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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the fiscal year ended September 30, 1996
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission File Number 0-14134
___________________________________
THE GOOD GUYS, INC.
(Exact name of registrant as specified in its charter)
Delaware 94-2366177
- ------------------------------ -----------------------------------
(State or other jurisdiction of (I.R.S. employer identification no.)
incorporation or organization)
7000 Marina Boulevard, Brisbane, California 94005-1840
(Address of principal executive offices)
Registrant's telephone number, including area code: (415) 615-5000
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.001 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 of the
registrant was approximately $94,490,135 as of December 15, 1996.
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
On December 15, 1996, there were 13,419,362 shares of common stock outstanding.
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DOCUMENTS INCORPORATED BY REFERENCE
(1) Portions of Annual Report to Shareholders for fiscal year
ended September 30, 1996. (Part II of Form 10-K)
(2) Portions of definitive proxy statement filed with Securities
and Exchange Commission relating to the Company's 1997 Annual
Meeting of Shareholders. (Part III of Form 10-K)
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PART I
ITEM 1. BUSINESS
General
THE GOOD GUYS! is a leading specialty retailer of consumer
electronics products. The Company currently operates 76 stores: In
California, 19 stores are located in the San Francisco Bay area, 25 in the
greater Los Angeles/Orange County metropolitan area, 3 in Sacramento, 7 in San
Diego, and one each in Bakersfield, Fresno, Modesto and Stockton. In
Washington, Oregon and Nevada, THE GOOD GUYS! operates 9 stores, 5 stores and 4
stores, respectively.
The Good Guys, Inc. was incorporated in California in 1976. On
March 4, 1992, the Company changed its state of incorporation from California
to Delaware by merging into a wholly-owned Delaware subsidiary formed for that
purpose. In September 1995, The Good Guys, Inc. transferred substantially all
of its assets and liabilities to The Good Guys - California, Inc., its
wholly-owned operating subsidiary. Unless the context otherwise requires, the
terms "THE GOOD GUYS!" and "Company" refer to The Good Guys, Inc., together
with its operating subsidiary.
Information Regarding Forward-Looking Statements
The Private Securities Litigation Reform Act of 1995 provides
companies with a "safe harbor" when making forward-looking statements.
Statements of the Company that are not historical facts, including statements
about management's expectations for fiscal year 1997 and beyond, are
forward-looking statements and involve certain risks and uncertainties.
Factors that could cause the Company's actual results to differ materially from
management's projections, forecasts, estimates and expectations include, but
are not limited to, the following:
(a) Demand for the Company's products, which in turn is
dependent upon factors such as economic trends, the availability
of consumer credit, the introduction and acceptance of new
products and new product features, and the continued popularity
of existing products.
(b) Changes in the amount of promotional activities of
current competitors and potential new competition from both
retail stores and alternative methods of distribution such as
electronic and telephone shopping services and mail order.
(c) Changes in the Company's product mix.
(d) The Company's ability to continue to locate suitable
store sites and to hire and train skilled personnel.
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(e) Changes in the cost of the Company's advertising or in
the support received from vendors for advertising and promotional
programs.
(f) The ability of the Company to achieve economies of scale
in its advertising.
(g) Changes in availability of capital expenditure, working
capital and credit card financing.
(h) Availability of sources of supply for the products the
Company desires to sell.
(i) Adoption of new laws or regulations placing restrictions
on the sale of products and/or services by the Company.
(j) Adverse results in significant litigation matters.
Business Strategy
THE GOOD GUYS! goal is to be a leading consumer electronics
retailer in each of its targeted markets. The cornerstones of its business
strategy include:
Customer Service. THE GOOD GUYS! believes that superior service
is the single most important factor in overall customer satisfaction, and that
the Company differentiates itself from other consumer electronics retailers by
providing superior customer service. The Company believes that friendly and
knowledgeable sales associates are critical to satisfying customers interested
in middle to high-end electronics products. The Company's objective is to
generate long-term repeat business from its customers.
Merchandising. The Company's merchandising strategy is to
provide customers with a broad and compelling selection of brand name consumer
electronics with an emphasis on middle to high-end merchandise. Merchandise is
offered at competitive prices, which are backed by a low price guarantee.
