6
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the fiscal quarter ended
August 1, 1998.
FEDERATED DEPARTMENT STORES, INC.
151 West 34th Street
New York, New York 10001
(212) 494-1602
and
7 West Seventh St.
Cincinnati, Ohio 45202
(513) 579-7000
Delaware 1-13536 13-3324058
(State of Incorporation) (Commission File No.) (I.R.S. Employer
Identification Number)
The Registrant has filed all reports required to be filed by
Section 12, 13 or 15 (d) of the Act during the preceding 12
months and has been subject to such filing requirements for the
past 90 days.
204,915,141 shares of the Registrant's Common Stock, $.01 par
value, were outstanding as of August 29, 1998.
PART I -- FINANCIAL INFORMATION
FEDERATED DEPARTMENT STORES, INC.
Consolidated Statements of Income
(Unaudited)
(millions, except per share figures)
13 Weeks Ended 26 Weeks Ended
August 1, August 2, August 1, August 2,
1998 1997 1998 1997
Net Sales $ 3,523 $ 3,453 $ 6,979 $ 6,862
Cost of sales 2,101 2,099 4,207 4,186
Selling, general and
administrative expenses 1,155 1,142 2,324 2,316
Operating Income 267 212 448 360
Interest expense (76) (106) (159) (221)
Interest income 2 7 8 18
Income Before Income Taxes and
Extraordinary Item 193 113 297 157
Federal, state and local income
tax expense (86) (46) (130) (66)
Income Before Extraordinary Item 107 67 167 91
Extraordinary Item - loss on early
extinguishment of debt, net of
tax effect of $25 - (39) - (39)
Net Income $ 107 $ 28 $ 167 $ 52
(Continued)
PART I -- FINANCIAL INFORMATION
FEDERATED DEPARTMENT STORES, INC.
Consolidated Statements of Income
(Unaudited)
(millions, except per share figures)
13 Weeks Ended 26 Weeks Ended
August 1, August 2, August 1, August 2,
1998 1997 1998 1997
Basic Earnings per Share:
Income before extraordinary
item $ .51 $ .32 $ .80 $ .43
Extraordinary item - (.19) - (.18)
Net income $ .51 $ .13 $ .80 $ .25
Diluted Earnings per Share:
Income before extraordinary
item $ .47 $ .31 $ .74 $ .42
Extraordinary item - (.18) - (.18)
Net income $ .47 $ .13 $ .74 $ .24
The accompanying notes are an integral part of these unaudited
Consolidated Financial Statements.
FEDERATED DEPARTMENT STORES, INC.
Consolidated Balance Sheets
(Unaudited)
(millions)
August 1, January 31, August 2,
1998 1998 1997
ASSETS:
Current Assets:
Cash $ 281 $ 142 $ 317
Accounts receivable 2,111 2,640 2,498
Merchandise inventories 3,361 3,239 3,372
Supplies and prepaid expenses 118 115 129
Deferred income tax assets 105 58 106
Total Current Assets 5,976 6,194 6,422
Property and Equipment - net 6,381 6,520 6,371
Intangible Assets - net 677 690 704
Other Assets 317 334 377
Total Assets $ 13,351 $ 13,738 $ 13,874
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current Liabilities:
Short-term debt $ 34 $ 556 $ 1,505
Accounts payable and accrued liabilities 2,517 2,416 2,482
Income taxes 67 88 4
Total Current Liabilities 2,618 3,060 3,991
Long-Term Debt 3,890 3,919 3,732
Deferred Income Taxes 977 939 836
Other Liabilities 557 564 559
Shareholders' Equity 5,309 5,256 4,756
Total Liabilities and Shareholders'
Equity $ 13,351 $ 13,738 $ 13,874
The accompanying notes are an integral part of these unaudited
Consolidated Financial Statements.
FEDERATED DEPARTMENT STORES, INC.
