___________________________________________________________________
___________________________________________________________________
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
Annual Report Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
(Mark One)
(X) Annual Report pursuant to Section 15(d) of the Securities
Exchange Act of 1934 (No fee required, effective October 7,
1996)
For Year Ended: January 31, 1998
( ) Transition Report Pursuant to Section 15(d) of the Securities
Exchange Act of 1934 (No fee required) For the transition
period from ___________________ to __________________
Commission File Number: 333-27813
A. Full title of plan and the address of the plan, if different
from that of the issuer named below:
G. R. Herberger's, Inc.
401(k) Employee Stock Purchase Plan and
Employee Stock Ownership Plan and Trust
B. Name of issuer of the securities held pursuant to the plan
and the address of its principal executive office:
Saks Incorporated
750 Lakeshore Drive, Birmingham, AL 35211
_________________________________________________________________
__________________________________________________________________
SIGNATURES
The Plan. Pursuant to the requirements of the Securities
Exchange Act of 1934, the trustees (or other persons who
administer the employee benefit plan) have duly caused this annual
report to be signed on its behalf by the undersigned hereunto duly
authorized.
G.R. Herberger's, Inc. 401(k)
Employee Stock Ownership Plan
and Trust
______________________________
(Name of Plan)
Dated: June 29, 1999 By: /s/ Douglas E. Coltharp
_________________________
Douglas E. Coltharp
Executive Vice President
and Chief Financial
Officer
EXHIBIT INDEX
Exhibit Number Description of Document Page
23 Consent of Independent Accountants
G. R. Herberger's, Inc.
401(k) Employee Stock Purchase Plan and
Employee Stock Ownership Plan and Trust
Financial Statements and Supplemental Schedules
December 31, 1998 and 1997
G. R. Herberger's, Inc.
401(k) Employee Stock Purchase Plan
and Employee Stock Ownership
Plan and Trust
Table of Contents Pages
Report of Independent Accountants 1
Financial Statements:
Statements of Net Assets Available for Plan Benefits
December 31, 1998 and 1997 (liquidation basis) 2
Statement of Changes in Net Assets Available for
Plan Benefits for the year ended December 31,
1998 (liquidation basis) 3
Notes to Financial Statements 4-9
Supplemental Schedules:
*Item 27a - Schedule of Assets Held For Investment
Purposes as of December 31, 1998 10
*Item 27d - Schedule of Reportable Transactions
for the year ended December 31, 1998 11-13
*Refers to item number in Form 5500 (Annual Return/
Report of Employee Benefit Plan) for the year ended
December 31, 1998.
Report of Independent Accountants
To the Administrator and Participants
G. R. Herberger's, Inc. 401(k) Employee Stock Purchase Plan
and Employee Stock Ownership Plan and Trust
We have audited the financial statements of G. R. Herberger's, Inc.
401(k) Employee Stock Purchase Plan and Employee Stock Ownership
Plan and Trust (the Plan), listed in the table of contents, as of
December 31, 1998 and 1997 and for the year ended December 31,
1998. These financial statements are the responsibility of the Plan
Administrator. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
As described in Note 5 to the accompanying financial statements,
the Plan has been terminated and all assets of the Plan have been
distributed. In accordance with generally accepted accounting
principles, the financial statements are presented on the
liquidation basis of accounting.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the net assets available for
benefits in liquidation of G. R. Herberger's, Inc. 401(k) Employee
Stock Purchase Plan and Employee Stock Ownership Plan and Trust as
of December 31, 1998 and 1997, and the changes in net assets
available for benefits in liquidation for the year ended December
31, 1998 in conformity with generally accepted accounting
principles applied on the basis described in the preceding
paragraph.
Our audits were conducted for the purpose of forming an opinion on
the basic financial statements taken as a whole. The supplemental
schedules listed on the accompanying index are presented for
purposes of complying with the Department of Labor's Rules and
Regulations for reporting and disclosure under the Employee
Retirement Income Security Act of 1974 and are not a required part
of the basic financial statements. The supplemental schedules have
been subjected to the auditing procedures applied in the audits of
the basic financial statements and, in our opinion, are fairly
stated, in all material respects, in relation to the basic
financial statements taken as a whole.
PricewaterhouseCoopers LLP
Birmingham, Alabama
June 15, 1999
G. R. Herberger's, Inc.
401(k) Employee Stock Purchase Plan and Employee Stock Ownership
Plan and Trust
Statements of Net Assets Available for Plan Benefits
December 31, 1998 and 1997 (liquidation basis)
ASSETS 1998 1997
------------ -------- --------
Investments:
Common stock of Proffitt's, Inc. $ $113,759,906
Norwest Stable Return Fund 1,168,797
----------- -----------
Total investments 0 114,928,703
----------- -----------
Cash and cash equivalents 716,382
-----------
Accrued interest 4,055
Receivable from G. R. Herberger's, Inc.:
Employer contribution 132,734
Employee contribution 15,585
----------- -----------
Total receivables 148,319
----------- -----------
0 115,797,459
LIABILITIES
Other accrued expenses 124,126
-----------
Net assets available for plan benefits $ 0 $115,673,333
=========== ============
The accompanying notes are an integral part of these
financial statements.