Marketing. The Company aggressively uses newspaper, direct mail
and television advertising to build name recognition, to position THE GOOD
GUYS! in its markets, and to increase store traffic. Stores are designed to be
exciting and easy to shop and are located in high visibility and high traffic
commercial areas.
Expansion. The Company plans to continue to expand its store
base. Successful expansion will depend, among other things, on the Company's
ability to continue to locate suitable store sites and to hire and train
skilled personnel. It will also depend on the Company's ability to open new
stores quickly in new markets, to achieve economies of scale in advertising and
distribution, and to continue to gain market share from established
competitors.
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Customer Service
The Company believes that knowledgeable and friendly sales
associates are critical to providing superior customer service. As of
September 30, 1996, the Company had over 2,600 highly trained part-time and
full-time sales associates. Sales associates are paid under an incentive
compensation program with a salary guarantee that is applied against incentives
earned. Incentives are based on the gross profit realized, the amount of
"repeat" business the sales associate generates, performance against sales
goals and peer ranking, which evaluates a number of performance standards
including product return percentage. The Company believes this incentive
structure creates long-term repeat customers for THE GOOD GUYS!.
All sales associates attend a full-time, in-house initial
training program. The Company's training program is continually updated and is
designed to develop good sales practices and techniques and to help sales
associates explain and demonstrate to customers the use and operation of store
merchandise. This training enables sales associates to better understand
customer needs and to help them select products with which they are satisfied.
The Company generally holds meetings daily at each store to keep
sales associates trained in Company procedures and policies and to update them
on competitive information, current product introductions, product availability
and pricing. Manufacturers also conduct in-store training sessions to
familiarize sales associates with existing and new products.
The Company hosts a product show annually. All sales associates
attend the product show and are required to participate in training sessions
focused on product knowledge and selling skills. Manufacturers are in
attendance with product displays and are available to answer questions.
Additionally, regional training workshops are conducted twice a year to enhance
the sales associates' product knowledge. These sessions are conducted by a
combination of manufacturers, corporate trainers and the corporate buyers.
Customer service and sales techniques are also incorporated into these training
workshops.
In recent years, THE GOOD GUYS! has eliminated cashiers and
customer pickup windows, enabling sales associates to assist customers
throughout the entire sales transaction. This allows sales associates to spend
more time assessing the customer's needs, and provides customers with a
smoother, more efficient and more enjoyable shopping experience.
The Company's satisfaction guaranteed policy provides that a
product generally may be returned within 30 days of purchase for a full refund
or in exchange for another product. When purchasing a product from the
Company, customers may elect to purchase a Premier Performance Guarantee under
which a third party provides extended service coverage beyond the period
covered by the manufacturer's warranty.
All merchandise purchased from THE GOOD GUYS! and in need of
repair may be returned to any of the Company's stores for service. Such
merchandise is sent to either a Company-operated or an independent factory
authorized repair facility
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and is returned to the store after repair. The Company has its own regional
service facilities, which service all of its stores. The Company also operates
car audio and car cellular phone installation facilities at almost all of its
locations.
The majority of the Company's sales are made through credit
cards. The Company currently honors MasterCard, VISA, American Express and
various other credit cards, as well as THE GOOD GUYS! "Preferred Customer Card"
issued by an independent third party. Because of the relatively high cost of
many of the consumer electronics products sold by the Company, its business
could be affected by consumer credit availability.
The Company places emphasis on developing the skills of its
employees in order to provide a source of quality management personnel for
current and future stores. The Company has been able to fill many sales
managerial positions by promoting sales associates and, similarly, to fill many
store management positions by promoting sales managers.
Merchandising
The Company offers its customers a broad range of high quality
consumer electronics products supplied primarily by manufacturers of nationally
known brands. This selection comprises approximately 4,400 products from over
240 vendors and is intended to cover all of the popular price points within
each product category. The Company does not carry private label products. In
addition, the Company continually introduces and evaluates new and
complementary product lines. For example, in 1994 the Company commenced
selling personal computers and peripheral equipment in all of its stores and in
1996 the Company began selling internet access devices.
The following table shows the approximate percentage of sales for
each major product category for the last three fiscal years. Historical
percentages may not be indicative of percentages in future years.
