10-K

TABLE OF CONTENTS

	Item 1. Business.
	Item 1A. Executive Officers of the Registrant.
	Item 2. Properties.
	Item 3. Legal Proceedings.
	Item 4. Submission of Matters to a Vote of Security-Holders.
PART II
	Item 5. Market for Registrant’s Common Equity and Related Stockholder Matters.
	Item 6. Selected Financial Data.
	Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
	Item 7A. Quantitative and Qualitative Disclosures About Market Risk
	Item 8. Consolidated Financial Statements and Supplementary Data.
	Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
PART III
	Item 10. Directors and Executive Officers of the Registrant.
	Item 11. Executive Compensation.
	Item 12. Security Ownership and Certain Beneficial Owners and Management.
	Item 13. Certain Relationships and Related Transactions.
PART IV
	Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

Annual Report Pursuant to Section 13

of the Securities Exchange Act of 1934

For the Fiscal Year Ended
January 29, 2000 Commission File Number
1-13536

Federated Department Stores, Inc.

151 West 34th Street

New York, New York 10001

(212) 494-1602

and

7 West Seventh Street

Cincinnati, Ohio 45202

(513) 579-7000

Incorporated in Delaware I.R.S. No. 13-3324058

Securities Registered Pursuant to Section 12(b) of the Act:

	Name of Each Exchange
Title of Each Class	on Which Registered
Common Stock, par value $.01 per share	New York Stock Exchange
Rights to Purchase Series A Junior Participating Preferred Stock	New York Stock Exchange
Series D Warrants	New York Stock Exchange
10% Senior Notes due 2001	New York Stock Exchange
8.125% Senior Notes due 2002	New York Stock Exchange
8.5% Senior Notes due 2003	New York Stock Exchange
7.45% Senior Debentures due 2017	New York Stock Exchange
6.79% Senior Debentures due 2027	New York Stock Exchange
7% Senior Debentures due 2028	New York Stock Exchange

Securities Registered Pursuant to Section 12(g) of the Act:

None

      The Company has filed all reports required to be filed by Section 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.

      Disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

      There were 211,548,809 shares of the Company’s Common Stock outstanding as of April 1, 2000, excluding shares held in the treasury of the Company or by subsidiaries of the Company. The aggregate market value of the shares of such Common Stock, excluding shares held in the treasury of the Company or by subsidiaries of the Company, based upon the last sale price as reported on the New York Stock Exchange Composite Tape on March 31, 2000, was approximately $8,964,400,000.

Documents Incorporated by Reference

      Portions of the definitive proxy statement (the “Proxy Statement”) relating to the Company’s Annual Meeting of Stockholders to be held on May 19, 2000 (the “Annual Meeting”), are incorporated by reference in Part III hereof.

      Unless the context requires otherwise, (i) references to “the Company” are, for all periods prior to December 19, 1994 (the “Merger Date”), references to Federated Department Stores, Inc. (“Federated”) and its subsidiaries and their respective predecessors, and for all periods following the merger (the “Merger”) of Federated and R.H. Macy & Co. Inc. (“Macy’s”) on the Merger Date, references to the surviving corporation in the Merger and its subsidiaries and (ii) references to “1999,” “1998,” “1997,” “1996” and “1995” are references to the Company’s fiscal years ended January 29, 2000, January 30, 1999, January 31, 1998, February 1, 1997 and February 3, 1996, respectively.

      This report and other reports, statements and information previously or subsequently filed by the Company with the Securities and Exchange Commission (the “SEC”) contain or may contain forward-looking statements. Such statements are based upon the beliefs and assumptions of, and on information available to, the management of the Company at the time such statements are made. The following are or may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995: (i) statements preceded by, followed by or that include the words “may,” “will,” “could,” “should,” “believe,” “expect,” “future,” “potential,” “anticipate,” “intend,” “plan,” “estimate” or “continue” or the negative or other variations thereof and (ii) statements regarding matters that are not historical facts. Such forward-looking statements are subject to various risks and uncertainties, including (i) risks and uncertainties relating to the possible invalidity of the underlying beliefs and assumptions, (ii) possible changes or developments in social, economic, business, industry, market, legal and regulatory circumstances and conditions, and (iii) actions taken or omitted to be taken by third parties, including customers, suppliers, business partners, competitors and legislative, regulatory, judicial and other governmental authorities and officials. In addition to any risks and uncertainties specifically identified in the text surrounding such forward-looking statements, the statements in the immediately preceding sentence and the statements under captions such as “Risk Factors” and “Special Considerations” in reports, statements and information filed by the Company with the SEC from time to time constitute cautionary statements identifying important factors that could cause actual amounts, results, events and circumstances to differ materially from those reflected in such forward-looking statements.

Item 1.  Business.

      General. The Company, through its subsidiaries, is one of the leading operators of full-line department stores in the United States, with over 400 department stores in 33 states as of January 29, 2000. The Company’s subsidiaries operate department stores under the names “Bloomingdale’s,” “The Bon Marché,” “Burdines,” “Goldsmith’s,” “Lazarus,” “Macy’s,” “Rich’s” and “Stern’s.” These department stores sell a wide range of merchandise, including men’s, women’s and children’s apparel and accessories, cosmetics, home furnishings and other consumer goods, and are diversified by size of store, merchandising character and character of community served. The department stores are located at urban or suburban sites, principally in densely populated areas across the United States.

      The Company, through its division, Federated Direct, also operates direct-to-customer mail catalog businesses under the names “Bloomingdale’s By Mail,” “Macy’s By Mail” and “Fingerhut,” and electronic commerce businesses which provide goods and services online through its subsidiary Fingerhut Companies, Inc. (“Fingerhut”) and under the names “bloomingdales.com” and “macys.com.” Through Fingerhut, the Company operates a database marketing business that sells a broad range of products and services through catalogs, direct marketing and the Internet, including (i) Figi’s, a food and gift catalog business; (ii) Arizona Mail Order and Bedford Fair, both apparel catalog businesses; and (iii) Popular Club, a membership-based general merchandise catalog business. Fingerhut also offers a broad range of services to third parties,

1

including telemarketing, direct marketing, information management, warehousing, product fulfillment and distribution, order and returns processing, customer service and credit-related services. The Company also has investments in entities engaged in complementary businesses, including Internet businesses.

      The Company provides various support functions to its retail operating divisions (except Fingerhut) on an integrated, company-wide basis.

•  The Company’s financial and credit services subsidiary, FACS Group, Inc. (“FACS”), supports the proprietary credit programs of the Company’s retail operating divisions in respect of all proprietary credit card accounts owned by the Company except support relating to statement mailing and payment processing, which is provided by GE Capital Consumer Card Co. (“GE Bank”). GE Bank owns all of the “Macy’s” credit card accounts originated prior to the Merger and an allocated portion of the “Macy’s” credit card accounts originated subsequent to the Merger. In addition, FACS provides payroll and benefits services to the Company’s retail operating and service divisions.

•  The Company’s data processing subsidiary, Federated Systems Group, Inc. (“FSG”), provides (directly and pursuant to outsourcing arrangements with third parties) operational electronic data processing and management information services to each of the Company’s retail operating and service divisions.

•  Federated Merchandising Group (“FMG”), a division of the Company, helps the Company to centrally develop and execute consistent merchandise strategies while retaining the ability to tailor merchandise assortments and strategies to the particular character and customer base of the Company’s various department store franchises. FMG is also responsible for all of the private label development of the Company’s retail operating divisions except for Bloomingdale’s and Stern’s, which source some of their private label merchandise through Associated Merchandising Corporation. Bloomingdale’s also has its own private label program and sells some of FMG’s merchandise.

•  Federated Logistics, a division of a subsidiary of the Company, provides warehousing and merchandise distribution services, store design and construction services and certain supply purchasing services for the Company’s retail operating divisions.

•  A specialized staff maintained in the Company’s corporate offices provides services for all divisions of the Company in such areas as accounting, real estate and insurance, as well as various other corporate office functions.

      FACS, FSG, FMG and certain departments in the Company’s corporate offices also offer their services to unrelated third parties.

      Fingerhut conducts its retail business though its principal subsidiaries Fingerhut Corporation, Figi’s Inc., Arizona Mail Order Company, Inc., Bedford Fair Apparel, Inc., Popular Club Plan, Inc. and Axsys National Bank, which provides credit for customers’ purchases in the form of revolving credit card loans. Other subsidiaries of Fingerhut support such retail operations by providing data processing, customer service, telemarketing and fulfillment services, as well as other corporate office functions.

      The Company and its predecessors have been operating department stores since 1820. Federated was organized as a Delaware corporation in 1920. On May 26, 1994, Federated acquired Joseph Horne Co., Inc. pursuant to a subsidiary merger. On December 19, 1994, Federated acquired Macy’s pursuant to the Merger. On October 11, 1995, the Company acquired Broadway Stores, Inc. (“Broadway”) pursuant to a subsidiary merger. On March 18, 1999, the Company acquired Fingerhut pursuant to a subsidiary merger.

2

      The Company’s executive offices are located at 151 West 34th Street, New York, New York 10001, telephone number: (212) 494-1602 and at 7 West Seventh Street, Cincinnati, Ohio 45202, telephone number: (513) 579-7000.

      Employees. As of January 29, 2000, the Company had approximately 133,000 regular full-time and part-time employees. Because of the seasonal nature of the retail business, the number of employees peaks in the Christmas season. Approximately 10% of the Company’s employees as of January 29, 2000 were represented by unions. Management considers its relations with employees to be satisfactory.

      Seasonality. The retail business is seasonal in nature with a high proportion of sales and operating income generated in the months of November and December. Working capital requirements fluctuate during the year, increasing somewhat in mid-summer in anticipation of the fall merchandising season and increasing substantially prior to the Christmas season when the Company must carry significantly higher inventory levels.

      Purchasing. The Company purchases merchandise from many suppliers, no one of which accounted for more than 5% of the Company’s net purchases during 1999. The Company has no long-term purchase commitments or arrangements with any of its suppliers, and believes that it is not dependent on any one supplier. The Company considers its relations with its suppliers to be satisfactory.

      Competition. The retailing industry, in general, and the department store and direct-to-customer businesses, in particular, are intensely competitive. Generally, the Company’s stores compete with other department stores in the geographic areas in which they operate. In addition, both the Company’s department stores and direct-to-customer operations compete with numerous other types of retail outlets, including specialty stores, general merchandise stores, off-price and discount stores, new and established forms of home shopping (including the Internet, mail order catalogs and television) and manufacturers’ outlets.

      Operating Segment Information. The information set forth in Note 16 to Consolidated Financial Statements appearing elsewhere in this report is incorporated by reference into this Item 1.

Item 1A.  Executive Officers of the Registrant.

      The following table sets forth certain information regarding the executive officers of the Company:

Name	Age		Position with the Company
James M. Zimmerman		56		Chairman of the Board and Chief Executive Officer; Director
Terry J. Lundgren		47		President and Chief Merchandising Officer; Director
Ronald W. Tysoe		47		Vice Chairman, Finance and Real Estate; Director
Thomas G. Cody		58		Executive Vice President, Legal and Human Resources
Dennis J. Broderick		51		Senior Vice President, General Counsel and Secretary
Karen M. Hoguet		43		Senior Vice President and Chief Financial Officer
Joel A. Belsky		46		Vice President and Controller

      James M. Zimmerman has been Chairman of the Board and Chief Executive Officer of the Company since May 1997; prior thereto he served as the President and Chief Operating Officer of the Company since May 1988.

3

      Terry J. Lundgren has been President and Chief Merchandising Officer of the Company since May 1997 and served as the Chairman of the Company’s Federated Merchandising Group division from February 1994 until February 19, 1998.

      Ronald W. Tysoe has been Vice Chairman, Finance and Real Estate of the Company since April 1990 and served as Chief Financial Officer of the Company from April 1990 until October 31, 1997.

      Thomas G. Cody has been Executive Vice President, Legal and Human Resources of the Company since May 1988.

      Dennis J. Broderick has been Secretary of the Company since July 1993 and Senior Vice President and General Counsel of the Company since January 1990.

      Karen M. Hoguet has been Senior Vice President of the Company since April 1991 and Chief Financial Officer of the Company since October 31, 1997. Prior to July 6, 1999, Mrs. Hoguet served as the Treasurer of the Company since January 1992.

      Joel A. Belsky has been Vice President and Controller of the Company since October 1996. Prior thereto, he served as Divisional Vice President and Deputy Controller of the Company since March 1993.

Item 2.  Properties.

      The properties of the Company consist primarily of stores and related retail facilities, including warehouses and distribution and fulfillment centers. The Company also owns or leases other properties, including corporate office space in New York and Cincinnati and other facilities at which centralized operational support functions are conducted. As of January 29, 2000, the Company operated 403 department stores in 33 states, comprising a total of 81,914,000 square feet. Of such department stores, 197 were entirely or mostly owned and 206 stores were entirely or mostly leased. Pursuant to various shopping center agreements, the Company is obligated to operate certain stores within the centers for periods of up to 20 years. Some of these agreements require that the stores be operated under a particular name.

Item 3.  Legal Proceedings.

      The Company and its subsidiaries are involved in various proceedings that are incidental to the normal course of their businesses. The Company does not expect that any of such proceedings will have a material adverse effect on the Company’s financial position or results of operations.

Item 4.  Submission of Matters to a Vote of Security-Holders.

      None.

4

PART II

Item 5.  Market for Registrant’s Common Equity and Related Stockholder Matters.

      The Common Stock is listed on the New York Stock Exchange (the “NYSE”) under the trading symbol “FD.” As of January 29, 2000, the Company had approximately 16,000 stockholders of record. The following table sets forth for each fiscal quarter during 1999 and 1998 the high and low sales prices per share of Common Stock as reported on the NYSE Composite Tape:

	1999				1998
	Low		High		Low		High
1st Quarter		36.438		47.125		42.750		53.000
2nd Quarter		45.938		57.063		49.813		56.188
3rd Quarter		38.438		52.875		32.813		53.313
4th Quarter		40.938		53.875		35.938		46.375

      The Company has not paid any dividends on its Common Stock during its two most recent fiscal years, and does not anticipate paying any dividends on the Common Stock in the foreseeable future.

5

Item 6.  Selected Financial Data.

      The selected financial data set forth below should be read in conjunction with the Consolidated Financial Statements and the notes thereto and the other information contained elsewhere in this report.

		52 Weeks			52 Weeks			52 Weeks			52 Weeks			53 Weeks
		Ended			Ended			Ended			Ended			Ended
		January 29,			January 30,			January 31,			February 1,			February 3,
		2000			1999			1998			1997			1996
		(millions, except per share data)
Consolidated Statement of Income Data:
	Net sales	$	17,716		$	15,365		$	15,220		$	14,833		$	14,614
	Cost of sales		10,443			9,218			9,200			9,018			9,038
	Selling, general and administrative expenses		5,572			4,692			4,679			4,922			4,913
	Operating income		1,701			1,455			1,341			893			663
	Interest expense		(368	)		(304	)		(418	)		(499	)		(508	)
	Interest income		13			12			35			47			47
	Income before income taxes and extraordinary items		1,346			1,163			958			441			202
	Federal, state and local income tax expense		(551	)		(478	)		(383	)		(175	)		(127	)
	Income before extraordinary items		795			685			575			266			75
	Extraordinary items (a)		–			(23	)		(39	)		–			–
	Net income	$	795		$	662		$	536		$	266		$	75
Basic earnings per share:
	Income before extraordinary items	$	3.78		$	3.27		$	2.74		$	1.28		$	.39
	Net income		3.78			3.16			2.56			1.28			.39
Diluted earnings per share:
	Income before extraordinary items	$	3.62		$	3.06		$	2.58		$	1.24		$	.39
	Net income		3.62			2.96			2.41			1.24			.39
Average number of shares outstanding			210.0			209.1			209.2			207.5			191.5
Depreciation and amortization		$	738		$	624		$	590		$	533		$	497
Capital expenditures		$	770		$	695		$	696		$	846		$	699
Balance Sheet Data (at year end):
	Cash	$	218		$	307		$	142		$	149		$	173
	Working capital		3,970			2,904			3,134			2,831			3,262
	Total assets		17,692			13,464			13,738			14,264			14,295
	Short-term debt		1,284			524			556			1,095			733
	Long-term debt		4,589			3,057			3,919			4,606			5,632
	Shareholders’ equity		6,552			5,709			5,256			4,669			4,274

(a)  The extraordinary items for 1998 and 1997 were after-tax expenses associated with debt prepayments.