G. R. Herberger's, Inc.
401(k) Employee Stock Purchase Plan and Employee Stock Ownership
Plan and Trust
Statement of Changes in Net Assets Available for Plan Benefits
for the year ended December 31, 1998 (liquidation basis)
Net investment income:
Interest $ 15,651
Net appreciation in the fair value of common stock 38,401,373
Net appreciation in the fair value of Norwest Stable
Return Fund 22,608
Employee contributions 22,484
Other income 52,720
Benefits paid to participants (40,382,706)
Transfer to merged plan (Note 5) (113,805,463)
-------------
Net decrease (115,673,333)
Net assets available for benefits, beginning
of year 115,673,333
-------------
Net assets available for benefits, end of year $ 0
=============
The accompanying notes are an integral part of these financial
statements.
G. R. Herberger's, Inc.
401(k) Employee Stock Purchase Plan and Employee Stock Ownership
Plan and Trust
Notes to Financial Statements
1. Plan Description
The following description of the G. R. Herberger's, Inc.
401(k) Employee Stock Purchase Plan and Employee Stock
Ownership Plan and Trust (the Plan) provides only general
information. References should be made to the plan agreement
for more complete information.
General - The Plan was established by G. R. Herberger's, Inc.
as a defined contribution stock bonus plan subject to the
provisions set forth in the Employee Retirement Income
Security Act of 1974 (ERISA). The Plan, formerly titled G. R.
Herberger's, Inc. Restated Profit Sharing Plan and Trust, was
amended and restated on January 1, 1989, to conform to the Tax
Reform Act of 1986, the Revenue Act of 1987, and the Tax and
Miscellaneous Revenue Act of 1988. In addition, the Plan was
converted to an Employee Stock Ownership Plan on December 31,
1989. The Plan was amended and restated to include a
qualified 401(k) Stock Bonus Plan within the meaning of the
IRS code Section 401(k) on April 15, 1993. On August 20, 1997,
Herberger's Board of Directors resolved to terminate the plan
(Note 5).
Employees are eligible to participate in the Plan after
completing one year of service and attaining age 21.
G. R. Herberger's, Inc. serves as the plan administrator and
has selected the Norwest Bank Minnesota, N. A. (Trustee) to be
the Plan's investment trustee and recordkeeper.
Contributions - Contributions to the Employee Stock Ownership
Plan are made each year at the discretion of the Board of
Directors of G. R. Herberger's, Inc. (the Employer). The
amount contributed to each participant's account is allocated
based upon the ratio which such participant's compensation
bears to the total compensation for all participants for the
plan year. The Employer also contributes all amounts withheld
from participants through their 401(k) payroll deductions
pursuant to their elective deferral agreements. Participants
electing to have their elective deferral contributions for a
Plan year invested in Proffitt's common stock may receive a
matching contribution in an amount determined by the Employer
for the plan year.
Voluntary participant deposits cannot be less than $25 per
biweekly payroll period and cannot exceed 11% of the
Employee's compensation or such other maximum percentage
announced from time to time by the Employer. In addition,
participant deposits plus Herberger's matching and ESOP
contributions cannot exceed the lesser of $30,000 or 25% of
total employee compensation for such limitation year.
Participant deposits, made on a before-tax basis, qualify as
a cash or deferred arrangement under Section 401(k) of the
Internal Revenue Code. As such, they are not subject to
federal income tax until the funds are disbursed.
Vesting - Participants are always 100% vested in any elective
deferral portion of their account balances. Participants vest
in their share of Herberger's matching and ESOP contributions
according to the following schedule:
Vesting Service Vesting
in Years Percentage
-------------- ---------------
Less than 3 0%
3 20%
4 40%
5 60%
6 80%
7 or more 100%
Participants are 100% vested upon reaching seven years of
service, attaining age 65, or upon death or total permanent
disability.
In connection with the decision to terminate the Plan (Note
5), all participants on August 20, 1997 became 100% vested in
their accounts.
Benefits - An account is maintained for each participant in
the Plan. The accounts are credited with the participant's
contributions and their allocated portion of the employer
contributions and investment earnings. Distributions,
withdrawals, and allocated expenses are subtracted from the
account balances.