Year Ended September 30,
---------------------------
Category 1996 1995* 1994*
- -------- ---- ---- ----
Video . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39% 38% 39%
Audio and cellular phones . . . . . . . . . . . . . . . . . . . 29% 32% 35%
Home office . . . . . . . . . . . . . . . . . . . . . . . . . . 20% 19% 15%
Other (accessories, repair service,
and premier performance guarantee) . . . . . . . . . . . . . 12% 11% 11%
---- ---- ----
100% 100% 100%
==== ==== ====
___________________
*Certain reclassifications have been made to the 1995 and 1994 financial
data in order to conform to the present year's presentation.
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For the year ended September 30, 1996, the Company's three
leading suppliers for video products were, in alphabetical order, Mitsubishi,
Panasonic and Sony and for audio and cellular products were, in alphabetical
order, Denon, Sony and Yamaha. The three leading suppliers of home office
products were, in alphabetical order, Apple, Hewlett Packard and Packard Bell.
Marketing
The Company believes that its advertising activities have
resulted in significant name recognition in its markets and have increased the
number of qualified potential customers visiting its stores. The Company's
advertising vehicles include newspaper, direct mail and television.
All of the Company's print and direct mail advertisements are
created, produced and placed by the Company's advertising staff. The Company
believes that the use of its own personnel maximizes its control over
advertising effectiveness, increases its flexibility, allows quick response to
changing market conditions, and enables it to purchase media on advantageous
terms.
The Company's advertisements promote the Company as an
"audio-video specialist" and emphasize competitive prices, extensive selection,
and superior customer service from knowledgeable sales associates.
Expansion
Since the end of fiscal 1985, the Company has grown from 7 to 76
stores. Over the past five years, the Company has expanded its store base at a
compound rate of approximately 18% per year. During fiscal 1996, THE GOOD
GUYS! opened 11 new stores, continuing to penetrate its current markets by
opening three stores in northern California, two stores each in Nevada, Oregon,
Washington and the Orange County area. The Company also closed two of its
northern California stores that were too small to adequately display its full
product selection. The Company will continue to expand within its current
four-state market during fiscal 1997, with plans to open one to three new
stores and remodel/relocate several stores during the fiscal year.
In October 1996, the Company also opened a WOW!, MULTIMEDIA
SUPERSTORE, in Long Beach, California, the second WOW! concept store jointly
operated with Tower Records. In October 1996, the Company also introduced its
new Expo format in its newly remodeled Redondo Beach, California store, as
discussed in the Store Operations section below.
Store Operations
The Company's stores range in size from approximately 9,000 to
32,000 square feet. Most of the newer stores reflect the ongoing evolution in
the Company's store design and are approximately 20,000 to 25,000 square feet
in size. All of the Company's stores are located in high visibility, high
traffic commercial areas and are open seven days a week, including most
holidays.
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THE GOOD GUYS! stores are designed to reinforce the Company's
merchandising philosophy and its desire to provide a pleasant shopping
experience. Merchandise is generally displayed by category to facilitate
comparison of brands, models and prices. During fiscal 1995, the Company
introduced a new store design, called "Generation 21". These stores are larger
and brighter stores that feature interactive displays, easily accessible
merchandise and vibrant graphics.
On November 1, 1996, the Company introduced its latest store
design called THE GOOD GUYS! Audio Video Exposition ("Expo") in its remodeled
Redondo Beach, California store. The new Expo store format was designed to
meet the changing merchandising needs that new convergence products, such as
home theater, internet access terminals, internet phones, internet televisions,
PCS communication devices, digital versatile discs and digital satellite
systems, require. The Expo format provides greater merchandising flexibility
and connectivity between existing categories of product, featuring hands-on
demonstrations of product interactivity throughout the store and a central area
for customers to meet with sales consultants to design system solutions for
their homes. The Company has identified and begun to initiate additional store
relocations/renovations using the Expo concept.
The Company opened its second WOW!, MULTIMEDIA SUPERSTORE in Long
Beach, California on October 31, 1996. These concept stores, which are jointly
operated with Tower Records, provide the full range of consumer electronics
offered at all THE GOOD GUYS! stores, as well as a full range of music, video,
computer software and books and magazines offered by Tower Records. THE GOOD
GUYS! occupies approximately 32,000 square feet in each of the WOW! stores.