6

Item 7. 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.

Results of Operations

      Comparison of the 52 Weeks Ended January 29, 2000 and January 30, 1999. Net sales for 1999 totaled $17,716 million, compared to net sales of $15,365 million for 1998, an increase of 15.3%. Net sales for department stores for 1999 were $15,850 million compared to $15,365 million for 1998, an increase of 3.2%. On a comparable store basis (sales from stores in operation throughout all of 1998 and 1999), net sales for 1999 increased 4.5% compared to 1998. Net sales for the direct-to-customer segment were $1,866 million for 1999.

      Cost of sales was 58.9% of net sales for 1999, compared to 60.0% for 1998. Cost of sales as a percent of net sales for department stores improved 0.2% in 1999 compared to 1998, benefiting from continued strength in consumer demand. This improvement in the cost of sales rate for department stores, together with a relatively lower cost of sales rate for the direct-to-customer segment, contributed to the overall 1.1% improvement in the cost of sales rate for 1999. The valuation of department store merchandise inventories on the last-in, first-out basis did not impact cost of sales in either year.

      Selling, general and administrative (“SG&A”) expenses were 31.5% of net sales for 1999, compared to 30.5% for 1998. Department store SG&A expenses improved 1.3% as a percent of department store net sales, reflecting the impact of higher sales with relatively flat nonpayroll expenses and lower bad debt expense, which was partially offset by reduced finance charge income resulting from lower average accounts receivable billings. A relatively higher SG&A expense rate for the direct-to-customer segment, including recently launched businesses, and increased amortization expense resulting from the Fingerhut acquisition combined to offset the improvement in the department store SG&A expense rate and produce a 1.0% increase in the overall SG&A expense rate for 1999.

      Net interest expense was $355 million for 1999 compared to $292 million for 1998. The higher interest expense for 1999 is due mainly to the increased outstanding debt resulting from the Fingerhut acquisition and the consolidation of the Fingerhut Master Trust for financial reporting purposes.

      The Company’s effective income tax rate of 40.9% for 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.

      Comparison of the 52 Weeks Ended January 30, 1999 and January 31, 1998. Net sales for 1998 were $15,365 million compared to $15,220 million for 1997, an increase of 1.0%. Excluding sales of the specialty stores division that was sold in July 1998, net sales increased 1.7% in 1998. On a comparable store basis (sales from stores in operation throughout all of 1997 and 1998), net sales increased 2.2% in 1998.

      Cost of sales was 60.0% of net sales for 1998, compared to 60.5% for 1997. The 0.5% improvement in the cost of sales rate reflects positive customer response to the merchandise assortments in the stores during the second and fourth quarters, attributed partially to an improved merchandise receipt flow. The valuation of merchandise inventory on the last-in, first-out basis did not impact cost of sales in either year.

7

      Selling, general and administrative expenses were 30.5% of net sales for 1998, compared to 30.7% for 1997. Selling, general and administrative expenses include finance charge income and expenses for doubtful customer accounts receivable. Finance charge income was $345 million for 1998, down from $391 million in 1997, primarily due to lower average accounts receivable balances as a result of accelerated payments. Amounts charged to expense for doubtful accounts receivable were $112 million for 1998, compared to $167 million for 1997. The decrease primarily reflects a reduction in the amount of uncollectible balances written off in 1998, also due to lower average accounts receivable balances and accelerated payments.

      Net interest expense was $292 million for 1998, compared to $383 million for 1997. The lower interest expense for 1998 is principally due to lower levels of borrowings and lower interest rates resulting from refinancings completed in 1998 and 1997.

      The Company’s effective tax rate of 41.1% for 1998 differs from the federal income tax statutory rate of 35.0% principally because of the effect of state and local income taxes and permanent differences arising from the amortization of intangible assets and from other non-deductible items.

      The extraordinary items of $23 million and $39 million for 1998 and 1997, respectively, represent after-tax expenses associated with debt prepayments.

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 1999 was $1,263 million, compared to $1,690 million provided in 1998. The Company’s improved operating results were more than offset by an increase in accounts receivable in 1999 compared to a decrease in 1998. The increase in accounts receivable in 1999 resulted from higher credit sales and a post-acquisition increase in Fingerhut’s accounts receivable.

      Net cash used by investing activities was $2,432 million for 1999, including the purchase of Fingerhut. Investing activities for 1999 also included purchases of property and equipment totaling $770 million, capitalized software of $52 million and investments in companies engaged in complementary businesses totaling $117 million. The Company opened four new department stores and two new furniture galleries during 1999.

      Net cash provided to the Company by all financing activities was $1,080 million. The Company funded the acquisition of Fingerhut through a combination of cash on hand and short-term borrowings. During 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. The Company repaid debt of $650 million in 1999, consisting principally of $490 million of receivables backed financings and the $125 million of Senior Notes assumed in the Fingerhut acquisition.

      The Company purchased 5.6 million shares of its common stock in 1999 at an approximate cost of $267 million. On January 27, 2000, the Board of Directors approved a new stock repurchase program that authorizes the Company to purchase up to $500 million of its common stock. The Company may from time to time commence, continue or suspend repurchases of shares under the repurchase program, depending on prevailing market conditions, alternate uses of capital and other factors. During 1999, the Company issued 9.0 million shares of its common stock upon the exercise of the Company’s Series C Warrants.

8

      In 1999, the Company took certain actions which resulted in the consolidation of the Fingerhut Master Trust for financial reporting purposes. The principal assets and liabilities of the Fingerhut Master Trust consisted of accounts receivable transferred by Fingerhut to the Trust in transactions treated as sales under Statement of Financial Accounting Standards No. 125, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities,” and the related debt issued by the Trust. As a result of the Company’s actions, the transfer of receivables and debt are being treated as secured borrowings as of and subsequent to July 31, 1999. These actions increased the Company’s consolidated net assets and debt by $1,132 million at July 31, 1999 and by $1,300 million at January 29, 2000.

      The Company intends to open eight new department stores and four new furniture galleries in 2000 and its budgeted capital expenditures are approximately $3,000 million for the 2000 to 2002 period. Management presently anticipates funding such expenditures from operations.

      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 believes that, with respect to its current operations, cash on hand and funds from operations, together with its credit facilities, will be sufficient to cover its reasonably foreseeable working capital, capital expenditure and debt service requirements. Acquisition transactions, if any, are expected to be financed through a combination of cash on hand and from operations, and the possible issuance from time to time of long-term debt or other securities. Depending upon conditions in the capital markets and other factors, the Company will from time to time consider the issuance of debt or other securities, or other possible capital markets transactions, the proceeds of which could be used to refinance current indebtedness or for other corporate purposes.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

      The Company is exposed to market risk from changes in interest rates which may adversely affect its financial position, results of operations and cash flows. In seeking to minimize the risks from interest rate fluctuations, the Company manages exposures through its regular operating and financing activities and, when deemed appropriate, through the use of derivative financial instruments. The Company does not use financial instruments for trading or other speculative purposes and is not party to any leveraged financial instruments.

      The Company is exposed to interest rate risk primarily through its borrowing activities, which are described in Note 8 to the Consolidated Financial Statements. The majority of the Company’s borrowings are under fixed rate instruments. However, the Company uses interest rate swap and interest rate cap agreements to help manage its exposure to interest rate movements and reduce borrowing costs. See Notes 8 and 15 to the Consolidated Financial Statements, which are incorporated herein by reference.

      Based on the Company’s market risk sensitive instruments (including variable rate debt and derivative financial instruments) outstanding at January 29, 2000, the Company has determined that there was no material market risk exposure to the Company’s consolidate financial position, results of operations or cash flows as of such date.

9

Item 8. Consolidated Financial Statements and Supplementary Data.

      Information called for by this item is set forth in the Company’s Consolidated Financial Statements and supplementary data contained in this report and is incorporated herein by this reference. Specific financial statements and supplementary data can be found at the pages listed in the following index.

INDEX

	Page
Management’s Report		F-2
Independent Auditors’ Report		F-3
Consolidated Statements of Income for the 52 weeks ended January 29, 2000, January 30, 1999 and January 31, 1998		F-4
Consolidated Balance Sheets at January 29, 2000 and January 30, 1999		F-5
Consolidated Statements of Changes in Shareholders’ Equity for the 52 weeks ended January 29, 2000, January 30, 1999 and January 31, 1998		F-6
Consolidated Statements of Cash Flows for the 52 weeks ended January 29, 2000, January 30, 1999 and January 31, 1998		F-7
Notes to Consolidated Financial Statements		F-8

Item 9.  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

      None.

PART III

Item 10.  Directors and Executive Officers of the Registrant.

      Information called for by this item is set forth under Item 1 “Election of Directors” and “Compliance with Section 16(a) of the Securities and Exchange Act of 1934” in the Proxy Statement, and in Item 1A “Executive Officers of the Registrant,” and incorporated herein by reference.

Item 11.  Executive Compensation.

      Information called for by this item is set forth under “Executive Compensation” and “Compensation Committee Report on Executive Compensation” in the Proxy Statement and incorporated herein by reference.

Item 12.  Security Ownership and Certain Beneficial Owners and Management.

      Information called for by this item is set forth under “Stock Ownership” in the Proxy Statement and incorporated herein by reference.

Item 13.  Certain Relationships and Related Transactions.

      None.

10

PART IV

Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K

      (a)  The following documents are filed as part of this report:

           1.  Financial Statements:

      The list of financial statements required by this item is set forth in “Item 8 Consolidated Financial Statements and Supplementary Data” and is incorporated herein by reference.

           2.  Financial Statement Schedules:

      All schedules are omitted because they are inapplicable, not required, or the information is included elsewhere in the Consolidated Financial Statements or the notes thereto.

           3.  Exhibits:

      The following exhibits are filed herewith or incorporated by reference as indicated below.

Exhibit
Number		Description	Document if Incorporated by Reference
	3.1	Certificate of Incorporation	Exhibit 3.1 to the Company’s Annual Report on Form 10-K for the fiscal year ended January 28, 1995 (the “1994 Form  10-K”)
	3.1.1	Certificate of Designations of Series A Junior Participating Preferred Stock	Exhibit 3.1.1 to the 1994 Form 10-K
	3.2	By-Laws	Exhibit 3.2 to the 1994 Form 10-K
	4.1	Certificate of Incorporation	See Exhibits 3.1 and 3.1.1
	4.2	By-Laws	See Exhibit 3.2
	4.3	Rights Agreement, dated as of December  19, 1994, between the Company and the Bank of New York, as rights agent	Exhibit 4.3 to the 1994 Form 10-K
	4.4	Indenture, dated as of December 15, 1994, between the Company and State Street Bank and Trust Company (successor in interest to The First National Bank of Boston), as Trustee	Exhibit 4.1 to the Company’s Registration Statement on Form S-3 (Registration No.  33-88328) filed on January 9, 1995
	4.4.1	Third Supplemental Indenture, dated as of January 23, 1995, between the Company and State Street Bank and Trust Company (successor in interest to The First National Bank of Boston), as Trustee	Exhibit 4.4.1 to the 1994 Form 10-K
	4.4.2	Fifth Supplemental Indenture, dated as of October 6, 1995, between the Company and State Street Bank and Trust Company (successor in interest to The First National Bank of Boston), as Trustee	Exhibit 2 to the Company’s Registration Statement on Form 8-A, dated October 4, 1995

11

Exhibit
Number		Description	Document if Incorporated by Reference
	4.4.3	Seventh Supplemental Indenture, dated as of May 22, 1996, between the Company and State Street Bank and Trust Company (successor in interest to The First National Bank of Boston), as Trustee	Exhibit 4 to the Company’s Current Report on Form 8-K, dated as of May 21, 1996
	4.4.4	Eighth Supplemental Indenture, dated as of July 14, 1997, between the Company and State Street Bank and Trust Company (successor in interest to The First National Bank of Boston), as Trustee	Exhibit 2 to the Company’s Current Report on Form 8-K dated as of July 15, 1997 (the “July 1997 Form 8-K”)
	4.4.5	Ninth Supplemental Indenture, dated as of July 14, 1997, between the Company and State Street Bank and Trust Company (successor in interest to The First National Bank of Boston), as Trustee	Exhibit 3 to the July 1997 Form 8-K
	4.5	Indenture, dated as of September 10, 1997, between the Company and Citibank, N.A., as Trustee	Exhibit 4.4 to the Company’s Amendment Number 1 to Form S-3 dated as of September 11, 1997
	4.5.1	First Supplemental Indenture, dated as of February 6, 1998, between the Company and Citibank, N.A., as Trustee	Exhibit 2 to the Company’s Current Report on Form 8-K dated as of February 6, 1998
	4.5.2	Second Supplemental Indenture, dated as of August 26, 1998, between the Company and Citibank, N.A., as Trustee	Exhibit 4 to the Company’s Current Report on Form 8-K dated as of August 25, 1998
	4.5.3	Third Supplemental Trust Indenture, dated as of March 24, 1999, between the Company and Citibank, N.A., as Trustee	Exhibit 4.2 to the Company’s Registration Statement on Form S-4 (Registration No.  333-76795) dated as of April 22, 1999
	4.6	Series D Warrant Agreement	Exhibit 4.7 to the 1994 Form 10-K
	10.1	364 Day Credit Agreement, dated as of July 28, 1997, by and among the Company, the Initial Lenders named therein, Citibank, N.A., as Administrative Agent and Paying Agent, The Chase Manhattan Bank, as Administrative Agent, Fleet National Bank (successor in interest to BankBoston, N.A.), as Syndication Agent, and The Bank of America, National Trust & Savings Association, as Documentation Agent	Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the period ended August 2, 1997 (the “August 1997 Form  10-Q”)

12

Exhibit
Number		Description	Document if Incorporated by Reference
	10.1.1	Second Amended and Restated Credit Agreement, dated as of July 26, 1999, by and among the Company, the Initial Lenders named therein, Citibank, N.A., as Administrative Agent and Paying Agent, The Chase Manhattan Bank, as Administrative Agent, Fleet National Bank (successor in interest to BankBoston, N.A.), as Syndication Agent, and The Bank of America, National Trust & Savings Association, as Documentation Agent	Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the period ended July 31, 1999 (the “July 1999 Form  10-Q”)
	10.2	Five-Year Credit Agreement, dated as of July 28, 1997, by and among the Company, the Initial Lenders named therein, Citibank, N.A., as Administrative Agent and Paying Agent, The Chase Manhattan Bank, as Administrative Agent, Fleet National Bank (successor in interest to BankBoston, N.A.), as Syndication Agent, and The Bank of America, National Trust & Savings Association, as Documentation Agent	Exhibit 10.2 to the August 1997 Form  10-Q
	10.2.1	Letter Amendment to the Five-Year Credit Agreement, dated as of June 29, 1998, by and among the Company, the Initial Lenders named therein, Citibank, N.A., as Administrative Agent and Paying Agent, The Chase Manhattan Bank, as Administrative Agent, Fleet National Bank (successor in interest to BankBoston, N.A.), as Syndication Agent, and The Bank of America, National Trust & Savings Association, as Documentation Agent	Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the period ended August 1, 1998
	10.3	Amended and Restated Pooling and Servicing Agreement, dated as of December 15, 1992 (the “Pooling and Servicing Agreement”), among the Company, Prime Receivables Corporation (“Prime”) and The Chase Manhattan Bank, (successor in interest to Chemical Bank), as Trustee	Exhibit 4.10 to Prime’s Current Report on Form 8-K (File No. 0-2118), dated March  29, 1993
	10.3.1	First Amendment, dated as of December 1, 1993, to the Pooling and Servicing Agreement	Exhibit 10.10.1 to the Company’s Annual Report on Form 10-K (File No. 1-10951) for the fiscal year ended January 29, 1994 (the “1993 Form 10-K”)

