UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 (FEE REQUIRED)
For the fiscal year ended February 1, 1997
Commission file number 001-14346
SAKS HOLDINGS, INC.
(Exact name of Registrant as specified in its charter)
Delaware 52-1685667
-------- ----------
(State or other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
12 East 49th Street, New York, New York 10017
- ---------------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (212) 940-4048
Securities pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered:
Common Stock, par value $.01 per share New York Stock Exchange
- -------------------------------------- -----------------------
Securities registered pursuant to Section 12(g) of the Act:
5-1/2% Convertible Subordinated Notes due September 15, 2006
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.
1) Yes /X/ No / /
2) Yes /X/ No / /
The aggregate market value of the voting stock held by non-affiliates of the
Registrant at April 5, 1997 was $1,691,382,450. The aggregate market value was
computed by reference to the closing price as of that date. (For purposes of
calculating this amount only, all directors, executive officers and greater than
10% shareholders of the Registrant are treated as affiliates.)
The number of shares outstanding of the Registrants only class of common stock
as of April 5, 1997 was 63,400,313.
Documents Incorporated by Reference
Portions of the Registrant's annual shareholders report for the year ended
February 1, 1997 are incorporated into Part II.
Portions of the Registrant's definitive Proxy Statement for its annual
shareholders meeting to be held on June 16, 1997 are incorporated by reference
into Part III.
Part I
Item 1. Business
GENERAL
Saks Holdings, Inc. is the parent company of Saks & Company,
which does business as Saks Fifth Avenue, OFF 5TH and Folio.
Saks Fifth Avenue is recognized worldwide as a premier fashion
retailer, offering the finest quality and latest style in
women's and men's apparel. Supported by a strong commitment to
personalized customer service, Saks primarily sells better,
bridge and designer apparel, shoes, accessories, jewelry,
cosmetics and fragrances for women and men, as well as gift
merchandise and children's apparel. Capitalizing on its
70-year history as a fashion authenticator and the prominence
of its landmark Fifth Avenue store in New York City, Saks
Fifth Avenue has developed one of the most recognized
retailing franchises in the world.
Saks Fifth Avenue was founded in 1867 and was incorporated in
New York as Saks & Company in 1902. Opened in New York City in
September 1924 by Horace Saks and Bernard Gimbel, the landmark
Fifth Avenue store offered exclusive merchandise from around
the world. In 1973, Saks & Company was acquired by a
subsidiary of B.A.T. Industries, PLC through its acquisition
of Gimbel Bros., Inc. In July 1990, affiliates of Investcorp
S.A. and a group of international investors acquired Saks &
Company from B.A.T. Industries, PLC.
Sales are generated through four retail store formats:
Full-line; resort stores; Main Street stores; OFF 5TH stores;
and, Folio catalogs. As of February 1, 1997, there were 40
Full-line stores, seven Resort stores, three Main Street
stores and 33 OFF 5TH outlet stores. The full-line, resort and
main street store operations are conducted from premier retail
locations and sell merchandise which has been determined to be
most important to its top customers. The OFF 5TH outlet
division sells high quality, upscale branded fashion apparel
and home furnishings at exceptional prices. The Folio catalogs
primarily offer fashionable women's apparel, accessories and
home furnishings and gifts.
In addition to the preceding discussion, a description of each
retail format included in the annual shareholders report for
the year ended February 1, 1997 is incorporated herein by
reference.
TRADEMARKS AND SERVICE MARKS
The Company owns its principal trademarks and service marks,
including "Saks Fifth Avenue", "SFA" and "S5A" marks. Other
important trademarks and service marks include "OFF 5TH",
"Folio", "Real Clothes", "The Works" and "The Fifth Avenue
Club". The Company's trademarks and service marks are
registered in the
United States Patent and Trademark Office. The term of these
registrations is generally ten years, and they are renewable
for additional ten year periods indefinitely, so long as the
marks are still in use at the time of renewal. Saks is not
aware of any claims of infringement or other challenges to its
right to register or use its marks in the United States.
SEASONALITY
The retail apparel industry is seasonal in nature, with a high
proportion of sales and operating income generated in November
and December. During fiscal 1996, fiscal 1995 and fiscal 1994,
the fourth quarter provided approximately 31%, 32% and 31%,
respectively, of the Company's net sales and the majority of
its operating income. As a result, the Company's operating
results depend significantly on the holiday selling season.
Working capital requirements fluctuate during the year,
increasing substantially in October and November in
anticipation of the holiday selling season as significantly
higher inventory levels are necessary.
