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 May
1, 1999.
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 (Commission File No.) (I.R.S. Employer
Incorporation) 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.
209,531,928 shares of the Registrant's Common Stock, $.01 par
value, were outstanding as of May 29, 1999.
PART I -- FINANCIAL INFORMATION
FEDERATED DEPARTMENT STORES, INC.
Consolidated Statements of Income
(Unaudited)
(millions, except per share figures)
13 Weeks Ended 13 Weeks Ended
May 1, 1999 May 2, 1998
Net Sales $ 3,707 $ 3,456
Cost of sales 2,266 2,106
Selling, general and
administrative expenses 1,216 1,169
Operating Income 225 181
Interest expense (78) (83)
Interest income 3 6
Income Before Income Taxes 150 104
Federal, state and local income
tax expense (63) (44)
Net Income $ 87 $ 60
Basic earnings per share $ .42 $ .29
Diluted earnings per share $ .40 $ .27
The accompanying notes are an integral part of these unaudited
Consolidated Financial Statements.
FEDERATED DEPARTMENT STORES, INC.
Consolidated Balance Sheets
(Unaudited)
(millions)
May 1, January 30, May 2,
1999 1999 1998
ASSETS:
Current Assets:
Cash $ 239 $ 307 $ 179
Accounts receivable 2,165 2,209 2,446
Merchandise inventories 3,599 3,259 3,336
Supplies and prepaid expenses 200 117 105
Deferred income tax assets 142 80 62
Total Current Assets 6,345 5,972 6,128
Property and Equipment - net 6,624 6,572 6,422
Intangible Assets - net 1,889 631 684
Other Assets 572 289 319
Total Assets $ 15,430 $ 13,464 $ 13,553
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current Liabilities:
Short-term debt $ 1,225 $ 524 $ 357
Accounts payable and
accrued liabilities 2,699 2,446 2,375
Income taxes 75 98 24
Total Current Liabilities 3,999 3,068 2,756
Long-Term Debt 3,806 3,057 3,920
Deferred Income Taxes 1,236 1,060 975
Other Liabilities 576 570 557
Shareholders' Equity 5,813 5,709 5,345
Total Liabilities and
Shareholders' Equity $ 15,430 $ 13,464 $ 13,553
The accompanying notes are an integral part of these unaudited
Consolidated Financial Statements.
FEDERATED DEPARTMENT STORES, INC.
Consolidated Statements of Cash Flows
(Unaudited)
(millions)
13 Weeks Ended 13 Weeks Ended
May 1, 1999 May 2, 1998
Cash flows from operating activities:
Net income $ 87 $ 60
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 158 149
Amortization of intangible assets 15 6
Amortization of financing costs 1 2
Changes in assets and liabilities:
Decrease in accounts receivable 158 194
Increase in merchandise inventories (175) (97)
Decrease in supplies and prepaid
expenses 2 10
Decrease in other assets not
separately identified 43 4
Decrease in accounts payable and accrued
liabilities not separately identified (114) (116)
Decrease in current income taxes (23) (64)
Increase in deferred income taxes 1 32
Decrease in other liabilities not
separately identified (7) (6)
Net cash provided by operating
activities 146 174
Cash flows from investing activities:
Purchase of property and equipment (52) (51)
Acquisition of Fingerhut Companies,
Inc., net of cash acquired (1,539) -
Capitalized software (6) -
Investments in affiliated companies (9) -
Disposition of property and equipment 3 16
Net cash used by
investing activities (1,603) (35)
Cash flows from financing activities:
Debt issued 1,326 300
Financing costs (10) (7)
Debt repaid (1) (499)
Increase in outstanding checks 69 75
Issuance of common stock 5 29
Net cash provided (used) by
financing activities 1,389 (102)
(Continued)
FEDERATED DEPARTMENT STORES, INC.
Consolidated Statements of Cash Flows
(Unaudited)
(millions)
13 Weeks Ended 13 Weeks Ended
May 1, 1999 May 2, 1998
Net increase (decrease) in cash (68) 37
Cash at beginning of period 307 142
Cash at end of period $ 239 $ 179
Supplemental cash flow information:
Interest paid $ 73 $ 80
Interest received 3 6
Income taxes paid (net of refunds
received) 84 68
Schedule of noncash investing and financing
activities:
Debt assumed in acquisition 125 -
Equity issued in acquisition 12 -
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 30, 1999 (the "1998 10-K"). The
accompanying Consolidated Financial Statements should be read
in conjunction with the Consolidated Financial Statements and
notes thereto in the 1998 10-K.