13

Exhibit
Number		Description	Document if Incorporated by Reference
	10.3.2	Second Amendment, dated as of February  28, 1994, to the Pooling and Servicing Agreement	Exhibit 10.10.2 to the 1993 Form 10-K
	10.3.3	Third Amendment, dated as of May 31, 1994, to the Pooling and Servicing Agreement	Exhibit 10.8.3 to the 1994 Form 10-K
	10.3.4	Fourth Amendment, dated as of January 18, 1995, to the Pooling and Servicing Agreement	Exhibit 10.6.4 to the Company’s Annual Report on Form 10-K (File No. 1-13536) for the fiscal year ended February 3, 1996 (the “1995 Form 10-K”)
	10.3.5	Fifth Amendment, dated as of April 30, 1995, to the Pooling and Servicing Agreement	Exhibit 10.6.5 to the 1995 Form 10-K
	10.3.6	Sixth Amendment, dated as of July 27, 1995, to the Pooling and Servicing Agreement	Exhibit 10.6.6 to the 1995 Form 10-K
	10.3.7	Seventh Amendment, dated as of May 14, 1996, to the Pooling and Servicing Agreement	Exhibit 10.6.7 to the Company’s Annual Report on Form 10-K (File No. 1-13536) for the fiscal year ended February 1, 1997 (the “1996 Form 10-K”)
	10.3.8	Eighth Amendment, dated as of March 3, 1997, to the Pooling and Servicing Agreement	Exhibit 10.6.8 to the 1996 Form 10-K
	10.3.9	Ninth Amendment, dated as of August 28, 1997, to the Pooling and Servicing Agreement	Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the period ended November 1, 1997 (the “November 1997 Form 10-Q”)
	10.3.10	Tenth Amendment, dated as of August 3, 1998, to the Pooling and Servicing Agreement	Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the period ended October 31, 1998
	10.4	Assumption Agreement under the Pooling and Servicing Agreement, dated as of September 15, 1993	Exhibit 10.10.3 to the 1993 Form 10-K
	10.5	Series 1992-3 Supplement, dated as of January 5, 1993, to the Pooling and Servicing Agreement	Exhibit 4.8 to Prime’s Current Report on Form 8-K (File No. 0-2118), dated January 29, 1993
	10.6	Series 1995-1 Supplement, dated as of July 27, 1995, to the Pooling and Servicing Agreement	Exhibit 4.7 to Prime’s Registration Statement on Form S-1, filed July 14, 1995, as amended
	10.6.1	First Amendment to Series 1995-1 Supplement, dated as of August 28, 1997, to the Pooling and Servicing Agreement	Exhibit 10.4 to the November 1997 Form  10-Q
	10.7	Series 1996-1 Supplement, dated as of May 14, 1996, to the Pooling and Servicing Agreement	Exhibit 4 to Prime’s Current Report on Form 8-K (File No. 0-21118) dated May  24, 1996
	10.7.1	First Amendment to Series 1996-1 Supplement, dated as of August 28, 1997, to the Pooling and Servicing Agreement	Exhibit 10.5 to the November 1997 Form  10-Q

14

Exhibit
Number		Description	Document if Incorporated by Reference
	10.8	Amended and Restated Pooling and Servicing Agreement dated as of March 18, 1998 (the “Fingerhut Amended and Restated Pooling and Servicing Agreement”), between Fingerhut Receivables, Inc., as Transferor, Axsys National Bank (formerly 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))	Exhibit 10.8 to the Company’s Quarterly Report on Form 10-Q for the period ended May 1, 1999 (the “May 1999 Form 10-Q”)
	10.9	Series 1998-1 Supplement dated as of April 28, 1998 to the Fingerhut Amended and Restated Pooling and Servicing Agreement	Exhibit 10.9 to the May 1999 Form 10-Q
	10.9.1	First Amendment dated as of March 17, 1999 to Series 1998-1 Supplement	Exhibit 10.12 to the May 1999 Form 10-Q
	10.10	Series 1998-2 Supplement dated as of April 28, 1998 to the Fingerhut Amended and Restated Pooling and Servicing Agreement	Exhibit 10.10 to the May 1999 Form 10-Q
	10.10.1	First Amendment dated as of March 17, 1999 to Series 1998-2 Supplement	Exhibit 10.13 to the May 1999 Form 10-Q
	10.11	Series 1998-3 Supplement dated as of April 28, 1998 to the Fingerhut Amended and Restated Pooling and Servicing Agreement	Exhibit 10.11 to the May 1999 Form 10-Q
	10.11.1	First Amendment dated as of March 17, 1999 to Series 1998-3 Supplement	Exhibit 10.14 to the May 1999 Form 10-Q
	10.11.2	Second Amendment to the Series 1998-3 Supplement, dated as of July 29, 1999, by and among Fingerhut Receivables, Inc., as Transferor, Axsys National Bank (formerly Fingerhut National Bank), as Servicer, and The Bank of New York (Delaware), as Trustee	Exhibit 10.2 to the July 1999 Form 10-Q
	10.12	Receivables Purchase Agreement, dated as of December 15, 1992 (the “Receivables Purchase Agreement”), among Abraham & Straus, Inc., Bloomingdale’s, Inc., Burdines, Inc., Jordan Marsh Stores Corporation, Lazarus, Inc., Rich’s Department Stores, Inc., Stern’s Department Stores, Inc., The Bon, Inc. and Prime	Exhibit 10.2 to Prime’s Registration Statement on Form 8-A filed January 22, 1993, as amended
	10.12.1	First Amendment, dated as of June 23, 1993, to the Receivables Purchase Agreement	Exhibit 10.14.1 to 1993 Form 10-K

15

Exhibit
Number		Description	Document if Incorporated by Reference
	10.12.2	Second Amendment, dated as of December 1, 1993, to the Receivables Purchase Agreement	Exhibit 10.14.2 to 1993 Form 10-K
	10.12.3	Third Amendment, dated as of February 28, 1994, to the Receivables Purchase Agreement	Exhibit 10.14.3 to 1993 Form 10-K
	10.12.4	Fourth Amendment, dated as of May 31, 1994, to the Receivables Purchase Agreement	Exhibit 10.13.4 to the 1994 Form 10-K
	10.12.5	Fifth Amendment, dated as of April 30, 1995, to the Receivables Purchase Agreement	Exhibit 10.12.5 to the 1995 Form 10-K
	10.12.6	Sixth Amendment, dated as of August 26, 1995, to the Receivables Purchase Agreement	Exhibit 10.13.6 to the 1996 Form 10-K
	10.12.7	Seventh Amendment, dated as of August 26, 1995, to the Receivables Purchase Agreement	Exhibit 10.13.7 to the 1996 Form 10-K
	10.12.8	Eighth Amendment, dated as of May 14, 1996, to the Receivables Purchase Agreement	Exhibit 10.13.8 to the 1996 Form 10-K
	10.12.9	Ninth Amendment, dated as of March 3, 1997, to the Receivables Purchase Agreement.	Exhibit 10.13.9 to the 1996 Form 10-K
	10.12.10	First Supplement, dated as of September  15, 1993, to the Receivables Purchase Agreement	Exhibit 10.14.4 to 1993 Form 10-K
	10.12.11	Second Supplement, dated as of May 31, 1994, to the Receivables Purchase Agreement	Exhibit 10.12.7 to the 1995 Form 10-K
	10.13	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))	Exhibit 10.15 to the May 1999 Form 10-Q
	10.14	Amended and Restated Bank Receivables Purchase Agreement dated as of March 18, 1998 between Fingerhut Companies, Inc., as Buyer, and Axsys National Bank (formerly Fingerhut National Bank), as Seller (incorporated by reference to Exhibit  10(e) to Fingerhut Receivables, Inc. Registration Statement (File No. 333-45599))	Exhibit 10.16 to the May 1999 Form 10-Q
	10.15	Depository Agreement, dated as of December 31, 1992, among Deerfield Funding Corporation, now known as Seven Hills Funding Corporation (“Seven Hills”), the Company, and The Chase Manhattan Bank, as Depository	Exhibit 10.15 to Company’s Annual Report on Form 10-K (File No. 1-10951) for the fiscal year ended January 30, 1993 (“1992 Form 10-K”)

16

Exhibit
Number		Description	Document if Incorporated by Reference
	10.16	Liquidity Agreement, dated as of December  31, 1992, among Seven Hills, the Company, the financial institutions named therein, and Credit Suisse, New York Branch, as Liquidity Agent	Exhibit 10.16 to 1992 Form 10-K
	10.17	Pledge and Security Agreement, dated as of December 31, 1992, among Seven Hills, the Company, The Chase Manhattan Bank, as Depository and Collateral Agent, and the Liquidity Agent	Exhibit 10.17 to 1992 Form 10-K
	10.18	Security Purchase Agreement, dated as of July 30, 1998, by and among Fingerhut Receivables, Inc. (the “Transferor”), Kitty Hawk Funding Corporation (“Kitty Hawk”), Falcon Asset Securitization Corporation (“Falcon”), Four Winds Funding Corporation (“Four Winds” and, collectively with Kitty Hawk and Falcon, the “Conduit Purchasers”), The Bank of America, N.A. (“BofA” or the “Administrative Agent”), The First National Bank of Chicago (“First Chicago”), Norddeutsche Landesbank Girozentrale, New York Branch and/or Cayman Island Branch (“Norddeutsche”), and Commerzbank Aktiengesellschaft, Chicago Branch (“Commerzbank” and collectively with BofA, First Chicago and Norddeutsche, the “Alternate Purchasers” and collectively with BofA and First Chicago, the “Managing Agents”)	Exhibit 10.3 to the July 1999 Form 10-Q
	10.18.1	First Amendment Agreement to Fingerhut Receivables, Inc. Security Purchase Agreement, dated as of July 29, 1999, by and among Fingerhut Receivables, Inc., Kitty Hawk, Falcon, Four Winds, the Conduit Purchasers, the Alternate Purchasers and the Managing Agents	Exhibit 10.4 to the July 1999 Form 10-Q
	10.19	Commercial Paper Dealer Agreement, dated as of December 31, 1992, among Seven Hills, the Company, and Goldman Sachs Money Markets, L.P.	Exhibit 10.18 to 1992 Form 10-K
	10.20	Commercial Paper Dealer Agreement, dated as of December 31, 1992, among Seven Hills, the Company, and Shearson Lehman Brothers, Inc.	Exhibit 10.19 to 1992 Form 10-K

17

Exhibit
Number		Description	Document if Incorporated by Reference
	10.21	Receivables Purchase Agreement, dated as of January 22, 1997, among FDS National Bank and Prime II Receivables Corporation (“Prime II”)	Exhibit 10.19 to the 1996 Form 10-K
	10.22	Class A Certificate Purchase Agreement, dated as of January 22, 1997, among Prime II, FDS National Bank, The Class A Purchasers Parties thereto and Credit Suisse First Boston, New York Branch, as Agent	Exhibit 10.20 to the 1996 Form 10-K
	10.23	Class B Certificate Purchase Agreement, dated as of January 22, 1997, among Prime II, FDS National Bank, The Class B Purchasers Parties thereto and Credit Suisse First Boston, New York Branch, as Agent	Exhibit 10.21 to the 1996 Form 10-K
	10.24	Class A Certificate Purchase Agreement, dated as of July 6, 1999, by and among Prime II, as Transferor, FDS National Bank, as Servicer, The Class A Purchasers, and PNC Bank, National Association, as Agent and Administrative Agent	Exhibit 10.6 to the July 1999 Form 10-Q
	10.24.1	First Amendment to Class A Certificate Purchase Agreement, dated as of August 3, 1999, by and among Prime II, as Transferor, FDS National Bank, as Servicer, The Class A Purchasers, and PNC Bank, National Association, as Agent and Administrative Agent	Exhibit 10.7 to the July 1999 Form 10-Q
	10.25	Class B Certificate Purchase Agreement, dated as of July 6, 1999, by and among Prime II, as Transferor, FDS National Bank, as Servicer, The Class A Purchasers, and PNC Bank, National Association, as Agent and Administrative Agent	Exhibit 10.8 to the July 1999 Form 10-Q
	10.25.1	First Amendment to Class B Certificate Purchase Agreement, dated as of August 3, 1999, by and among Prime II, as Transferor, FDS National Bank, as Servicer, The Class A Purchasers, and PNC Bank, National Association, as Agent and Administrative Agent	Exhibit 10.9 to the July 1999 Form 10-Q

18

Exhibit
Number		Description	Document if Incorporated by Reference
	10.26	Pooling and Servicing Agreement, dated as of January 22, 1997, (the “Prime II Pooling and Servicing Agreement”) among Prime II, FDS National Bank and The Chase Manhattan Bank, as Trustee	Exhibit 10.22 to the 1996 Form 10-K
	10.27	Series 1997-1 Supplement, dated as of January 22, 1997, to the Prime II Pooling and Servicing Agreement	Exhibit 10.23 to the 1996 Form 10-K
	10.28	Series 1999-1 Variable Funding Supplement, dated as of July 6, 1999, to the Prime II Pooling and Servicing Agreement	Exhibit 10.5 to the July 1999 Form 10-Q
	10.29	Commercial Paper Issuing and Paying Agent Agreement, dated as of January 30, 1997, between Citibank, N.A. and the Company	Exhibit 10.25 to the 1996 Form 10-K
	10.30	Commercial Paper Dealer Agreement, dated as of March 12, 1999, between the Company, as Issuer, and Goldman Sachs & Co., as Dealer	Exhibit 10.2 to the May 1999 Form 10-Q
	10.31	Commercial Paper Dealer Agreement, dated as of March 12, 1999, between the Company, as Issuer, and First Chicago Capital Markets, Inc., as Dealer	Exhibit 10.3 to the May 1999 Form 10-Q
	10.32	Commercial Paper Dealer Agreement, dated as of March 12, 1999, between the Company, as Issuer, and Chase Securities Inc., as Dealer	Exhibit 10.4 to the May 1999 Form 10-Q
	10.33	Tax Sharing Agreement	Exhibit 10.10 to Form 10
	10.34	Ralphs Tax Indemnification Agreement	Exhibit 10.1 to Form 10
	10.35	Account Purchase Agreement dated as of May 10, 1991, by and among Monogram Bank, USA, Macy’s, Macy Credit Corporation, Macy Funding, Macy’s California, Inc., Macy’s Northeast, Inc., Macy’s South, Inc., Bullock’s Inc., I. Magnin, Inc., Master Servicer, and Macy Specialty Stores, Inc.**	Exhibit 19.2 to Macy’s Quarterly Report on Form 10-Q for the fiscal quarter ended May 4, 1991 (File No. 33-6192), as amended under cover of Form 8, dated October 3, 1991
	10.36	Amended and Restated Credit Card Program Agreement, dated as of June 4, 1996, among GE Capital Consumer Card Co. (“GE Bank”), FDS National Bank, Macy’s East, Inc., Macy’s West, Inc., Bullock’s, Inc., Broadway Stores, Inc., FACS Group, Inc., and MSS-Delaware, Inc.**	Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the period ended August 3, 1996 (the “August 1996 Form  10-Q”)

19

Exhibit
Number		Description	Document if Incorporated by Reference
	10.37	Amended and Restated Trade Name and Service Mark License Agreement, dated as of June 4, 1996, among the Company, GE Bank and General Electric Capital Corporation (“GE Capital”)	Exhibit 10.2 to the August 1996 Form 10-Q
	10.38	FACS Credit Services and License Agreement, dated as of June 4, 1996, by and among GE Bank, GE Capital and FACS Group, Inc.**	Exhibit 10.3 to the August 1996 Form  10-Q
	10.39	FDS Guaranty, dated as of June 4, 1996	Exhibit 10.4 to the August 1996 Form  10-Q
	10.40	GE Capital Credit Services and License Agreement, dated as of June 4, 1996, among GE Capital, FDS National Bank, the Company and FACS Group, Inc.**	Exhibit 10.5 to the August 1996 Form  10-Q
	10.41	GE Capital/ GE Bank Credit Services Agreement, dated as of June 4, 1996, among GE Capital and GE Bank**	Exhibit 10.6 to the August 1996 Form  10-Q
	10.42	Amended and Restated Commercial Accounts Agreement, dated as of June 4, 1996, among GE Capital, the Company, FDS National Bank, Macy’s East, Inc., Macy’s West, Inc., Bullock’s, Inc., Broadway Stores, Inc., FACS Group, Inc. and MSS-Delaware, Inc.**	Exhibit 10.7 to the August 1996 Form  10-Q
	10.43	Agreement and Plan of Merger, dated as of February 10, 1999, among the Company, Bengal Subsidiary Corporation and Fingerhut Companies, Inc. (incorporated by reference to Exhibit (c)(I) of the Schedule 14D-1, filed by the Company and Bengal on February 18, 1999)	Exhibit 10.1 to the May 1999 Form 10-Q
	10.44	1992 Executive Equity Incentive Plan*	Exhibit 10.12 to the Company’s Registration Statement on Form 10 filed November 27, 1991, as amended
	10.45	1995 Executive Equity Incentive Plan, as amended and restated as of May 21, 1999*	Appendix A to the Company’s Proxy Statement on Schedule 14A, filed April 21, 1999
	10.46	1992 Incentive Bonus Plan, as amended and restated as of December 10, 1999*
	10.47	Form of Severance Agreement*	Exhibit 10.33 to the 1994 Form 10-K
	10.48	Form of Indemnification Agreement*	Exhibit 10.14 to Form 10
	10.49	Senior Executive Medical Plan*	Exhibit 10.1.7 to the Company’s Annual Report on Form 10-K (File No. 1-163) for the fiscal year ended February 3, 1990