RELIANCE ON FIFTH AVENUE STORE
The Company's flagship Fifth Avenue store in New York City
accounted for approximately 21%, 22% and 24% of consolidated
net sales in fiscal 1996, fiscal 1995 and fiscal 1994,
respectively and plays a significant role in marketing the
Saks Fifth Avenue name.
COMPETITION
All aspects of the retail industry, including attracting
customers, securing merchandise and locating appropriate
retail sites, are highly competitive. The Company competes for
customers in this industry with retailers in the following
five categories: large specialty apparel retailers; better
department stores; national specialty apparel chains; designer
boutiques; and individual specialty apparel stores. The type
of individual competitor in each of these groups differs from
region to region and from store to store. Although management
believes it will be able to continue to compete on the basis
of quality, service and reputation, there can be no assurance
that it will maintain or improve the Company's competitive
position.
EMPLOYEES
At February 1, 1997, the Company employed approximately 838
people at its headquarters and buying offices and 14,506 in
its stores, two distribution centers and data center. The
Company's staffing requirements fluctuate during the year as a
result of the seasonality of the retail apparel industry,
adding approximately 1,200 to 1,500 more seasonal employees in
the fourth quarter. Approximately 147 of the Company's
employees are covered by collective bargaining
agreements. The Company has never been subject to a strike and
believes that its relationship with its employees and the
unions is good.
FORWARD-LOOKING STATEMENTS
Certain statements contained in this document as well as those
items incorporated by reference, including, without
limitation, statements containing the words "believes",
"anticipates", "intends", "expects" and words of similar
import, constitute "forward-looking statements" within the
meaning of the Reform Act. Such forward-looking statements
involve known and unknown risks, uncertainties and other
factors that may cause the actual results, performance or
achievements of Saks Holdings, Saks or the retail industry to
be materially different from any future results, performance
or achievements expressed or implied by such forward-looking
statements. Such factors include, among others, the following:
general economic and business conditions, both nationally and
in those areas in which Saks operates; demographic changes;
prospects for the retail industry; competition; changes in
business strategy or development plans; the loss of key
personnel; the availability of capital to fund the expansion
of Saks' business; and other factors referenced in this
document as well as those items incorporated by reference.
Given these uncertainties, prospective investors are cautioned
not to place undue reliance on such forward-looking
statements. Saks Holdings disclaims any obligation to update
any such factors or to publicly announce the results of any
revisions to any of the forward-looking statements contained
herein to reflect future events or developments.
CAPITAL EXPENDITURES; LIQUIDITY; SOURCES OF SUPPLY; REVENUES
BY RETAIL FORMAT
For information on capital expenditures, liquidity, sources of
supply and revenues by retail format, Management's Discussion
and Analysis of Financial Condition and Results of Operations
included in the annual shareholders report for the year ended
February 1, 1997 is incorporated herein by reference.
Item 2. Properties
The following table summarizes the property ownership of
stores as of February 1, 1997:
Number Gross % of Gross
of Square Square
Stores Footage Footage
Full-Line, Resort and Main Street Stores:
Owned store on owned land ..................... 7 1,380,000 23 %
Owned on leased land .......................... 20 1,949,700 36
Leased store on leased land ................... 23 1,757,200 27
=========== ============= ===========
50 5,086,900 86
OFF 5TH Stores:
Leased store on leased land ................... 32 772,600 13
Owned on leased land .......................... 1 27,100 1
----------- ------------- -----------
33 799,700 14
----------- ------------- -----------
Total ............................................ 83 5,886,600 100 %
=========== ============= ===========
In addition to the preceding table, a listing of all retail
properties included in the annual shareholders report for the
year ended February 1, 1997 is incorporated herein by
reference.
The Company currently operates two distribution centers
located in Yonkers, N.Y. and Ontario, CA. A new
state-of-the-art distribution center in Aberdeen, MD is being
constructed to replace the Yonkers, NY facility. The Company
expects to make the transition to this new facility in 1997.
The Company also leases its home office space in New York, NY.
Item 3. Legal Proceedings
There are no material legal proceedings, other than ordinary
routine litigation incidental to the business, to which the
Company or any of its subsidiaries is a party or of which any
of their property is the subject.
Item 4. Submission of Matters to a Vote of Security Holders
The Company did not submit any matter to a vote of its
security holders during the fourth quarter of fiscal 1996.
Part II
Item 5. Market for Registrant's Common Stock and Related Stockholder Matters
Common Stock Market Prices and Common Stock Information
included in the annual shareholders report for the year ended
February 1, 1997 is incorporated herein by reference.