Consolidated Statements of Cash Flows
(Unaudited)
(millions)
26 Weeks Ended 26 Weeks Ended
August 1, 1998 August 2, 1997
Cash flows from operating activities:
Net income $ 167 $ 52
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization of property and
equipment 298 277
Amortization of intangible assets 13 14
Amortization of financing costs 4 13
Amortization of unearned restricted stock 1 1
Loss on early extinguishment of debt - 39
Changes in assets and liabilities:
Decrease in accounts receivable 331 337
Increase in merchandise inventories (122) (126)
Increase in supplies and prepaid expenses (3) (19)
(Increase) decrease in other assets not
separately identified 4 (5)
Increase (decrease) in accounts payable and
accrued liabilities not separately identified 45 (21)
Increase (decrease) in current income taxes (21) 3
Increase (decrease) in deferred income taxes (9) 4
Decrease in other liabilities not separately
identified (8) (5)
Net cash provided by operating activities 700 564
Cash flows from investing activities:
Purchase of property and equipment (189) (219)
Disposition of property and equipment 22 89
Decrease in notes receivable 200 200
Net cash provided by investing activities 33 70
Cash flows from financing activities:
Debt issued 300 850
Financing costs (7) (5)
Debt repaid (851) (1,356)
Increase in outstanding checks 79 11
Acquisition of treasury stock (154) (2)
Issuance of common stock 39 36
Net cash used by financing activities (594) (466)
(Continued)
FEDERATED DEPARTMENT STORES, INC.
Consolidated Statements of Cash Flows
(Unaudited)
(millions)
26 Weeks Ended 26 Weeks Ended
August 1, 1998 August 2, 1997
Net increase in cash $ 139 $ 168
Cash at beginning of period 142 149
Cash at end of period $ 281 $ 317
Supplemental cash flow information:
Interest paid $ 147 $ 212
Interest received 11 20
Income taxes paid (net of refunds received) 150 48
The accompanying notes are an integral part of these unaudited
Consolidated Financial Statements.
FEDERATED DEPARTMENT STORES, INC.
Notes to Consolidated Financial Statements
(Unaudited)
1. Summary of Significant Accounting Policies
A description of the Company's significant accounting policies
is included in the Company's Annual Report on Form 10-K for
the fiscal year ended January 31, 1998 (the "1997 10-K"). The
accompanying Consolidated Financial Statements should be read
in conjunction with the Consolidated Financial Statements and
notes thereto in the 1997 10-K.
Because of the seasonal nature of the general merchandising
business, the results of operations for the 13 and 26 weeks
ended August 1, 1998 and August 2, 1997 (which do not include
the Christmas season) are not indicative of such results for
the fiscal year.
The Consolidated Financial Statements for the 13 and 26 weeks
ended August 1, 1998 and August 2, 1997, in the opinion of
management, include all adjustments (consisting only of normal
recurring adjustments) considered necessary to present fairly,
in all material respects, the consolidated financial position
and results of operations of the Company and its subsidiaries.
During the first quarter of 1998, the Company adopted
Statement of Financial Accounting Standards (SFAS) No. 130,
"Reporting Comprehensive Income," which establishes standards
for the reporting and display of comprehensive income and its
components. For all periods presented, comprehensive income
is equivalent to net income.
SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activity" was issued in June 1998 and is effective for
all quarters of all fiscal years beginning after June 15,
1999. This statement establishes accounting and reporting
standards for derivative instruments and hedging activities
and requires recognition of all derivatives as either assets
or liabilities on the balance sheet using fair value
measurement. The accounting for changes in the fair value of
derivatives depends on the intended use of the derivative and
the resulting hedging designation, if any. The Company is
currently reviewing the impact of this statement; however,
based on the Company's minimal use of derivatives, management
does not anticipate that its adoption will have a material
impact on the Company's consolidated financial position,
results of operations or cash flows.
