and the Company over an extended period led management during fiscal 1996 to review the Company's operations and to explore methods to improve operational efficiency and reduce costs. To that end, the Company implemented several initiatives designed to improve the Company's operations. Although management believed that these measures, if given enough time, would have had a positive impact, the Company's comparable store sales continued to decline as retail industry conditions have continued to deteriorate, leading management to conclude during the first quarter of fiscal 1997 that a comprehensive review of the Company's operations was appropriate for the purpose of developing a long-term strategic plan. As part of this self-evaluative process, the Company hired a consulting firm in the third quarter that specializes in turning around financially troubled companies in consumer retail industries. After evaluating and discussing with the Board of Directors several different strategic options, the consulting firm ultimately recommended to the Board a significant downsizing of the Company's operations; specifically, the closing of nine stores, in addition to two unprofitable stores that had been closed in the second quarter, and the closure of one distribution center. In addition, in order to allow the Company to fully realize the operational benefits from the closing of these facilities, the consulting firm recommended that the Company seek the protection of the federal bankruptcy laws, which the Company did by filing a voluntary petition under Chapter 11 on June 4, 1997. The Company's use of this strategic tool was primarily to allow the Company to terminate on a more favorable basis the long- term leases of the facilities identified for closure. The Chapter 11 filing was undertaken with the cooperation and support of the Company's bank group and floor plan lenders. As discussed in "Liquidity and Capital Resources," the Company has amended its bank credit facility to defer principal payments for one year until June 1998, to defer maturity of the facility for three years until August 31, 2000, and to remove the Company's merchandise inventory as collateral for the facility. The Company has also obtained a $3 million line of credit from certain of its floor plan lenders, which is collateralized by certain merchandise inventory. Immediately following its filing for protection under Chapter 11, the Company experienced temporary inventory shortages largely attributable to the disruptive effect that the bankruptcy filing had on its relationships with its vendors. These inventory shortages had an adverse effect on sales and customer confidence during the fourth quarter. The Company believes it has successfully restored its relationships with its vendors and inventory levels have been rebuilt in sufficient quantities to meet customer demand. Recent Management Changes. In June 1997, the Company hired a new Chief Executive Officer, William Wulfers, whose extensive retail background included seven years as the Regional Vice President of Wal-Mart Inc. for Louisiana, Arkansas, Mississippi, Virginia, North Carolina, South Carolina, Georgia and Florida. In August 1997, the Company hired three new Senior Vice Presidents, all with extensive retail backgrounds. John Watson was hired as Sr. Vice President of Operations, and his experience included twelve years with Woolco, eleven years with Rose's stores, and three years with Wal-Mart. Malcolm Ballinger joined the Company as Sr. Vice President of Merchandising and Advertising and has 20 years of merchandising experience in the consumer electronics and appliances industry. Michael Ware was hired as Sr. Vice President, Chief Financial Officer and Secretary and has sixteen years of experience in financial management positions with both public and private retail companies, including experience with two retailers that successfully emerged from Chapter 11 reorganizations. Business Strategy The Company's business strategy is to establish market leadership in each of its markets and to build and maintain a loyal customer base by offering guaranteed low prices, superior customer service through a professional sales force, a pleasing shopping environment and the merchandising of top name brand products. The Company believes this strategy, supported by an aggressive advertising program and an experienced senior management team, will help it regain a dominant share of all of the markets it serves for the product categories offered. The key elements of its business strategy include: Experienced Management Team. Since filing for Chapter 11 reorganization, the Company has assembled an exceptional senior management team. The top four executives have an average of over twenty-five years of retail experience. Their business backgrounds include high level positions with major retailers such as Wal-Mart and Woolco. The Chief Financial Officer is uniquely qualified for his position having been part of senior management teams which successfully led two retails chains out of Chapter 11 reorganizations to profitability. Similarly, the Senior Vice President of Merchandising and Advertising has over twenty years of merchandising management experience in the consumer electronics and appliance industry. Brand Merchandising. The Company offers a comprehensive selection of top name brand consumer electronics, major appliances, computers and home office products, with an emphasis on those name brands with the highest name recognition among consumers, and carries a wide range of prices and models within those brands. The Company's brand merchandising strategy is designed to provide a high quality image in the marketplace and to encourage increased vendor support. Customer Service. Customer service is the key to the Company's business strategy. To promote customer loyalty and to provide a competitive advantage, the Company seeks to assure that its customers consistently receive knowledgeable and courteous assistance by maintaining the technical and interpersonal skills of its sales associates. These skills are developed through extensive initial and ongoing training sessions. Sales associates and store management are supported by the Company's customer service department, which is staffed by representatives with over 15 years of customer service experience. The Company also offers guaranteed next-day, and same day and timed delivery services on major purchases, home installation of major appliances, computer training classes, product performance guarantees ("PPG") and a thirty-day, no questions asked return policy on most products. Aggressive Advertising; Targeted Marketing. The Company engages in extensive advertising to promote its competitive prices on top name brands and customer service. The Company's in-house advertising department produces all of the Company's newspaper advertisements and television and radio commercials, which provides the Company with cost savings and gives the Company greater control and flexibility over its creative product. In an effort to improve sales, the Company has analyzed each individual market and is now tailoring its advertising so that it appeals to the majority of potential customers in each market. The Company will continue to adjust its advertising programs to take into account changing lifestyles and trends. In line with the Company's desire to increase computer sales and attract more customer traffic, a larger percentage of the advertising expenditures will be focused on this category in the future. To encourage repeat business and a longer term relationship with its customers, the Company offers a private label credit card through an independent credit card bank that bears substantially all credit risk without recourse to the Company. Competitive Pricing. The Company's policy is to offer superior value to its customers by maintaining competitive prices in each of its markets. To support this policy, the Company actively monitors prices at competing stores and maintains a low price program that guarantees that if an item can be purchased at a lower price from another retailer, or even from the Company, within 30 days after the customer has purchased the item, the Company will refund the difference to the customer. Operational Controls. Inventory control is one of the keys to the Company's return to profitability. If the Company is to succeed in its goal of increasing computer sales, it must carefully manage its inventory turns in order to reduce the risk of aging or obsolete products. To accomplish this goal, the Company has a dynamic program for frequent inventory cycle counts and once a year full inventory counts of all products. This allows for the timely evaluation of the age and condition of all products and minimizes the opportunities for internal and external theft. In addition, the Company's automated Point-of-Sale reporting system gives management real time information on product availability, pricing deviations and instant sales information by location and sales associate. Marketing Campo Concept Stores. In 1991, management designed a prototype Campo Concept store that has been the model for all new stores. The Campo Concept store format has allowed the Company to offer consumers a broad selection of consumer electronics, appliances and home office products. These stores feature a contemporary design aimed at educating the customer and enhancing the shopping experience, and contain hands-on displays that enable the customer to explore the features of the products sold. The store design and layout is bright and open and is intended to demonstrate the Company's broad selection of merchandise and to expose the consumer to each of the store's product categories immediately upon entering the store. Computer and home office products, which have been the Company's fastest growing product category since their introduction in fiscal 1991, are located near the front of each store and major appliances, television/video equipment and home audio equipment are positioned around the perimeter of the stores. To capitalize on the growing convergence of audio and video technology, Campo showcases televisions and VCRs with audio products in home theater settings throughout the stores. The stores display a wide assortment of personal electronics products in the center to encourage impulse shopping. Existing Campo Concept stores generally contain approximately 18,000 to 30,000 square feet, including approximately 11,000 to 20,000 square feet of selling space. The Company locates its stores in high visibility, high traffic commercial areas including strip shopping centers and free-standing formats with large readily identifiable signage, easy access from major roads and adequate customer parking. The stores are open seven days per week, including most holidays. The Company's store hours are intended to make its stores more accessible to customers than certain other stores selling similar goods, particularly for those customers who are unable to shop during ordinary business hours. The Company's general policy is to lease its stores in order to limit its investment in fixed assets and increase the availability of capital for other purposes. The Company's investment in leasehold improvements, fixtures and equipment generally ranges from $475,000 to $1,000,000 per store. The Company has been successful in negotiating lessor contributions for tenant improvements, rent abatements and other concessions to reduce these costs. Advertising. The Company promotes its prices, selection and service