The Company's common stock is traded on the New York Stock
Exchange (ticker symbol SKS). The approximate number of record
holders of the Company's common stock at February 1, 1997 was
354.
The Company currently does not pay any cash dividends on
common stock. Saks Holdings is a holding company with no
business operations of its own. Saks Holdings is therefore
dependent upon payments, dividends and distributions from Saks
& Company for funds to pay its expenses and to pay future cash
dividends or
distributions, if any, to holders of the common stock. The
Company currently retains any earnings for support of its
working capital, repayment of indebtedness, capital
expenditures and general corporate purposes. Saks & Company
has no current intention of paying dividends or making other
distributions to the Company in excess of amounts necessary to
pay the Company's expenses and taxes. Saks & Company's credit
facility contains restrictions on the ability to pay dividends
or make other distributions to the Company.
Item 6. Selected Financial Data
Fiscal Fiscal Fiscal Fiscal Fiscal
1996 1995 1994 1993 1992
---------------------------------------------------------------------------------------
(In Millions, except per share data)
Net sales ................................ $1,945 $1,687 $1,418 $1,396 $1,344
Management fees .......................... (1) (7) (2) (2) (2)
Impairment and special charges ........... - (36) - (178) -
Operating income (loss) ................. 109 36 66 (154) 12
Income (loss) before
extraordinary charge ................... 37 (58) (10) (228) (77)
Net income (loss) ........................ 24 (64) (11) (256) (86)
Total assets ............................. 1,573 1,366 1,289 1,306 1,471
Long-term debt and capital lease
obligations ......................... 709 976 874 892 862
Per common share:
Income (loss) before
extraordinary charge .............. 0.63 (1.29) (0.22) (5.07) (1.93)
Net income (loss) ................... 0.41 (1.43) (0.24) (5.68) (2.14)
All per share data have been retroactively adjusted to reflect
the five-for-one stock split in fiscal 1996 of the Company's
common stock effected in the form of share distributions
("stock dividends").
Management's Discussion and Analysis of Financial Condition
and Results of Operations included in the annual shareholders
report for the year ended February 1, 1997 is incorporated
herein by reference.
Impairment and special charges of $36.4 million were recorded
in fiscal 1995. The charges recorded consist of exit costs of
its Yonkers distribution center, the integration costs of
former I. Magnin locations and write-down of capitalized EDP
software and amounted to $10,015, $8,900 and $8,500,
respectively.
Impairment and special charges of $177.7 million were recorded
in fiscal 1993. These charges consisted of $118.0 million to
reduce the carrying value of property and equipment, goodwill
and intangible assets, $40.2 million related to store closings
and downsizings (write-down of property and equipment to net
realizable value, lease related costs, inventory liquidations
and severance) and $19.5 million related to an early
retirement program.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Management's Discussion and Analysis of Financial Condition
and Results of Operations included in the annual shareholders
report for the year ended February 1, 1997 is incorporated
herein by reference.
Item 8. Financial Statements and Supplementary Data
The report of independent accountants and consolidated
financial statements included in the annual shareholders
report for the year ended February 1, 1997 is incorporated
herein by reference.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
Part III
Item 10. Directors and Officers of the Registrant
The information contained in Saks Holdings, Inc.'s Proxy
Statement dated May 2, 1997, with respect to directors and
executive officers of the Company, is incorporated herein by
reference in response to this item.
Item 11. Executive Compensation
The information contained in Saks Holdings, Inc.'s Proxy
Statement dated May 2, 1997, with respect to executive
compensation and transactions, is incorporated herein by
reference in response to this item.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The information contained in Saks Holdings, Inc.'s Proxy
Statement dated May 2, 1997, with respect to security
ownership of certain beneficial owners and management, is
incorporated herein by reference in response to this item.
Item 13. Certain Relationships and Related Transactions
The information contained in Saks Holdings, Inc.'s Proxy
Statement dated May 2, 1997, with respect to certain
relationships and related transactions, is incorporated herein
by reference in response to this item.
Part IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a-1) The following consolidated financial statements of Saks
Holdings, Inc. included in the annual report to shareholders for
the year ended February 1, 1997, are incorporated by reference in
Item 8:
Consolidated Balance Sheets - February 1, 1997 and February 3,
1996
Consolidated Statements of Operations - Fiscal years ended
February 1, 1997, February 3, 1996 and January 28, 1995.
Consolidated Statements of Shareholders' Equity - Fiscal years
ended February 1, 1997, February 3, 1996 and January 28, 1995.