Substantially all department store merchandise inventories are
valued by the retail method and stated on the LIFO (last-in,
first-out) basis, which is generally lower than market.
Direct-to-customer merchandise inventories are stated at the
lower of FIFO (first-in, first-out) cost or market.
Because of the seasonal nature of the general merchandising
business, the results of operations for the 13 weeks ended
May 1, 1999 and May 2, 1998 (which do not include the
Christmas season) are not indicative of such results for the
fiscal year.
The Consolidated Financial Statements for the 13 weeks ended
May 1, 1999 and May 2, 1998, 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.
2. Acquisition
On March 18, 1999, the Company purchased Fingerhut Companies,
Inc. ("Fingerhut"), a database marketing company that sells a
broad range of products and services directly to consumers via
catalogs, direct marketing and the Internet. The total
purchase price of the Fingerhut acquisition was approximately
$1,720 million, including the assumption of $125 million of
debt and transaction costs.
The Fingerhut acquisition is being accounted for under the
purchase method of accounting and, accordingly, the Company's
results of operations do not include any revenues or expenses
related to the acquisition prior to the closing date and the
purchase price has been allocated to Fingerhut's assets and
liabilities based on the estimated fair value of these assets
and liabilities as of that date.
FEDERATED DEPARTMENT STORES, INC.
Notes to Consolidated Financial Statements
(Unaudited)
3. Segment Data
The Company conducts its business through two segments,
department stores and direct-to-customer. The Company
operates over 400 department stores throughout the country
that sell a wide range of merchandise, including men's,
women's and children's apparel and accessories, cosmetics,
home furnishings and other consumer goods. On March 18, 1999,
the Company acquired Fingerhut which, together with
Bloomingdale's By Mail, Macy's By Mail, macys.com and certain
other direct marketing activities, comprises its direct-to-
customer segment. This segment sells a broad range of
products and services directly to consumers via catalogs,
direct marketing and the Internet. Corporate and other
consists of the assets and liabilities, and related income or
expense, associated with the corporate office and certain
items managed on a company-wide basis (e.g., intangibles,
financial instruments, income taxes, retirement benefits and
properties held for sale or disposition).
The financial information for each segment is reported on the
basis used internally by the Company to evaluate performance
and allocate resources. Prior year results have not been
restated to conform to the current presentation as it is not
practicable to do so.
13 Weeks Ended
May 1, May 2,
(millions) 1999 1998
Revenues by segment were as follows:
Department Stores $3,544 $3,456
Direct-to-Customer 163 -
Total $3,707 $3,456
Operating income by segment was
as follows:
Department Stores $ 273 $ 220
Direct-to-Customer (2) -
Total segment operating income 271 220
Corporate and other (46) (39)
Operating income $ 225 $ 181
Depreciation and amortization by
segment was as follows:
Department Stores $ 153 $ 147
Direct-to-Customer 3 -
Corporate and other 17 8
Total $ 173 $ 155
FEDERATED DEPARTMENT STORES, INC.
Notes to Consolidated Financial Statements
(Unaudited)
13 Weeks Ended
May 1, May 2,
(millions) 1999 1998
Capital expenditures (purchase of
property and equipment)
by segment were as follows:
Department Stores $ 51 $ 51
Direct-to-Customer 1 -
Corporate and other - -
Total $ 52 $ 51
Total assets for each segment at
the end of the reporting
period were as follows:
Department Stores $12,083 $12,236
Direct-to-Customer 900 -
Corporate and other 2,447 1,317
Total $15,430 $13,553
4. Earnings Per Share
The following table sets forth the computation of basic and
diluted earnings per share:
13 Weeks Ended
May 1, 1999 May 2, 1998
Shares Income Shares Income
(millions, except per share data)
Net income and average number of
shares outstanding 208.6 $ 87 210.4 $ 60
Shares to be issued under
deferred compensation plan .4 - .3 -
209.0 $ 87 210.7 $ 60
Basic earnings per share $ .42 $ .29
Effect of dilutive securities:
Warrants 5.7 8.1
Stock options 1.7 2.6
Convertible notes - - 10.2 3
216.4 $ 87 231.6 $ 63
Diluted earnings per share $ .40 $ .27
FEDERATED DEPARTMENT STORES, INC.
Notes to Consolidated Financial Statements
(Unaudited)
In addition to the warrants and stock options reflected in the
foregoing table, warrants and stock options to purchase 6.6
million and 4.5 million shares of common stock at prices
ranging from $41.50 to $79.44 per share were outstanding at
May 1, 1999 and May 2, 1998, 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.