through aggressive mass media advertising campaigns designed to create an awareness of the Company's comprehensive selection of quality name brand merchandise, its competitive pricing policy and its strong customer service orientation. The Company's strategy is to maintain a balanced advertising program utilizing local newspaper advertising and radio and television commercials. In each of its markets, the Company generally runs four-color multi-page newspaper inserts weekly. Television and radio advertising is run on a regular basis in all markets to reinforce messages such as the Company's guaranteed next-day delivery and name brand selection. The Company also runs highly concentrated television and radio advertising to support specific sales events. The Company's advertising typically stresses promotional pricing, a broad assortment of top name brand merchandise and the services provided by its knowledgeable personnel. Content, production and media placement (as well as layout and artwork in the case of newspaper advertising) are handled by the Company's in-house advertising department. The Company's approach is to be flexible in decisions regarding advertising and to make changes to advertising copy on short notice where necessary in order to take advantage of new products or unexpected market developments. The Company's use of an in-house department, instead of an independent advertising agency, has resulted in cost savings to the Company and has given the Company the flexibility it requires as well as greater control over the creative product. The Company has computerized publishing and media- buying systems that allow it to produce large numbers of advertisements quickly and professionally without the use of a large advertising staff. Pricing. The Company's policy is to offer superior value to its customers by maintaining competitive prices in each of its markets. To support this policy, the Company actively monitors prices at competing stores and maintains a low price program that guarantees that if a customer can buy merchandise purchased from a competitor at a lower price, including the Company's own sale price, within 30 days of purchase, the Company will refund the difference to the customer. All initial pricing decisions are made centrally by the Company's merchandising department. At the store level, store managers retain flexibility to match competitor's prices in order to comply with the Company's guaranteed low price program. Private Label Credit Card Program. The Company accepts most major credit cards and has its own private label credit card with the "Campo" name which allows qualifying customers to pay for purchases in installments through an arrangement between the Company and an independent credit card bank. Under the agreement, customers' credit card applications are filed and evaluated electronically from the Company's stores. Typically, this procedure enables qualifying customers to receive credit card authorizations within a few minutes. Independent market research indicates that a well-established base of credit card consumers provides a competitive advantage to retailers. The Company believes it has experienced longer-term relationships, more repeat business and higher average purchases through the use of its private label credit card. There are more than 300,000 holders of the Company's private label credit card. The Company has experienced a decline in its approval rate of new card holders, primarily due to increased competition in the consumer credit industry. Under the Company's private label credit card agreement, the independent credit card bank has agreed to provide a $125 million revolving line of credit for the purchase of merchandise and services from the Company's stores by approved private label credit card holders and to bear substantially all credit risk without recourse to the Company under the program. The Company also receives fees from the credit card bank, which are used in part to market the credit card program and to fund the cost of special promotions (such as 90 days interest free for purchases made with the card) that complement the Company's other advertising and marketing activities. Payments received under the agreement are recorded as reductions in selling, general and administrative expenses. If the growth rate of the credit card portfolio continues to decline, the Company would not expect future payments received from the bank under the agreement to continue at current levels. The Company also provides credit to its customers for individual transactions through independent finance companies. Similar to the private label credit card program, the independent finance company bears substantially all credit risk without recourse to the Company. Management believes that the Company's private label credit card and related programs will provide for adequate availability of consumer credit for fiscal 1998 and that it has the ability to obtain additional consumer credit facilities in the future under these existing or other similar programs on substantially similar terms. There can be no assurance that future changes in the availability of consumer credit will not have an adverse impact upon the Company's sales and results of operations. Merchandising Products. The Company offers a comprehensive selection of top name brand electronics, major appliances and computer and home office products, with an emphasis on those name brands with the highest awareness among consumers, and carries a wide range of prices and models within those brands. The Company's merchandising strategy is designed to provide a higher quality image in the marketplace and to encourage increased vendor support. The Company currently offers more than 3,000 products in its major categories: Category Products Principal Brand Names Television/Video Televisions GE, JVC, Magnavox, Mitsubishi, Panasonic, VCRs RCA, Samsung, Sony, Zenith Camcorders Digital Satellites Major Appliances Refrigerators Admiral, Friedrich, Frigidaire, GE, Dishwashers Hotpoint, Jenn Air, Kelvinator, KitchenAid Washer/Dryers Maytag, Panasonic, Sharp, Tappan, Ranges Whirlpool, White-Westinghouse Cooktops Range Hoods Microwaves Room Air Conditioners Home Audio Stereo Bose, Infinity, JBL, JVC, Kenwood, Components Magnavox, Mitsubishi, Panasonic, Pioneer, Speakers Sharp, Sony, Yamaha, Zenith Stereo Systems Computers/Home Computers Brother, Canon, Compaq, Epson, IBM, Office Printers Packard Bell, Fax Machines Panasonic, Sony Electronics/ Personal Audio Aiwa, GE, Infinity, JBL, JVC, Kenwood, Accessories Radar Lucent Technologies, Magnavox, Motorola, Detectors Panasonic, Pioneer, RCA, Sharp, Sony, Portable Southwestern Bell, Sprint PCS Radios Car Audio Car Alarms Telephones Cellular Phones Pagers Consumer electronics, including television/video and home audio equipment, are currently the Company's leading product categories. Campo stores display a wide assortment of name brand merchandise in this category, and for fiscal 1997, the Company's three leading selling name brands were Mitsubishi, RCA and Sony. By advertising both inexpensive promotional goods and sale prices on the leading television/video brands in the industry, Campo believes it is able to attract a wide range of consumers. Campo's sales counselors are trained to demonstrate the best values and latest features in each customer's brand preference. Campo's audio marketing strategy focuses on mid- to high-end products from leading audio manufacturers in the industry. A wide selection of products is displayed in both open display areas and smaller acoustically controlled sound rooms. To capitalize on the growing convergence of audio and video technology, Campo showcases televisions and VCR's with audio products in multiple home theater settings throughout the store. Campo also offers custom system design and installation for high-end surround- sound and multi-room speaker systems. The Company believes that one of its competitive strengths is its focus on major appliances. The Company devotes a significant portion of its store floor space to this category and offers a large selection of high-end, built-in appliances. The Company believes that its ability to successfully merchandise major appliances helps to differentiate it from its competition, strengthens its image of high quality and wide selection, provides it with a stable base of business and promotes customer loyalty and repeat business. Campo Concept stores display a large assortment of the leading brands in the industry, and for fiscal 1997, the Company's three leading selling name brands were GE, Maytag and Whirlpool. Campo Concept stores showcase the latest built-in appliances in a custom kitchen display complete with connections for in-store cooking demonstrations. Campo's inventory management system allows the Company to offer its next-day delivery guarantee and its same day and timed delivery services to make appliance replacement as convenient as possible for the customer. Computers and home office products have been the Company's fastest growing product category since their introduction in fiscal 1991. The Company offers an assortment of computers, printers and telecommunication machines from industry leaders. For fiscal 1997, the Company's three leading selling brands were Canon, Compaq and Packard Bell. For fiscal 1998, management's goal is to increase sales of computers and home office products as a percentage of the Company's overall merchandise mix because the Company believes that future annual sales growth will depend on a strong base of computer sales. In a retail environment with few new exciting products to offer, management believes that computers provide an opportunity to build store traffic and create awareness of other Campo products. Success in this fast moving and volatile catagory will require management to monitor this catagory closely in order to maintain adequate inventory turns and manage aged goods. The Company's promotional pricing on portable audio products such as personal electronics and hand held televisions is designed to build store traffic. Campo Concept stores display a wide assortment of personal electronics in the store's center to encourage impulse shopping. The Company's hands-on displays also help customers try out the models, compare features and make an informed purchasing decision. Campo Concept stores also offer sales and installation of car audio, alarms, radar detectors and cellular phones, with on-site demonstration rooms and auto installation bays. For fiscal 1997, the Company's three leading selling name brands for electronics/accessories were Aiwa, Panasonic and Sony. The following table indicates the percentage of gross sales in each product category for each of the Company's last three fiscal years. The percentage of gross sales contributed by each product category is affected by season, store type, promotional activities, consumer trends and the development of new products. Because these percentages change continually, historical percentages may not be indicative of future results. Percentage of Gross Sales Fiscal Years Ended August 31, 1997 1996 1995 Product category: Television/video 31.2% 32.9% 32.8% Major appliances 23.6 22.5 23.1 Computers/home office 19.5 18.6 17.6 Home audio 8.4 8.4 10.4 Extended warranty plans 5.4 5.5 5.9 Portable/personal audio 3.9 4.7 5.4 Mobile electronics 4.4 4.0 3.7 Accessories and other 3.6 3.4 3.1 100.0% 100.0% 100.0% Purchasing. The Company purchases its merchandise directly from manufacturers. The Company has a staff of three buyers under the