Termination - In the event the Plan is terminated, the amount
of each participant's account balance becomes fully vested and
will be distributed based on the current value of assets
available for plan benefits allocated to the participant's
accounts at such time. On August 20, 1997, Herberger's Board
of Directors resolved to terminate the Plan (Note 5). As a
result, the Plan has changed its basis of accounting from the
going-concern basis to a liquidation basis during the years
ended December 31, 1998 and 1997. All of the Plan's assets are
carried at market values; therefore, no change in asset values
occurred due to the change from the going-concern basis to the
liquidation basis of accounting.
Upon termination of employment, request for payment of vested
account balances must be made on or before December 31 of each
year to be eligible for distribution in the following plan
year.
Forfeitures - As of the last day of each plan year,
forfeitures are allocated among the accounts of all remaining
participants as part of and on the same basis as the Employer
contribution allocation.
2. Summary of Significant Accounting Policies
Basis of Financial Statements - The financial statements of
the Plan are maintained on the accrual basis and have been
prepared in conformity with generally accepted accounting
principles.
Investments - Plan investments are stated at aggregate current
value. In 1997, the value of Proffitt's, Inc. common stock is
based on the December 31, 1997 quoted market price. Quoted
market prices are used to value the Norwest Stable Return
Fund.
Interest and dividend income from investments is recorded when
earned. The Plan presents in the statement of changes in net
assets available for plan benefits the net appreciation
(depreciation) in the fair value of its investments, which
consists of the realized gains or losses and the unrealized
appreciation (depreciation) on those investments.
Cash and Cash Equivalents - Cash and cash equivalents consist
of demand deposits and short-term investments with original
maturities of three months or less.
Contributions - Contributions from the Employer are made
either in Proffitt's common stock or in cash and are accrued
based on amounts declared by G. R. Herberger's Board of
Directors. Contributions from employees are recorded in the
period in which the Employer makes the deductions from the
participants' payroll.
Administrative Fees - In 1998, all administrative expenses
were paid by the Plan.
Use of Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles
requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of additions
and deductions during the reporting periods. Actual results
could differ from those estimates.
3. Income Tax Status
The Plan received a determination letter dated February 23,
1994, in which the Internal Revenue Service stated that the
Plan, as designed, was in compliance with the applicable
requirements of the Internal Revenue Code. The plan
administrator and the Plan's tax counsel believe that the Plan
continues to qualify and operate as designed. Therefore, no
provisions for income taxes has been included in the Plan's
financial statements.
The Plan obtained its latest determination letter on May 7,
1998, in which the Internal Revenue Service stated that the
planned termination of this plan does not adversely affect its
qualification for federal tax purposes.
4. Investments
Participating employees elect to authorize Herberger's to
withhold amounts from their salaries and deposit the amounts
in the Norwest Bank Minnesota, N. A. Stable Return Fund. The
fund assets are used to purchase debt certificates issued by
corporations, the government, or its agencies offering a
conservative fixed income investment with higher returns over
time.
All 401(k) elective deferral contributions are initially
invested in the Norwest Stable Return Fund. On or about May 15
of each plan year, the balance in this fund is used to
purchase common stock of Proffitt's, on behalf of the Plan's
participants, unless the participants direct the Trustee in
writing not to acquire such stock. The participants electing
to have their elective deferral contributions for a Plan year
invested in Proffitt's common stock may receive a matching
contribution at the discretion of and in an amount determined
by the Employer for the plan year.
Investments held by the Plan at December 31, 1997 are as
follows:
December 31, 1997
---------------------------
Market Cost
--------- ---------
Common stock of Proffitt's, Inc. $113,759,906 $16,362,967
Norwest Stable Return Fund 1,168,797 1,121,776
------------ ------------
$114,928,703 $17,484,743
============ ============
No investments were held by the Plan at December 31, 1998.
5. Plan Termination
On August 20, 1997, Herberger's Board of Directors resolved to
terminate the Plan and merge the plan assets into the Saks
Incorporated 401(k) Retirement Plan effective December 31,
1997, or as soon as administratively practicable thereafter.
On May 7, 1998, the Plan obtained a favorable determination
letter from the Internal Revenue Service approving the planned
termination. Accordingly, all plan assets transferred to the
Saks Incorporated 401(k) Retirement Plan prior to or on
December 31, 1998 and the Plan was terminated.
6. Asset Allocation
The allocation of the net assets available for plan benefits
to investment programs as of December 31, 1997 and the
allocation of changes in net assets available for plan
benefits to investment programs for the year ended December
31, 1998 are as follows. Due to the termination of the ESOP
and the transfer of all Plan assets to the Saks Incorporated
Retirement Savings Plan, the Plan's net assets at December 31,
1998 are zero.