FEDERATED DEPARTMENT STORES, INC.
Management's Discussion and Analysis
of Financial Condition and Results of Operations
The Company acquired Fingerhut on March 18, 1999. The
acquisition is being accounted for under the purchase method
of accounting and, accordingly, the Company's results of
operations do not include any revenues or expenses related to
the acquisition prior to the closing date. The results of
operations of Fingerhut have been grouped with the Company's
Bloomingdale's By Mail, Macy's By Mail and macys.com
operations and certain other direct marketing activities as
the direct-to-customer segment.
For purposes of the following discussion, all references to
"first quarter of 1999" and "first quarter of 1998" are to the
Company's 13-week fiscal periods ended May 1, 1999 and May 2,
1998, respectively.
Results of Operations
Comparison of the 13 Weeks Ended May 1, 1999 and May 2, 1998
Net sales for the first quarter of 1999 totaled $3,707
million, compared to net sales of $3,456 million for the first
quarter of 1998, an increase of 7.3%. Net sales for
department stores for the first quarter of 1999 were $3,544
million compared to $3,456 million for the first quarter of
1998, an increase of 2.5%. On a comparable store basis (sales
from stores opened prior to February 1, 1998), net sales for
the first quarter of 1999 increased 4.0% compared to the first
quarter of 1998. Net sales for the direct-to-customer
business segment were $163 million for the first quarter of
1999.
Cost of sales was 61.1% of net sales for the first quarter of
1999, compared to 61.0% for the first quarter of 1998. Due to
the highly competitive environment, cost of sales as a percent
of net sales for department stores was up 0.4% in the first
quarter of 1999 compared to the same period a year ago. Due to
the lower cost of sales from the direct-to-customer business
in the first quarter of 1999, compared to cost of sales for
department stores, total cost of sales as a percent of net
sales increased only slightly from the same year-ago period.
Cost of sales was not impacted by the valuation of department
store merchandise inventory on the last-in, first-out basis in
the first quarter of 1999 or in the first quarter of 1998.
Selling, general and administrative ("SG&A") expenses were
32.8% of net sales for the first quarter of 1999 compared to
33.8% for the first quarter of 1998. Department store SG&A
expenses improved 1.8% as a percent of department store net
sales, reflecting the impact of higher sales with flat
nonpayroll expenses and lower bad debt expense, which was
partially offset by reduced finance charge income resulting
from lower receivable balances. The higher SG&A expense rate
for the direct-to-customer segment, including recently
launched businesses, and higher amortization expense due to
the Fingerhut acquisition combined to reduce the overall
improvement in the SG&A expense rate to 1.0%.
Net interest expense was $75 million for the first quarter of
1999, compared to $77 million for the first quarter of 1998.
The lower interest expense for the first quarter of 1999 is
due to lower interest rates resulting from refinancings
completed in 1998, which was partially offset by the increased
outstanding debt resulting from the Fingerhut acquisition.
FEDERATED DEPARTMENT STORES, INC.
Management's Discussion and Analysis
of Financial Condition and Results of Operations (Continued)
The Company's effective income tax rate of 42.0% for the first
quarter of 1999 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 the first quarter
of 1999 was $146 million, a decrease of $28 million from the
net cash provided by operating activities in the first quarter
of 1998. The decrease in net cash provided by operating
activities reflects increased payments of non-merchandise
accounts payable due primarily to the Fingerhut acquisition.
The increase in merchandise inventories was offset by a
greater increase in merchandise accounts payable.
Net cash used by investing activities was $1,603 million for
the first quarter of 1999, including the purchase of
Fingerhut. Investing activities for the first quarter of 1999
also included purchases of property and equipment totaling $52
million and $9 million invested in Internet companies. During
the first quarter of 1999, the Company opened one new
department store and plans to open two additional department
stores during the remainder of 1999.
Net cash provided by the Company from all financing activities
was $1,389 million for the first quarter of 1999. The Company
funded the acquisition of Fingerhut through a combination of
cash on hand and short-term borrowings. During the first
quarter of 1999, the Company issued $350 million of 6.3%
Senior Notes due 2009 and $400 million of 6.9% Senior
Debentures due 2029, the proceeds of which were used to
refinance a portion of the short-term borrowings used by the
Company to acquire Fingerhut.
Management believes the department store business and other
retail businesses will continue to consolidate. Accordingly,
the Company intends from time to time to consider additional
acquisitions of, and investments in, department stores,
Internet-related companies, catalog companies 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 existing indebtedness or for other corporate
purposes.