Each store generally has one store manager, three sales managers
and an operations manager. The store manager oversees the store's operations
and the sales managers supervise the sales associates. Sales associates are
specialized by product category. Sales associates handle all aspects of the
customer interface: providing customers with the information necessary to
determine the best product for their specific need, tendering the invoice and
handling the payment, and bringing the goods from the stockroom to the
customer.
Store operations are overseen by a senior management team which
holds frequent meetings with the store managers. Merchandising and store
operation policies for all stores are established by senior management.
Distribution
The Company operates a 460,000 square foot operations center in
Hayward, California, which has the capacity to handle deliveries to more than
100 stores in the western United States. Deliveries are generally made to each
store six or seven days a week, as ordered by the Company's automatic
replenishment system. The Company believes that this frequency of delivery
maximizes availability of merchandise at the stores while minimizing store
level and overall inventories.
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Management Information Systems
The Company's management information system is a distributed,
on-line network of computers that links all stores, delivery locations, service
centers, credit providers, the distribution facility and the corporate offices
into a fully integrated system. Each store has its own system which allows
store management to track sales and inventory at the product, customer or sales
associate level. The Company's point of sale system allows the capture of
sales data and customer information and allows the tracking of merchandising
trends and inventory levels on a daily basis. Management believes that its
current systems are adequate to support THE GOOD GUYS! anticipated growth.
Competition
The business of the Company is highly competitive. The Company
competes primarily with other specialty stores, independent electronics and
appliance stores, department stores, mass merchandisers, discount stores and
catalog showrooms. To some extent, the Company also competes with drugstores,
supermarkets and others that make incidental sales of electronics products.
Competitors of the Company include Circuit City Stores, Best Buy, Sears,
Incredible Universe, Montgomery Ward, Target, several smaller electronics
chains and independent stores.
The Company's strategy is to compete by being a value-added
retailer, offering a broad selection of top national brand name merchandise
sold at competitive prices by a friendly, knowledgeable and motivated team of
associates.
Seasonality
As is the case with many other retailers, the Company's sales are
higher during the Christmas season than during other periods of the year.
Employees
At September 30, 1996, the Company employed approximately 4,500
persons, of whom 700 were salaried, 1,200 were hourly non-selling associates
and 2,600 were salespeople on commission against a minimum guarantee. At
September 30, 1996, over 300 of its employees were employed in the Company's
executive offices; the balance were employed in its stores, distribution
center, home delivery center, and service centers. There are no collective
bargaining agreements covering any of the Company's employees. The Company has
never experienced a strike or work stoppage and management believes that
relations with its employees are excellent.
Trademarks and Service Marks
The Company has registered the name "THE GOOD GUYS!" as a
trademark with the United States Patent and Trademark Office and the State of
California. Federal registration of the trademark extends through 2000 and is
renewable indefinitely. The Company has registered "THE GOOD GUYS!" as a
service mark through
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1999, which is renewable indefinitely. The Company's name is an integral part
of its advertising and is important to its business.
ITEM 2. PROPERTIES
Of the Company's stores in California, 19 are located in the San
Francisco Bay area, 25 in the greater Los Angeles/Orange County metropolitan
area, 3 in Sacramento, 7 in San Diego; and one each in Bakersfield, Fresno,
Modesto and Stockton, California. In addition, THE GOOD GUYS! operates 9
stores in the State of Washington, 5 stores in Oregon and 4 stores in Nevada.
All of the stores are leased under leases that have expiration dates (assuming
that lease options are exercised) in years ranging from 1999 to 2038.
The Company's operations center is located in a 460,000 square
foot facility in Hayward, California under a lease, the term of which expires
(assuming that lease options are exercised) in 2011.
The Company also maintains executive offices in Brisbane,
California at 7000 Marina Boulevard under a lease, the term of which expires
(assuming that lease options are exercised) in 2004.