Consolidated Statements of Cash Flows - Fiscal years ended
February 1, 1997, February 3, 1996 and January 28, 1995.
Notes to Consolidated Financial Statements.
Report of Independent Accountants.
(a-2) The following consolidated financial statement schedules of
Saks Holdings, Inc. and subsidiaries are included in Item 14(d):
Schedule I Condensed financial information of registrant.
Report of Independent Accountants on Schedule I.
All other schedules for which provision is made in the
applicable accounting regulation of the Securities and
Exchange Commission are not required under the related
instructions or are inapplicable and therefore have been
omitted.
(a-3) Listing of Exhibits
Exhibit No.
-----------
3.01* - Amended and Restated Certificate of Incorporation
of Saks Holdings, as filed with the Delaware Secretary
of State on May 28, 1996.
3.02* - Bylaws of Saks Holdings, as adopted on August 6, 1990.
4.01* - See Exhibits 3.01 and 3.02 as to the rights of holders
of Saks Holdings' Common Stock.
4.02* - Form of Stock Certificate of the Common Stock of
Saks Holdings.
4.03.1- Credit Agreement, dated as of October 8, 1996,
among Saks, the several lenders form time to time party
thereto and The Chase Manhattan Bank as administrative agent
(the "Credit Facility").
4.04.2- Consent No. 1 to the Credit Facility, dated as of
January 17, 1997.
4.05* - Amended and Restated Loan and Security Agreement
dated as of May 12, 1995 between Fifth Avenue Capital Trust
("FACT") and certain direct and indirect wholly-owned
subsidiaries of Saks (the "Borrowers").
4.06* - Trust and Servicing Agreement dated as of
May 12, 1995 among FACT, Bankers Trust Company, as
servicer, and Marine Midland Bank, as trustee.
4.07* - Amended and Restated Trust Agreement, dated as of
May 12, 1995, among Saks, HNY, INc. and Wilmington Trust
Company, as owner trustee.
4.08* - Registration Rights Agreement, dated as of August
16, 1996, among Saks Holdings and certain stockholders of
Saks.
10.01.1* Amended and Restated Pooling & Servicing
Agreement, dated as of December 16, 1991, among SFA Finance
Company, Saks and Bankers Trust Company, as trustee
(the "1991 P&S").
10.01.2* First Amendment to the 1991 P&S, dated as of
November 5, 1992.
10.01.3* Second Amendment to the 1991 P&S, dated as of
October 26, 1993.
10.02.1* Second Amended and Restated Receivables Purchase
Agreement, dated as of December 16, 1991, between Saks and
SFA Finance Company (the "Receivables Purchase Agreement")
10.02.2* First Amendment to the Receivables Purchase
Agreement, dated as of November 5, 1992.
10.02.3* Second Amendment to the Receivables Purchase
Agreement, dated as of October 26, 1993.
10.03.1* Series 1991-2 Supplement, dated as of December 16,
1991, among SFA Finance Company, Saks, MHTC, as
administrative agent, and Bankers Trust Company, as trustee
(the "1991-2 Supplement").
10.03.2* First Amendment to the 1991-2 Supplement, dated as
of July 22, 1992.
10.03.3* Second Amendment to the 1991-2 Supplement, dated
as of August 20, 1992.
10.03.4* Third Amendment to the 1991-2 Supplement, dated as
of November 5, 1992.
10.03.5* Fourth Amendment to the 1991-2 Supplement, dated
as of May 20, 1993.
10.03.6* Fifth Amendment to the 1991-2 Supplement, dated as
of October 28, 1993.
10.03.7* Sixth Amendment to the 1991-2 Supplement, dated as
of September 30, 1994.
10.04.1* Class C Supplement to Series 1991-2 Supplement,
dated as of November 5, 1992, among SFA Finance Company,
Saks and Bankers Trust Company, as trustee (the "1991-2(C)
Supplement").
10.04.2* First Amendment to the 1991-2(C) Supplement, dated
as of September 30, 1994
10.05* Class B Supplement to Series 1991-2 Supplement,
dated as of September 30, 1994, among SFA Finance Company,
Saks and Bankers Trust Company, as trustee.
10.06* Series 1995-1 Supplement, dated as of November 13,
1995, among SFA Finance Company, Saks, Swiss Bank
Corporation, New York Branch, as administrative agent, and
Bankers Trust Company, as trustee.
10.07* Transition Supplement to the 1991 P&S, dated as of
April 25, 1996, among SFA Finance Company, Saks and Bankers
Trust Company, as trustee.
