11-K 1 0001.txt SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 11-K [X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For fiscal year ended December 31, 1999 [ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from___ to ___ Commission file number: 1-13536 A. Full title of the plan and the address of the plan, if different from that of the issuer named below: Federated Department Stores, Inc. Profit Sharing 401 (k) Investment Plan. B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: Federated Department Stores, Inc. 151 West 34th Street New York, New York 10001 and 7 West Seventh Street Cincinnati, Ohio 45202 FEDERATED DEPARTMENT STORES, INC. PROFIT SHARING 401 (k) INVESTMENT PLAN Financial Statements December 31, 1999 and 1998 With Independent Auditors' Report Thereon Independent Auditors' Reports Pension and Profit Sharing Committee Federated Department Stores, Inc. Profit Sharing 401(k) Investment Plan: We have audited the accompanying statements of net assets available for benefits of the Federated Department Stores, Inc. Profit Sharing 401(k) Investment Plan (the "Plan") as of December 31, 1999 and 1998, and the related statements of changes in net assets available for benefits for the years then ended. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audit 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 report presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 1999 and 1998, and the changes in net assets available for benefits for the years then ended in conformity with generally accepted accounting principles. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The Fund Information in the statements of net assets available for benefits and the statements of changes in net assets available for benefits is presented for purposes of additional analysis rather than to present the net assets available for benefits and changes in net assets available for benefits of each fund. The Fund Information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. KPMG LLP Cincinnati, Ohio June 26, 2000 FEDERATED DEPARTMENT STORES, INC. PROFIT SHARING 401 (k) INVESTMENT PLAN Index Independent Auditors' Report Statements of Net Assets Available for Benefits, with Fund Information - December 31, 1999 and 1998 Statements of Changes in Net Assets Available for Benefits, with Fund Information - Years Ended December 31, 1999 and 1998 Notes to Financial Statements FEDERATED DEPARTMENT STORES, INC. PROFIT SHARING 401 (k) INVESTMENT PLAN Statement of Net Assets Available for Benefits, with Fund Information December 31, 1999 (in thousands)
Fund A Fund B Fund C Fund D Fund E Fund F Fund L Total Assets: Investments, at fair value (Note 3): Master Trust investments $413,902 $307,087 $422,071 $ 54,687 $ 26,012 $ 83,438 $ - $1,307,197 Participant loans - - - - - - 19,061 19,061 Total investments 413,902 307,087 422,071 54,687 26,012 83,438 19,061 1,326,258 Receivables: Employer contributions - - - - - 28,432 - 28,432 Interest 33 4 - - - 69 - 106 Total receivables 33 4 - - - 28,501 - 28,538 Total assets 413,935 307,091 422,071 54,687 26,012 111,939 19,061 1,354,796 Liabilities: Trustee and management fees payable 218 278 165 98 15 29 - 803 Total liabilities 218 278 165 98 15 29 - 803 Net assets available for benefits $413,717 $306,813 $421,906 $54,589 $ 25,997 $111,910 $ 19,061 $1,353,993 The accompanying notes are an integral part of these financial statements.
FEDERATED DEPARTMENT STORES, INC. PROFIT SHARING 401 (k) INVESTMENT PLAN Statement of Net Assets Available for Benefits, with Fund Information December 31, 1998 (in thousands)
Fund A Fund B Fund C Fund D Fund E Fund F Fund L Total Assets: Investments, at fair value (Note 3): Master Trust investments $424,606 $314,086 $339,728 $ 52,553 $ 13,876 $ 52,762 $ - $1,197,611 Participant loans - - - - - - 16,360 16,360 Total investments 424,606 314,086 339,728 52,553 13,876 52,762 16,360 1,213,971 Receivables: Employer contributions - - - - - 24,492 - 24,492 Participant contributions 386 264 310 95 24 49 - 1,128 Interest - 145 - - - - - 145 Forfeitures - - - - - 457 - 457 Total receivables 386 409 310 95 24 24,998 - 26,222 Total assets 424,992 314,495 340,038 52,648 13,900 77,760 16,360 1,240,193 Liabilities: Trustee and management fees payable 269 277 177 99 13 30 - 865 Total liabilities 269 277 177 99 13 30 - 865 Net assets available for benefits $424,723 $314,218 $339,861 $52,549 $13,887 $77,730 $16,360 $1,239,328 The accompanying notes are an integral part of these financial statements.