ITEM 3. LEGAL PROCEEDINGS
On September 7, 1995, the Company was named as a defendant in two
purported class actions, entitled Long v. Packard Bell Electronics, et al.,
Case No. 7515706, filed in Orange County Superior Court on August 21, 1995, and
Sutter v. Acer America Corporation, et al., Case No. 95A505027, Sacramento
County Superior Court. In both cases, plaintiffs have named a large number of
computer manufacturers, wholesalers and retailers, alleging that since 1986 the
defendants have misrepresented to the public the screen size of certain
computer monitors. In addition to these two cases, there are numerous other
cases pending around the State of California (and in other parts of the
country) making essentially the same allegations against a variety of computer
manufacturers, wholesalers and retailers. All of the California cases have now
been coordinated in a single court in San Francisco. At the end of June 1996,
the Court granted the Company's demurrers on the grounds (a) that a prior
settlement of an action brought by the California Attorney General precludes
relitigation of the same issues in this case; and (b) that plaintiffs lack
standing to bring class claims against the Company because none of the named
plaintiffs claims to have purchased any computer monitors from the Company.
Plaintiffs have indicated that they plan to appeal these rulings. The cases
are at an early stage, discovery has not yet commenced, and it is too early to
be able to express any opinion as to the likely outcome of the matter. The
Company believes it has meritorious defenses to the claims alleged in the
lawsuit and intends to defend the action vigorously. The Company also believes
it has meritorious claims for indemnification from certain computer
manufacturers from which it has purchased computer equipment.
On July 19, 1996, McBride-Newell, Inc. dba Carphones, Inc. and
numerous other individuals and entities filed a complaint against the Company
and 21 other named defendants entitled McBride-Newell, Inc., et al. v.
Mobilworks, Inc., et
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al., San Diego Superior Court Case No. 695897. The defendants include the two
cellular telephone service providers in the San Diego area, Airtouch Cellular
and U.S. West; a manufacturer of cellular telephones, Motorola, Inc.; and
numerous large retail chain stores, including Circuit City, Tandy, Office
Depot, Sears Roebuck, Wal-Mart Stores, Price-Costco, and others. Plaintiffs,
who are small agents of the cellular service providers offering cellular
telephone products and service in the San Diego area, allege a wide variety of
antitrust and fraud-related claims against the cellular telephone service
providers, including alleged conspiracy to fix cellular telephone rates. As
against the retailer defendants, including the Company, the plaintiffs allege a
conspiracy to sell cellular telephone equipment below cost with the intent to
drive the plaintiffs out of business, in violation of the California Cartwright
Act and Unfair Practices Act; unfair trade practices; unlawful "leveraging";
and "bundling" of cellular telephone equipment and service. Plaintiffs seek
treble damages under the California antitrust laws. The case is at a very
early stage, and it is too soon to be able to express an opinion as to the
likely outcome of this matter. The Company believes it has meritorious
defenses to the claims alleged in the lawsuit and intends to defend the action
vigorously.
On or about July 22, 1996, Joe Quattrini dba Sand Canyon Cellular
and numerous other individuals and entities filed a complaint against the
Company and 20 other named defendants entitled Quattrini, et al. v.
Pana-Pacific Corp., et al., Orange County Superior Court Case No. 766649. The
defendants include the two cellular telephone service providers in the Orange
County area, Los Angeles Cellular Telephone Company and Airtouch Cellular; a
manufacturer of cellular telephones, Motorola, Inc.; and numerous large and
small retail chain stores, including Tandy, Wal-Mart Stores, Sears Roebuck, The
Wherehouse, Al & Ed's Audio, Affordable Portables, L.A. Tronics, Adrays,
Celluland, and others. Plaintiffs, who are small agents or sub-agents of the
cellular service providers offering cellular telephone products and service in
the Orange County area, allege a wide variety of antitrust and fraud-related
claims against the cellular telephone service providers, including alleged
conspiracy to fix cellular telephone prices. As against the retailer
defendants, plaintiffs allege a conspiracy to sell cellular telephone equipment
below cost with the intent to drive plaintiffs out of business in violation of
the California Cartwright Act and Unfair Practices Act; unfair trade practices;
and "bundling" of cellular telephone equipment and service. Plaintiffs seek
treble damages under the California antitrust laws. The case is at a very
early stage, and it is too soon to be able to express an opinion as to the
likely outcome of this matter. The Company believes it has meritorious
defenses to the claims alleged in the lawsuit and intends to defend the action
vigorously.