10.08* Pooling and Servicing Agreement, dated as of
April 25, 1996, among SFA Finance Company, Saks and Bankers
Trust Company, as trustee (the "1996 P&S").
10.09* Series 1996-1 Supplement to the 1996 P&S, dated as
of April 25, 1996, among SFA Finance Company, Saks and
Bankers Trust Company, as trustee.
10.10* Third Amended and Restated Receivables Purchase
Agreement, dated as of April 25, 1996, between Saks and SFA
Finance Company.
10.11* Series 1996-2 Supplement to the 1996 P&S, dated as
of April 25, 1996, among SFA finance Company, Saks and
Bankers Trust Company, as trustee.
10.12* Purchase Agreement, dated May 4, 1995 among Saks,
FACT, the Borrowers, Goldman, Sachs & Company and Chemcial
Securities,Inc. with respect to the sale of Commercial
Mortgage Pass-Through Certificates due May 12, 2002.
10.13* Saks Fifth Avenue Supplemental Pension Plan,
effective July 2, 1990.
10.14* Saks Holdings, Inc. Senior Management Stock
Incentive Plan, dated as of October 17, 1990 (the "Old
Incentive Plan").
10.15* Standard form of Stock Option Agreement Pursuant to
the Old Incentive Plan
10.16.1* Saks Holdings, Inc. 1996 Management Stock Incentive
Plan, dated as of February 1, 1996 (the "New Incentive Plan").
10.16.2* Amendment to the New Incentive Plan.
10.17* Standard Form of Stock Option Agreement Pursuant to
the New Incentive Plan.
10.18* Amended and Restated Employment Agreement, dated as
of March 1, 1996, between Saks and Philip B. Miller.
10.19* Amended and Restated Employment Agreement, dated as
of March 1, 1996, between Saks and Rose Marie Bravo.
10.20* Amended and Restated Employment Agreement, dated as
of March 1, 1996, between Saks and Owen E. Dorsey.
10.21* Employment Agreement, dated as of March 1, 1996,
between Saks and Brian E. Kendrick.
10.22* Agreement for Management Advisory and Consulting
Services, dated as of July 2, 1995, between Saks and III.
10.23* Acquisitions Advisory Agreement, dated as of
January 29, 1995, between Saks and III.
10.24* Public Company Expenses Agreement, dated as of
April 27, 1996, between Saks Holdings and Saks.
10.25* Form of Common Stock Purchase Agreement between Saks
Holdings and Investcorp, S.A.
11.01 - Statement Re: Computation of Per Share Earnings
13.01 - Common Stock Market Prices and Common Stock
Information, incorporated into Part II, Item 5 of this Form
10-K by reference to the Registrant's annual shareholders
report for the year ended February 1, 1997 (the "1997 Annual
Report").
13.02 - Management's Discussion and Analysis of Financial
Condition and Results of Operations, incorporated into Part
II, Item 6 and Item 7 of this Form 10-K by reference to the
1997 Annual Report.
13.03 - Report of Independent Accountants and Consolidated
Financial Statements, incorporated into Part II, Item 8 of
this Form 10-K by reference to the 1997 Annual Report.
21.01 - Subsidiaries of the Registrant
22.01 - Proxy Statement, incorporated herein by reference to
Registrants' definitive Proxy Statement for its annual
shareholders meeting to be held on June 16, 1997
(File No. 001-14346), filed on May 2, 1997.
23.01 - Consent of Independent Accountants
27.01 - Financial Data Schedule
Exhibit No.
-----------
99.01 - Press Release - Saks announces preliminary first
quarter results
99.02 - Press Release - Saks Holding, Inc. and Isetan
Company Limited agree to a joint reorganization plan for
Barney's Inc.
- ----------------
* Incorporated herein by reference to Saks Holdings' registration statement
on Form S-1 (File No. 333-2426)
(b) Reports on Form 8-K filed in the fourth quarter of fiscal
1996:
None.
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
SAKS HOLDINGS, INC.
/s/ Mark E. Hood
-----------------
Mark E. Hood
Senior Vice President - Finance
Chief Accounting Officer
May 2, 1997
-----------
Date
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of Registrant and in
the capacities and on the dates indicated.