FEDERATED DEPARTMENT STORES, INC. PROFIT SHARING 401 (k) INVESTMENT PLAN Statement of Changes in Net Assets Available for Benefits, with Fund Information Year Ended December 31, 1999 (in thousands)
Fund A Fund B Fund C Fund D Fund E Fund F Fund L Total Additions: Net investment income (Note 3): Net appreciation in fair value of investments $ - $ 15,865 $ 67,179 $ 6,866 $ 4,841 $ 15,437 $ - $ 110,188 Interest and dividends 27,008 7,518 5,966 - 1,480 121 1,510 43,603 Total investment income 27,008 23,383 73,145 6,866 6,321 15,558 1,510 153,791 Less administrative expenses (2,057) (1,737) (823) (392) (201) (165) - (5,375) Net investment income 24,951 21,646 72,322 6,474 6,120 15,393 1,510 148,416 Contributions: Employer - - - - - 28,456 - 28,456 Participant 22,955 24,647 31,228 7,856 2,419 4,351 - 93,456 Total contributions 22,955 24,647 31,228 7,856 2,419 32,807 - 121,912 Total additions 47,906 46,293 103,550 14,330 8,539 48,200 1,510 270,328 Deductions: Distributions 69,262 34,500 36,889 5,017 1,262 6,857 1,876 155,663 Interfund transfers 10,350 (19,198) 15,384 (7,273) 4,833 (7,163) 3,067 - Net increase (decrease) (11,006) (7,405) 82,045 2,040 12,110 34,180 2,701 114,665 Net assets available for benefits: Beginning of year 424,723 314,218 339,861 52,549 13,887 77,730 16,360 1,239,328 End of year $413,717 $306,813 $421,906 $54,589 $25,997 $111,910 $19,061 $1,353,993 The accompanying notes are an integral part of these financial statements.
FEDERATED DEPARTMENT STORES, INC. PROFIT SHARING 401 (k) INVESTMENT PLAN Statement of Changes in Net Assets Available for Benefits, with Fund Information Year Ended December 31, 1998 (in thousands)
Fund A Fund B Fund C Fund D Fund E Fund F Fund L Total Additions: Net investment income (Note 3): Net appreciation (depreciation) in fair value of investments $ - $ 49,808 $ 68,686 $ (1,765) $ 985 $ (2,953) $ - $ 114,761 Interest and dividends 28,441 7,645 5,406 - 624 229 1,111 43,456 Total investment income 28,441 57,453 74,092 (1,765) 1,609 (2,724) 1,111 158,217 Less administrative expenses (2,196) (1,611) (735) (484) (171) (144) - (5,341) Net investment income 26,245 55,842 73,357 (2,249) 1,438 (2,868) 1,111 152,876 Contributions: Employer 3 1 1 - - 24,494 - 24,499 Participant 24,390 20,829 25,954 8,998 2,175 3,789 - 86,135 Total contributions 24,393 20,830 25,955 8,998 2,175 28,283 - 110,634 Total additions 50,638 76,672 99,312 6,749 3,613 25,415 1,111 263,510 Deductions: Distributions 67,842 31,990 30,196 4,747 716 5,819 1,242 142,552 Interfund transfers 7,687 (15,963) 7,921 (5,668) 1,847 (3,062) 7,238 - Net increase (decrease) (9,517) 28,719 77,037 (3,666) 4,744 16,534 7,107 120,958 Net assets available for benefits: Beginning of year 434,240 285,499 262,824 56,215 9,143 61,196 9,253 1,118,370 End of year $424,723 $314,218 $339,861 $ 52,549 $ 13,887 $ 77,730 $ 16,360 $1,239,328 The accompanying notes are an integral part of these financial statements.