In November 1995, the Company was named as a defendant in an
action captioned as Littau et al. v. Circuit City, et al., No. 973978, San
Francisco Superior Court. The other defendants are Circuit City Stores West
Coast, Inc., Sears Roebuck & Co., Tandy Corp., Fry's Electronics, Inc., Best
Buy Co., Inc., CompUSA, Inc., and Whole Earth Access Co. (which we understand
is now in bankruptcy). Plaintiffs' complaint, which is styled as a class
action, alleges that the Company has engaged in false advertising and unfair
competition in violation of the California Business and Professions Code and
the California Consumer Legal Remedies Act in the manner in which it has
advertised personal computers sold with pre-installed, "bundled" software.
Plaintiffs' primary allegation is that the Company's advertisements overstated
the value of this software. Plaintiffs seek injunctive relief,
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restitution, special damages, and attorneys' fees. The case is still in the
discovery stage, and it is too early to express any opinion as to the likely
outcome of the matter. The Company believes it has meritorious defenses to the
claims alleged in the suit and intends to defend the action vigorously. The
Company also believes it has meritorious claims for indemnification from the
computer manufacturers from which it has purchased personal computers and upon
whose representations it relied in representing the values of bundled software
in its advertisements.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
Not Applicable.
ITEM 4A. EXECUTIVE OFFICERS OF THE COMPANY
The executive officers of the Company and their respective ages
and positions with the Company are as follows:
Name Age Position
- ---- --- --------
Robert A. Gunst 48 President and Chief Executive Officer
Thomas A. Hannah 51 Senior Vice President, Operations
Brad S. Bramy 44 Vice President, Advertising
Dennis C. Carroll 37 Vice President, Chief Financial Officer and Secretary
William C. Curley 53 Vice President, Management Information Services and Operations
John G. Duken 36 Vice President, Store Operations
William B. Perlstein 46 Vice President, Stores
Gregory L. Steele 49 Vice President, Real Estate
Geradette M. Vaz 43 Vice President, Human Resources
All executive officers are elected by and serve at the discretion
of the Board of Directors.
Robert A. Gunst became the President and Chief Operating Officer
of the Company in May 1990 and its Chief Executive Officer in January 1993.
Thomas A. Hannah joined the Company as Senior Vice President,
Stores in June 1993 and was named Senior Vice President, Operations, in May
1995. From November 1982 to March 1993 he was Assistant Vice President,
Circuit City Stores, Inc., and General Manager of three separate operating
divisions located in Richmond, San Francisco and Dallas.
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Brad S. Bramy was named Vice President, Advertising in May 1995.
Prior to holding this position, Mr. Bramy served in various positions in the
advertising department since joining the Company in 1983.
Dennis C. Carroll, who had served as controller of the Company
from 1990 to 1993, rejoined the Company as Vice President, Chief Financial
Officer and Secretary in May 1996. Mr. Carroll served as Vice President and
Chief Financial Officer of Beverages, & more!, a specialty retailer, from
February 1994 to April 1996 and as Vice President, Controller and Treasurer of
Supercuts, Inc., an owner and franchisor of hair salons, from May 1993 to
January 1994.
William C. Curley joined the Company as Vice President,
Management Information Services and Distribution in October 1990 and became
Vice President, Management Information Services and Operations in November
1991.
John G. Duken joined the Company in September 1993 as General
Manager of Store Operations and was named Vice President, Store Operations in
June 1994. From June 1988 to August 1993 he held several positions with
Circuit City Stores, Inc., including Divisional Operations Manager of the
Northern California Division and General Operations Manager of the Midwest
Division.
William B. Perlstein joined the Company as Regional Sales Manager
in March 1987, was named Vice President, Store Operations in January 1993, and
was named Vice President, Stores in June 1993.
Gregory L. Steele has served as Vice President, Real Estate since
April 1986.
Geradette M. Vaz joined the Company in July 1986 as Vice
President, Human Resources, and has served in that position to the present.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND
RELATED SECURITY HOLDER MATTERS
Incorporated by reference from page 26 of the Company's 1996
Annual Report to Shareholders.
ITEM 6. SELECTED FINANCIAL DATA
Incorporated by reference from page 15 of the Company's 1996
Annual Report to Shareholders.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Incorporated by reference from pages 12 through 14 of the
Company's 1996 Annual Report to Shareholders.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Incorporated by reference from pages 16 through 24 of the
Company's 1996 Annual Report to Shareholders.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not Applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information relating to directors of the Company required to
be furnished pursuant to this item is incorporated by reference from portions
of the Company's definitive Proxy Statement for its annual meeting of
shareholders to be filed with the Securities and Exchange Commission pursuant
to Regulation 14A within 120 days after September 30, 1996 (the "Proxy
Statement") under the caption "Election of Directors." Certain information
relating to executive officers of the Company is set forth in Item 4A of Part I
of this Form 10-K under the caption "Executive Officers of Registrant."