2. Extraordinary Item
The extraordinary item for the 13 and 26 weeks ended August 2,
1997 represents costs of $39 million, net of income tax
benefit of $25 million, associated with the prepayment of all
amounts outstanding under the Company's mortgage loan
facility, secured promissory note, certain other mortgages and
previous bank credit facility, all of which were retired and
terminated.
FEDERATED DEPARTMENT STORES, INC.
Notes to Consolidated Financial Statements
(Unaudited)
3. Earnings Per Share
The following tables set forth the computation of basic and
diluted earnings per share based on income before
extraordinary item:
13 Weeks Ended
August 1, 1998 August 2, 1997
(millions, except per share data) Shares Income Shares Income
Income before extraordinary item
and average number of
shares outstanding 210.2 $ 107 209.1 $ 66
Shares to be issued under deferred
compensation plan .3 - .3 -
210.5 $ 107 209.4 $ 66
Basic earnings per share $ .51 $ .32
Effect of dilutive securities:
Warrants 8.9 4.6
Stock options 2.8 1.8
Convertible notes 10.2 2 10.2 3
232.4 $ 109 226.0 $ 69
Diluted earnings per share $ .47 $ .31
26 Weeks Ended
August 1, 1998 August 2, 1997
(millions, except per share data) Shares Income Shares Income
Income before extraordinary item
and average number of
shares outstanding 210.3 $ 167 208.7 $ 91
Shares to be issued under deferred
compensation plan .3 - .3 -
210.6 $ 167 209.0 $ 91
Basic earnings per share $ .80 $ .43
Effect of dilutive securities:
Warrants 8.5 4.0
Stock options 2.7 1.7
Convertible notes 10.2 5 - -
232.0 $ 172 214.7 $ 91
Diluted earnings per share $ .74 $ .42
FEDERATED DEPARTMENT STORES, INC.
Notes to Consolidated Financial Statements
(Unaudited)
In addition to the warrants and stock options reflected in
the foregoing tables, warrants and stock options to purchase
.6 million and .5 million shares of common stock at prices
ranging from $37.85 to $79.44 per share were outstanding at
August 1, 1998 and August 2, 1997, respectively, but were not
included in the computation of diluted earnings per share
because the exercise price thereof exceeded the average
market price and would have been antidilutive. Additionally,
for the 26 weeks ended August 2, 1997, the assumed conversion
of the convertible notes would have an antidilutive effect on
diluted earnings per share and was therefore excluded from
the computation.
FEDERATED DEPARTMENT STORES, INC.
Management's Discussion and Analysis
of Financial Condition and Results of Operations
For purposes of the following discussion, all references to
"second quarter of 1998" and "second quarter of 1997" are to
the Company's 13-week fiscal periods ended August 1, 1998 and
August 2, 1997, respectively, and all references to "1998" and
"1997" are to the Company's 26-week fiscal periods ended
August 1, 1998 and August 2, 1997, respectively.
Results of Operations
Comparison of the 13 Weeks Ended August 1, 1998 and August 2, 1997
Net sales for the second quarter of 1998 totaled $3,523
million, compared to net sales of $3,453 million for the
second quarter of 1997, an increase of 2.0%. Since February
1, 1997, the Company has opened six new department stores and
two new furniture galleries, changed nameplates on two stores,
closed nineteen stores and eliminated certain consumer
electronics lines of business. On a comparable store basis,
net sales for the second quarter of 1998 increased 3.0% over
the second quarter of 1997.
Cost of sales was 59.6% of net sales for the second quarter of
1998 compared to 60.8% for the second quarter of 1997. The
1.2% improvement in the cost of sales rate, as well as the
comparable-store sales improvement, reflects positive customer
response to the merchandise assortments in the stores,
attributed partially to an improved merchandise receipt flow.
Cost of sales was not impacted by the valuation of merchandise
inventory on the last-in, first-out basis in the second
quarter of 1998 or the second quarter of 1997.