FEDERATED DEPARTMENT STORES, INC.
Management's Discussion and Analysis
of Financial Condition and Results of Operations (Continued)
Year 2000
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.
As discussed separately under the caption "Fingerhut" below,
Fingerhut undertook a similar program prior to being
acquired by the Company.
The Company's Year 2000 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 has
completed 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). The Company is presently conducting varying
levels of follow-up testing of selected systems.
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
testing those third-party software programs that have been
identified as being critical to the Company's operations. The
Company is also 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.
FEDERATED DEPARTMENT STORES, INC.
Management's Discussion and Analysis
of Financial Condition and Results of Operations (Continued)
Non-IT Systems. The Company has undertaken a review of its
non-IT systems and has substantially completed the remediation
of those systems that are within the Company's control. In
addition, the Company's centralized real estate department has
communicated to the developers, landlords and property
managers of all of the Company's properties the Company's
expectation that the systems utilized in the management and
operation of such properties that are not within the Company's
control are or will timely be Year 2000 compliant. As a
further step, the Company has engaged in written or oral
communications with its key developers, landlords and property
managers in order to assess the Year 2000 readiness of their
respective operations.
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. The Company
procures its private label merchandise, which constitutes
approximately 15% of the Company's total sales, principally
from manufacturers located outside the United States. All of
the Company's vendors have been notified in writing of the
Company's expectation that the systems and operations of such
vendors will be Year 2000 compliant. Selected key vendors
have provided to the Company written or oral assurances that
they are in the process of implementing compliance programs
that are intended to address the Year 2000 issues affecting
their respective operations.
Contingency Planning. 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. The Company has
substantially completed the process of gathering data in order
to assess the potential effects on these mission critical
functions of a failure of the Company's Year 2000 compliance
program to be fully effective and, to the extent deemed
appropriate, is currently developing a contingency plan to
address such effects. The Company expects to complete its
contingency plan by July 31, 1999.
Fingerhut. Fingerhut implemented a program to address the
effects of the Year 2000 issue prior to being acquired by the
Company. The actions contemplated by Fingerhut's Year 2000
compliance program have been substantially completed and
substantially all of the costs Fingerhut expected to incur
have been incurred. The foregoing discussion of the Company's
Year 2000 compliance program does not address Fingerhut's
systems or vendors or any aspect of Fingerhut's Year 2000
compliance program. However, the discussion below of risks
associated with the Year 2000 issue apply equally to the
Company and Fingerhut and their respective Year 2000
compliance programs.
Costs. The Company (excluding Fingerhut) has incurred to
date approximately $30 million of costs to implement its Year
2000 compliance program and presently expects to incur
approximately $46 million of costs in the aggregate, of which
approximately 25% represents capitalized expenditures for
hardware purchases. All of the Company's Year 2000 compliance
costs have been or are expected to be funded from operating
cash flows. The Company's Year 2000 compliance budget does
not include material amounts for hardware replacement because
the Company has historically employed a strategy
FEDERATED DEPARTMENT STORES, INC.
Management's Discussion and Analysis
of Financial Condition and Results of Operations (Continued)
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. 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 Year 2000 compliance 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 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of the Company's stockholders
was held on May 21, 1999. The Company's
stockholders voted on the following items at such
meeting:
i. The stockholders approved the election of
four Directors for a three-year
term expiring at the 2002 Annual Meeting of
the Company's stockholders. The votes for
such elections were as follows: Meyer
Feldberg - 172,932,103 votes in favor and
35,644,459 votes withheld; Terry J. Lundgren
- 173,383,157 votes in favor and 35,193,405
votes withheld; Ronald W. Tysoe - 173,392,688
votes in favor and 35,183,874 votes withheld;
and Marna C. Whittington - 173,391,085 votes
in favor and 35,185,477 votes withheld.
There were no broker non-votes on this item.
ii. The stockholders ratified the employment of KPMG LLP
as the Company's independent accountants for the
fiscal year ending January 29, 2000. The
votes for the ratification were 174,951,900,
the votes against the ratification were
319,530, the votes abstained were 83,723, and
there were no broker non-votes.
iii. The stockholders approved a proposal to amend
the 1995 Executive
Equity Incentive Plan to increase the number
of shares of common stock of the Company
available for issuance thereunder. The votes
for the proposal were 122,088,623, the votes
against the proposal were 486,707, the votes
abstained were 52,143,421, and there were no
broker non-votes.