ITEM 11. EXECUTIVE COMPENSATION
Incorporated by reference from portions of the Proxy Statement
under the captions "Compensation of Directors and Executive Officers" and
"Certain Relationships and Related Transactions."
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Incorporated by reference from portions of the Proxy Statement
under the captions "Certain Shareholders" and "Compensation of Directors and
Executive Officers."
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Incorporated by reference from portions of the Proxy Statement
under the caption "Compensation of Directors and Executive Officers" and
"Certain Relationships and Related Transactions."
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a)1. FINANCIAL STATEMENTS
Included in Part II of this report by incorporation by
reference from the 1996 Annual Report to Shareholders:
Independent Auditors' Report (page 25 of the
1996 Annual Report to Shareholders)
Consolidated statements of operations for each
of the three years in the period ended September
30, 1996 (page 17 of the 1996 Annual Report to
Shareholders)
Consolidated balance sheets as of September 30,
1996 and 1995 (page 16 of the 1996 Annual Report
to Shareholders)
Consolidated statements of shareholders' equity
for each of the three years in the period ended
September 30, 1996 (page 18 of the 1996 Annual
Report to Shareholders)
Consolidated statements of cash flows for each
of the three years in the period ended September
30, 1996 (page 19 of the 1996 Annual Report to
Shareholders)
Notes to consolidated financial statements (pages
20 through 24 of the 1996 Annual Report to
Shareholders)
(a)2. FINANCIAL STATEMENT SCHEDULES
All schedules are omitted because they are not required (in some
cases because the information is not material), or are not
applicable, or the information is included in the financial
statements.
(a)3. EXHIBITS
3.1 Certificate of Incorporation. (Exhibit 3.1 to the Company's
Form 8-K Report for March 4, 1992; incorporated herein by reference.)
3.2 Bylaws. (Exhibit 3.2 to the Company's Form 8-K Report for
March 4, 1992; incorporated herein by reference.)
10.1 1985 Stock Option Plan, as amended.*
__________________________________
*Compensatory plan or arrangement.
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10.2 Form of Nonqualified Stock Option Agreements.* (Exhibit 4.3 to the
Company's Registration Statement on Form S-8 as filed on January 28,
1991, registration number 33-38749; incorporated herein by reference.)
10.3 THE GOOD GUYS! Profit-Sharing Plan, as amended and restated as of
December 20, 1990.* (Exhibit 10.4 to the Company's Form 10-K Annual
Report for its fiscal year ended September 30, 1991; incorporated
herein by reference.)
10.4 THE GOOD GUYS! Deferred Pay Plan.* (Exhibit 4.1 to the Company's
Registration Statement on Form S-8 as filed on March 12, 1991,
registration number 33-39421; incorporated herein by reference.)
10.5 THE GOOD GUYS! Deferred Pay Plan Amendment No. 1.* (Exhibit 4.6 to
the Company's Registration Statement on Form S-8 as filed on March 12,
1991, registration number 33-39421; incorporated herein by reference.)
10.6 Letter Agreement with Robert A. Gunst, dated March 30, 1990.*
(Exhibit 10.14 to the Company's Form 10-K Annual Report for its fiscal
year ended September 30, 1990; incorporated herein by reference.)
10.7 Employee Stock Purchase Plan, as amended.*
10.8 THE GOOD GUYS! Deferred Pay Plan Amendment No. 2.* (Exhibit 10.27 to
the Company's Form 10-K Annual Report for its fiscal year ended
September 30, 1992; incorporated herein by reference.)
10.9 Letter Agreement with Thomas A. Hannah, dated June 1, 1993.* (Exhibit
10.10 to the Company's Form 10-K Annual Report for its fiscal year
ended September 30, 1993, incorporated herein by reference.)
10.10 1994 Stock Incentive Plan, as amended.*
10.11 Assignment and Assumption Agreement, dated September 26, 1995, by and
between The Good Guys, Inc. and The Good Guys - California, Inc.