FEDERATED DEPARTMENT STORES, INC. PROFIT SHARING 401 (k) INVESTMENT PLAN Notes to Financial Statements December 31, 1999 and 1998 1. Description of the Plan The following brief description of the Federated Department Stores, Inc. Profit Sharing 401 (k) Investment Plan (the "Plan") is provided for general information purposes only. Participants should refer to the Plan document for more complete information. General The Plan is sponsored by Federated Department Stores, Inc. (the "Company"). The Plan is a defined contribution plan and is subject to the provisions of the Employee Retirement Income Security Act of 1974 and U.S. tax law. Eligibility Employees are generally eligible for participation in the Plan after one year of service of at least 1,000 hours and after reaching a minimum age of 21. Contributions Participants may elect to contribute an amount equal to 1% to 15% (subject to certain limitations) of the participant's eligible compensation. A participant may elect to make these contributions (subject to certain limitations) on a pre-tax basis pursuant to Section 401(k) of the Internal Revenue Code or on an after-tax basis . Pre-tax contributions up to 5% of eligible compensation are considered basic savings which are eligible for matching Company contributions. Company contributions are made as soon as administratively feasible after year end only to persons who are active participants on the last day of the year and who did not make a withdrawal of basic savings during the year. The Company's contribution formula is based on the Company's annual earnings and the minimum Company contribution is the amount necessary to produce a company match of 33 1/3% of an employee's basic savings. The Plan also provides that the matching percentage for eligible participants with 15 or more years of vesting service at the start of the applicable Plan year is up to 1-1/2 times the matching percentage of eligible participants with less than 15 years of service at the start of the applicable Plan year. For the Plan year ended December 31, 1999, the Company's matching percentage, including the allocation of all forfeited nonvested amounts, was 49.3% of the participants' basic savings for participants with less than 15 years of vesting service at January 1, 1999 and 74.0% of the participants' basic savings for participants with 15 or more years of vesting service at January 1, 1999. For the Plan year ended December 31, 1998, the Company's matching percentage was 48.4% of the participants' basic savings for participants with less than 15 years of vesting service at January 1, 1998 and 72.6% of the participants' basic savings for participants with 15 or more years of vesting service at January 1, 1998. Forfeited nonvested accounts of participants who terminate employment are applied to participants' accounts in accordance with Plan provisions. During the 1999 Plan year, forfeited nonvested accounts totaled $473,000. During the 1998 Plan year, forfeited nonvested accounts totaled $457,000. (Continued) FEDERATED DEPARTMENT STORES, INC. PROFIT SHARING 401 (k) INVESTMENT PLAN Notes to Financial Statements - Continued December 31, 1999 and 1998 Participant Accounts Each participant's account is credited with the participant's contributions and an allocation of each fund's earnings or losses. Allocations are based on participant account balances. As soon as administratively feasible after the end of each year, the Company's applicable matching contributions are credited to the eligible individual accounts. Vesting Participants are immediately 100% vested in their own contributions and become 20% vested in the Company's contributions after 3 years of service, with additional vesting of 20% each year thereafter until fully vested. 100% vesting is also achieved through normal retirement, death or disability. Participant Withdrawals Participants may borrow from their accounts up to a maximum amount equal to the lesser of $50,000 or 50% of their 401(k) vested account balance. All loans must be repaid within five years and are also subject to certain other conditions as to security, a reasonable rate of interest and repayment schedules. Loan transactions are treated as a transfer to (from) the investment fund from (to) the Participant Loan Fund (Fund L). Participants are permitted to make withdrawals of their after- tax contributions and earnings thereon at any time. Withdrawals of pre-tax contributions are subject to the hardship rules of Section 401 of the Internal Revenue Code. At termination, participants may elect to receive the balance of their vested account either in the form of a lump sum payment or in a variety of annuity forms. 2. Summary of Significant Accounting Policies a) Master Trust The Plan entered into the Federated Department Stores, Inc. Defined Contribution Plan Master Trust (the "Master Trust") Agreement with Chase Manhattan Bank (the "Trustee"). As of December 31, 1999 and 1998, the Master Trust holds the assets of the Plan exclusively. Under the terms of the Master Trust, the Trustee serves as Trustee custodian for the Master Trust. The Federated Department Stores, Inc. Pension and Profit Sharing Committee selects a diversified group of investment managers who determine purchases and sales of investments for the respective portions of the assets in the Master Trust managed by them. b) Basis of Presentation The accompanying financial statements of the Plan have been prepared on the accrual basis of accounting. (Continued) FEDERATED DEPARTMENT STORES, INC. PROFIT SHARING 401 (k) INVESTMENT PLAN Notes to Financial Statements - Continued December 31, 1999 and 1998 c) Investments Investments are reported at fair value as determined by quoted market prices on an active market. Corporate bonds are