Selling, general and administrative ("SG&A") expenses were
32.8% of net sales for the second quarter of 1998 compared to
33.1% for the second quarter of 1997. The major factor
contributing to the 0.3% improvement in the SG&A expense rate
was lower distribution-related expense resulting from
restructuring and technological enhancements within the
merchandise distribution process.
Net interest expense was $74 million for the second quarter of
1998, compared to $99 million for the second quarter of 1997.
The lower interest expense for the second quarter of 1998 is
principally due to lower levels of borrowings and lower
interest rates resulting from refinancings completed in July
1997.
The Company's effective income tax rate of 44.6% for the
second quarter of 1998 differs from the federal income tax
statutory rate of 35.0% principally because of the effect of
state and local income taxes and permanent differences arising
from the amortization of intangible assets and from other non-
deductible items.
The extraordinary item of $39 million in the second quarter of
1997 represents the after-tax expenses associated with debt
prepayments.
FEDERATED DEPARTMENT STORES, INC.
Management's Discussion and Analysis
of Financial Condition and Results of Operations (Continued)
Comparison of the 26 Weeks Ended August 1, 1998 and August 2, 1997
Net sales for 1998 were $6,979 million compared to $6,862
million for 1997, an increase of 1.7%. On a comparable store
basis, net sales for 1998 increased 2.7% over 1997.
Cost of sales was 60.3% of net sales for 1998 compared to
61.0% for 1997. The 0.7% improvement in the cost of sales
rate, as well as the comparable-store sales improvement,
reflects positive customer response to the merchandise
assortments in the stores during the second quarter of 1998,
attributed partially to an improved merchandise receipt flow.
Cost of sales was not impacted by the valuation of merchandise
inventory on the last-in, first-out basis in 1998 or 1997.
SG&A expenses were 33.3% of net sales for 1998 compared to
33.8% for 1997. The major factor contributing to the 0.5%
improvement in the SG&A expense rate was lower distribution-
related expenses resulting from restructuring and
technological enhancements within the merchandise distribution
process.
Net interest expense was $151 million for 1998 compared to
$203 million for 1997. The lower interest expense for 1998
is principally due to lower levels of borrowings and lower
interest rates resulting from refinancings completed in July
1997.
The Company's effective income tax rate of 43.8% for 1998
differs from the federal income tax statutory rate of 35.0%
principally because of the effect of state and local income
taxes and permanent differences arising from the amortization
of intangible assets and from other non-deductible items.
Liquidity and Capital Resources
The Company's principal sources of liquidity are cash from
operations, cash on hand and certain available credit
facilities.
Net cash provided by operating activities in 1998 was $700
million, an increase of $136 million compared to the $564
million provided in 1997. The major factor contributing to
this improvement was stronger operating results.
Net cash provided by investing activities was $33 million in
1998, with the final $200 million installment of a note
receivable held by the Company being received on May 4, 1998,
purchases of property and equipment totaling $189 million and
dispositions of property and equipment totaling $22 million.
The Company opened one new store in August 1998 and intends to
open two additional new stores in Fall 1998. On August 1,
1998, the Company completed the sale of its specialty store
division to the division's management group. The sale did not
have a material impact on the Company's financial position or
results of operations.
FEDERATED DEPARTMENT STORES, INC.
Management's Discussion and Analysis
of Financial Condition and Results of Operations (Continued)
Net cash used by the Company for all financing activities was
$594 million in 1998. During the first quarter of 1998, the
Company issued $300 million of 7.0% Senior Debentures due
2028. The proceeds of such issuance, together with other
available funds, were used to repay $669 million of short-term
borrowings and the remaining $176 million of borrowings under
a note monetization facility. Also during the quarter, the
Company renewed a portion of the bank credit agreement which
provides a $500 million unsecured revolving credit facility
with a termination date of July 26, 1999.
During the quarter, the Company repurchased 2.9 million shares
of its common stock at an aggregate cost of approximately $154
million as part of the previously announced $500 million stock
repurchase program. Under the repurchase program announced in
May 1998, the Company intends to continue to repurchase shares
throughout the year, depending on prevailing market
conditions, alternate uses of capital and other factors. Any
such purchases may be discontinued or resumed at any time.