/s/ Philip B. Miller
- --------------------------------------- Chairman of the Board and May 2, 1997
Philip B. Miller Chief Executive Officer
(Principal Executive Officer)
/s/ Brian E. Kendrick
- --------------------------------------- Vice Chairman of the Board and May 2, 1997
Brian E. Kendrick Chief Operating Officer
/s/ Rose Marie Bravo
- -------------------------------------- President and Director May 2, 1997
Rose Marie Bravo
/s/ Richard F. Zannino
- -------------------------------------- Executive Vice President, May 2, 1997
Richard F. Zannino Chief Financial Officer and
Treasurer (Principal Financial
Officer)
/s/ Savio W. Tung
- ---------------------------------------- Director May 2, 1997
Savio W. Tung
/s/ Jon P. Hedley
- ------------------------------------------ Director May 2, 1997
Jon P. Hedley
/s/ E. Garrett Bewkes III
- -------------------------------------- Director May 2, 1997
E. Garrett Bewkes III
/s/ Charles J. Philippin
- ---------------------------------------- Director May 2, 1997
Charles J. Philippin
/s/ Stephen I. Sadove
- ---------------------------------------- Director May 2, 1997
Stephen I. Sadove
/s/ Brian Ruder
- ---------------------------------------- Director May 2, 1997
Brian Ruder
/s/ Mark E. Hood
- ----------------------------------------- Senior Vice President - Finance May 2, 1997
Mark E. Hood (Principal Accounting Officer)
Report of Independent Accountants
To the Board of Directors and Shareholders
of Saks Holdings, Inc.
Our report on the consolidated financial statements of Saks Holdings, Inc. has
been incorporated by reference in this Form 10-K from the Annual Shareholders
Report of Saks Holdings, Inc. In connection with our audits of such consolidated
financial statements, we have also audited the related financial statement
schedule listed in item 14(a-2) of this Form 10-K.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic consolidated financial statements taken as a
whole, presents fairly, in all material respects, the information required to be
included therein.
/s/ Coopers & Lybrand L.L.P.
New York, New York
March 4, 1997
Schedule I - Condensed Financial Information of Registrant
Saks Holdings, Inc.
(Parent Company)
Condensed Balance Sheets
February 1, February 3,
1997 1996
-------------------- ---------------------
(In Thousands)
Assets
Current assets:
Cash and cash equivalents ............................ $ 5,159 $ -
Interest receivable from subsidiary .................. 5,429 -
-------------------- ---------------------
Total current assets ............................ 10,588 -
Note receivable from subsidiary .......................... 276,000 -
Deferred financing costs, net ............................ 7,907 -
Investment in subsidiary ................................. 515,604 83,175
-------------------- ---------------------
Total assets ................................... $ 810,099 $ 83,175
==================== =====================
Liabilities and shareholders' equity
Current liabilities ...................................... $ 5,429 $ -
Long-term debt ........................................... 276,000 -
Shareholders' equity:
Common stock ........................................ 633 450
Other shareholders' equity .......................... 528,037 82,725
-------------------- ---------------------
Total shareholders' equity ............................... 528,670 83,175
-------------------- ---------------------
Total liabilities and shareholders' equity ............... $ 810,099 $ 83,175
==================== =====================
The accompanying Notes are an integral part of the condensed financial
statements
Schedule I - Condensed Financial Information of Registrant - Continued
Saks Holdings, Inc.
(Parent Company)
Condensed Statements of Operations
Fiscal Fiscal Fiscal
1996 1995 1994
------------------ ----------------- ------------------
(In Thousands)
Interest income .................................. $ 5,468 $ - $ -
Interest expense ................................. 5,722 - -
------------------ ----------------- ------------------
Income (loss) before income taxes and equity
in net income (loss) of subsidiaries ........ (254) - -
Income taxes ..................................... - - -
------------------ ----------------- ------------------
(254) - -
Equity in net income (loss) of subsidiaries ...... 24,398 (64,095) (10,618)
------------------ ----------------- ------------------
Net income (loss) ................................ $ 24,144 $ (64,095) $ (10,618)
================== ================= ==================
The accompanying Notes are an integral part of the condensed financial
statements
Schedule I - Condensed Financial Information of Registrant - Continued
Saks Holdings, Inc.