20

Exhibit
Number		Description	Document if Incorporated by Reference
	10.50	Employment Agreement, dated as of August  27, 1999, between James M. Zimmerman and the Company*
	10.51	Employment Agreement, dated as of May 16, 1997, between Terry J. Lundgren and the Company*	Exhibit 10.43 to the 1997 Form 10-K
	10.52	Form of Employment Agreement for Executives and Key Employees*	Exhibit 10.31 to 1993 Form 10-K
	10.53	Form of Severance Agreement (for Executives and Key Employees other than the Executive Officers)*	Exhibit 10.44 to the Company’s Annual Report on Form 10-K for the fiscal year ended January 30, 1999 (the “1998 Form  10-K”)
	10.54	Form of Second Amended and Restated Severance Agreement (for the Executive Officers)*	Exhibit 10.45 to the 1998 Form 10-K
	10.55	Supplementary Executive Retirement Plan, as amended and restated as of January 1, 1997*	Exhibit 10.46 to the 1996 Form 10-K
	10.56	Executive Deferred Compensation Plan, as amended*	Exhibit 10.47 to the 1996 Form 10-K
	10.57	Profit Sharing 401(k) Investment Plan (amending and restating the Retirement Income and Thrift Incentive Plan) effective as of April 1, 1997*	Exhibit 10.48 to the 1996 Form 10-K
	10.58	Cash Account Pension Plan (amending and restating the Company Pension Plan) effective as of January 1, 1997*	Exhibit 10.49 to the 1996 Form 10-K
	21	Subsidiaries
	22	Consent of KPMG LLP
	23	Powers of Attorney
	27	Financial Data Schedule

*	Constitutes a compensatory plan or arrangement.
**	Confidential portions of this Exhibit were omitted and filed separately with the SEC pursuant to Rule 24b-2 under the Exchange Act.

(b)  Reports on Form 8-K.

(i)  Current report on Form 8-K, dated December 6, 1999, reporting matters under items 5 and 7 thereof.

21

SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

FEDERATED DEPARTMENT STORES, INC.

By:  /s/ DENNIS J. BRODERICK

Dennis J. Broderick

Senior Vice President, General Counsel and Secretary

Date: April 19, 2000

     Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated on April 19, 2000.

Signature	Title
* James M. Zimmerman	Chairman of the Board and Chief Executive Officer (principal executive officer) and Director
* Terry J. Lundgren	President and Chief Merchandising Officer and Director
* Ronald W. Tysoe	Vice Chairman, Finance and Real Estate and Director
* Karen M. Hoguet	Senior Vice President and Chief Financial Officer
* Joel A. Belsky	Vice President and Controller (principal accounting officer)
* Meyer Feldberg	Director
* Earl G. Graves, Sr.	Director
* George V. Grune	Director
* Sara Levinson	Director
* Joseph Neubauer	Director
* Joseph A. Pichler	Director
* Karl M. von der Heyden	Director
* Craig E. Weatherup	Director
* Marna C. Whittington	Director

     * The undersigned, by signing his name hereto, does sign and execute this Annual Report on Form 10-K pursuant to the Powers of Attorney executed by the above-named officers and directors and filed herewith.

By:  /s/ DENNIS J. BRODERICK

Dennis J. Broderick

Attorney-in-Fact

22

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page
Management’s Report		F-2
Independent Auditors’ Report		F-3
Consolidated Statements of Income for the 52 weeks ended January 29, 2000, January 30, 1999, and January 31, 1998		F-4
Consolidated Balance Sheets at January 29, 2000, and January 30, 1999		F-5
Consolidated Statements of Changes in Shareholders’ Equity for the 52 weeks ended January 29, 2000, January 30, 1999 and January 31, 1998		F-6
Consolidated Statements of Cash Flows for the 52 weeks ended January 29, 2000, January 30, 1999 and January 31, 1998		F-7
Notes to Consolidated Financial Statements		F-8

F-1

MANAGEMENT’S REPORT

To the Shareholders of

Federated Department Stores, Inc.:

      The integrity and consistency of the consolidated financial statements of Federated Department Stores, Inc. and subsidiaries, which were prepared in accordance with generally accepted accounting principles, are the responsibility of management and properly include some amounts that are based upon estimates and judgments.

      The Company maintains a system of internal accounting controls, which is supported by a program of internal audits with appropriate management follow-up action, to provide reasonable assurance, at appropriate cost, that the Company’s assets are protected and transactions are properly recorded. Additionally, the integrity of the financial accounting system is based on careful selection and training of qualified personnel, organizational arrangements which provide for appropriate division of responsibilities and communication of established written policies and procedures.

      The consolidated financial statements of the Company have been audited by KPMG LLP, independent certified public accountants. Their report expresses their opinion as to the fair presentation, in all material respects, of the financial statements and is based upon their independent audits conducted in accordance with generally accepted auditing standards.

      The Audit Review Committee, composed solely of outside directors, meets periodically with the independent certified public accountants, the internal auditors and representatives of management to discuss auditing and financial reporting matters. In addition, the independent certified public accountants and the Company’s internal auditors meet periodically with the Audit Review Committee without management representatives present and have free access to the Audit Review Committee at any time. The Audit Review Committee is responsible for recommending to the Board of Directors the engagement of the independent certified public accountants, which is subject to shareholder approval, and the general oversight review of management’s discharge of its responsibilities with respect to the matters referred to above.

James M. Zimmerman

Chairman and Chief Executive Officer

Karen M. Hoguet

Senior Vice President, Chief Financial Officer

Joel A. Belsky

Vice President and Controller

F-2

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Shareholders

Federated Department Stores, Inc.:

      We have audited the accompanying consolidated balance sheets of Federated Department Stores, Inc. and subsidiaries as of January 29, 2000 and January 30, 1999, and the related consolidated statements of income, changes in shareholders’ equity and cash flows for the fifty-two week periods ended January 29, 2000, January 30, 1999 and January 31, 1998. These consolidated financial statements are the responsibility of management. Our responsibility is to express an opinion on these consolidated 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.

      In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Federated Department Stores, Inc. and subsidiaries as of January 29, 2000 and January 30, 1999, and the results of their operations and their cash flows for the fifty-two week periods ended January 29, 2000, January 30, 1999 and January 31, 1998, in conformity with generally accepted accounting principles.

KPMG LLP

Cincinnati, Ohio

February 22, 2000

F-3

FEDERATED DEPARTMENT STORES, INC.

CONSOLIDATED STATEMENTS OF INCOME

(millions, except per share data)

		52 Weeks Ended			52 Weeks Ended			52 Weeks Ended
		January 29, 2000			January 30, 1999			January 31, 1998
Net sales		$	17,716		$	15,365		$	15,220
Cost of sales			10,443			9,218			9,200
Selling, general and administrative expenses			5,572			4,692			4,679
Operating income			1,701			1,455			1,341
Interest expense			(368	)		(304	)		(418	)
Interest income			13			12			35
Income before income taxes and extraordinary items			1,346			1,163			958
Federal, state and local income tax expense			(551	)		(478	)		(383	)
Income before extraordinary items			795			685			575
Extraordinary items			–			(23	)		(39	)
Net income		$	795		$	662		$	536
Basic earnings per share:
	Income before extraordinary items	$	3.78		$	3.27		$	2.74
	Extraordinary items		–			(.11	)		(.18	)
	Net income	$	3.78		$	3.16		$	2.56
Diluted earnings per share:
	Income before extraordinary items	$	3.62		$	3.06		$	2.58
	Extraordinary items		–			(.10	)		(.17	)
	Net income	$	3.62		$	2.96		$	2.41

      The accompanying notes are an integral part of these Consolidated Financial Statements.

F-4

FEDERATED DEPARTMENT STORES, INC.

CONSOLIDATED BALANCE SHEETS

(millions)

			January 29, 2000		January 30, 1999
ASSETS
Current Assets:
	Cash		$	218	$	307
	Accounts receivable			4,313		2,209
	Merchandise inventories			3,589		3,259
	Supplies and prepaid expenses			230		117
	Deferred income tax assets			172		80
		Total Current Assets		8,522		5,972
Property and Equipment – net				6,828		6,572
Intangible Assets – net				1,735		631
Other Assets				607		289
		Total Assets	$	17,692	$	13,464
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
	Short-term debt		$	1,284	$	524
	Accounts payable and accrued liabilities			3,043		2,446
	Income taxes			225		98
		Total Current Liabilities		4,552		3,068
Long-Term Debt				4,589		3,057
Deferred Income Taxes				1,444		1,060
Other Liabilities				555		570
Shareholders’ Equity				6,552		5,709
		Total Liabilities and Shareholders’ Equity	$	17,692	$	13,464

      The accompanying notes are an integral part of these Consolidated Financial Statements.

F-5

FEDERATED DEPARTMENT STORES, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(millions)

														Accumulated
			Additional								Unearned			Other			Total
	Common		Paid-In			Accumulated		Treasury			Restricted			Comprehensive			Shareholders’
	Stock		Capital			Equity		Stock			Stock			Income			Equity
Balance at February 1, 1997	$	2	$	4,400		$	834	$	(566	)	$	(1	)	$	–		$	4,669
Net Income							536											536
Minimum pension liability adjustment, net of income tax effect															(3	)		(3	)
Total comprehensive income																		533
Stock issued under stock plans				46					(7	)		(1	)					38
Deferred compensation plan distributions									1									1
Income tax benefit related to stock plan activity				15														15
Balance at January 31, 1998		2		4,461			1,370		(572	)		(2	)		(3	)		5,256
Net Income							662											662
Minimum pension liability adjustment, net of income tax effect															(7	)		(7	)
Total comprehensive income																		655
Stock repurchases									(591	)								(591	)
Stock issued under stock plans				36					(6	)								30
Deferred compensation plan distributions									1									1
Restricted stock plan amortization												1						1
Income tax benefit related to stock plan activity				13														13
Stock issued in conversion of subordinated notes				(104	)				448									344
Balance at January 30, 1999		2		4,406			2,032		(720	)		(1	)		(10	)		5,709
Net Income							795											795
Minimum pension liability adjustment, net of income tax effect															10			10
Total comprehensive income																		805
Stock repurchases									(267	)								(267	)
Stock issued under stock plans				52					(4	)		(9	)					39
Stock issued upon exercise of warrants		1		233														234
Restricted stock plan amortization												3						3
Deferred compensation plan distributions									1									1
Equity issued in acquisition				12														12
Income tax benefit related to stock plan activity				16														16
Balance at January 29, 2000	$	3	$	4,719		$	2,827	$	(990	)	$	(7	)	$	–		$	6,552

      The accompanying notes are an integral part of these Consolidated Financial Statements.

F-6

FEDERATED DEPARTMENT STORES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(millions)

				52 Weeks Ended			52 Weeks Ended			52 Weeks Ended
				January 29, 2000			January 30, 1999			January 31, 1998
Cash flows from operating activities:
	Net income			$	795		$	662		$	536
	Adjustments to reconcile net income to net cash provided by Operating activities:
		Depreciation and amortization			657			596			563
		Amortization of intangible assets			78			27			27
		Amortization of financing costs			7			7			20
		Amortization of unearned restricted stock			3			1			–
		Loss on early extinguishment of debt			–			23			39
		Changes in assets and liabilities:
		(Increase) decrease in accounts receivable			(473	)		235			194
		(Increase) decrease in merchandise inventories			(164	)		(20	)		7
		Increase in supplies and prepaid expenses			(27	)		(2	)		(5	)
		(Increase) decrease in other assets not separately identified			(8	)		31			(7	)
		Increase (decrease) in accounts payable and accrued liabilities not separately identified			194			6			(36	)
		Increase in current income taxes			128			25			103
		Increase in deferred income taxes			64			103			138
		Increase (decrease) in other liabilities not separately identified			9			(4	)		(6	)
			Net cash provided by operating activities		1,263			1,690			1,573
Cash flows from investing activities:
	Acquisition of Fingerhut Companies, Inc., net of cash acquired				(1,539	)		–			–
	Purchase of property and equipment				(770	)		(695	)		(696	)
	Capitalized software				(52	)		–			–
	Investments in companies				(117	)		–			–
	Disposition of property and equipment				46			50			178
	Collection of note receivable				–			200			200
			Net cash used by investing activities		(2,432	)		(445	)		(318	)
Cash flows from financing activities:
	Debt issued				1,684			650			763
	Financing costs				(10	)		–			(7	)
	Debt repaid				(650	)		(1,229	)		(2,027	)
	Increase (decrease) in outstanding checks				33			47			(45	)
	Acquisition of treasury stock				(267	)		(594	)		(2	)
	Issuance of common stock				290			46			56
			Net cash provided (used) by financing activities		1,080			(1,080	)		(1,262	)
Net increase (decrease) in cash					(89	)		165			(7	)
Cash beginning of period					307			142			149
Cash end of period				$	218		$	307		$	142
Supplemental cash flow information:
	Interest paid			$	348		$	306		$	412
	Interest received				14			15			38
	Income taxes paid (net of refunds received)				327			304			121

      The accompanying notes are an integral part of these Consolidated Financial Statements.

F-7

FEDERATED DEPARTMENT STORES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  Organization and Summary of Significant Accounting Policies

      Federated Department Stores, Inc. (the “Company”) is a retail organization operating department stores and direct-to-customer businesses that sell a wide range of products and services, including men’s, women’s, and children’s apparel and accessories, cosmetics, home furnishings and other consumer goods.

      The Consolidated Financial Statements include the accounts of the Company and its wholly-owned subsidiaries. The Company from time to time invests in companies engaged in complementary businesses. Investments in companies in which the Company has the ability to exercise significant influence, but not control, are accounted for by the equity method. All other investments are carried at cost. The Company’s investments in companies engaged in complementary businesses amounted to approximately $126 million at January 29, 2000. There were no such investments at January 30, 1999. All significant intercompany transactions have been eliminated. 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 revenues and expenses during the reporting period. Such estimates and assumptions are subject to inherent uncertainties, which may result in actual amounts differing from reported amounts.

      Cash includes cash and liquid investments with original maturities of three months or less.

      Installments of deferred payment accounts receivable maturing after one year are included in current assets in accordance with industry practice. Such accounts are accepted on customary revolving credit terms and offer the customer the option of paying the entire balance on a 25-day basis without incurring finance charges. Alternatively, customers may make scheduled minimum payments and incur competitive finance charges. Minimum payments vary from 2.5% to 100.0% of the account balance, depending on the size of the balance. Profits on installment sales are included in income when the sales are made. Finance charge income is treated as a reduction of selling, general and administrative expenses.

      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.

      Depreciation and amortization are provided primarily on a straight-line basis over the shorter of estimated asset lives or related lease terms. Estimated asset lives range from 15 to 50 years for buildings and building equipment, 3 to 15 years for fixtures and equipment and 2 to 5 years for capitalized software. Real estate taxes and interest on construction in progress and land under development are capitalized. Amounts capitalized are amortized over the estimated lives of the related depreciable assets. The carrying value of property and equipment is periodically reviewed and adjusted appropriately by the Company whenever events or changes in circumstances indicate that the estimated fair value is less than the carrying amount.

      Intangible assets are amortized on a straight-line basis over their estimated lives (see Note 7). The carrying value of intangible assets is periodically reviewed by the Company and impairments are recognized when the present value of the expected future operating cash flows derived from such intangible assets is less than their carrying value.

F-8

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – Continued

      Advertising and promotional costs amounted to $1,219 million, $739 million and $680 million for the 52 weeks ended January 29, 2000, January 30, 1999 and January 31, 1998, respectively. Direct response advertising and promotional costs are deferred and expensed over the period during which the sales are expected to occur, generally one to four months. Non-direct response advertising and promotional costs are expensed as incurred.

      Financing costs are amortized over the life of the related debt.