(Exhibit 10.18 to the Company's Form 10-K Annual Report for the fiscal
year ended September 30, 1995; incorporated herein by reference.)
10.12 Credit Agreement, dated as of September 26, 1995, by and among Bank of
America National Trust & Savings Association, The Bank of California,
N.A. and The Good Guys-California, Inc. (Exhibit 10.19 to the
Company's Form 10-K Annual Report for the fiscal year ended September
30, 1995; incorporated herein by reference.)
10.13 Amendment to September 26, 1995 Credit Agreement among Bank of America
National Trust & Savings Association, The Bank of California and The
Good Guys-California, Inc., dated as of February 29, 1996.
__________________________________
*Compensatory plan or arrangement.
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10.14 Operating Agreement, dated effective as of April 15, 1995, between
MTS, Inc., a California corporation, dba Tower Records/Book/Video, and
The Good Guys, Inc., a Delaware corporation. (Exhibit 10.20 to the
Company's Form 10-K Annual Report for the fiscal year ended September
30, 1995; incorporated herein by reference.)
10.15 Non-Committed Line of Credit Agreement, dated October 27, 1995, by and
between The Bank of California, N.A. and The Good Guys - California,
Inc. (Exhibit 10.21 to the Company's Form 10-K Annual Report for the
fiscal year ended September 30, 1995; incorporated herein by
reference.)
10.16 Non-Committed Line of Credit Agreement, dated July 24, 1995, by and
between The Dai-Ichi Kangyo Bank, Limited and The Good Guys, Inc.
(Exhibit 10.22 to the Company's Form 10-K Annual Report for the fiscal
year ended September 30, 1995; incorporated herein by reference.)
10.17 Amended and Restated Credit Agreement, dated December 27, 1996, among
The Good Guys - California, Inc., Bank of America National Trust &
Savings Association and The Union Bank of California N.A.
11.1 Statement re Computation of Per Share Earnings.
13.1 Annual Report to Shareholders for fiscal year ended September 30, 1996
(pages incorporated by reference).
23.1 Independent Auditors' Consent.
24.1 Powers of Attorney.
(b) REPORTS ON FORM 8-K.
There were no reports on Form 8-K for the quarter ended
September 30, 1996.
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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.
Dated: December 30, 1996 THE GOOD GUYS, INC.
By /s/ ROBERT A. GUNST
Robert A. Gunst
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the dates indicated.
/s/ ROBERT A. GUNST Director, President and December 30, 1996
- -------------------
(Robert A. Gunst) Chief Executive Officer
(Principal Executive Officer)
/s/ DENNIS C. CARROLL Vice President and December 30, 1996
- ---------------------
(Dennis C. Carroll) Chief Financial Officer
(Principal Financial Officer)
/s/ LESLIE S. BENSON Controller (Principal December 30, 1996
- --------------------
(Leslie S. Benson) Accounting Officer)
/s/ STANLEY R. BAKER* Director December 30, 1996
- ---------------------
(Stanley R. Baker)
/s/ RUSSELL M. SOLOMON* Director December 30, 1996
- -----------------------
(Russell M. Solomon)
/s/ JOHN E. MARTIN* Director December 30, 1996
- -------------------
(John E. Martin)
/s/ W. HOWARD LESTER* Director December 30, 1996
- ---------------------
(W. Howard Lester)
*By /s/ ROBERT A. GUNST
--------------------
Attorney-in-Fact
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EXHIBIT INDEX
Number Description
------ -----------
10.1 1985 Stock Option Plan, as amended.
10.7 Employee Stock Purchase Plan, as amended.
10.10 1994 Stock Incentive Plan, as amended.
10.13 Amendment to September 26, 1995 Credit Agreement among Bank
of America National Trust & Savings Association, The Bank
of California and The Good Guys-California, Inc., dated as
of February 29, 1996.
10.17 Amended and Restated Credit Agreement, dated December 27,
1996, among The Good Guys - California, Inc., Bank of
America National Trust & Savings Association and The Union
Bank of California N.A.
11.1 Statement re Computation of Per Share Earnings.
13.1 Annual Report to Shareholders for fiscal year ended
September 30, 1996 (pages incorporated by reference).
23.1 Independent Auditors' Consent.
24.1 Powers of Attorney.
27.1 Financial Data Schedule.