direction of the Senior Vice President of Merchandising each of whom has responsibility for specific product categories. The buyers are assisted by the Company's management information system which provides them with current inventory price and volume information, allowing them to respond quickly to market demands. The Company has been able to negotiate favorable price and payment terms on very large volume purchases, which in part allows the Company to maintain its low price strategy. The Company has benefited from its membership in Nationwide Television and Appliance Association, Inc. ("Nationwide"), a national buying group that currently consists of approximately 300 retailers of home appliance and consumer electronic products located throughout the country, representing more than $4 billion in retail sales. Although it is a member of Nationwide, the Company makes its own purchasing decisions and is not required to purchase any particular products or quantity of products. In fiscal 1997, a majority of the Company's purchases were effected through Nationwide-sanctioned programs. Nationwide is also a forum for the exchange of ideas on new products, product lines and services as well as on management and administrative techniques and procedures, which has also directly benefited the Company. Although Nationwide is an important source of information and industry communication, management believes that the Company's independent buying power, which has strengthened in recent years through its regional expansion activities, is not dependent on its membership in this association. The Company purchases inventory with financing provided either through third party finance companies or through open lines of credit from vendors, the former of which is collateralized by the inventory purchased. During fiscal 1997, sales of goods purchased from the Company's largest supplier accounted for approximately 12.7% of merchandise sales. The Company typically does not maintain long-term purchase contracts with suppliers and operates principally on a purchase order basis. The Company's current sales, inventory, purchasing and other key information is tracked at the Company's corporate headquarters on its computerized point-of-sale system. This system provides management with information that facilitates merchandising, pricing, sales management and the management of warehouse and store inventories, and enables management to review and analyze the performance of each of the Company's stores and sales personnel on a daily basis. The Company's central purchasing department monitors current sales and inventory at the stores each day. The purchasing department also establishes the level of inventory required at each store and handles the replenishment of store inventory on a daily or weekly basis. The Company also conducts periodic cycle counts of selected inventory categories. Inventory turned over 3.6 times for fiscal 1997. Distribution. The Company owns one distribution facility in New Orleans, containing approximately 100,000 square feet of warehouse space, and leases another adjacent warehouse containing approximately 48,000 square feet of space. Substantially all inventory purchased by the Company is shipped directly to its distribution facilities in New Orleans. The Company closed its Bessemer, Alabama distribution center during fiscal 1997 and closed its Shreveport, Louisiana distribution center in October 1997. Each store receives shipments of inventory from the distribution facilities at least three times a week and based on demand, daily, thereby increasing availability to customers by enabling each store to maintain sufficient inventories of all products and to promptly replenish inventories of fast moving products. The Company believes its computerized distribution system allows it to support a broad selection of merchandise within the stores while minimizing store level inventory requirements. The Company also believes its distribution system provides for savings by consolidating receiving and handling functions and by enabling the Company to purchase in full truck loads from suppliers. Store Operations Sales Associates. The Company views itself as being in a service business and emphasizes to its sales personnel the need to provide personal attention to each customer. Although most of the merchandise carried by the Company is displayed in specialized fixtures or self-demonstrating audio and visual displays, the Company does not operate its stores in a self-service fashion and encourages its trained personnel to assist customers in selecting merchandise by demonstrating products and providing information desired by the customer with respect to price, features and other matters. Highly visible displays of many products at each Campo store promote sales by enabling sales personnel to demonstrate for customers the use of these products. The Company believes that one of its distinguishing characteristics is the quality of the people serving its customers and has made a serious commitment to the training and development of its sales associates to insure that customers consistently receive knowledgeable and courteous assistance. This training and development also serves to provide the Company with a pool of talented associates for promotion into management. The Company produces all of its sales training and product training manuals and courses using an in-house professional training staff. The Company is assisted in its training programs by its extended warranty administrator, which has assigned a full-time trainer to work with the Company's store manager on the effective techniques of selling Product Protection Guarantees (extended warranties). At the commencement of employment, each sales associate must complete an intensive two-week training program that utilizes classroom instruction for the first week and a standardized video tape and workbook system for the second week. In addition, each sales associate must study the appropriate product training manuals and pass a test to certify his or her knowledge in each product category. The sale associate's progress is monitored by the store manager and each sales associate is further assisted by a "mentor," who is a more experienced sales associate, during the training period. Management and Organizational Structure. The Company now operates 20 stores in 4 states and a two-unit distribution center in the greater New Orleans area. Because of the downsizing of the Company, as previously disclosed, the Company has been able to reduce the number of layers of management and effect significant cost savings. Formerly, the Company was divided into five districts, each with its own District Manager reporting to a Director of Stores. Beginning in August 1997, the Company eliminated the District Manager level of management, and store managers now report directly to the Director of Stores. The Director of Stores is assisted by an Operations and Loss Prevention Director. The Director of Stores has over 25 years of retail sales management experience with major, multi-unit retailers, and the Director of Operations and Loss Prevention has over 12 years of retail experience in the consumer electronics and appliances industry. The management structure of each store consists of a full-time store manager, an assistant store operations manager and a sales manager. The assistant store operations managers have responsibility for most non-selling tasks such as inventory control, receiving, delivery and other operations. The Company's store management structure is designed to maximize each store manager's presence on the sales floor and thus his or her personal involvement in sales and customer service. Each store manager's compensation consists of a salary based on the store's size, and an annual bonus based on certain key financial performance criteria. Assistant store operations managers are compensated in a similar fashion. The sales managers' compensation is based almost completely on commission sales. All of the Company's sales counselors are paid on a commission basis. Additionally, the Company motivates its sales counselors with recognition awards and sales contests and by providing opportunities for advancement within the Company. The Company has developed its own materials and courses for management training and development. Campo has a system to identify sales counselors with management potential, assess the strengths and developmental needs of each individual and tailor a development plan to expedite his or her growth within the organization. All new managers are required to complete a one month initial training program. The Company also conducts periodic store management workshops and monthly sales managers meetings to continue the growth and development of its sales management teams. Customer Services. The Company supports its merchandise sales by providing a number of important customer services including guaranteed next-day, same day and timed delivery in most metropolitan areas, home and car installation, an improved type of extended warranty contract, and a thirty-day, no questions asked, return policy on most products. The Company also offers in select markets free or reduced rate computer training classes to purchasers of its computer products. The Company's "Next-Day Express Metro Delivery" service guarantees that a major purchase will be delivered to the customer by the day after purchase or the Company will refund the purchase price to the customer. In rare instances, the Company has been required to refund to customers the purchase price of an item because of the Company's inability to deliver the item by the day after purchase. The Company also offers same day and timed delivery of appliances in certain markets at a premium price. The same day service is available on purchases made before 3 p.m. and the timed delivery service offers customers a narrower delivery time window that includes evening delivery hours. The Company believes its delivery service has contributed to the Company's significant sales growth in the appliance category, indicating that this service provides a competitive advantage and is highly desired by customers. Many of the Company's competitors do not offer even next-day delivery of major appliances. The delivery service is currently provided by both in-house delivery services and independent contractors approved by the Company, however, the Company plans to shift to using solely independent contractors for its delivery services which provides a cost-savings to the Company. Product Service and Product Performance Guarantee (PPG). At the time of purchase of most products, each customer may elect to purchase an improved version of an extended warranty contract called a "Product Performance Guarantee" ("PPG"). While most extended warranties simply extend the manufacturer's limited warranty for a number of extra years the PPG program guarantees to keep the product in the same operating condition as when new. Product performance deterioration resulting from normal use will be brought back to original "like new" quality by an authorized service center under the provisions of this program. Products damaged from power surges caused by lightening, or other conditions will also be automatically replaced in most instances. Generally, these PPG contracts provide one to five years of extended warranty coverage and are renewable, which promotes post- sale customer satisfaction and a longer-term relationship with the Company. The contracts are administered for the Company by Federal