      Income taxes are accounted for under the asset and liability method. Deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and net operating loss and tax credit carryforwards. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

      The cost of postretirement benefits other than pensions is recognized in the financial statements over an employee’s term of service with the Company.

      The Company accounts for its stock-based employee compensation plan in accordance with Accounting Principles Board (“APB”) Opinion No. 25 and related interpretations (see Note 13).

      Earnings per share are computed in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 128 “Earnings Per Share” (see Note 17).

      Certain reclassifications were made to prior years’ amounts to conform with the classifications of such amounts for the most recent year.

      In 1998, the Financial Accounting Standards Board issued SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activity,” which is effective for fiscal years beginning after June 15, 2000. This statement establishes accounting and reporting standards for derivative instruments and hedging activities and requires recognition of all derivatives as either assets or liabilities on the balance sheet using fair value measurement. The accounting for changes in the fair value of derivatives depends on the intended use of the derivatives and the hedging designation, if any. Based on the Company’s minimal use of derivatives, management does not anticipate that the adoption of this statement will have a material impact on the Company’s consolidated financial position, results of operations or cash flows.

2.  Acquisition

      On March 18, 1999, the Company purchased Fingerhut Companies, Inc. (“Fingerhut”), for a purchase price of approximately $1,720 million, including the assumption of $125 million of debt.

      The Fingerhut acquisition is being accounted for under the purchase method of accounting. Accordingly, the Company’s results of operations do not include Fingerhut’s results of operations for any period prior to March 18, 1999 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 March 18, 1999.

F-9

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – Continued

3.  Extraordinary Items

      The extraordinary item for the 52 weeks ended January 30, 1999 represents costs of $23 million, net of income tax benefit of $15 million, associated with a debt prepayment.

      The extraordinary item for the 52 weeks ended January 31, 1998 represents costs of $39 million, net of income tax benefit of $25 million, associated with debt prepayments.

4.  Accounts Receivable

	January 29,		January 30,
	2000		1999
	(millions)
Due from customers	$	4,392	$	2,099
Less allowance for doubtful accounts		358		77
		4,034		2,022
Other receivables		279		187
Net receivables	$	4,313	$	2,209

      Sales through the Company’s credit plans were $5,726 million, $4,028 million and $4,002 million for the 52 weeks ended January 29, 2000, January 30, 1999 and January 31, 1998, respectively. The credit plans relating to certain operations of the Company are owned by a third party.

      Finance charge income amounted to $465 million, $345 million and $391 million for the 52 weeks ended January 29, 2000, January 30, 1999 and January 31, 1998, respectively.

      Changes in allowance for doubtful accounts are as follows:

	52 Weeks Ended			52 Weeks Ended			52 Weeks Ended
	January 29, 2000			January 30, 1999			January 31, 1998
	(millions)
Balance, beginning of year	$	77		$	100		$	96
Charged to costs and expenses		310			112			167
Acquired		275			–			–
Net uncollectible balances written off		(304	)		(135	)		(163	)
Balance, end of year	$	358		$	77		$	100

5.  Inventories

      Merchandise inventories were $3,589 million at January 29, 2000, compared to $3,259 million at January 30, 1999. At these dates, the cost of department store inventories using the LIFO method approximated the cost of such inventories using the first-in, first-out method. The application of the LIFO method did not impact cost of sales for the 52 weeks ended January 29, 2000, January 30, 1999 or January 31, 1998.

F-10

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – Continued

6.  Properties and Leases

	January 29,		January 30,
	2000		1999
	(millions)
Land	$	1,021	$	1,018
Buildings on owned land		2,467		2,399
Buildings on leased land and leasehold improvements		1,660		1,552
Fixtures and equipment		3,831		3,713
Leased properties under capitalized leases		73		73
		9,052		8,755
Less accumulated depreciation and amortization		2,224		2,183
	$	6,828	$	6,572

      In connection with various shopping center agreements, the Company is obligated to operate certain stores within the centers for periods of up to 20 years. Some of these agreements require that the stores be operated under a particular name.

      The Company leases a portion of the real estate and personal property used in its operations. Most leases require the Company to pay real estate taxes, maintenance and other executory costs; some also require additional payments based on percentages of sales and some contain purchase options. Certain of the Company’s real estate leases have terms that extend for significant numbers of years and provide for rental rates that increase over time. In addition, certain of these leases contain covenants that restrict the ability of the tenant (typically a subsidiary of the Company) to take specified actions (including the payment of dividends or other amounts on account of its capital stock) unless the tenant satisfies certain financial tests.

      Minimum rental commitments (excluding executory costs) at January 29, 2000, for noncancellable leases are:

		Capitalized		Operating
		Leases		Leases		Total
				(millions)
Fiscal year:
	2000	$	12	$	177	$	189
	2001		12		166		178
	2002		10		148		158
	2003		9		132		141
	2004		9		123		132
	After 2005		55		1,931		1,986
Total minimum lease payments			107	$	2,677	$	2,784
Less amount representing interest			46
Present value of net minimum capitalized lease payments		$	61

F-11

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – Continued

      Capitalized leases are included in the Consolidated Balance Sheets as property and equipment while the related obligation is included in short-term ($6 million) and long-term ($55 million) debt. Amortization of assets subject to capitalized leases is included in depreciation and amortization expense. Total minimum lease payments shown above have not been reduced by minimum sublease rentals of approximately $4 million on capitalized leases and $21 million on operating leases.

      Rental expense consists of:

			52 Weeks Ended		52 Weeks Ended		52 Weeks Ended
			January 29, 2000		January 30, 1999		January 31, 1998
					(millions)
Real estate (excluding executory costs)
	Capitalized leases –
		Contingent rentals	$	3	$	3	$	4
	Operating leases –
		Minimum rentals		149		144		149
		Contingent rentals		23		21		23
				175		168		176
	Less income from subleases –
		Capitalized leases		3		2		2
		Operating leases		20		19		18
				23		21		20
			$	152	$	147	$	156
Personal property – Operating leases			$	50	$	22	$	37

7. Intangible Assets

	January 29,		January 30,
	2000		1999
	(millions)
Goodwill	$	1,201	$	362
Identifiable intangibles		802		458
		2,003		820
Less accumulated amortization		268		189
Intangible assets — net	$	1,735	$	631

      Goodwill is being amortized on a straight-line basis over its estimated useful life, ranging from 20 to 40 years. Identifiable intangibles include tradenames, customer lists and credit files and are being amortized on a straight-line basis over their estimated useful lives, ranging from 7 to 40 years.

F-12

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – Continued

8. Financing

			January 29,		January 30,
			2000		1999
			(millions)
Short-term debt:
	Receivables backed financings		$	885	$	490
	Commercial paper program			393		–
	Current portion of long-term debt			6		34
		Total short-term debt	$	1,284	$	524
Long-term debt:
	Receivables backed financings		$	1,624	$	836
	8.5% Senior notes due 2003			450		450
	8.125% Senior notes due 2002			400		400
	6.9% Senior debentures due 2029			400		–
	6.125% Term Enhanced ReMarketable Securities due 2011			350		–
	6.3% Senior notes due 2009			350		–
	7.45% Senior debentures due 2017			300		300
	7.0% Senior debentures due 2028			300		300
	6.79% Senior debentures due 2027			250		250
	10.0% Senior notes due 2001			110		110
	Capital lease obligations			55		61
		Total long-term debt	$	4,589	$	3,057

      Interest expense was as follows:

		52 Weeks Ended		52 Weeks Ended		52 Weeks Ended
		January 29, 2000		January 30, 1999		January 31, 1998
		(millions)
Interest on debt		$	357	$	293	$	392
Amortization of financing costs			7		7		20
Interest on capitalized leases			7		7		8
	Subtotal		371		307		420
Less interest capitalized on construction			3		3		2
		$	368	$	304	$	418

F-13

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – Continued

      Future maturities of long-term debt, other than capitalized leases are shown below:

		(millions)
Fiscal year:
	2001	$	958
	2002		1,189
	2003		709
	2004		328
	2005		–
	After 2005		1,350

      The Company funded the acquisition of Fingerhut through a combination of cash on hand and short-term borrowings. During 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. The Company repaid debt of $650 million in 1999, consisting principally of $490 million of receivables backed financings and the $125 million of Senior Notes assumed in the Fingerhut acquisition.

      In 1999, the Company took certain actions which resulted in the consolidation of the Fingerhut Master Trust for financial reporting purposes. The principal assets and liabilities of the Fingerhut Master Trust consisted of accounts receivable transferred by Fingerhut to the Trust in transactions treated as sales under SFAS No. 125, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities,” and the related debt issued by the Trust. As a result of the Company’s actions, the transfer of receivables and debt are being treated as secured borrowings as of and subsequent to July 31, 1999. These actions increased the Company’s consolidated net assets and debt by $1,132 million at July 31, 1999 and by $1,300 million at January 29, 2000.

      The following summarizes certain components of the Company’s debt:

Receivables Backed Financings

      Receivables backed financings classified as short-term debt consist of current amounts due under certain receivables backed certificates issued by subsidiaries of the Company together with receivables backed commercial paper issued by subsidiaries of the Company (of which $372 million and none were outstanding as of January 29, 2000 and January 30, 1999, respectively). Receivables backed financings classified as long-term debt consist of receivables backed certificates issued by subsidiaries of the Company, which certificates represent undivided interests in master trusts originated by such subsidiaries, and bear interest at both fixed and floating rates. The majority of the certificates bear interest at fixed rates ranging from 6.07% to 6.90% and a portion of the certificates bear interest at a floating rate based on LIBOR. The receivables backed financings classified as long-term debt at January 29, 2000 have maturity dates between February 2001 and April 2004.

Bank Credit Agreements

      The Company and certain financial institutions are parties to (i) the Five-Year Credit Agreement, pursuant to which such financial institutions have provided the Company with a $1,500 million revolving loan

F-14

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – Continued

facility (the “Five Year Facility”) and (ii) the 364 Day Credit Agreement, pursuant to which such financial institutions have provided the Company with a $500 million revolving loan facility (the “364-Day Facility” and, together with the Five-Year Facility, the “Revolving Loan Facilities”). The Company’s obligations under the Revolving Loan Facilities are not secured or guaranteed.

      As of January 29, 2000 and January 30, 1999, there were no revolving credit loans outstanding under the Revolving Loan Facilities. However, there were $31 million and $69 million of letters of credit outstanding under the Revolving Loan Facilities at January 29, 2000 and January 30, 1999, respectively. Revolving loans under the Revolving Loan Facilities bear interest based on published rates.

Commercial Paper

      The Company established a $2,000 million program for the issuance from time to time of unsecured commercial paper. The issuance of commercial paper under the program will have the effect, while such commercial paper is outstanding, of reducing the Company’s borrowing capacity under the Revolving Loan Facilities by an amount equal to the principal amount of such commercial paper. As of January 29, 2000, there was $393 million of such commercial paper outstanding. As of January 30, 1999, there was no such commercial paper outstanding.

Senior Notes and Debentures

      The Senior Notes and the Senior Debentures are unsecured obligations of the Company. The holders of the Senior Debentures due 2027 may elect to have such debentures repaid on July 15, 2004 at 100% of the principal amount thereof, together with accrued and unpaid interest to the date of repayment.

Term Enhanced ReMarketable Securities (“TERMS”)

      The TERMS are unsecured obligations of the Company. The final maturity is scheduled to occur on September 1, 2011 (“Final Maturity”), but may be adjusted during the remarketing process. The TERMS will bear interest at the rate of 6.125% per annum to September 1, 2001 (“Investor Maturity Date”). The interest rate to Final Maturity will be determined during the remarketing process and will be equal to the sum of 5.64% per annum plus the Company’s then current credit spread for similar debt instruments. At the Investor Maturity Date, the remarketing dealer may purchase the TERMS from the investors, at face value, and remarket the securities to new investors or the remarketing dealer may give notice to the Company that such securities shall be tendered to the Company and retired.

Other Financing Arrangements

      In addition to the financing arrangements discussed above, the Company entered into arrangements providing for off balance sheet financing of up to $500 million of non-proprietary credit card receivables arising under accounts owned by the Company. At January 29, 2000 and January 30, 1999, $423 million and $340 million, respectively, of borrowings were outstanding under these arrangements.

      There were also $67 million of letters of credit outstanding at January 29, 2000. There were no such letters of credit outstanding at January 30, 1999.

F-15

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – Continued

9.  Accounts Payable and Accrued Liabilities

	January 29,		January 30,
	2000		1999
	(millions)
Merchandise and expense accounts payable	$	1,876	$	1,630
Liabilities to customers		415		263
Taxes other than income taxes		181		116
Accrued wages and vacation		160		91
Accrued interest		60		45
Other		351		301
	$	3,043	$	2,446

10.  Taxes

      Income tax expense is as follows:

	52 Weeks Ended							52 Weeks Ended							52 Weeks Ended
	January 29, 2000							January 30, 1999							January 31, 1998
	Current		Deferred			Total		Current		Deferred			Total		Current		Deferred			Total
	(millions)
Federal	$	458	$	(4	)	$	454	$	405	$	(19	)	$	386	$	319	$	(1	)	$	318
State and local		98		(1	)		97		96		(4	)		92		66		(1	)		65
	$	556	$	(5	)	$	551	$	501	$	(23	)	$	478	$	385	$	(2	)	$	383

      The income tax expense reported differs from the expected tax computed by applying the federal income tax statutory rate of 35% for the 52 weeks ended January 29, 2000, January 30, 1999 and January 31, 1998, to income before income taxes and extraordinary items. The reasons for this difference and their tax effects are as follows:

	52 Weeks Ended		52 Weeks Ended		52 Weeks Ended
	January 29, 2000		January 30, 1999		January 31, 1998
	(millions)
Expected tax	$	471	$	407	$	335
State and local income taxes, net of federal income tax benefit		63		60		43
Permanent difference arising from amortization of intangible assets		14		9		9
Other		3		2		(4	)
	$	551	$	478	$	383

F-16

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – Continued

      The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are as follows:

			January 29,			January 30,
			2000			1999
			(millions)
Deferred tax assets:
	Operating loss carryforwards		$	76		$	115
	Accrued liabilities accounted for on a cash basis for tax purposes			187			172
	Allowance for doubtful accounts			178			30
	Postretirement benefits other than pensions			155			165
	Capitalized lease debt			27			29
	Other			104			149
		Total gross deferred tax assets		727			660
Deferred tax liabilities:
	Excess of book basis over tax basis of property and equipment			(1,408	)		(1,355	)
	Deductible intangibles			(210	)		–
	Merchandise inventories			(112	)		(125	)
	Prepaid pension expense			(71	)		(64	)
	Other			(198	)		(96	)
		Total gross deferred tax liabilities		(1,999	)		(1,640	)
		Net deferred tax liability	$	(1,272	)	$	(980	)

      As of January 29, 2000, the Company had net operating loss carryforwards of approximately $216 million which are available through 2009.

11.  Retirement Plans

      The Company has defined benefit plans (“Pension Plans”) and defined contribution plans (“Savings Plans”) which cover substantially all employees who work 1,000 hours or more in a year. In addition, the Company has defined benefit supplementary retirement plans which include benefits, for certain employees, in excess of qualified plan limitations. For the 52 weeks ended January 29, 2000, January 30, 1999 and January 31, 1998, net retirement expense for these plans totaled $53 million, $30 million and $35 million, respectively.

      Measurement of plan assets and obligations for the Pension Plans and the defined benefit supplementary retirement plans are calculated as of December 31 of each year. The discount rates used to determine the actuarial present value of projected benefit obligations under such plans were 7.75% as of December 31, 1999 and 6.75% as of December 31, 1998. The assumed weighted average rate of increase in future compensation levels under such plans was 5.0% as of December 31, 1999 and December 31, 1998. The long-term rate of return on assets (Pension Plans only) was 9.75% as of December 31, 1999 and December 31, 1998.