(Parent Company)
Condensed Statements of Cash Flows
Fiscal Fiscal Fiscal
1996 1995 1994
---------------- --------------- ---------------
(In Thousands)
Net cash provided by operating activities ............... $ 16,477 $ 0 $ 0
---------------- --------------- ---------------
Investing activities:
Advances to subsidiary ............................. (276,000) - -
Investment in subsidiary ........................... (424,469) - -
---------------- --------------- ---------------
Net cash (used in) investing activities ................. (700,469) 0 0
---------------- --------------- ---------------
Financing activities:
Proceeds from initial public offering .............. (416,969) - -
Proceeds from exercise of stock options ............ 4,325 - -
Proceeds from issuance of Notes .................... 276,000 - -
Financing costs .................................... (8,200) - -
Other .............................................. 57 - -
---------------- --------------- ---------------
Net cash provided by financing activities ............... 689,151 0 0
---------------- --------------- ---------------
Increase in cash and cash equivalents ................... 5,159 $ 0 $ 0
---------------- --------------- ---------------
Cash at end of year ..................................... $ 5,159 $ 0 $ 0
================ =============== ===============
The accompanying Notes are an integral part of the condensed financial
statements
Schedule I - Condensed Financial Information of Registrant - Continued
Saks Holdings, Inc.
(Parent Company)
Notes to Condensed Financial Statements
1. Basis of Presentation
Saks Holdings, Inc.'s investment in subsidiaries is accounted for under the
equity method and is stated at cost plus (minus) equity in undistributed
earnings (losses) since the date of acquisition, less dividends received from
subsidiaries. Parent company-only financial statements are not the primary
financial statements of the registrant and should be read in conjunction with
the Company's consolidated financial statements included in the Saks Holdings,
Inc. consolidated annual report to shareholders.
2. Note Receivable from Subsidiary
The terms and provisions of this note correspond to those of the convertible
subordinated notes disclosed in the Saks Holdings, Inc. consolidated financial
statements.
Exhibit Index
Exhibit No. Page No.
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3.01* - Amended and Restated Certificate of Incorporation of Saks Holdings, as
filed with the Delaware Secretary of State on May 28, 1996.
3.02* - Bylaws of Saks Holdings, as adopted on August 6, 1990.
4.01* - See Exhibits 3.01 and 3.02 as to the rights of holders of Saks
Holdings' Common Stock.
4.02* - Form of Stock Certificate of the Common Stock of Saks Holdings.
4.03.1- Credit Agreement, dated as of October 8, 1996, among Saks, the several
lenders form time to time party thereto and The Chase Manhattan Bank as
administrative agent (the "Credit Facility").
4.04.2- Consent No. 1 to the Credit Facility, dated as of January 17, 1997.
4.05* - Amended and Restated Loan and Security Agreement dated as of
May 12, 1995 between Fifth Avenue Capital Trust ("FACT") and certain
direct and indirect wholly-owned subsidiaries of Saks (the "Borrowers").
4.06* - Trust and Servicing Agreement dated as of May 12, 1995 among FACT,
Bankers Trust Company, as servicer, and Marine Midland Bank, as trustee.
4.07* - Amended and Restated Trust Agreement, dated as of May 12, 1995, among
Saks, HNY, Inc. and Wilmington Trust Company, as owner trustee.
4.08* - Registration Rights Agreement, dated as of August 16, 1996, among Saks
Holdings and certain stockholders of Saks.
10.01.1* Amended and Restated Pooling & Servicing Agreement, dated as of
December 16, 1991, among SFA Finance Company, Saks and Bankers Trust
Company, as trustee (the "1991 P&S").
10.01.2* First Amendment to the 1991 P&S, dated as of November 5, 1992.
10.01.3* Second Amendment to the 1991 P&S, dated as of October 26, 1993.
10.02.1* Second Amended and Restated Receivables Purchase Agreement dated as of
December 16, 1991, between Saks and SFA Finance Company (the
"Receivables Purchase Agreement")
10.02.2* First Amendment to the Receivables Purchase Agreement, dated as
of November 5, 1992.
10.02.3* Second Amendment to the Receivables Purchase Agreement, dated as
of October 26, 1993.
10.03.1* Series 1991-2 Supplement, dated as of December 16, 1991, among SFA
Finance Company, Saks, MHTC, as administrative agent, and Bankers
Trust Company, as trustee (the "1991-2 Supplement").
10.03.2* First Amendment to the 1991-2 Supplement, dated as of July 22, 1992.
10.03.3* Second Amendment to the 1991-2 Supplement, dated as of August 20, 1992.
10.03.4* Third Amendment to the 1991-2 Supplement, dated as of November 5, 1992.
10.03.5* Fourth Amendment to the 1991-2 Supplement, dated as of May 20, 1993.
10.03.6* Fifth Amendment to the 1991-2 Supplement, dated as of October 28, 1993.
10.03.7* Sixth Amendment to the 1991-2 Supplement, dated as of
September 30, 1994.
10.04.1* Class C Supplement to Series 1991-2 Supplement, dated as of
November 5, 1992, among SFA Finance Company, Saks and Bankers Trust
Company, as trustee (the "1991-2(C) Supplement").