Warranty Service Corporation ("Federal"), an unaffiliated third party warranty company, although the Company's customer service department handles all questions and problems regarding service and the PPG contracts. Federal is owned by American Bankers Insurance Group. Federal performs the repair services required by the contracts through factory authorized service centers and is required by its agreement with the Company to maintain insurance to fully protect the Company in the event that Federal fails to fulfill its obligations under the PPG contracts. The Company sells the PPG contracts to Federal on a non-recourse basis. Controls. The Company closely monitors the performance of its sales personnel as well as the sales results and operations at each of its stores through its management information system. The Company takes cyclical physical inventory counts of selected categories on a regular basis throughout the year, and a complete physical inventory of each store at least once per year. Each store is also visited at least twice monthly by members of corporate management ranging from the President of the Company to the Vendor Products Return Specialist. Supplementing these visits are "surprise" safety and loss prevention audits twice annually at each location by the Company's insurance underwriter. Each store is connected with the Company's wide area computer network which allows for the instant exchange of e-mail messages from or to any point in the organization. This allows for rapid dissemination of directed changes in store procedures, pricing changes and other corporate directives. Information Systems The Company utilizes computer technology to support its point-of- sale, retail management, and financial software applications. These software applications are maintained primarily by the Company's in- house information systems department. The hardware platform, an IBM AS/400 model F90, has been upgraded as needed to accommodate the Company's recent aggressive growth. All stores and distribution centers are equipped with computer terminals and printers which communicate interactively to the host AS/400 system at the Company's corporate headquarters. The hardware, telecommunications network, and interactive software allow the Company to have "real-time" sales and inventory information. The activity of all stores and distribution centers may be viewed by management via on-line inquiry at any time. This allows for decisions to be based on current, real-time information and provides immediate feedback on sales activity associated with special promotions and events. Trend, gross margin, and sales analysis reports are produced each morning from the previous day's business. The Company's need for real-time inventory and distribution information is driven by a variety of reasons, the most significant being efficient management of inventory. The auto-replenishment feature of the system is utilized to replenish store stock rapidly from the Company's distribution centers. Additionally, this real- time inventory information enables the Company to meet its guaranteed next-day delivery policy and to facilitate its same day and timed delivery services. During the first quarter of fiscal 1997, the Company leased portions of a new Hewlett-Packard hardware system utilizing Oracle and GERS retail software that was intended to integrate all store processes into one system, allow for user-driven reporting based on individual needs for information, and improve inventory management and the financial reporting function. Because of the Chapter 11 Bankruptcy filing and the cash position of the Company at that time, this project was interrupted prior to implementation. However, an e- mail system was implemented which has improved communications with the stores and includes on-line help with regard to Company policies and procedures, delivery and inventory information and other reporting functions. The Company estimates that it would require additional cash expenditures of approximately $900,000 to complete implementation of the planned system, and has decided to delay implementation of this system for at least two years due to the reorganization process and cash restraints. During fiscal 1998, the Company will re-evaluate its information systems strategy and alternatives. Because of this delay, during fiscal 1998 the Company's existing software systems will have to be evaluated and programs upgraded or changed to be year 2000 compliant. The current cost of this effort is still being evaluated. Competition The Company's business is highly competitive in all product categories. In general, the Company's competitors include other specialty stores, independent consumer electronics and appliance stores, department stores, warehouse clubs, mass merchandisers, discount stores and catalogue showrooms, many of which are national in scope and have significantly greater resources than the Company. The Company believes that it competes in its current markets most directly with Sears, Wal-Mart and Sams (in all markets), Montgomery Wards (all markets except New Orleans) and Circuit City in certain of its markets. The Company competes with these companies by aggressively advertising and emphasizing its product selection, guaranteed low prices and superior customer service. The Company believes it is positioned in its current market areas to compete effectively with national and other regional companies. However, there can be no assurance that the Company will not face additional competition in its current or future markets from new or existing competitors. Employees As of November 23, 1997, the Company employed approximately 778 persons, 625 of whom were full-time employees and 153 of whom were part-time. The Company is not a party to any collective bargaining agreement and is not aware of any efforts to unionize its employees. The Company considers its relations with its employees to be good. Trade Names and Service Marks The Company holds various federal trade names and service mark registrations including rights to the name "Campo." The Company believes that this trade name has acquired substantial goodwill and reputation and broad consumer recognition as a trade name of the Company within its market areas and that its continued use is important to the development of its business. The Company is not aware of any adverse claims or infringements concerning any of its trade names or service marks. ITEM 2. PROPERTIES The Company's general policy is to lease its stores in order to limit its investments in fixed assets and increase the availability of capital for other purposes; however, as of August 31, 1997, the Company does own the land and buildings for six of its Campo Concept stores. All of its other stores are leased from unrelated parties except two stores which are leased from the estate of Mr. Tony Campo, the founder and former majority shareholder of the Company, or a family LLC owned by his descendants. The Company's store leases have generally provided for a base rental and have not provided for a percentage of sales in addition to the fixed rent; however, two leases for Campo Concept stores require percentage rents. In addition, the leases generally require the Company to pay all or a portion of the real estate taxes and assessments, utilities, insurance and common area and interior maintenance and repairs. Rental payments (including amounts paid in respect to expenses, taxes and other charges) by the Company aggregated approximately $5.3 million in fiscal 1997. The table below sets forth certain information concerning the Company's stores. Calendar Approximate Year Gross Selling Lease Opened Square Square Expir- or Footage Footage ation Acquired Date(1) Campo Stores Claiborne Ave., New Orleans, LA 1967 22,000 5,000 2011 Bloomfield Road, New Orleans, LA 1977 24,000 18,000 2017 Campo Concept Stores Northlake Shopping Ctr., Mandeville, LA 1991 18,410 11,844 2006 Edgewood Village Shopping Ctr., Biloxi, MS 1992 19,751 11,482 2012 2801 Veterans Blvd., Kenner, LA 1992 20,153 12,555 2012 Oak Ridge Plaza, Marrero, LA 1992 24,287 11,960 2002 The Crossings Shopping Ctr., Slidell, LA 1993 19,840 12,206 2018 8888 Airline Hwy., Baton Rouge, LA 1993(2) 49,043 17,976 N/A East Lake Plaza, New Orleans East, LA 1993 19,000 14,209 2013 Bossier Corners Shopping Center, Bossier City, LA 1994 21,276 14,404 2024 Oak Park Shopping Center, Lake Charles, LA 1994 26,024 15,329 2024 4600 Hardy Street, Hattiesburg, MS 1994 29,264 16,866 2032 6235 N. Davis Highway, Pensacola, FL 1994 51,900 18,871 2024 4641 Pecanland Mall Dr., Monroe, LA 1994(2) 27,500 17,553 N/A 8815 Jewella Rd., Shreveport, LA 1994(2) 30,000 17,553 N/A 146 Wildwood Parkway, Birmingham, AL 1994 30,000 17,338 2024 6981 Crestwood Blvd., Birmingham, AL 1994(2) 30,500 19,400 N/A Wiregrass Mall, Dothan, AL 1995(2) 30,000 18,894 N/A 525 West 23rd St., Panama City, FL 1995 47,057 17,770 2017 3943 Airport Road, Mobile, AL 1995(2) 30,000 20,000 N/A __________ (1) Includes all renewal options unless otherwise indicated. (2) These facilities are owned by the Company. ________________ Until August 1996, the Company's corporate headquarters were located in an approximately 46,000 square foot leased facility in an office building in Covington, Louisiana. In September 1996 the Company consolidated its corporate headquarters into approximately 20,000 square feet of space located in the same office building. This facility contains the Company's executive offices, and accounting, data processing, merchandising and marketing operations. The Company owns a 100,000 square foot warehouse and distribution facility in Harahan, Louisiana and leases another facility with approximately 48,000 square feet of warehouse space adjacent to the Harahan facility. The Company closed its Shreveport distribution center, which contained approximately 50,000 square feet of warehouse space and the administrative offices for its North Louisiana district in October 1997, and in July 1997 closed its Alabama distribution facility, which contained approximately 110,000 square feet of warehouse space, in Bessemer, Alabama. The Claiborne Avenue store is owned by the Campo Family LLC and leased to the Company. The Company subleases the Bloomfield Road store from Campo Appliance Co. of Clearview, Inc., a corporation wholly-owned by the estate of Mr. Tony Campo. ITEM 3. LEGAL PROCEEDINGS On June 4, 1997, the Company filed a voluntary petition in the U.S. Bankruptcy Court for the Eastern District of Louisiana for reorganization under Chapter 11 of the Bankruptcy Code, and is currently operating its business as debtor-in-possession under the supervision of the Court. The Company is not a party to any other material legal proceedings. The Company is, however, involved in various routine claims and legal actions which arise in the ordinary course of business. Management of the Company intends to vigorously defend these claims and believes that the ultimate disposition of these matters will not have a material adverse effect on the Company's financial condition, results of operations or cash flow. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Annual Meeting of the shareholders of Campo Electronics, Appliances and Computers, Inc. (the "Meeting") was held on September 25, 1997 and 5,127,368 shares were represented. The voting tabulation for the election of directors, which is the only matter to come before the Meeting, follows: William E. Wulfers, 3,671,625 votes for, 1,455,743 votes withheld; and Anthony J. Correro, III, 3,671,075 votes for, 1,456,293 votes withheld. The following directors' terms of office continued after the Meeting: Donald T. Bollinger, Anthony P. Campo, Joseph E. Campo, Barbara Treuting Casteix, David L. Ducote and L. Ronald Forman. PART II ITEM 5. MARKET PRICE FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS The Company's Common Stock is traded on the Nasdaq National Market under the symbol CMPOQ. The following table sets forth, for each quarterly period in the two most recent years, the range of high and low sales prices, as reported by the Nasdaq National Market: High Low Fiscal Year 1996: First Quarter (November 30, 1995) 6-1/2 3-5/8 Second Quarter (February 29, 1996) 4-1/8 2-3/4 Third Quarter (May 31, 1996) 3-3/4 2-1/4 Fourth Quarter (August 31, 1996) 2-5/8 1-5/8 Fiscal Year 1997: First Quarter (November 30, 1996) 2-3/16 1-7/16 Second Quarter (February 28, 1997) 1-13/16 15/16 Third Quarter (May 31, 1997) 2-1/8 7/8 Fourth Quarter (August 31, 1997) 1-13/16 9/16 The Company is prohibited from paying dividends on its Common Stock by the terms of its existing debt instruments. See "Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources." As of November 28, 1997, there were approximately 361 record holders of the Company's Common Stock. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT Information With Respect to Directors Set forth below is information regarding the age and principal occupation or employment of each director. Unless otherwise indicated, each director has been engaged in the principal occupation shown for more than the past five years. Name, Age, and Principal Occupation First Serving Elected Term Director Expiring William E. Wulfers, 51, (1) 1997 2000 President and Chief Executive Officer Donald T. Bollinger, 48,(2) 1997 1999 Chairman and Chief Executive Officer Bollinger Shipyards, Inc. Anthony P. Campo, 42, (3)(4) 1991 1999 Private Investments Joseph E. Campo, 43, (3)(5) 1991 1998 President, Golf Zone, Inc., a retail golf supply store Anthony J. Correro, III, 55, (7) 1997 2000 Partner, Correro Fishman Haygood Phelps Weiss Walmsley & Casteix, LLP, a law firm Barbara Treuting Casteix, 44, (6) 1992 1998 Managing Partner, Barrios, Kingsdorf & Casteix, L.L.P., a law firm David L. Ducote, 29 1997 1998 Chief Executive Officer, Tchoupitoulas Partners, Inc., a private investment and merchant bank; Vice Chairman, Park One, Inc., a developer, owner and operator of commercial parking facilities L. Ronald Forman, 50 1994 1999 President and Chief Executive Officer of the Audubon Institute, Inc., operator of a zoo, aquarium and several parks _______________ (1) William E. Wulfers has served as President and Chief Executive Officer of the Company since June 1997. For more than five years before then he worked for Wal-Mart Stores, Inc. in a variety of positions beginning in 1983 as store manager, then as District Manager and most recently as Regional Vice President-Store Operations for Louisiana, Arkansas, Mississippi, Virginia, North Carolina, South Carolina, Georgia and Florida. William Wulfers also worked in a variety of capacities for Woolco Company, a division of F. W. Woolworth from 1967 to 1979, most recently as District Manager for South Florida. (2) Donald T. Bollinger has served as Chairman of Bollinger Shipyards, Inc. since 1989 and as its Chief Executive Officer since 1985. He also serves on the Board of Directors of Tidewater Inc. and Bank One of Louisiana. (3) Anthony P. Campo and Joseph E. Campo are brothers. (4) Since March 1997, Anthony Campo has managed certain family investments and properties. He served as Chairman of the Board and Chief Executive Officer from May 1992 until March 1997. He also served as President of the Company from September 1991 until August 1996, and as Senior Vice President of the Company from 1984 to 1991. (5) Since July 1997, Joseph Campo has served as President of Golf Zone, Inc. and manages certain family investments and properties. From February 1997 to July 1997, Joseph Campo served as Director-Loss Prevention for the Company. From December 1995 until February 1997, Joseph Campo managed certain family investments and properties. For more than five years prior to December 1995, Joseph Campo served as Director- New Market Development for the Company. (6) Barbara Treuting Casteix has served in this position since October 1, 1995. For more than five years prior to October 1, 1995, Barbara Casteix served as managing partner of Cleveland, Barrios, Kingsdorf & Casteix, L.L.P. (7) Anthony J. Correro, III has served in this position since July 1996. From June 1994 until July 1996 he was a partner of Correro, Fishman & Casteix, LLP. For more than five years before June 1994, Anthony Correro was a partner in the law firm of Jones, Walker, Waechter, Poitevent, Carrere & Denegre, L.L.P. He is also a director of Avondale Industries, Inc. ________________ Information with respect to Executive Officers The following table sets forth certain information with respect to the executive officers who are not also directors of the Company as of the date of this report. The Company is not aware of any family relationships between any executive officers of the Company. Executive officers are appointed by and serve at the discretion of the Board of Directors. Name Age Position Michael G. Ware 48 Senior Vice President, Chief Financial Officer and Secretary John Watson 49 Senior Vice President-Operations Malcolm Ballinger 50 Senior Vice President- Merchandising and Advertising Michael G. Ware joined the Company as Senior Vice President, Chief Financial Officer and Secretary in August 1997. From July 1996 to August 1997, he served as a private consultant to the retail industry. From July 1993 to July 1996 he served as Senior Vice President and Chief Financial Officer of Sunshine-Jr. Stores, Inc., which filed for Chapter 11 Bankruptcy in December 1992 and successfully emerged from Chapter 11 in June 1994. From December 1987 to October 1992 he served as Vice President and Chief Financial Officer of Farm Stores, Inc., which filed for Chapter 11 in 1991 and successfully emerged in September 1992. Michael Ware also served as Vice President-Controller of Kash n' Karry, Inc. from July 1987 to December 1987, as Vice President and Chief Financial Officer of Bin & Barrel, Inc. from December 1985 to December 1986, as Vice President of Finance of Little General Stores and Circle K General, Inc. from May 1977 to August 1985, and as a Staff Accountant and later a Senior Accountant for Price Waterhouse from September 1972 to May 1977. He is a certified public accountant. John Watson joined the Company as Senior Vice President- Operations in July 1997. From 1994 to July 1997, he served as Regional Manager for Wal-Mart Stores, Inc. for North Carolina and Virginia, and from 1983 to 1994 worked in various capacities for Rose's Stores, including District Manager, Regional Human Resources Manager and Regional Manager. From 1971 to 1983 he served in a variety of capacities for Woolco Company, a division of F. W. Woolworth, most recently as District Manager. Malcolm Ballinger joined the Company as Senior Vice President- Merchandising and Advertising in July 1997. From November 1995 to July 1997, Malcolm Ballinger served as General Merchandise Manager for Apex, Inc., an appliance and electronics retailer in Rhode Island, and from July 1994 to November 1995, served as General Merchandise Manager for the Company. From December 1992 to July 1994, he served as Merchandise Manager for Fretter Inc., an appliance and electronics retailer in the mid-west. He was the owner/operator of Mrs. B's Appliance & T.V. from August 1989 to December 1992, and served as Vice President, Merchandising and Sales for World Radio Inc. from January 1984 to August 1989. He served in a variety of capacities with Silo Inc. from September 1977 to January 1984, most recently as Vice President, Merchandising and Sales. Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Securities Exchange Act of 1934 requires the Company's directors, executive officers and 10% shareholders to file with the Securities and Exchange Commission reports of beneficial ownership, and changes in beneficial ownership of the Common Stock of the Company. Barbara Casteix failed to timely file a Statement of Changes in Beneficial Ownership (Form 4) to report a transaction by her husband in November 1995, and reported this transaction on a Form 4 in January 1997. William Wulfers failed to timely file an Initial Statement of Beneficial Ownership (Form 3) to report his holdings as of the date of his employment with the Company, and filed the Form 3 in July 1997. Dean Hanby and James Rogan, two former executive officers of the Company, failed to timely file their Initial Statements of Beneficial Ownership (Form 3) to report their holdings as of the date of their employment with the Company, and filed the Form 3s in September 1997. ITEM 11. EXECUTIVE COMPENSATION Summary of Executive Compensation The following table sets forth information with respect to compensation paid by the Company for services rendered in all capacities during the fiscal years ended August 31, 1997, 1996 and 1995 to the Chief Executive Officer and to each of the four most highly compensated executive officers of the Company whose annual compensation exceeded $100,000. SUMMARY COMPENSATION TABLE Annual Compensation Long-Term All Other Compensation Compensation Awards Names and Year Salary Bonus Other Restricted Number Principal Position Annual Stock of Compen- Awards Options sation William E. Wulfers 1997 $ 57,692 $20,833 $ ---- $125,000(2) 100,000 $ ------- President and Chief Executive Officer(1) Anthony P. Campo, 1997 197,423 50,000 31,057(4) -------- ------- 379,000(5) Former Chairman of 1996 351,581 53,311 -------- -------- ------- -------- the Board and Chief 1995 318,467 53,300 -------- -------- 50,000(6) -------- Executive Officer(3) Rex O. Corley, Jr. 1997 178,942 25,000 -------- -------- 75,000(6) 76,103(8) Former President and 1996 163,737 10,000 -------- -------- ------- -------- Chief Operating 1995 155,082 25,000 -------- -------- ------- -------- Officer, Former Acting Chairman of the Board and Chief Executive Officer(7) James B. Warren 1997 152,885 25,000 -------- -------- 50,000(6) 37,500(8) Former Vice 1996 14,423 ------- -------- -------- ------- 3,000(10) President- Merchandising(9) Charles S. Gibson 1997 135,577 25,000 -------- -------- 50,000(6) -------- Former Vice 1996 129,816 30,000 -------- -------- ------- -------- President- 1995 96,154 15,000 -------- -------- 10,000 -------- Logistics and Operations(11) John K. Ross 1997 97,115 50,000 -------- -------- 50,000(6) -------- Former Vice 1996 102,497 30,000 -------- -------- ------- 19,100(13) President- 1995 72,308 ------- -------- -------- 5,000(6) -------- Marketing(12) __________ (1) William Wulfers joined the Company on June 15, 1997. (2) Calculated based on the grant of 100,000 shares of restricted stock valued at the per share closing price of the Common Stock on the date of grant (June 15, 1997). The restrictions on these shares lapsed on July 15, 1997. (3) Anthony Campo served as Chief Executive Officer of the Company until March 1997. (4) Includes $17,307 for unused vacation time and $13,750 for a Company car. (5) Includes $363,000 paid or accrued as severance upon resignation of the officer, and $16,000 paid as directors' fees after March 1997. (6) These options automatically terminated upon resignation of the officer. (7) Rex Corley served as Acting Chief Executive Officer of the Company from March 1997 to June 1997. (8) Amount paid or