F-17

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – Continued

Pension Plans

      The following provides a reconciliation of benefit obligations, plan assets and funded status of the Pension Plans as of December 31, 1999 and 1998:

		1999			1998
		(millions)
Change in projected benefit obligation
	Projected benefit obligation, beginning of year	$	1,460		$	1,403
	Service cost		38			29
	Interest cost		95			97
	Acquisition		52			–
	Actuarial (gain) loss		(164	)		58
	Benefits paid		(136	)		(127	)
	Projected benefit obligation, end of year	$	1,345		$	1,460
Changes in plan assets (primarily stocks, bonds and U.S. government securities)
	Fair value of plan assets, beginning of year	$	1,664		$	1,590
	Actual return on plan assets		288			201
	Acquisition		47			–
	Benefits paid		(136	)		(127	)
	Fair value of plan assets, end of year	$	1,863		$	1,664
	Funded status	$	518		$	204
	Unrecognized net gain		(337	)		(28	)
	Unrecognized prior service cost		2			3
	Prepaid benefit cost	$	183		$	179
Amounts recognized in the statement of financial position
	Prepaid pension expense	$	192		$	179
	Accrued benefit cost		(9	)		–
Net amount recognized		$	183		$	179

      Net pension costs for the Company’s Pension Plans included the following actuarially determined components:

		52 Weeks Ended			52 Weeks Ended			52 Weeks Ended
		January 29, 2000			January 30, 1999			January 31, 1998
		(millions)
Service cost		$	38		$	29		$	30
Interest cost			95			97			99
Expected return on assets			(146	)		(137	)		(132	)
Amortization of prior service cost			1			1			–
Cost of special termination benefits			3			–			9
	Net pension expense (credit)	$	(9	)	$	(10	)	$	6

F-18

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – Continued

      In connection with programs to modify certain health care benefits for future retirees at one division, the Company incurred $3 million during the 52 weeks ended January 29, 2000 and $9 million during the 52 weeks ended January 31, 1998 of special termination benefits to eligible employees who elected to retire within a specified time period.

      As permitted under SFAS No. 87, “Employers’ Accounting for Pensions,” the amortization of any prior service cost is determined using a straight-line amortization of the cost over the average remaining service period of employees expected to receive benefits under the Pension Plans.

      The Company’s policy is to fund the Pension Plans at or above the minimum required by law. For the 1999 plan year, a $1 million funding contribution is required by September 15, 2000. For the 1998 plan year, no funding contribution was required or made. Plan assets are held by independent trustees.

Supplementary Retirement Plans

      The following provides a reconciliation of benefit obligations, plan assets and funded status of the supplementary retirement plans as of December 31, 1999 and 1998:

		1999			1998
		(millions)
Change in projected benefit obligation
	Projected benefit obligation, beginning of year	$	132		$	94
	Service cost		4			4
	Interest cost		9			8
	Acquisition		1			–
	Actuarial (gain) loss		(22	)		36
	Benefits paid		(7	)		(10	)
	Projected benefit obligation, end of year	$	117		$	132
Change in plan assets
	Fair value of plan assets, beginning of year	$	–		$	–
	Company contributions		7			10
	Benefits paid		(7	)		(10	)
	Fair value of plan assets, end of year	$	–		$	–
	Funded status	$	(117	)	$	(132	)
	Unrecognized net loss		24			49
	Unrecognized prior service cost		4			6
	Accrued benefit cost	$	(89	)	$	(77	)
Amounts recognized in the statement of financial position
	Accrued benefit cost		(91	)		(99	)
	Intangible asset		2			5
	Accumulated other comprehensive income		–			17
Net amount recognized		$	(89	)	$	(77	)

F-19

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – Continued

      The accumulated benefit obligation for the supplementary retirement plans was $91 million and $99 million as of December 31, 1999 and December 31, 1998, respectively.

      Net pension costs for the supplementary retirement plans included the following actuarially determined components:

		52 Weeks Ended		52 Weeks Ended		52 Weeks Ended
		January 29, 2000		January 30, 1999		January 31, 1998
		(millions)
Service cost		$	4	$	4	$	2
Interest cost			9		8		5
Amortization of prior service cost			1		1		2
Recognition of net actuarial loss			4		3		–
	Net pension expense	$	18	$	16	$	9

      As permitted under SFAS No. 87, “Employers’ Accounting for Pensions,” the amortization of any prior service cost is determined using a straight-line amortization of the cost over the average remaining service period of employees expected to receive benefits under the plans.

Savings Plans

      Certain savings plans include voluntary savings features which are eligible for employer matching contributions and others are subject to discretionary profit sharing contributions. Expense for the Savings Plans amounted to $44 million for the 52 weeks ended January 29, 2000, $24 million for the 52 weeks ended January 30, 1999 and $20 million for the 52 weeks ended January 31, 1998.

Deferred Compensation Plan

      The Company has a deferred compensation plan wherein eligible executives may elect to defer a portion of their compensation each year as either stock credits or cash credits. The Company transfers shares to a trust to cover the number it estimates will be needed for distribution on account of stock credits currently outstanding. At January 29, 2000, January 30, 1999 and January 31, 1998, the liability under the plan, which is reflected in other liabilities, was $26 million, $21 million, and $17 million, respectively. Expense for the 52 weeks ended January 29, 2000, 52 weeks ended January 30, 1999, and 52 weeks ended January 31, 1998, was immaterial.

12.  Postretirement Health Care and Life Insurance Benefits

      In addition to pension and other supplemental benefits, certain retired employees currently are provided with specified health care and life insurance benefits. Eligibility requirements for such benefits vary by division and subsidiary, but generally state that benefits are available to eligible employees who retire after a certain age with specified years of service. Certain employees are subject to having such benefits modified or terminated.

F-20

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – Continued

      The following provides a reconciliation of benefit obligations, plan assets and funded status of the postretirement obligations as of December 31, 1999 and 1998:

		1999			1998
		(millions)
Change in accumulated postretirement benefit obligation
	Accumulated postretirement benefit obligation, beginning of year	$	332		$	325
	Service cost		1			2
	Interest cost		20			22
	Plan amendments		(24	)		(2	)
	Actuarial (gain) loss		(33	)		12
	Benefits paid		(26	)		(27	)
	Accumulated postretirement benefit obligation, end of year	$	270		$	332
Change in plan assets
	Fair value of plan assets, beginning of year	$	–		$	–
	Company contributions		26			27
	Benefits paid		(26	)		(27	)
	Fair value of plan assets, end of year	$	–		$	–
	Funded status	$	(270	)	$	(332	)
	Unrecognized net gain		(76	)		(50	)
	Unrecognized prior service cost		(42	)		(30	)
	Accrued benefit cost	$	(388	)	$	(412	)

      Net postretirement benefit expense included the following actuarially determined components:

		52 Weeks Ended			52 Weeks Ended			52 Weeks Ended
		January 29, 2000			January 30, 1999			January 31, 1998
		(millions)
Service cost		$	1		$	2		$	2
Interest cost			20			23			23
Amortization of prior service cost			(7	)		(5	)		(4	)
Recognition of net actuarial gain			(8	)		(9	)		(11	)
Reduction for special termination benefits			(4	)		–			(3	)
	Net postretirement benefit expense	$	2		$	11		$	7

      The discount rate used in determining the actuarial present value of unfunded postretirement benefit obligations was 7.75% as of December 31, 1999 and 6.75% as of December 31, 1998.

      The future medical benefits provided by the Company for certain employees are based on a fixed amount per year of service, and the accumulated postretirement benefit obligation is not affected by increases in health care costs. However, the future medical benefits provided by the Company for certain other employees

F-21

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – Continued

are affected by increases in health care costs. For purposes of determining the present values of unfunded postretirement benefit obligations, the annual growth rate in the per capita cost of various components of such medical benefit obligations was assumed to range from 6.5% to 9.0% in the first year, and to decrease gradually for each such component to range from 4.5% to 5.5% by 2003 and to remain at those levels thereafter. The foregoing growth-rate assumption has a significant effect on such determination. To illustrate, increasing such assumed growth rates by one percentage point would increase the present value of unfunded postretirement benefit obligation as of December 31, 1999 by $9 million and the net periodic postretirement benefit expense for 1999 by $1 million. Alternatively, decreasing such assumed growth rates by one percentage point would decrease the present value of unfunded postretirement benefit obligations as of December 31, 1999 by $9 million and the net periodic postretirement benefit expense for 1999 by $1 million.

      As permitted under SFAS No. 106, “Employers’ Accounting for Postretirement Benefits Other Than Pensions,” the amortization of any prior service cost is determined using a straight-line amortization of the cost over the average remaining service period of employees expected to receive benefits under the plan.

13.  Equity Plan

      The Company has adopted an equity plan intended to provide an equity interest in the Company to key management personnel and thereby provide additional incentives for such persons to devote themselves to the maximum extent practicable to the businesses of the Company and its subsidiaries. The equity plan is administered by the Compensation Committee of the Board of Directors (the “Compensation Committee”). The Compensation Committee is authorized to grant options, stock appreciation rights and restricted stock to officers and key employees of the Company and its subsidiaries. The equity plan also provides for the award of options to non-employee directors.

      Stock option transactions are as follows:

	52 Weeks Ended					52 Weeks Ended					52 Weeks Ended
	January 29, 2000					January 30, 1999					January 31, 1998
				Weighted					Weighted					Weighted
				Average					Average					Average
				Option					Option					Option
	Shares			Price		Shares			Price		Shares			Price
	(shares in thousands)
Outstanding, beginning of year		13,660.8		$	36.72		10,825.3		$	28.78		9,140.2		$	24.65
Granted		5,775.0			41.13		4,592.2			52.49		4,133.7			34.49
Canceled		(658.8	)		40.33		(677.5	)		35.54		(630.0	)		29.51
Exercised		(1,469.9	)		26.10		(1,079.2	)		24.96		(1,818.6	)		20.80
Outstanding, end of year		17,307.1		$	38.95		13,660.8		$	36.72		10,825.3		$	28.78
Exercisable, end of year		5,800.3		$	31.33		4,590.8		$	25.34		3,315.0		$	22.56
Weighted average fair value of options granted during the year				$	17.54				$	20.67				$	14.26

F-22

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – Continued

      The following summarizes information about stock options which remain outstanding as of January 29, 2000:

		Options Outstanding						Options Exercisable
				Weighted		Weighted				Weighted
				Average		Average				Average
Range of		Number		Remaining		Exercisable		Number		Exercise
Exercise Price		Outstanding		Contractual Life		Price		Exercisable		Price
		(thousands)						(thousands)
$	11.63–25.00		2,505.6		4.4 years	$	21.01		2,498.4	$	21.01
	25.01–40.00		7,747.2		7.7 years		35.42		2,380.8		33.88
	40.01–79.44		7,054.3		8.7 years		49.21		921.1		52.69

      As of January 29, 2000, 8.9 million shares of Common Stock were available for additional grants pursuant to the Company’s equity plan, of which 462,300 shares were available for grant in the form of restricted stock. During the 52 weeks ended January 29, 2000, 212,600 shares of Common Stock were granted in the form of restricted stock at market values ranging from $39.25 to $46.75 vesting ratably over a four-year period. No shares of Common Stock were granted in the form of restricted stock during the 52 weeks ended January 30, 1999. During the 52 weeks ended January 31, 1998, 30,000 shares of Common Stock were granted in the form of restricted stock at a market value of $34.38 vesting ratably over a three-year period. Compensation expense is recorded for all restricted stock grants based on the amortization of the fair market value at the time of grant of the restricted stock over the period the restrictions lapse. There have been no grants of stock appreciation rights under the equity plan.

      The Company applies APB Opinion No. 25 and related Interpretations in accounting for compensation cost under its equity plan. Had compensation cost for the Company’s equity plan been determined consistent with SFAS No. 123, “Accounting for Stock-Based Compensation,” for options granted subsequent to January 28, 1995, the Company’s net income and earnings per share would have been reduced to the pro forma amounts indicated below:

		52 Weeks Ended		52 Weeks Ended		52 Weeks Ended
		January 29, 2000		January 30, 1999		January 31, 1998
		(millions, except per share data)
Net income	As Reported	$	795	$	662	$	536
	Pro forma		758		637		521
Basic earnings per share	As Reported		3.78		3.16		2.56
	Pro forma		3.60		3.04		2.49
Diluted earnings per share	As Reported		3.62		2.96		2.41
	Pro forma		3.45		2.85		2.34

F-23

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – Continued

      The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions used:

	52 Weeks Ended		52 Weeks Ended		52 Weeks Ended
	January 29, 2000		January 30, 1999		January 31, 1998
Dividend yield		–		–		–
Expected volatility		32.5%		30.6%		29.7%
Risk-free interest rate		5.4%		5.7%		6.8%
Expected life		6 years		6 years		6 years

14.  Shareholders’ Equity

      The authorized shares of the Company consist of 125.0 million shares of preferred stock (“Preferred Stock”), par value of $.01 per share, with no shares issued, and 500.0 million shares of Common Stock, par value of $.01 per share, with 252.9 million shares of Common Stock issued and 213.5 million shares of Common Stock outstanding at January 29, 2000 and 242.2 million shares of Common Stock issued and 208.5 million shares of Common Stock outstanding at January 30, 1999 (with shares held in the Company’s treasury or by subsidiaries of the Company being treated as issued, but not outstanding).

      The Company purchased 5.6 million shares of its Common Stock in 1999 at an approximate cost of $267 million and 12.8 million shares of its Common Stock in 1998 at an approximate cost of $591 million, under a stock repurchase program. On January 27, 2000, the Board of Directors approved a new stock repurchase program which authorizes the Company to purchase up to $500 million of its Common Stock. The Company may from time to time commence, continue or suspend repurchases of shares under the repurchase program, depending on prevailing market conditions, alternate uses of capital and other factors.

      In 1999, the Company issued 9.0 million shares of its Common Stock upon the exercise of the Company’s Series C Warrants.

Common Stock

      The holders of the Common Stock are entitled to one vote for each share held of record on all matters submitted to a vote of shareholders. Subject to preferential rights that may be applicable to any Preferred Stock, holders of Common Stock are entitled to receive ratably such dividends as may be declared by the Board of Directors out of funds legally available therefor. However, it is not presently anticipated that dividends will be paid on Common Stock in the foreseeable future.

Preferred Share Purchase Rights

      Each share of Common Stock is accompanied by one right (a “Right”) issued pursuant to the Share Purchase Rights Agreement between the Company and The Bank of New York, as Rights Agent. Each Right entitles the registered holder thereof to purchase from the Company one one-hundredth of a share of Series A Junior Participating Preferred Stock, par value $.01 per share (the “Series A Preferred Shares”), of the Company at a price (the “Purchase Price”) of $62.50 per one one-hundredth of a Series A Preferred Share (subject to adjustment).

F-24

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – Continued

      In general, the Rights will not become exercisable or transferable apart from the shares of Common Stock with which they were issued unless a person or group of affiliated or associated persons becomes the beneficial owner of, or commences a tender offer that would result in beneficial ownership of, 20% or more of the outstanding shares of Common Stock (any such person or group of persons being referred to as an “Acquiring Person”). Thereafter, under certain circumstances, each Right (other than any Rights that are or were beneficially owned by an Acquiring Person, which Rights will be void) could become exercisable to purchase at the Purchase Price a number of shares of Common Stock having a market value equal to two times the Purchase Price. The Rights will expire on December 19, 2004 unless earlier redeemed by the Company at a redemption price of $.03 per Right (subject to adjustment).

Future Stock Issuances

      The Company is authorized to issue 9.0 million shares of Common Stock (subject to adjustment) upon the exercise of the Company’s Series D Warrants. The Series D Warrants have an exercise price of $29.92 and expire on December 19, 2001.

      In February 2000, the Company issued 1.0 million shares of Common Stock and received $35 million in proceeds from the exercise of the Company’s Series B Warrants, which expired on February 15, 2000.

Treasury Stock

      Treasury stock contains shares repurchased under the stock repurchase program, shares issued to wholly owned subsidiaries of the Company in connection with an acquisition, shares maintained in a trust related to the deferred compensation plans and shares repurchased to cover employee tax liabilities related to other stock plan activity.

      Changes in the number of shares held in the treasury are as follows:

		52 Weeks Ended			52 Weeks Ended			52 Weeks Ended
		January 29, 2000			January 30, 1999			January 31, 1998
		(thousands)
Balance, beginning of year			3,819.4			159.3			84.8
Additions:
	Repurchase program		5,631.7			12,810.1			–
	Restricted stock		5.8			51.6			70.0
	Deferred compensation plans		4.1			4.1			4.5
Distributions:
	Stock plans		(21.1	)		–			–
	Issued in conversion of subordinated notes		–			(9,205.7	)		–
Balance, end of year			9,439.9			3,819.4			159.3

      Additions to treasury stock for restricted stock and the deferred compensation plans represent shares accepted in lieu of cash to cover employee tax liability upon lapse of restrictions for restricted stock and upon distribution of Common Stock under the deferred compensation plans.