On August 18, 1998, the Company completed a tender offer
pursuant to which it purchased approximately $340 million
aggregate principal amount of its 10% Senior Notes due 2001
(the "10% Notes"), leaving approximately $110 million
aggregate principal amount of such notes outstanding. The
Company's purchases of the 10% Notes pursuant to the tender
offer were financed through a combination of cash on hand and
the issuance of commercial paper. Based on the tender premium
paid to holders of the 10% Notes and the write-off of the
related deferred debt issuance costs, the Company will report
an extraordinary charge of approximately $23 million, net of
the related tax benefit, in the 13-week fiscal period ending
October 31, 1998. On August 26, 1998, in a related
transaction, the Company issued $350 million of 6 1/8% Term
Enhanced ReMarketable Securities. The proceeds from this
offering were used by the Company to repurchase outstanding
commercial paper used to finance the tender offer and for
general corporate purposes.
On August 26, 1998, the Company called for redemption,
effective October 1, 1998, all of its 5.0% Convertible
Subordinated Notes due 2003 (the "5% Notes") at a redemption
price equal to $1,056.25 for each $1,000 principal amount
thereof (inclusive of accrued interest to October 1, 1998).
No interest will accrue on the 5% Notes on or after October 1,
1998. The 5% Notes may be converted into shares of the
Company's common stock at any time prior to the close of
business on September 30, 1998 at the rate of 29.2547 shares
for each $1,000 principal amount represented by the 5% Notes
(equivalent to a conversion price of approximately $34.1825
per share). However, interest for the period from April 1,
1998 to October 1, 1998 will be paid, without being funded by
the holder surrendering a 5% Note for conversion, only with
respect to 5% Notes that are surrendered for conversion after
the opening of business on September 24, 1998 and prior to the
close of business on September 30, 1998.
FEDERATED DEPARTMENT STORES, INC.
Management's Discussion and Analysis
of Financial Condition and Results of Operations (Continued)
Management believes the department store business will
continue to consolidate. Accordingly, the Company intends
from time to time to consider additional acquisitions of
department store and other complementary assets and companies.
Management of the Company believes that, with respect to its
current operations, cash on hand and funds from operations,
together with its credit facilities, will be sufficient to
cover its reasonably foreseeable working capital, capital
expenditure and debt service requirements. Acquisition
transactions, if any, are expected to be financed through a
combination of cash on hand and from operations and the
possible issuance from time to time of long-term debt or other
securities. Depending upon conditions in the capital markets
and other factors, the Company will from time to time consider
the issuance of debt or other securities, or other possible
capital markets transactions, the proceeds of which could be
used to refinance current indebtedness or for other corporate
purposes.
Year 2000 Matters
The Year 2000 Issue
Many existing computer programs utilized globally use only two
digits to identify a year in the date field. These programs,
if not corrected, could fail or create erroneous results after
the century date changes on January 1, 2000 or when otherwise
dealing with dates later than December 31, 1999. This "Year
2000" issue is believed to affect virtually all companies and
organizations, including the Company.
The Company relies on computer-based technology and utilizes a
variety of third-party hardware and proprietary and third-
party software. The Company's retail functions, such as
merchandise procurement and distribution, inventory control,
point-of-sale information systems and proprietary credit card
account servicing, generally use proprietary software, with
third-party software being used more extensively for
administrative functions, such as accounting and human
resource management. In addition to such information
technology ("IT") systems, the Company's operations rely on
various non-IT equipment and systems that contain embedded
computer technology, such as elevators, escalators and energy
management systems. Third parties with whom the Company has
commercial relationships, including vendors of merchandise for
resale by the Company and of products and services used by the
Company in its operations (such as banking and financial
services, data processing services, telecommunications
services and utilities), are also highly reliant on computer-
based technology.