accrued as severance upon resignation of the officer. (9) James Warren joined the Company in fiscal 1996 and resigned at the end of fiscal 1997. (10) Moving allowance. (11) Charles Gibson joined the Company in fiscal 1995 and resigned before the end of fiscal 1997. (12) John Ross became an executive officer of the Company in December 1994 (fiscal 1995) and resigned from the Company before the end of fiscal 1997. (13) Tuition reimbursement for Tulane MBA program. ____________________ Option Grants OPTION GRANTS IN FISCAL YEAR 1997 Name Number Percent Exercise Expiration Potential Value of of Total Price Date at Assumed Options Options Annual Rates Granted Granted(1) of Stock Price Appreciation for Option Term 5% 10% William E. Wulfers 100,000 19.08% 1.187 06/18/07 $ 74,650 $189,177 Anthony P. Campo 0 0 --- --- --- --- Rex O. Corley, Jr. 75,000(2) 14.31% 2.0625 10/04/06 97,280 246,534 James B. Warren 50,000(2) 9.54% 2.0625 10/04/06 64,855 164,355 Charles S. Gibson 50,000(2) 9.54% 2.0625 10/04/06 64,855 164,355 John K. Ross 50,000(2) 9.54% 2.0625 10/04/06 64,855 164,355 ________________ (1) Based on grants of options exercisable for a total of 524,000 shares during fiscal 1997. (2) These options automatically terminated upon resignation of the officer. Option Holdings The following table provides information concerning unexercised options held by the named executive officers at August 31, 1997. FISCAL YEAR END OPTION VALUES Number of Securities Value of Unexercised Underlying Unexercised In-The-Money Options Name Stock Options at August at August 31, 1997 31, 1997 Exercisable Unexercisable Exercisable Unexercisable - ----------------------------------------------------------------------------- William E. Wulfers 0 100,000 0 $ 12,550 Anthony P. Campo 0 0 0 0 Rex O. Corley, Jr. 0 0 0 0 James B. Warren 0 0 0 0 Charles S. Gibson, Jr. 0 0 0 0 John K. Ross 0 0 0 0 - ----------------------------------------------------------------------------- ____________________ Employment and Severance Agreements and Arrangements General Until March 1997, the Company had employment agreements only with its two most senior executives, Anthony Campo and Donald Galloway. Donald Galloway resigned in July 1996 and Anthony Campo resigned in March 1997, and both received severance benefits in accordance with their employment agreements. At the time of Anthony Campo's resignation, the Board was also in the process of reorganizing the Company's operations and it engaged Hewitt Associates LLC to make recommendations regarding appropriate executive retention and severance arrangements and director compensation packages that could be implemented by the Company in order to attract new board members and retain members of its executive management team during the reorganization period. After reviewing Hewitt's recommendations, the Board determined to increase the amount of its director compensation as noted under "Compensation of Directors." The Board also decided to enter into employment agreements with its five most senior executives, as described below. All five of these executives have now resigned from the Company and two were paid the severance benefits described below. The Company currently has only a personal service and non- competition agreement with Anthony Campo, as described below, and an employment agreement with William Wulfers, the Company's new President and Chief Executive Officer, as described below. Employment Agreements Anthony P. Campo. The Company had an employment agreement with Anthony Campo pursuant to which the Company agreed, among other things, to pay an annual base salary of $300,000, $330,000 and $363,000 for the 1994, 1995 and 1996 calendar years, respectively. On May 16, 1996 the employment agreement was amended to extend the initial term of the agreement through December 31, 1997 and to provide that Mr. Campo's compensation for calendar year 1997 would remain the same as that provided in the agreement for calendar year 1996. Anthony Campo's employment agreement also provided for payment of an annual cash bonus of $50,000 and an annual incentive bonus of 2% of the Company's net income before taxes, and provided that if his employment were terminated during the initial term of the agreement by the Company for any reason other than cause (as defined in the agreement) or by him for good reason (as defined in the agreement), he would be paid an amount equal to his then current base salary multiplied by the number of years remaining in such initial term, but in no event less than one full year's base salary. Effective March 19, 1997, Anthony Campo resigned as an executive officer of the Company and entered into an agreement with the Company that provides for the continuation of certain benefits for twelve months following resignation and provides for a lump sum payment in the amount of $363,000. The Company also agreed to continue making the lease payments on his Company car for the duration of the lease which is approximately 18 months from the date of his resignation. The Company also entered into a personal services contract and non- competition agreement with Anthony Campo pursuant to which he has agreed to render consultant services to the Company and not to compete with the Company for two years, for which agreements he is to be paid a fee of $5,000 per month. Rex O. Corley, Jr. Upon Anthony Campo's resignation, the Company entered into an employment agreement dated March 21, 1997 with Rex O. Corley, Jr. pursuant to which he was employed as Acting Chairman of the Board and Chief Executive Officer of the Company until a permanent replacement for Anthony Campo was appointed. Pursuant to this Agreement, which had a two-year term, the Company agreed to pay Rex Corley an annual base salary of $200,000 for the first year and $210,000 for the second year. The Agreement also provided for the payment of a one-time performance bonus upon execution of the agreement of $25,000 and a stay bonus of $200,000 due 15 days after the occurrence of certain events provided that he was still a full time employee of the Company on such date. The agreement also provided for the payment of severance benefits equal to the amount he would have received had his employment terminated (a) by reason of death or Disability (as defined in the agreement and including the payment of the stay bonus in accordance with the calculation described therein) and (b) (i) at the first anniversary of the agreement or (ii) six months from the actual termination date, if his employment was terminated for any reason other than cause (as defined in the agreement) or by him for good reason (as defined in the agreement), but any such severance would be reduced by any amount he had previously been paid and by any severance benefits payable under the Company's severance plan (discussed below). Effective June 19, 1997, Rex Corley resigned as an executive officer and director of the Company and agreed to accept a lump sum severance payment of $75,000. Charles S. Gibson, Jr. The Company also entered into a two-year employment agreement, dated March 21, 1997, with Charles S. Gibson, Jr., which provided for (i) a base salary of $150,000 for the first year and $157,500 for the second year, (ii) a one-time performance bonus payable upon execution of the agreement of $25,000 and (iii) a stay bonus of $150,000 payable within 15 days after the occurrence of certain events. This agreement also provided for the payment of severance benefits on substantially the same terms as provided in Rex Corley's agreement. This officer resigned before the end of fiscal 1997, and no severance benefits were paid to this officer. John K. Ross and James B. Warren. The Company also entered into one-year employment agreements, dated April 14 and April 23, 1997, with John K. Ross and James B. Warren, respectively. The agreement with John Ross provided for a base salary of $125,000, a one-time performance bonus of $25,000 payable upon execution of the agreement and an incentive bonus of up to $25,000 payable 15 days after the first anniversary of the agreement provided certain performance criteria were met. The agreement with James Warren provided for a base salary of $150,000, a one time performance bonus payable upon execution of the agreement of $25,000 and an incentive bonus of up to $100,000 payable within 15 days after the first anniversary of the agreement provided certain performance criteria were met. Both agreements provided for a six month severance benefit if the officer's employment were terminated for any reason other than cause or by the executive with good reason, such amount to be reduced by any amounts previously paid and by any severance benefits payable under the Company's severance plan. John Ross and Jim Warren resigned effective July 18 and August 29, 1997, respectively. No severance payments were made to John Ross; however, the Company agreed to pay as severance to James Warren the amount of $37,500, payable over three months. William Wulfers. Effective June 15, 1997, William E. Wulfers became the Company's President and Chief Executive Officer and a director. The Company entered into an employment agreement with William Wulfers, dated as of June 15, 1997, which has a term expiring on August 31, 2000, providing for an annual base salary of $300,000, bonuses of $20,833 for the fiscal year ended August 31, 1997, and $100,000 for the fiscal year ended August 31, 1998, and an incentive bonus equal to $500 per basis point of pre-tax net profit margin achieved by the Company for each of the fiscal years ended August 31, 1999 and 2000. The agreement also provides for six months severance benefits if he is terminated without cause or he terminates his employment for good reason. Pursuant to the agreement, the Company also awarded William Wulfers 100,000 shares of restricted stock, the restrictions on which lapsed on July 15, 1997 and non-qualified stock options for 100,000 shares, which become exercisable on June 15, 2000. The agreement also provides for additional grants of non-qualified stock options for 100,000 shares each on June 15, 1998 and 1999, which will become exercisable on June 15, 2000. Severance Plan and Agreements. Effective August 29, 1996, the Company adopted a Severance Plan for its executive officers which provides for the payment of certain benefits upon an involuntary or constructive termination of an officer's employment, except for cause, within one year following a change of control. Benefits payable under the plan include a cash payment in an amount equal to six month's salary and continued health and life insurance benefits for six months after termination. The Company has also agreed to provide each of Malcolm Ballinger, Michael Ware and John Watson with a additional severance payment of $37,500 if such officer's employment is terminated by the Company without cause. Compensation of Directors Each member of the Board of Directors who is not a full-time employee of the Company is paid $1,000 per month, and is reimbursed for all ordinary and necessary expenses incurred in attending any meeting of the Board or any committee. Beginning in March 1997, each non-employee director also receives $1,000 for each Board and Committee meeting attended and each Chairman of a Board Committee also receives $3,000 per year. Compensation Committee Interlocks and Insider Participation For fiscal 1997, until March 1997 the members of the Company's Compensation Committee were L. Ronald Forman and Mervin L. Trail, M.D., and since March 1997 the members of the Compensation Committee have been L. Ronald Forman, Donald T. Bollinger and David L. Ducote. No member of the Compensation Committee has ever been an officer or employee of the Company, nor has or has had any other significant relationship with the Company. No executive officer of the Company served in the last fiscal year as a director or member of the compensation committee of another entity, one of whose executive officers served as a director or on the Compensation Committee of the Company. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT Security Holdings of Directors and Executive Officers The following table sets forth certain information concerning the beneficial ownership of the Common Stock of the Company by (i) each director, (ii) each executive officer named in the Summary Compensation Table and (iii) all directors and executive officers of the Company as a group, as of November 28, 1997, determined in accordance with Rule 13d-3 of the Securities and Exchange Commission. Unless otherwise indicated, all shares shown as beneficially owned are held with sole voting and investment power. Number of Percent Name of Beneficial Owner Shares of Class William E. Wulfers 100,000 1.73% Anthony P. Campo(1) 306,853.75(1) 5.32% Joseph E. Campo 313,508.75(2) 5.44% Barbara Treuting Casteix 3,850(3) * L. Ronald Forman 0 0 Donald T. Bollinger 114,600 1.99% David L. Ducote 97,300(4) 1.69% Anthony J. Correro, III 0 0 Rex O. Corley, Jr.(5) 2,000 * Charles S. Gibson(5) 0 0 John K. Ross(5) 800 * James B. Warren(5) 0 0 All directors and executive officers as a group (11 persons) 1,056,112.5(6) 18.17%(7) __________ * Less than 1% (1) Includes 66,042.9 shares held by trusts for the benefit of Anthony Campo's children of which he serves as trustee, and 25,998 shares held by a partnership of which he is a partner. Also includes 6,572.82 shares, representing his interest in shares held by an LLC, of which he serves as a manager (the "Campo Family LLC"), and 2,577.93 shares, representing the interest held by a trust for the benefit of his children, of which he serves as trustee, in shares held by the Campo Family LLC. (2) Includes 107,142.9 shares held by trusts for the benefit of Joseph Campo's children of which he serves as trustee. Also includes 6,572.82 shares, representing his interest in shares held by the Campo Family LLC, of which he serves as a manager, and 2,577.93 shares, representing the interest held by a trust for the benefit of his children, of which he serves as trustee, in shares held by the Campo Family LLC. (3) Includes 2,500 shares owned by Barbara Casteix's husband, of which she disclaims beneficial ownership. (4) Includes 26,800 shares held by a family corporation of which David Ducote serves as President. (5) This person resigned as an executive officer and/or director of the Company at or prior to the end of the 1997 fiscal year. (6) Includes 45,000 shares that such persons have the right to acquire through the exercise of stock options that are exercisable within 60 days. (7) Calculated on the basis of 5,766,906 shares outstanding at November 28, 1997 and 45,000 shares that all directors and executive officers as a group have the right to acquire through the exercise of stock options that are exercisable within 60 days. Security Holdings of Certain Beneficial Owners The following table lists those persons other than executive officers or directors of the Company who are known by the Company to own beneficially more than 5% of its outstanding Common Stock as of November 28, 1997. The information set forth below is based upon information furnished by the persons listed. Unless otherwise indicated, all shares shown as beneficially owned are held with sole voting and investment power. Name and Address of Beneficial Owner Number of Percent Shares of Class Gina Campo Morgan 342,008.76(1) 5.93% 214 Monsanto Luling, LA 70070 Dimensional Fund Advisors, Inc.. 314,800(2) 5.46% 1299 Ocean Avenue, 11th Fl. Santa Monica, CA 90401 __________ (1) Includes 71,428.6 shares held by trusts for the benefit of Ms. Morgan's children of which Ms. Morgan serves as trustee. Also includes 7,432.32 shares, representing Ms. Morgan's interest in shares held by the Campo Family LLC, of which Ms. Morgan serves as a manager, and 1,718.44 shares, representing the interest held by a trust for the benefit of Ms. Morgan's children, of which Ms. Morgan serves as trustee, in shares held by the Campo Family LLC. (2) Held as of December 31, 1996in portfolios of DFA Investment Dimensions Group Inc. (the "Fund"), a registered open-end investment company, in series of The DFA Investment Trust Company (the "Trust"), a Delaware business trust, or the DFA Group Trust and the DFA Participating Group Trust, investment vehicles for qualified employee benefit plans, for all of which Dimensional Fund Advisors Inc. ("Dimensional") serves as investment manager. Dimensional disclaims beneficial ownership of all such shares. Includes 94,800 shares as to which Dimensional shares voting power with certain officers of Dimensional who also serve as officers of the Fund and the Trust. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Prior to September 1991, the Company was controlled by Tony Campo, late father of Anthony P. Campo and Joseph E. Campo, and his seven children (the "Campo Family"). From September 1991 until the Company's initial public offering on February 23, 1993, the Company was controlled by the Campo Family. On September 1, 1991, the Company and Tony Campo entered into certain agreements pursuant to which (i) Tony Campo cancelled $4,676,520 of Company indebtedness to him, (ii) the Company redeemed all of Tony Campo's stock in the Company for its $5,611,144 promissory note (the "Note") and (iii) Tony Campo entered into a non-competition and personal services agreement with the Company providing for aggregate monthly payments of approximately $11,690 to him over ten years. On April 29, 1994, the Company paid $2,769,678 to Tony Campo with proceeds from the Company's secondary offering to pay off the remaining balance of the Note, and upon Tony Campo's death in December 1996, all further obligations of the Company under the agreement were extinquished. The Company leases one store from the Campo Family LLC and it subleases one store from Campo Appliance Co. of Clearview, Inc. ("Clearview"), a corporation wholly-owned by Tony Campo's estate. The Company believes that its lease payments under the lease and sublease are at fair market rental rates. The sublease requires lease payments identical to the payments required by the underlying lease which is with an unrelated third party lessor. For fiscal 1997, the Company paid aggregate rental payments under this lease and sublease of approximately $173,000. Barbara Casteix is the managing partner of Barrios, Kingsdorf & Casteix, which serves as general counsel to the Company. The Company paid $142,000 during fiscal 1997 to this firm for legal services rendered. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K 2. Financial Statement Schedules All schedules have been omitted because they are not applicable or not required, or the information appears in the financial statements or notes thereto. 3. Exhibits 3.1 Amended and Restated Articles of Incorporation of the Company(1), as amended by Articles of Amendment dated January 3, 1995.(2) 3.2 Composite By-laws of the Company, as of October 4, 1996.(3) 10.1 Master Lease of 2201 S. Claiborne Avenue, 110 Terry Parkway and 800 Distributors Row dated as of August 1, 1991 by and between Anthony J. Campo and Giant TC, Inc., as terminated with respect to Terry Parkway by Partial Termination of Master Lease dated as of December 30, 1992 by and between Anthony J. Campo and Giant TC, Inc.(1) 10.2 Lease of 5015 Bloomfield dated March 15, 1977, by and between Elmwood Development Co. and Campo Appliance Co. of Clearview, Inc., as amended by Supplemental and Amended Lease Agreement dated 1977, together with Sublease of 5015 Bloomfield dated as of August 1, 1991 by and between Campo Appliance Co. of Clearview, Inc. and Giant TC, Inc.(1) 10.3 Non-Competition Agreement dated September 1, 1991 by and between Giant TC, Inc. and Anthony J. Campo.(1) 10.4 Personal Services Contract dated September 1, 1991 by and between Giant TC, Inc. and Anthony J. Campo.(1) 10.5 Amendment and Restatement of Non-Competition Agreement and Personal Services Contract dated June 29, 1992 by and between Anthony J. Campo and Giant TC, Inc.(1) 10.6 Credit Card Program Agreement dated as of May 29, 1992 by and between Giant TC, Inc. and Monogram Credit Card Bank of Georgia(1), as amended by Amendment to Credit Card Program Agreement dated as of May 29, 1992 by and between Monogram Credit Card Bank of Georgia and Campo Electronics, Appliances and Computers, Inc. (formerly Giant TC, Inc.), dated October 29, 1993.(4) 10.7 Giant TC, Inc. 1992 Stock Incentive Plan(1), as amended by Amendment No. 1 to Campo Electronics, Appliances and Computers, Inc. 1992 Stock Incentive Plan dated October 13, 1993(5), as amended by Amendment No. 2 to Campo Electronics, Appliances and Computers, Inc. 1992 Stock Incentive Plan dated May 20, 1994(6), as amended by Amendment No. 3 and the Amended and Restated Campo Electronics, Appliances and Computers, Inc. 1992 Stock Incentive Plan dated December 7, 1994(2), as amended by the Second Amended and Restated Campo Electronics, Appliances and Computers, Inc. 1992 Stock Incentive Plan dated January 12, 1996,(7) as amended by Amendment No. 1 thereto dated October 4, 1996,(3) as further amended and restated by the Third Amended and Restated 1992 Stock Incentive Plan dated August 8, 1997. 10.8 Form of Indemnity Agreement by and between Giant TC, Inc. and each of Anthony P. Campo, Joseph E. Campo, Barbara Treuting Casteix, L. Ronald Forman, Donald T. Bollinger, Anthony J. Correro, III, David L. Ducote, William E. Wulfers, Michael G. Ware, John Watson and Malcolm Ballinger.(1) 10.9 Employment Agreement dated June 29, 1992 by and between Giant TC, Inc. and Anthony P. Campo , as amended December 30, 1992(1) as terminated and replaced by Employment Agreement dated December 16, 1993 by and between Campo Electronics, Appliances and Computers, Inc. and Anthony P. Campo(5), as amended by the Amendment to Employment Agreement dated May 16, 1996,(7) as terminated by the Severance Agreement and Personal Services Contract and Non-Competition Agreement dated March 19, 1997.(8) 10.10 Employment Agreement dated June 29, 1992 by and between Giant TC, Inc. and Donald E. Galloway(1) as terminated and replaced by Employment Agreement dated December 16, 1993 by and between Campo Electronics, Appliances and Computers, Inc. and Donald E. Galloway(5), as amended by the Amendment to Employment Agreement dated May 16, 1996, as terminated by letter agreement dated July 12, 1996.(7) 10.11 Acquisition and Interim Servicing Agreement dated November 22, 1993 by and between Monogram Credit Card Bank of Georgia Item 14 and Campo Electronics, Appliances and Computers, Inc.(4) 10.12 Loan Agreement dated August 30, 1995 by and between Hibernia National Bank and Campo Electronics, Appliances and Computers, Inc.(9), as amended by the First Amendment to Loan Agreement as of August 30, 1995 by and between Hibernia National Bank and Campo Electronics, Appliances and Computers, Inc.(3), as amended by the Second Amendment to Loan Agreement dated May 31, 1996 by and between Hibernia National Bank and Campo Electronics, Appliances and Computers, Inc.