F-25

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – Continued

      Under the deferred compensation plans, shares are maintained in a trust to cover the number estimated to be needed for distribution on account of stock credits currently outstanding. Changes in the number of shares held in the trust are as follows:

	52 Weeks Ended			52 Weeks Ended			52 Weeks Ended
	January 29, 2000			January 30, 1999			January 31, 1998
	(thousands)
Balance, beginning of year		434.5			378.7			283.5
Additions		63.6			80.0			123.7
Distributions		(14.3	)		(24.2	)		(28.5	)
Balance, end of year		483.8			434.5			378.7

15.  Financial Instruments and Concentrations of Credit Risk

      The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value:

  Cash and short-term investments

      The carrying amount approximates fair value because of the short maturity of these instruments.

  Accounts receivable

      The carrying amount approximates fair value because of the short average maturity of the instruments, and because the carrying amount reflects a reasonable estimate of losses from doubtful accounts.

  Long-term debt

      The fair values of the Company’s long-term debt, excluding capitalized leases, are estimated based on the quoted market prices for publicly traded debt or by using discounted cash flow analysis, based on the Company’s current incremental borrowing rates for similar types of borrowing arrangements.

  Interest rate cap agreements

      The fair values of the interest rate cap agreements are estimated based on current settlement prices of comparable contracts obtained from dealer quotes.

  Interest rate swap agreements

      The fair values of the interest rate swap agreements are obtained from dealer quotes. The values represent the estimated amount the Company would pay or receive to terminate the agreements at the reporting date, taking into account current interest rates and the current creditworthiness of the swap counterparties.

F-26

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – Continued

      The estimated fair values of certain financial instruments of the Company are as follows:

	January 29, 2000							January 30, 1999
	Notional		Carrying		Fair			Notional		Carrying		Fair
	Amount		Amount		Value			Amount		Amount		Value
	(millions)
Long-term debt	$	4,534	$	4,534	$	4,361		$	2,997	$	2,996	$	3,207
Interest rate cap agreements		1,201		–		–			789		–		–
Interest rate swap agreements		777		6		(16	)		–		–		–

      The interest rate cap agreements are used, in effect, to hedge interest rate risk related to a portion of the variable rate indebtedness under the Company’s Receivables Backed Financings. These interest rate cap agreements are recorded at cost and are amortized on a straight-line basis over the life of the cap.

      The interest rate swap agreements are used, in effect, to hedge interest rate risk related to a portion of the debt outstanding under the Company’s Receivables Backed Financings. The notional amount of the interest rate swap agreements amortize down to zero in tandem with a portion of the debt outstanding under the Company’s Receivables Backed Financings.

      Commitments to extend credit under revolving agreements relate primarily to the aggregate unused credit limits and unused lines of credit extended to customers under the Company’s credit plans. These commitments generally can be terminated at the option of the Company. It is unlikely that the total commitment amount will represent future cash requirements. The Company evaluates each customer’s creditworthiness on a case-by-case basis.

      Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of temporary cash investments and trade receivables. The Company places its temporary cash investments in what it believes to be high credit quality financial instruments. Credit risk with respect to trade receivables is concentrated in the geographic regions in which the Company operates stores. Such concentrations, however, are considered to be limited because of the Company’s large number of customers and their dispersion across many regions.

16.  Segment Data

      The Company conducts its business through two segments, department stores and direct-to-customer. The department store segment sells a wide range of merchandise, including men’s, women’s and children’s apparel and accessories, cosmetics, home furnishings and other consumer goods. The direct-to-customer segment (Fingerhut, Bloomingdale’s By Mail, Macy’s By Mail, macys.com and certain other direct marketing activities) 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, investments, income taxes, retirement benefits and properties held for sale or disposition).

F-27

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – Continued

      The financial information for each segment is reported on the basis used internally by the Company to evaluate performance and allocate resources. Prior year operating segment results have not been restated to conform to the current presentation as it is not practicable to do so.

		52 Weeks Ended			52 Weeks Ended			52 Weeks Ended
		January 29, 2000			January 30, 1999			January 31, 1998
		(millions)
Net sales
	Department Stores	$	15,850		$	15,365		$	15,220
	Direct-to-Customer		1,866			–			–
		$	17,716		$	15,365		$	15,220
Operating income
	Department Stores	$	1,871		$	1,589		$	1,473
	Direct-to-Customer		51			–			–
	Total segment operating income		1,922			1,589			1,473
	Corporate and other		(221	)		(134	)		(132	)
		$	1,701		$	1,455		$	1,341
Depreciation and amortization expense
	Department Stores	$	619		$	592		$	559
	Direct-to-Customer		33			–			–
	Corporate and other		86			32			31
		$	738		$	624		$	590
Capital expenditures (purchase of property
and equipment)
	Department Stores	$	738		$	691		$	691
	Direct-to-Customer		29			–			–
	Corporate and other		3			4			5
		$	770		$	695		$	696

	January 29,		January 30,
	2000		1999
	(millions)
Total assets
Department Stores	$	12,553	$	12,221
Direct-to-Customer		2,736		–
Corporate and other		2,403		1,243
	$	17,692	$	13,464

F-28

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – Continued

17.  Earnings Per Share

      The reconciliation of basic earnings per share to diluted earnings per share based on income before extraordinary items is as follows:

			52 Weeks Ended						52 Weeks Ended						52 Weeks Ended
			January 29, 2000						January 30, 1999						January 31, 1998
			Shares				Income		Shares				Income		Shares				Income
			(millions, except per share data)
Income before extraordinary items and average number of shares outstanding				210.0			$	795		209.1			$	685		209.2			$	575
Shares to be issued under deferred compensation plans				.4						.4						.3
				210.4			$	795		209.5			$	685		209.5			$	575
		Basic earnings per share			$	3.78					$	3.27					$	2.74
Effect of dilutive securities:
	Warrants			6.9						7.4						5.4
	Stock options			2.3						2.2						2.0
	Convertible notes									6.8				7		10.2				10
				219.6			$	795		225.9			$	692		227.1			$	585
		Diluted earnings per share			$	3.62					$	3.06					$	2.58

      In addition to the warrants and stock options reflected in the foregoing table, warrants and stock options to purchase 4.7 million, 4.7 million and 0.2 million shares of common stock at prices ranging from $41.50 to $79.44 per share were outstanding at January 29, 2000, January 30, 1999 and January 31, 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.

F-29

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – Continued

18.  Quarterly Results (unaudited)

      Unaudited quarterly results for the 52 weeks ended January 29, 2000 and January 30, 1999, were as follows:

			First		Second		Third		Fourth
			Quarter		Quarter		Quarter		Quarter
			(millions, except per share data)
52 Weeks Ended January 29, 2000:
	Net sales		$	3,600	$	4,006	$	4,137	$	5,973
	Operating income			225		318		302		856
	Net income			87		137		123		448
	Basic earnings per share			.42		.65		.59		2.11
	Diluted earnings per share			.40		.61		.56		2.04
52 Weeks Ended January 30, 1999:
	Net sales		$	3,357	$	3,426	$	3,548	$	5,034
	Operating income			181		267		257		750
	Income before extraordinary item			60		107		110		408
	Net income			60		107		87		408
	Basic earnings per share:
		Income before extraordinary item		.29		.51		.53		1.95
		Net income		.29		.51		.42		1.95
	Diluted earnings per share:
		Income before extraordinary item		.27		.47		.50		1.88
		Net income		.27		.47		.40		1.88