In February 1996, the Company commenced an assessment of the
potential effects of the Year 2000 issue on the Company's
business, financial condition and results of operations. In
conjunction with such assessment, the Company developed and
commenced the implementation of the compliance program
described below.
FEDERATED DEPARTMENT STORES, INC.
Management's Discussion and Analysis
of Financial Condition and Results of Operations (Continued)
The Company's Compliance Program
Proprietary IT Systems. Pursuant to the Company's Year 2000
compliance program, the Company has undertaken an examination
of the Company's proprietary IT systems. All such systems
that have been identified as relating to a critical function
and as not being Year 2000 compliant have been or are being
remediated or replaced. The Company believes that the
remediation of its proprietary IT systems is substantially
complete, and nearly all of the proprietary IT systems that
have been remediated have been installed and placed into
production. The Company commenced testing of such remediated
systems for Year 2000 compliance in August 1998 and presently
anticipates completing a comprehensive, integrated test of all
of its main-frame and mid-range IT systems (including third-
party and proprietary hardware, software, network components
and interfaces) by January 31, 1999.
Third-Party IT Systems. The strategy instituted by the
Company to identify and address Year 2000 issues affecting
third-party IT systems used by the Company includes contacting
all third-party providers of computer hardware and software to
secure appropriate representations to the effect that such
hardware or software is or will timely be Year 2000 compliant.
The Company has received Year 2000 compliant versions of
almost all third-party software and is currently engaged in
developing contingency plans as to third-party hardware and
software used by the Company in respect of which the Company
has not received adequate compliance assurances to date.
Non-IT Systems. The Company has undertaken a review of its
non-IT systems and is in the process of implementing a
remediation program in respect of such systems that are within
the control of the Company. The Company expects to complete
this remediation effort by April 30, 1999. In addition, the
Company's centralized real estate department has communicated
to the developers, landlords and property managers of
substantially all of the Company's properties the Company's
expectation that the systems utilized in the management and
operation of such properties which are not within the
Company's control are or will timely be Year 2000 compliant.
Non-IT Vendors and Suppliers. The Company procures its
merchandise for resale and supplies for operational purposes
from a vast network of vendors located both within and outside
the United States, and is not dependent on any one vendor for
more than 5% of its merchandise purchases. With respect to
private label merchandise, which constitutes approximately 15%
of the Company's total sales, procurement is principally from
manufacturers located outside the United States. As a part of
its contingency planning effort, the Company has commenced
making inquiries as to the Year 2000 readiness of selected
vendors and private label manufacturers in order to identify
any significant exposures that may exist and establish
alternate sources or strategies where necessary.
FEDERATED DEPARTMENT STORES, INC.
Management's Discussion and Analysis
of Financial Condition and Results of Operations (Continued)
Costs
The Company has incurred to date approximately $16 million of
costs to implement its Year 2000 compliance program and
presently expects to incur approximately $50 million of costs
in the aggregate, of which approximately 30% represents
capitalized expenditures for hardware purchases. All of the
Company's Year 2000 compliance costs have been or are expected
to be funded from the Company's operating cash flow. The
Company's Year 2000 compliance budget does not include
material amounts for hardware replacement because the Company
has historically employed a strategy to continually upgrade
its main-frame and mid-range computer systems and to install
state of the art point-of-sale systems with respect to both
pre-existing operations and in conjunction with the
acquisitions and mergers effected by the Company in recent
years. Consequently, the Company's Year 2000 budget has not
required the diversion of funds from or the postponement of
the implementation of other planned IT projects.
Risks Associated With Year 2000 Issues
The Company's Year 2000 compliance program is directed
primarily towards ensuring that the Company will be able to
continue to perform three critical functions: (i) effect
sales, (ii) order and receive merchandise, and (iii) pay its
employees and vendors. It is difficult, if not impossible, to
assess with any degree of accuracy the impact on any of these
three areas of the failure of one or more aspects of the
Company's compliance program.