(10), as amended by the Third Amendment to Loan Agreement dated December 1, 1996 by and between Hibernia National Bank and Campo Electronics, Appliances and Computers, Inc., as amended by Amendment to Loan Agreement dated June 25, 1997. 10.13 Loan Agreement dated August 30, 1995 by and between Met Life Capital Corporation and Campo Electronics, Appliances and Computers, Inc.(9) 10.14 Sale Agreement dated August 30, 1995 by and between Federal Warranty Service Corporation and Campo Electronics, Appliances and Computers, Inc.(9) 10.15 Change of Control Agreement dated as of August 29, 1996 by and between Campo Electronics, Appliances and Computers, Inc. and Anthony P. Campo.(7) 10.16 Campo Electronics, Appliances and Computers, Inc. Severance Pay Plan dated as of August 29, 1996.(7) 10.17 Employment Agreement, dated March 21, 1997, by and between the Company and Rex O. Corley, Jr., as terminated by Severance Agreement dated June 19, 1997.(8) 10.18 Employment Agreement, dated March 21, 1997, by and between the Company and Charles S. Gibson, Jr., as amended on June 24, 1997,(8) as terminated upon resignation of the officer. 10.19 Employment Agreement, dated March 21, 1997, by and between the Company and Wayne J. Usie, as amended on June 24, 1997,(8) as terminated upon resignation of the officer. 10.20 Employment Agreement, dated April 14, 1997, by and between the Company and John K. Ross,(8) as terminated upon resignation of the officer. 10.21 Employment Agreement, dated April 23, 1997, by and between the Company and James B. Warren,(8) as terminated upon resignation of the officer. 10.22 Employment Agreement, dated June 15, 1997, by and between the Company and William E. Wulfers.(8) 10.23 Consultation Agreement, dated April 17, 1997, by and between the Company and York Management Services, Inc. 23 Consent of Coopers & Lybrand L.L.P. 27 Financial Data Schedule __________ (1) Incorporated by reference from the Company's Registration Statement on Form S-1 (Registration No. 33-56796) filed with the Commission on January 6, 1993. (2) Incorporated by reference from the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended February 28, 1995. (3) Incorporated by reference from the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended November 30, 1996. (4) Incorporated by reference from the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 1993. (5) Incorporated by reference from the Company's Registration Statement on Form S-1 (Registration No. 33-76184) filed with the Commission on March 8, 1994. (6) Incorporated by reference from the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 1994. (7) Incorporated by reference from the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 1996. (8) Incorporated by reference from the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended May 31, 1997. (9) Incorporated by reference from the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 1995. (10) Incorporated by reference from the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended May 31, 1996. ____________________ b) Reports on Form 8-K A Current Report on Form 8-K was filed on June 4, 1997 to report the Company's filing of a voluntary petition to reorganize under Chapter 11 of the Federal Bankruptcy Code. (c) Exhibits All exhibits required by Item 601 of Regulation S-K have been filed. (d) Financial Statement Schedules All schedules have been omitted because they are not applicable or not required, or the information appears in the financial statements or notes thereto. 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. By: /s/ WILLIAM E. WULFERS William E. Wulfers President and Chief Executive Officer Dated:November 19, 1997 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 indicated on November 19, 1997. /s/ WILLIAM E. WULFERS President and Chief Executive William E. Wulfers Officer /s/ MICHAEL G. WARE Sr. Vice President, Chief Michael G. Ware Financial Officer and Secretary (Principal Financial and Accounting Officer) /s/ ANTHONY P. CAMPO Director Anthony P. Campo Director Joseph E. Campo /s/ BARBARA TREUTING CASTEIX Director Barbara Treuting Casteix /s/ L. RONALD FORMAN Director L. Ronald Forman /s/ DAVID L. DUCOTE Director David L. Ducote /s/ DONALD T. BOLLINGER Director Donald T. Bollinger /s/ ANTHONY J. CORRERO, III Director Anthony J. Correro, III EXHIBIT INDEX Exhibits Page No. 3.1 Amended and Restated Articles of Incorporation of the Company(1), as amended by Articles of Amendment dated January 3, 1995.(2) 3.2 Composite By-laws of the Company, as of October 4, 1996.(3) 10.1 Master Lease of 2201 S. Claiborne Avenue, 110 Terry Parkway and 800 Distributors Row dated as of August 1, 1991 by and between Anthony J. Campo and Giant TC, Inc., as terminated with respect to Terry Parkway by Partial Termination of Master Lease dated as of December 30, 1992 by and between Anthony J. Campo and Giant TC, Inc.(1) 10.2 Lease of 5015 Bloomfield dated March 15, 1977, by and between Elmwood Development Co. and Campo Appliance Co. of Clearview, Inc., as amended by Supplemental and Amended Lease Agreement dated 1977, together with Sublease of 5015 Bloomfield dated as of August 1, 1991 by and between Campo Appliance Co. of Clearview, Inc. and Giant TC, Inc.(1) 10.3 Non-Competition Agreement dated September 1, 1991 by and between Giant TC, Inc. and Anthony J. Campo.(1) 10.4 Personal Services Contract dated September 1, 1991 by and between Giant TC, Inc. and Anthony J. Campo.(1) 10.5 Amendment and Restatement of Non-Competition Agreement and Personal Services Contract dated June 29, 1992 by and between Anthony J. Campo and Giant TC, Inc.(1) 10.6 Credit Card Program Agreement dated as of May 29, 1992 by and between Giant TC, Inc. and Monogram Credit Card Bank of Georgia(1), as amended by Amendment to Credit Card Program Agreement dated as of May 29, 1992 by and between Monogram Credit Card Bank of Georgia and Campo Electronics, Appliances and Computers, Inc. (formerly Giant TC, Inc.), dated October 29, 1993.(4) 10.7 Giant TC, Inc. 1992 Stock Incentive Plan(1), as amended by Amendment No. 1 to Campo Electronics, Appliances and Computers, Inc. 1992 Stock Incentive Plan dated October 13, 1993(5), as amended by Amendment No. 2 to Campo Electronics, Appliances and Computers, Inc. 1992 Stock Incentive Plan dated May 20, 1994(6), as amended by Amendment No. 3 and the Amended and Restated Campo Electronics, Appliances and Computers, Inc. 1992 Stock Incentive Plan dated December 7, 1994(2), as amended by the Second Amended and Restated Campo Electronics, Appliances and Computers, Inc. 1992 Stock Incentive Plan dated January 12, 1996,(7) as amended by Amendment No. 1 thereto dated October 4, 1996,(3) as further amended and restated by the Third Amended and Restated 1992 Stock Incentive Plan dated August 8, 1997. 10.8 Form of Indemnity Agreement by and between Giant TC, Inc. and each of Anthony P. Campo, Joseph E. Campo, Barbara Treuting Casteix, L. Ronald Forman, Donald T. Bollinger, Anthony J. Correro, III, David L. Ducote, William E. Wulfers, Michael G. Ware, John Watson and Malcolm Ballinger.(1) 10.9 Employment Agreement dated June 29, 1992 by and between Giant TC, Inc. and Anthony P. Campo , as amended December 30, 1992(1) as terminated and replaced by Employment Agreement dated December 16, 1993 by and between Campo Electronics, Appliances and Computers, Inc. and Anthony P. Campo(5), as amended by the Amendment to Employment Agreement dated May 16, 1996,(7) as terminated by the Severance Agreement and Personal Services Contract and Non- Competition Agreement dated March 19, 1997.(8) 10.10 Employment Agreement dated June 29, 1992 by and between Giant TC, Inc. and Donald E. Galloway(1) as terminated and replaced by Employment Agreement dated December 16, 1993 by and between Campo Electronics, Appliances and Computers, Inc. and Donald E. Galloway(5), as amended by the Amendment to Employment Agreement dated May 16, 1996, as terminated by letter agreement dated July 12, 1996.(7) 10.11 Acquisition and Interim Servicing Agreement dated November 22, 1993 by and between Monogram Credit Card Bank of Georgia Item 14 and Campo Electronics, Appliances and Computers, Inc.(4) 10.12 Loan Agreement dated August 30, 1995 by and between Hibernia National Bank and Campo Electronics, Appliances and Computers, Inc.(9), as amended by the First Amendment to Loan Agreement as of August 30, 1995 by and between Hibernia National Bank and Campo Electronics, Appliances and Computers, Inc.(3), as amended by the Second Amendment to Loan Agreement dated May 31, 1996 by and between Hibernia National Bank and Campo Electronics, Appliances and Computers, Inc.(10), as amended by the Third Amendment to Loan Agreement dated December 1, 1996 by and between Hibernia National Bank and Campo Electronics, Appliances and Computers, Inc., as amended by Amendment to Loan Agreement dated June 25, 1997. 10.13 Loan Agreement dated August 30, 1995 by and between Met Life Capital Corporation and Campo Electronics, Appliances and Computers, Inc.(9) 10.14 Sale Agreement dated August 30, 1995 by and between Federal Warranty Service Corporation and Campo Electronics, Appliances and Computers, Inc.(9) 10.15 Change of Control Agreement dated as of August 29, 1996 by and between Campo Electronics, Appliances and Computers, Inc. and Anthony P. Campo.(7) 10.16 Campo Electronics, Appliances and Computers, Inc. Severance Pay Plan dated as of August 29, 1996.(7) 10.17 Employment Agreement, dated March 21, 1997, by and between the Company and Rex O. Corley, Jr., as terminated by Severance Agreement dated June 19, 1997.(8) 10.18 Employment Agreement, dated March 21, 1997, by and between the Company and Charles S. Gibson, Jr., as amended on June 24, 1997,(8) as terminated upon resignation of the officer. 10.19 Employment Agreement, dated March 21, 1997, by and between the Company and Wayne J. Usie, as amended on June 24, 1997,(8) as terminated upon resignation of the officer. 10.20 Employment Agreement, dated April 14, 1997, by and between the Company and John K. Ross,(8) as terminated upon resignation of the officer. 10.21 Employment Agreement, dated April 23, 1997, by and between the Company and James B. Warren,(8) as terminated upon resignation of the officer. 10.22 Employment Agreement, dated June 15, 1997, by and between the Company and William E. Wulfers.(8) 10.23 Consultation Agreement, dated April 17, 1997, by and between the Company and York Management Services, Inc. 23 Consent of Coopers & Lybrand L.L.P. 27 Financial Data Schedule __________ (1) Incorporated by reference from the Company's Registration Statement on Form S-1 (Registration No. 33-56796) filed with the Commission on January 6, 1993. (2) Incorporated by reference from the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended February 28, 1995. (3) Incorporated by reference from the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended November 30, 1996. (4) Incorporated by reference from the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 1993. (5) Incorporated by reference from the Company's Registration Statement on Form S-1 (Registration No. 33-76184) filed with the Commission on March 8, 1994. (6) Incorporated by reference from the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 1994. (7) Incorporated by reference from the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 1996. (8) Incorporated by reference from the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended May 31, 1997. (9) Incorporated by reference from the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 1995. (10) Incorporated by reference from the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended May 31, 1996.