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
PART II -- OTHER INFORMATION
FEDERATED DEPARTMENT STORES, INC. (continued)
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 Agreement and Plan of Merger, dated as of
February 10, 1999, among Federated Department
Stores, Inc., Bengal Subsidiary Corporation
and Fingerhut Companies, Inc. (incorporated
by reference to Exhibit (c)(1) of the
Schedule 14D-1, filed by Federated and Bengal
on February 18, 1999.
10.2 Commercial Paper Dealer Agreement, dated as
of March 12, 1999, between Federated
Department Stores, Inc., as Issuer, and
Goldman, Sachs & Co., as Dealer.
10.3 Commercial Paper Dealer Agreement, dated as
of March 12, 1999, between Federated
Department Stores, Inc., as Issuer, and First
Chicago Capital Markets, Inc., as Dealer.
10.4 Commercial Paper Dealer Agreement, dated as of
March 12, 1999, between Federated Department Stores,
Inc., as Issuer, and Chase Securities Inc., as Dealer.
10.5 Purchase Agreement, dated as of March 18,
1999, between Federated Department Stores,
Inc. and Credit Suisse First Boston
Corporation, Salomon Smith Barney Inc., Chase
Securities Inc., NationsBanc Montgomery
Securities LLC and PNC Capital Markets, Inc.,
as representatives of the Several Purchasers
(incorporated by reference to Exhibit 4.1 to
Federated Department Stores, Inc.'s
Registration Statement on Form S-4
(Registration No. 333-76795) filed on April
22, 1999 (the "Registration Statement")).
PART II -- OTHER INFORMATION
FEDERATED DEPARTMENT STORES, INC. (continued)
10.6 Registration Rights Agreement, dated as of
March 18, 1999, between Federated Department
Stores, Inc. and Credit Suisse First Boston
Corporation, Salomon Smith Barney Inc., Chase
Securities Inc., NationsBanc Montgomery
Securities LLC and PNC Capital Markets, Inc.
(incorporated by reference to Exhibit 4.3 to
the Registration Statement).
10.7 Third Supplemental Trust Indenture, dated as
of March 24, 1999, between Federated
Department Stores, Inc. and Citibank, N.A.,
as Trustee (incorporated by reference to
Exhibit 4.2 to the Registration Statement).
10.8 Amended and Restated Pooling and Servicing
Agreement dated as of March 18, 1998 between
Fingerhut Receivables, Inc., as Transferor,
Fingerhut National Bank as Servicer, and The
Bank of New York (Delaware) as Trustee
(incorporated by reference to Exhibit 4(d) to
Fingerhut Receivables, Inc. Registration
Statement on Form S-1 (File No. 333-45599)).
10.9 Series 1998-1 Supplement dated as of April
28, 1998 to Amended and Restated Pooling and
Servicing Agreement.
10.10 Series 1998-2 Supplement dated as of
April 28, 1998 to Amended and Restated
Pooling and Servicing Agreement.
10.11 Series 1998-3 Supplement dated as of
April 28, 1998 to Amended and Restated
Pooling and Servicing Agreement.
10.12 First Amendment dated as of March 17,
1999 to Series 1998-1 Supplement.
10.13 First Amendment dated as of March 17,
1999 to Series 1998-2 Supplement.
10.14 First Amendment dated as of March 17,
1999 to Series 1998-3 Supplement.
10.15 Amended and Restated Purchase Agreement
dated as of March 18, 1998 between Fingerhut
Receivables, Inc., as Buyer and Fingerhut
Companies, Inc., as Seller (incorporated by
reference to Exhibit 10(d) to Fingerhut
Receivables, Inc. Registration Statement on
Form S-1 (File No. 333-45599)).
PART II -- OTHER INFORMATION
FEDERATED DEPARTMENT STORES, INC. (continued)
10.16 Amended and Restated Bank Receivables Purchase
Agreement dated as of March 18, 1998 between Fingerhut
Companies, Inc., as Buyer, and Fingerhut National Bank, as
Seller (incorporated by reference to Exhibit 10(e) to
Fingerhut Receivables, Inc. Registration Statement (File No.
333-45599)).
10.17 Indenture dated as of September 15, 1996
between Fingerhut Companies, Inc. and First
Bank, National Association, as trustee (now
know as U.S. Bank) (incorporated by reference
to Exhibit 4.1 to Fingerhut Companies, Inc.
Registration Statement on Form S-4 (File No.
333-15491)).
27 Financial Data Schedule
(b) Reports on Form 8-K
Current report on Form 8-K, dated March 18, 1999,
reporting matters under items 2, 5 and 7 thereof.
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 June 15, 1999
/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)