valued based on yields currently available on comparable securities of issuers with similar credit ratings. Purchases and sales of securities are recorded on a trade- date basis. Realized gains and losses on the sale of securities are reported on the average cost method. Participant loans are valued at cost which approximates fair value. Cash equivalents include highly liquid fixed-income securities with a maturity of one year or less. Dividend income is recorded on the ex-dividend date. Income from other investments is recorded as earned on an accrual basis. d) Insurance Contracts Insurance contracts are valued at contract value, which represents contributions made under the contract, plus interest earned, less benefits paid and expenses charged. e) Use of Estimates The Plan administrator has made a number of estimates and assumptions relating to the preparation of these financial statements. Actual results could differ from these estimates and assumptions. f) Reclassifications Certain reclassifications were made to prior years' amounts to conform with the classifications of such amounts for the most recent year. 3. Investments All of the Plan's investments are included in the Master Trust and are held by the trustee. The Trustee under the Master Trust, in accordance with the trust agreement, invests all contributions to the Plan among several investment funds. The funds are: Fund A - Fixed Income Fund - consisting primarily of high quality fixed-income and stable value products. Fund B - Balanced Fund - consisting of common/collective trusts which invest in a varying mixture of equity securities and fixed income instruments. Fund C - S&P 500 Stock Index Fund - consisting principally of shares of companies included in the S&P 500 Composite Stock Price Index. (Continued) FEDERATED DEPARTMENT STORES, INC. PROFIT SHARING 401 (k) INVESTMENT PLAN Notes to Financial Statements - Continued December 31, 1999 and 1998 Fund D - Small Cap Stock Fund - consisting principally of small capitalization domestic equity securities. Fund E - International Stock Fund - consisting of stocks of companies not based in the United States. Fund F - Federated Stock Fund - consisting principally of the Company's registered common stock. Company contributions are directed to Fund F. Participants may elect to redirect the value of Company contributions to other investment options permitted pursuant to Plan provisions. The following table presents the fair values or contract values of investments and total net assets for the Master Trust at December 31, 1999 and 1998: 1999 1998 (in thousands) Assets: Investments at fair value: Cash and cash equivalents $ 19,267 $ 7,730 U. S. government securities - 6,985 Common stock 82,961 52,745 Common/collective trusts 782,770 698,939 Registered investment companies 26,008 13,956 Total investments at fair value 911,006 780,355 Non interest bearing cash 88 8 Participant loans 19,061 16,360 Insurance contracts at contract value 396,103 417,248 Total investments 1,326,258 1,213,971 Receivables: Employer contributions 28,432 24,492 Participant contributions - 1,128 Forfeitures - 457 Interest 106 145 Total receivables 28,538 26,222 Total assets 1,354,796 1,240,193 Liabilities: Accrued administrative expenses 803 865 Total accrued liabilities 803 865 Total net assets $1,353,993 $1,239,328 (Continued) FEDERATED DEPARTMENT STORES, INC. PROFIT SHARING 401 (k) INVESTMENT PLAN Notes to Financial Statements - Continued December 31, 1999 and 1998 Net investment income for the Master Trust for the years ended December 31, 1999 and 1998 is as follows: 1999 1998 (in thousands) Net appreciation (depreciation) in fair value of investments: U.S. government securities $ (448) $ 740 Common stock 15,437 (2,953) Common/collective trusts 90,359 115,989 Registered investment companies 4,840 985 Net appreciation in fair value of investments 110,188 114,761 Interest and dividends 43,603 43,456 Total investment income 153,791 158,217 Administrative expenses (5,375) (5,341) Net investment income $ 148,416 $ 152,876 4. Plan Termination Although the Company has not expressed any intent to terminate the Plan, it may do so at any time. In the event the Plan is terminated, the Company would have no further obligation to make contributions, and all sums credited to individual accounts (after expenses) would be distributed to participants. 5. Federal Income Taxes The Plan obtained its latest determination letter on June 13, 1996, in which the Internal Revenue Service stated that the Plan, as then designed, was in compliance with the applicable requirements of the Internal Revenue Code. While the Plan has been amended since receiving such determination letter, the Plan administrator and the Plan's tax counsel believe that the Plan is currently designed and being operated in compliance with the applicable requirements of the Internal Revenue Code. Therefore, no provision for income taxes has been included in the Plan's financial statements. The Plan's testings, subject to the provisions of the Internal Revenue Code, have not been completed for the current year. However, the Plan's sponsor believes that the Plan is currently in compliance. 6. Administrative Expenses The Plan pays reasonable and necessary expenses incurred for the ongoing administration of the Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the members of the Pension and Profit Sharing Committee (which is the administrative committee for the Federated Department Stores, Inc. Profit Sharing 401 (k) Investment Plan have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized. FEDERATED DEPARTMENT STORES, INC. PROFIT SHARING 401 (K) INVESTMENT PLAN Dated: June 28, 2000 By: \s\Karen M. Hoguet Karen M. Hoguet Chairman of the Pension and Profit Sharing Committee