Allocation of Plan Assets and Liabilities to Investment Programs
December 31, 1997 (liquidation basis)
Norwest
Company Stable
Stock Return
Fund Fund Total
---------- ---------- ----------
ASSETS
Investments:
Proffitts, Inc. common stock $113,759,906 $113,759,906
Norwest Stable Return Fund $1,168,797 1,168,797
------------ ------------ ------------
Total investments 113,759,906 1,168,797 114,928,703
------------ ------------ ------------
Cash and cash equivalents 716,382 716,382
------------ ------------
Accrued Interest 4,055 4,055
Receivable from G. R. Herberger's, Inc.:
Employer contribution 132,734 132,734
Employee contribution 15,585 15,585
------------ ------------ ------------
Total receivables 148,319 148,319
------------ ------------ ------------
114,476,288 1,321,171 115,797,459
------------ ------------ ------------
LIABILITIES
Other accrued expenses 124,126 124,126
------------ ------------
Net assets available for plan
benefits $114,352,162 $1,321,171 $115,673,333
============ ============ ============
Allocation of Plan Assets and Changes in
Net Assets Available for Benefits to Investment Programs
December 31, 1998 (liquidation basis)
Company Norwest
Stock Stable Return
Fund Fund Total
---------- ---------- ----------
Net investments income:
Interest $15,651 $15,651
----------- -----------
Net investment income 15,651 15,651
----------- -----------
Net appreciation in the fair value of
common stock 38,401,373 38,401,373
Net appreciation in the fair value of
Stable Return fund $22,608 22,608
Employee contributions 22,484 22,484
Other income 52,720 52,720
Transfer to merged plan (113,396,108) (409,355) (113,805,463)
Benefits paid to participants (39,997,421) (385,285) (40,382,706)
Transfer of cash shares 571,623 (571,623) 0
----------- ----------- -----------
Net decrease (114,352,162) (1,321,171) (115,673,333)
Net assets available for benefits, beginning
of year 114,352,162 1,321,171 115,673,333
----------- ----------- -----------
Net assets available for benefits, end of year $0 $0 $0
=========== =========== ===========
Supplemental Schedules
G. R. Herberger's, Inc.
401(k) Employee Stock Purchase Plan and Employee Stock Ownership
Plan and Trust
Item 27a - Schedule of Assets Held for Investment Purposes
as of December 31, 1998
c. Description Of Investment,
Including Maturity Date,
b. Identity Of Issuer, Borrower, Rate Of Interest, Collateral e. Current
a. Lessor, Or Similar Party Par, Or Maturity Value d. Cost Value
- ---- ----------------------------- ------------------------------ ------- ----------
No assets were held at December 31, 1998.
G. R. Herberger's, Inc.
401(k) Employee Stock Purchase Plan and Employee Stock Ownership
Plan and Trust
Item 27d - Schedule of Reportable Transactions
for the year ended December 31, 1998
I. Single transactions exceeding 5% of assets.
See attached schedule.
Information required in columns c, e, f and h is inapplicable.
II. Series of transactions involving property other than
securities.
NONE
III. Series of transactions of same issue exceeding 5% of assets.
See attached schedule.
Information required in columns c, e, f, and h is inapplicable.
IV. Transaction in conjunction with same person involved in
reportable single transactions.
NONE
G. R. Herberger's, Inc.
401(k) Employee Stock Purchase Plan and Employee Stock Ownership
Plan and Trust
Item 27d(I) - Schedule of Reportable Transactions
for the year ended December 31, 1998
h. Current
Value of
b. Descrip- g. Cost Asset on
a. Identity of tion of d. Sales of Transaction i.
Party Involved Assets Price Asset Date Net Gain
- ------------------ ------------- ----------- ---------- ------------ ---------
*Proffitt's, Inc. Common Stock $15,510,465 $1,933,498 $15,510,465 $13,576,967
*Proffitt's, Inc. Common Stock $33,056,250 $1,486,321 $33,056,250 $31,569,929
*Proffitt's, Inc. Common Stock $53,706,790 $6,362,807 $53,706,790 $47,343,983
*Proffitt's, Inc. Common Stock $21,131,035 $3,697,151 $21,131,035 $17,433,884
*Proffitt's, Inc. Common Stock $12,896,647 $1,527,905 $12,896,647 $11,368,742
*Party-in-interest to the Plan.
G. R. Herberger's, Inc.
401(k) Employee Stock Purchase Plan and Employee Stock Ownership
Plan and Trust
Item 27d(III) - Schedule of Reportable Transactions
for the year ended December 31, 1998
d. Sales
a. Identity of b. Description --------------------- g. Cost of
Party Involved of Asset Price Number Asset i. Net Gain
- ----------------- --------------- ------- -------- ------------ ------------
Proffitt's, Inc. Common Stock $154,868,961 21 $18,024,182 $136,844,779