The novelty and complexity of the issues presented and the
proposed solutions therefor and the Company's dependence on
the technical skills of employees and independent contractors
and on the representations and preparedness of third parties
are among the factors that could cause the Company's efforts
to be less than fully effective. Moreover, Year 2000 issues
present a number of risks that are beyond the Company's
reasonable control, such as the failure of utility companies
to deliver electricity, the failure of telecommunications
companies to provide voice and data services, the failure of
financial institutions to process transactions and transfer
funds, the failure of vendors to deliver merchandise or
perform services required by the Company and the collateral
effects on the Company of the effects of Year 2000 issues on
the economy in general or on the Company's business partners
and customers in particular. Although the Company believes
that its Year 2000 compliance program is designed to
appropriately identify and address those Year 2000 issues that
are subject to the Company's reasonable control, there can be
no assurance that the Company's efforts in this regard will be
fully effective or that Year 2000 issues will not have a
material adverse effect on the Company's business, financial
condition or results of operations.
PART II -- OTHER INFORMATION
FEDERATED DEPARTMENT STORES, INC.
Item 5. Other Information
This report and other reports, statements and
information previously or subsequently filed by the
Company with the Securities and Exchange Commission
(the "SEC") contain or may contain forward-looking
statements. Such statements are based upon the beliefs
and assumptions of, and on information available to,
the management of the Company at the time such
statements are made. The following are or may
constitute forward-looking statements within the
meaning of the Private Securities Litigation Reform Act
of 1995: (i) statements preceded by, followed by or
that include the words "may," "will," "could,"
"should," "believe," "expect," "future," "potential,"
"anticipate," "intend," "plan," "estimate," or
"continue" or the negative or other variations thereof
and (ii) statements regarding matters that are not
historical facts. Such forward-looking statements are
subject to various risks and uncertainties, including
(i) risks and uncertainties relating to the possible
invalidity of the underlying beliefs and assumptions,
(ii) possible changes or developments in social,
economic, business, industry, market, legal and
regulatory circumstances and conditions, and (iii)
actions taken or omitted to be taken by third parties,
including customers, suppliers, business partners,
competitors and legislative, regulatory, judicial and
other governmental authorities and officials. In
addition to any risks and uncertainties specifically
identified in the text surrounding such forward-looking
statements, the statements in the immediately preceding
sentence and the statements under captions such as
"Risk Factors" and "Special Considerations" in reports,
statements and information filed by the Company with
the SEC from time to time constitute cautionary
statements identifying important factors that could
cause actual amounts, results, events and circumstances
to differ materially from those reflected in such
forward-looking statements.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 Amended and Restated Credit Agreement, dated as of
June 29, 1998, by and among the Company, the
Initial Lenders named therein, Citibank, N.A., as
Administrative Agent and Paying Agent, The Chase
Manhattan Bank, as Administrative Agent,
BankBoston, N.A., as Syndication Agent, and The
Bank of America, National Trust & Savings
Association, as Documentation Agent.
10.2 Letter Amendment to the Five-Year Credit Agreement,
dated as of June 29, 1998, by and among the Company, the
Initial Lenders named therein, Citibank, N.A., as
Administrative Agent and Paying Agent, The Chase Manhattan
Bank, as Administrative Agent, BankBoston, N.A., as
Syndication Agent, and The Bank of America, National
Trust & Savings Association, as Documentation Agent.
27 Financial Data Schedule
(b) Reports on Form 8-K
No reports were filed on Form 8-K during the quarter ended
August 1, 1998.
FEDERATED DEPARTMENT STORES, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunder duly authorized.
FEDERATED DEPARTMENT STORES, INC.
Date September 15, 1998 /s/ Dennis J. Broderick
Dennis J. Broderick
Senior Vice President, General Counsel
and Secretary
/s/ Joel A. Belsky
Joel A. Belsky
Vice President and Controller
(Principal Accounting Officer)