10.04.2* First Amendment to the 1991-2(C) Supplement, dated as of
September 30, 1994.
10.05*- Class B Supplement to Series 1991-2 Supplement, dated as of
September 30, 1994, among SFA Finance Company, Saks and Bankers Trust
Company, as trustee.
10.06*- Series 1995-1 Supplement, dated as of November 13, 1995, among SFA
Finance Company, Saks, Swiss Bank Corporation, New York Branch, as
administrative agent, and Bankers Trust Company, as trustee.
10.07*- Transition Supplement to the 1991 P&S, dated as of April 25, 1996,
among SFA Finance Company, Saks and Bankers Trust Company, as trustee.
10.08*- Pooling and Servicing Agreement, dated as of April 25, 1996, among SFA
Finance Company, Saks and Bankers Trust Company, as trustee (the "1996
P&S").
10.09*- Series 1996-1 Supplement to the 1996 P&S, dated as of April 25, 1996,
among SFA Finance Company, Saks and Bankers Trust Company, as trustee.
10.10*- Third Amended and Restated Receivables Purchase Agreement, dated as of
April 25, 1996, between Saks and SFA Finance Company.
10.11*- Series 1996-2 Supplement to the 1996 P&S, dated as of April 25, 1996,
among SFA finance Company, Saks and Bankers Trust Company, as trustee.
10.12*- Purchase Agreement, dated May 4, 1995 among Saks, FACT, the Borrowers,
Goldman, Sachs & Company and Chemcial Securities,Inc. with respect to
the sale of Commercial Mortgage Pass-Through Certificates due
May 12, 2002.
10.13*- Saks Fifth Avenue Supplemental Pension Plan, effective July 2, 1990.
10.14*- Saks Holdings, Inc. Senior Management Stock Incentive Plan, dated as of
October 17, 1990 (the "Old Incentive Plan").
10.15*- Standard form of Stock Option Agreement Pursuant to the Old Incentive
Plan.
10.16.1* Saks Holdings, Inc. 1996 Management Stock Incentive Plan, dated as of
February 1, 1996 (the "New Incentive Plan").
10.16.2* Amendment to the New Incentive Plan.
10.17*- Standard Form of Stock Option Agreement Pursuant to the New Incentive
Plan.
10.18*- Amended and Restated Employment Agreement, dated as of March 1, 1996,
between Saks and Philip B. Miller.
10.19*- Amended and Restated Employment Agreement, dated as of March 1, 1996,
between Saks and Rose Marie Bravo.
10.20*- Amended and Restated Employment Agreement, dated as of March 1, 1996,
between Saks and Owen E. Dorsey.
10.21*- Employment Agreement, dated as of March 1, 1996, between Saks and
Brian E. Kendrick.
10.22*- Agreement for Management Advisory and Consulting Services, dated as of
July 2, 1995, between Saks and III.
10.23*- Acquisitions Advisory Agreement, dated as of January 29, 1995, between
Saks and III.
10.24*- Public Company Expenses Agreement, dated as of April 27, 1996, between
Saks Holdings and Saks.
10.25*- Form of Common Stock Purchase Agreement between Saks
Holdings and Investcorp, S.A.
11.01 - Statement Re: Computation of Per Share Earnings
13.01 - Common Stock Market Prices and Common Stock Information,
incorporated into Part II, Item 5 of this Form 10-K by
reference to the Registrant's annual shareholders report for
the year ended Feburary 1, 1997 (the "1997 Annual Report").
13.02 - Management's Discussion and Analysis of Financial Condition
and Results of Operations, incorporated into Part II, Item 6
and Item 7 of this Form 10-K by reference to the 1997 Annual
Report.
13.03 - Report of Independent Accountants and Consolidated Financial
Statements, incorporated into Part II, Item 8 of this Form
10-K by reference to the 1997 Annual Report.
21.01 - Subsidiaries of the Registrant
22.01 - Proxy Statement, incorporated herein by reference to
Registrants' definitive Proxy Statement for its annual
shareholder meeting to be held on June 16, 1997
(File No. 001-14346), filed on May 2, 1997.
23.01 - Consent of Independent Accountants
27.01 - Financial Data Schedule
99.01 - Press Release - Saks announces preliminary first quarter
results
99.02 - Press Release - Saks Holding, Inc. and Isetan Company Limited
agree to a joint reorganization plan for Barney's Inc.
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* Incorporated herein by reference to Saks Holdings' registration statement
on Form S-1 (File No. 333-2426)