F-30 EX-10.46 2 EXHIBIT 10.46 1 Exhibit 10.46 FEDERATED DEPARTMENT STORES, INC. 1992 INCENTIVE BONUS PLAN (AS AMENDED AND RESTATED AS OF DECEMBER 10, 1999) Federated Department Stores, Inc., a Delaware corporation (the "Company"), hereby amends and restates this 1992 Incentive Bonus Plan (this "Bonus Plan") effective, subject to the provisions of Section 14, as of December 10, 1999. 1. PURPOSE. The purpose of this Bonus Plan is to promote the attainment of the Company's performance goals by providing incentive compensation for certain designated key executives and employees of the Company and its Subsidiaries. 2. DEFINITIONS. As used in this Bonus Plan, the following terms have the following meanings when used herein with initial capital letters: (a) "Annual Incentive Award" means the incentive bonus earned by a Participant pursuant to Section 5. (b) "Board" means the Board of Directors of the Company or, pursuant to any delegation by the Board to the Compensation Committee pursuant to Section 12, the Compensation Committee. (c) "Chief Executive Officer" means the Chief Executive Officer of the Company. (d) "Chief Operating Officer" means the Chief Operating Officer of the Company. (e) "Chief Merchandising Officer" means the Chief Merchandising Officer of the Company. (f) "Code" means the Internal Revenue Code of 1986, as amended from time to time. (g) "Compensation Committee" means a committee appointed by the Board in accordance with the By-Laws of the Company consisting of at least three Non-Employee Directors. (h) "Covered Employee" means a Participant who is, or is determined by the Board to be likely to become, a "covered employee" within the meaning of Section 162(m) of the Code (or any successor provision). (i) "Long-Term Incentive Award" means the incentive bonus, if any, earned by a Participant pursuant to Section 6. (j) "Non-Employee Director" means a Director of the Company who is not a full-time employee of the Company or any Subsidiary. (k) "Operating Unit" means the Company as a whole and each other individual subsidiary, division, store, or other business unit of the Company in which individuals employed thereby or therein have been approved to participate in this Bonus Plan by the Board. (l) "Participant" means a person who is designated by the Chief Executive Officer, the Chief Operating Officer, or the Chief Merchandising Officer, with the approval of the Board, to receive benefits under this Bonus Plan and who is at the time an officer, executive, or other employee of the Company or any one or more of its Subsidiaries, or who has agreed to commence serving in any of such capacities. 2 (m) "Performance Goal" means the target level of performance for each Performance Period for the Company as a whole and for each Operating Unit of the Company and, where applicable, for an individual Participant, in each case as established by the Board pursuant to Section 4. The Performance Goals applicable to any Annual Incentive Award or Long-Term Incentive Award made to a Covered Employee will be based solely upon one or more of the following measures of performance: (1) total sales; (2) comparable store sales; (3) gross margin; (4) operating or other expenses; (5) earnings before interest and taxes ("EBIT"); (6) earnings before interest, taxes, depreciation and amortization; (7) net income; (8) earnings per share; (9) cash flow; (10) return on investment (determined with reference to one or more categories of income or cash flow and one or more categories of assets, capital or equity); and (11) stock price appreciation. Such Performance Goals may be expressed with respect to the Company or one or more other Operating Units and may be expressed in terms of absolute levels or percentages or ratios expressing relationships between two or more of the foregoing measures of performance (e.g., EBIT as a percentage of total sales), period-to-period changes, relative to business plans or budgets, or relative to one or more other companies or one or more indices. The two immediately preceding sentences are intended to comply with the exception from Section 162(m) of the Code for qualified performance-based compensation, and will be construed, applied, and administered accordingly. (n) "Performance Period" means, in the case of determining Annual Incentive Awards pursuant to Section 5, one fiscal year of the Company, and in the case of determining Long-Term Incentive Awards pursuant to Section 6, a period determined by the Board not longer than five consecutive fiscal years of the Company. The initial Performance Period under this Bonus Plan in either case will commence on February 2, 1992 and terminate, in the case of Annual Incentive Awards and Long-Term Incentive Awards, on such date or dates as the Board may determine. Any new Performance Period in each case would commence on the first day of each fiscal year of the Company. (o) "Retirement" means a Participant's voluntary termination of employment with the Company on or after attainment of age 65, or such other age as may from time to time be established as the normal retirement date under the Company's principal retirement benefit plan in which the Participant is a participant, and before being informed by the Company that his or her employment will be terminated. 2 3 (p) "Rule 16b-3" means Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended (or any successor rule substantially to the same effect), as in effect from time to time. (q) "Subsidiary" has the meaning specified in Rule 405 promulgated under the Securities Act of 1933, as amended (or under any successor rule substantially to the same effect). 3. ELIGIBILITY. (a) Except as otherwise provided in this Section 3, an employee of the Company or one of its Subsidiaries will become a Participant for a particular Performance Period (i) in respect of Annual Incentive Awards if such employee (x) is an executive of the Company (including without limitation a store principal, general merchandise manager, divisional merchandise manager, store manager, senior vice president, or other vice president or elected officer of the Company or another Operating Unit) on or as of the first day of the Performance Period, (y) is recommended for participation by the Chief Executive Officer, the Chief Operating Officer, or the Chief Merchandising Officer or any designee thereof, and (z) is approved as a Participant by the Board, and (ii) in respect of Long-Term Incentive Awards if such employee has overall responsibility for day-to-day and long-term achievement of results of the Company or is in a key broad-based strategy formulation and decision-making position of the Company or another Operating Unit selected by the Board to participate in this Bonus Plan, in each case as specifically determined by the Chief Executive Officer, the Chief Operating Officer, or the Chief Merchandising Officer and approved by the Board on or as of the first day of the Performance Period. (b) An executive employee who first becomes eligible to participate after the beginning of a particular Performance Period will become a Participant for such Performance Period only in accordance with this Section 3(b). The Chief Executive Officer, the Chief Operating Officer, or the Chief Merchandising Officer may, with the approval of the Board, allow participation for a portion of such Performance Period for such employee on such terms and conditions as the Chief Executive Officer, the Chief Operating Officer, or the Chief Merchandising Officer (with such approval) may determine. In the event that at any time during any Performance Period with respect to Annual Incentive Awards an executive employee is first hired by the Company or a Subsidiary, or is promoted by the Company or any such Subsidiary to a position in a different Operating Unit and as a result thereof becomes eligible to participate in this Bonus Plan, then, except as otherwise determined by the Board or as otherwise provided in Section 10, such employee will be entitled to be a Participant for purposes of Annual Incentive Awards, which will be prorated on the basis of the number of months of such employee's participation during such Performance Period to the aggregate number of months in such Performance Period. In the event that within the first thirty months of any Performance Period with respect to Long-Term Incentive Awards an executive employee is first hired by the Company or a Subsidiary, or is promoted by the Company or any such Subsidiary to a position in a different Operating Unit and as a result thereof becomes eligible to participate in this Bonus Plan, then, except as otherwise determined by the Board or as otherwise provided in Section 10, such employee will be entitled to be a Participant for purposes of Long-Term Incentive Awards, which will be prorated on the basis of the ratio of the number of months of such employee's participation during such Performance Period to the aggregate number of months in such Performance Period. (c) The Board may, in its discretion, allow an executive employee who is not otherwise eligible to participate in this Bonus Plan to be treated as a Participant for all or a portion of any Performance Period on such basis as the Board may determine. 4. PERFORMANCE GOALS. (a) The Board will approve for each Performance Period the applicable Performance Goals for the Company and each other Operating Unit, as well as for individual Participants in this Bonus Plan, where appropriate, based upon the consolidated business plan of the Company. Such Performance Goals will not be adjusted during a Performance Period, except that such Performance Goals may be so adjusted to prevent dilution or enlargement of any 3 4 Annual Incentive Award or Long-Term Incentive Award as a result of extraordinary events or circumstances as determined by the Board or to exclude the effects of extraordinary, unusual or nonrecurring events, changes in accounting principles, discontinued operations, acquisitions, divestitures and material restructuring charges; provided, however, in the case of a Covered Employee, that no such adjustment will be made if the effect of such adjustment would be to cause the related compensation to fail to qualify as "performance-based compensation" within the meaning of Section 162(m) of the Code. (b) Prior to the beginning of each Performance Period, the Chief Executive Officer, the Chief Operating Officer, or the Chief Merchandising Officer or any designee thereof will (i) notify each eligible employee who has been selected to participate in this Bonus Plan that he or she is a Participant under this Bonus Plan for such Performance Period and (ii) communicate in writing to each Participant the minimum, maximum, and target Performance Goals applicable to such Participant for the Company and each other Operating Unit for such Performance Period, and the corresponding minimum, maximum, and target levels of Annual Incentive Awards and Long-Term Incentive Awards for performance by the Participant with respect to such Performance Goals. 5. ANNUAL INCENTIVE AWARDS. (a) Subject to Section 4, unless changed by the Board, each eligible Participant may earn Annual Incentive Awards as hereinafter provided. Each Operating Unit's actual performance during a particular Performance Period will be measured against the Performance Goals established therefor by the Board in accordance with Section 4. In the event such Operating Unit's performance for the Performance Period (A) is below the minimum Performance Goal established therefor, no Annual Incentive Awards will be paid to Participants in respect thereof, (B) is equal to the minimum Performance Goal established therefor, the minimum level of Annual Incentive Awards will be paid to Participants in respect thereof, (C) is equal to the target Performance Goal established therefor, the target level of Annual Incentive Awards will be paid to Participants in respect thereof, (D) is equal to or greater than the maximum Performance Goal established therefor, the maximum level of Annual Incentive Awards will be paid to Participants in respect thereof, and (E) is between any two of the Performance Goal levels described in the immediately preceding clauses (B), (C), and (D), the level of Annual Incentive Awards to be paid to Participants in respect thereof will be a level interpolated by the Board between the corresponding levels of Annual Incentive Awards paid in respect of such Performance Goal levels. (b) Except in the case of a Covered Employee, the Annual Incentive Award determined pursuant to Section 5(a) may be modified by the Board to recognize a Participant's individual performance or in other circumstances deemed appropriate by the Board. (c) Notwithstanding any other provision of this Bonus Plan to the contrary, in no event will an Annual Incentive Award paid to any Participant for a fiscal year exceed $2.0 million. 6. LONG-TERM INCENTIVE AWARDS. (a) Unless changed by the Board, each eligible Participant may earn Long-Term Incentive Awards as hereinafter provided. Each Operating Unit's actual performance during a particular Performance Period will be measured against the Performance Goals established therefor by the Board in accordance with Section 4. In the event such Operating Unit's performance for such Performance Period (A) is below the minimum Performance Goal established therefor, no Long-Term Incentive Awards will be paid to Participants in respect thereof, (B) is equal to the minimum Performance Goal established therefor, the minimum level of Long-Term Incentive Awards will be paid to Participants in respect thereof, (C) is equal to the target Performance Goal established therefor, the target level of Long-Term Incentive Awards will be paid to Participants in respect thereof, (D) is equal to or greater than the maximum Performance Goal established therefor, the maximum level of Long-Term Incentive Awards will be paid to Participants in respect thereof, and (E) is between any two of the Performance Goal levels described in the immediately preceding clauses (B), (C), and (D), the level of Long-Term Incentive Awards to be paid to Participants in respect thereof will be a level interpolated by the Board 4 5 between the corresponding levels of Long-Term Incentive Awards paid in respect of such Performance Goal levels. (b) Except in the case of a Covered Employee, the Long-Term Incentive Award determined pursuant to Section 6(a) may be modified by the Board to recognize a Participant's individual performance or in other circumstances deemed appropriate by the Board. (c) Notwithstanding any other provision of this Bonus Plan to the contrary, in no event will a Long-Term Incentive Award paid to any Participant for a Performance Period exceed $3.0 million. 7. PAYMENT OF AWARDS. Annual Incentive Awards and Long-Term Incentive Awards will be paid to Participants in respect of any particular Performance Period (i) in cash and/or Company equity (including stock options, stock credits or equity equivalents), (ii) in a lump sum and/or in deferred payments or grants, and (iii) on the date(s) and other terms, including any premium in respect of any non-cash payments or deferred payments or grants, in each case as determined by the Board at the time that Performance Goals are established for a particular Performance Period. All Annual Incentive Awards and Long-Term Incentive Awards that are paid in cash will be paid in U.S. dollars. The Company may deduct from any payment such amounts as may be required to be withheld under any federal, state, or local tax laws. 8. TERMINATION OF EMPLOYMENT. If a Participant terminates employment with the Company and its Subsidiaries before the last day of a Performance Period due to death, disability, or Retirement with the consent of the Company, the Participant's Annual Incentive Awards and Long-Term Incentive Awards will be prorated on the basis of the ratio of the number of months of participation during the Performance Period to which the Annual Incentive Awards and Long-Term Incentive Awards relate to the aggregate number of months in such Performance Period. If a Participant's employment with the Company and its Subsidiaries is terminated by the Company or any such Subsidiary before the last day of a Performance Period for any reason other than for Cause (as hereinafter defined), the Participant's Annual Incentive Awards and Long-Term Incentive Awards will be prorated on the basis of the ratio of the number of months of participation during the Performance Period to which the Annual Incentive Awards and the Long-Term Incentive Awards relate to the aggregate number of months in such Performance Period, unless otherwise determined by the Board. Except as otherwise provided in this Section 8, if a Participant's employment with the Company and its Subsidiaries is terminated before the last day of a Performance Period for any reason, the Participant will not be entitled to any Annual Incentive Award or Long-Term Incentive Award for such Performance Period unless otherwise determined by the Board. For purposes of this Agreement, "Cause" means any act of dishonesty, fraud, or willful misconduct by a Participant in the performance of the Participant's duties as an employee of the Company, or any conviction of a Participant for any felony involving moral turpitude. 9. CHANGE IN CONTROL. In connection with any actual or potential change in control of the Company, whether as a result of any stock acquisition, merger, or other business combination transaction, or any restructuring or recapitalization of the Company, then the Board will take all such actions hereunder as it may determine to be necessary or appropriate to treat Participants equitably hereunder, including without limitation the modification or waiver of applicable Performance Goals, Performance Periods, Annual Incentive Awards, or Long-Term Incentive Awards, notwithstanding the terms of any initial award, and whether to establish or fund a trust or other arrangement intended to secure the payment of such awards. 10. TRANSFERS AND CHANGES IN RESPONSIBILITIES. (a) If a Participant's responsibilities materially change or the Participant is transferred during a Performance Period to another Operating Unit or to a position that is not designated or eligible to participate in this Bonus Plan, the Company may, as determined by the Board, either (i) continue the Participant's participation in this Bonus Plan and, except in the case of a Covered Employee, as of the date of such change or transfer, 5 6 establish new performance awards (as determined pursuant to Section 10(b)) in respect of Annual Incentive Awards and/or Long-Term Incentive Awards, as the case may be, for the Participant with respect to his or her new position, or (ii) terminate the Participant's participation in this Bonus Plan in respect of Annual Incentive Awards and/or Long-Term Incentive Awards, as the case may be, and, as of the date of such change or transfer, the Participant's Annual Incentive Awards and/or Long-Term Incentive Awards, as the case may be, would be prorated on the basis of the ratio of the number of months of the Participant's participation during the Performance Period to which such Annual Incentive Awards and/or Long-Term Incentive Awards, as the case may be, relate to the aggregate number of months in such Performance Period. (b) If in the event of such a change or transfer the Participant's participation in this Bonus Plan in respect of Annual Incentive Awards and/or Long-Term Incentive Awards, as the case may be, is not terminated pursuant to Section 10(a)(ii), then the Participant's Annual Incentive Awards and/or Long-Term Incentive Awards, as the case may be, will be prorated on the basis of the number of months of service by the Participant at each Operating Unit during the Performance Period. 11. SECURITY OF PAYMENT OF BENEFITS. Unless otherwise determined by the Board, all Annual Incentive Awards and Long-Term Incentive Awards will be paid from the Company's general assets, and nothing contained in this Bonus Plan will require the Company to set aside or hold in trust any funds for the benefit of any Participant, who will have the status of a general unsecured creditor of the Company. 12. ADMINISTRATION OF THE PLAN. (a) This Bonus Plan will be administered by the Board, which may from time to time delegate all or any part of its authority under this Bonus Plan to the Compensation Committee. (b) The Board will take such actions as are required to be taken by it hereunder, may take the actions permitted to be taken by it hereunder, and will have the authority from time to time to interpret this Bonus Plan and to adopt, amend, and rescind rules and regulations for implementing and administering this Bonus Plan. All such actions will be in the sole discretion of the Board and, when taken, will be final, conclusive, and binding. Without limiting the generality or effect of the foregoing, the interpretation and construction by the Board of any provision of this Bonus Plan or of any agreement, notification, or document evidencing the grant of benefits payable to Participants and any determination by the Board in its sole discretion pursuant to any provision of this Bonus Plan or any provision of such agreement, notification, or document will be final and conclusive. Without limiting the generality or effect of any provision of the Certificate of Incorporation of the Company, neither the Chief Executive Officer, the Chief Operating Officer, or the Chief Merchandising Officer nor any member of the Board will be liable for any action or determination made in good faith. (c) The provisions of Sections 5 and 6 will be interpreted as authorizing the Board, in taking any action under or pursuant to this Bonus Plan, to take any action it determines in its sole discretion to be appropriate, subject only to the express limitations therein contained, and no authorization in either such Section or any other provision of this Bonus Plan is intended or may be deemed to constitute a limitation on the authority of the Board. (d) The existence of this Bonus Plan or any right granted or other action taken pursuant hereto will not affect the authority of the Board or the Company to take any other action, including in respect of the grant or award of any annual or long-term bonus or other right or benefit, whether or not authorized by this Bonus Plan, subject only to limitations imposed by applicable law as from time to time applicable thereto. 13. MISCELLANEOUS. (a) This Bonus Plan will not confer upon any Participant any right with respect to continuance of employment or other service with the Company or any Subsidiary, 6 7 nor will it interfere in any way with any right the Company or any Subsidiary would otherwise have to terminate or modify the terms of such Participant's employment or other service at any time. (b) Except as otherwise provided in this Bonus Plan, no right or benefit under this Bonus Plan will be subject to anticipation, alienation, sale, assignment, pledge, encumbrance, or charge, and any attempt to anticipate, alienate, sell, assign, pledge, encumber, or charge such right or benefit will be void. No such right or benefit will in any manner be liable for or subject to the debts, liabilities, or torts of a Participant. (c) This Bonus Plan may be amended or terminated from time to time by the Board. In the event this Bonus Plan is terminated before the last day of a Performance Period, Annual Incentive Awards and Long-Term Incentive Awards payable for such Performance Period will be prorated on the basis of the ratio of the number of months in such Performance Period prior to such termination to the aggregate number of months in such Performance Period and will be paid only after the end of such Performance Period, which will be deemed to continue until the expiration thereof as if this Bonus Plan had not been terminated. (d) If any provision in this Bonus Plan is held to be invalid or unenforceable, no other provision of this Bonus Plan will be affected thereby. (e) This Bonus Plan will be governed by and construed in accordance with applicable United States federal law and, to the extent not preempted by such federal law, in accordance with the laws of the State of Delaware, without giving effect to the principles of conflict of laws thereof. 14. EFFECTIVENESS. The amendment and restatement of this Bonus Plan set forth herein will become effective as of December 10, 1999. 7 EX-10.50 3 EXHIBIT 10.50 1 Exhibit 10.50 EMPLOYMENT AGREEMENT Entered into as of August 27, 1999 between FEDERATED CORPORATE SERVICES, INC. and JAMES M. ZIMMERMAN 2 EMPLOYMENT AGREEMENT -------------------- THIS AGREEMENT, made in the City of Cincinnati and State of Ohio, as of the 27th day of August, 1999 (the "Agreement Effective Date"), between Federated Corporate Services, Inc., a Delaware corporation (hereinafter called the "Employer"), and James M. Zimmerman of Cincinnati, Ohio (hereinafter called the "Employee"). RECITALS -------- Employer and Employee are parties to an Employment Agreement dated as of March 10, 1997. Employer and Employee are desirous of entering into a new employment agreement with a term commencing on May 1, 1999. IT IS AGREED by and between the parties hereto as follows: ARTICLE I --------- EMPLOYMENT ---------- 1.1 TERM AND DUTIES. The Employer agrees to and does employ the Employee to perform the duties of Chairman of the Board ("Chairman") and Chief Executive Officer of Federated Department Stores, Inc. ("Federated") in accordance with the terms of this Agreement. The period (the "Term") of such employment shall begin on May 1, 1999 and shall end on the later of April 30, 2003 or such later date as agreed by the Employer and Employee. The duties of the Employee shall be those commensurate with the office of Chairman of the Board and Chief Executive Officer of Federated. In such capacity he shall have general charge of the business and affairs of Federated. Neither the Employee's title nor any of his functions shall be changed without his consent. While it is understood that the right to elect directors and officers of Federated is by law vested in the stockholders and directors of Federated, it is nevertheless mutually contemplated, subject to such rights, that the Employee shall, at all times 1 3 during his employment, be Chairman of the Board and Chief Executive Officer of Federated and shall be a member of the Board of Directors of Federated. 1.2 COMPENSATION. In consideration of Employee's services during the Term, the Employer agrees to (a) pay the Employee an annual salary in the amount of One Million Two Hundred Fifty Thousand Dollars ($1,250,000) ("Base Salary"), (b) permit the Employee to participate in Federated's annual and long-term bonus programs as set forth on Exhibit A and (c) grant the Employee stock options as set forth on Exhibit A. Nothing in this Agreement shall preclude or in any way affect the grant by the Employer or the receipt by the Employee of increases in such salary or any such bonuses or other forms of additional compensation, including additional equity or equity-based awards, any such salary and/or bonus increases and additional compensation, contingent or otherwise, to be determined solely in the discretion of the Board of Directors of the Employer or persons to whom such authority is delegated by such Board of Directors. The Employee's salary shall never be reduced during the Term without the Employee's consent. 1.3 PAYMENT SCHEDULE. The Base Salary specified in Section 1.2(a) hereof shall be payable as current salary, in installments not less frequently than monthly, and at the same rate for any fraction of a month unexpired at the end of the Term. 1.4 EXPENSES. During the Term the Employee shall be allowed reasonable traveling expenses and shall be furnished office space, assistance and accommodations suitable to the character of his position with Federated and adequate for the performance of his duties hereunder. 1.5 BENEFITS. The Employee and/or the Employee's family, as the case may be, shall be eligible for participation in and shall receive all benefits under savings and retirement programs, welfare benefit plans, fringe benefit programs and perquisites provided by the Employer and its affiliates (including, for example, without limitation, medical, prescription, dental, disability, salary continuance, executive life, group life, accidental death and travel accident insurance plans and programs, use of an automobile, financial counseling, and suitable 2 4 business and country club memberships), at least as favorable as the most favorable of such plans and programs provided to key executives of Federated in effect from time to time. 1.6 TERMINATION IN CASE OF DISABILITY. The Employee shall not be in breach of this Agreement if he shall fail to perform his duties hereunder because of physical or mental disability. If for a continuous period of 12 months during the Term the Employee fails to render services to the Employer because of the Employee's physical or mental disability, the Board or its delegate may end the Term prior to its stated termination date. If there should be any dispute between the parties as to the Employee's physical or mental disability at any time, such question shall be settled by the opinion of an impartial reputable physician agreed upon for the purpose by the parties or their representatives, or failing agreement within 10 days of a written request therefor by either party to the other, then one designated by the then president of the local Academy of Medicine. The written opinion of such physician as to the matter in dispute shall be final and binding on the parties. 1.7 TERMINATION OF SERVICES. If, prior to the end of the Term, (a) the Employer shall terminate the Employee's employment other than for Cause, or (b) the Executive shall terminate his employment for Good Reason, then the Employer shall immediately thereupon pay the Employee in a lump sum in cash (a) the full amount of salary that would be payable to the Employee under Section 1.2 and (b) the aggregate of the target level annual bonus for which the Employee is eligible under the Employer's 1992 Incentive Bonus Plan as set forth in Exhibit A for each year remaining in the Term following such termination. Employee shall be credited with vesting and benefit service through the remainder of the Term. 1.8 TERMINATION FOR CAUSE. The Employer may terminate the employment of the Employee and this Agreement and all of its obligations hereunder, except for obligations accrued but unpaid to the effective date of termination, for Cause upon notice given pursuant to this Section. As used in this Agreement, the term "Cause" shall mean (a) the willful breach of duty by the Employee in the course of his employment, (b) the Employee's habitual neglect of his duties, (c) a material willful breach by the Employee of his duties under this Agreement which 3 5 breach is not cured by the Employee within ten (10) days of receipt of written notice thereof from the Employer to the Employee, or (d) the Employee's final conviction of a felony, which conviction is nonappealable or for which the period of filing an appeal has expired. "Cause" shall not include (a) bad judgment or negligence of the Employee (other than his habitual neglect of duty), or (b) any act or omission believed by the Employee in good faith to have been in or not opposed to the interests of the Employer (without intent of gaining therefrom directly or indirectly a profit to which he was not legally entitled) and reasonably believed by the Employee not to have been improper or unlawful, or (c) any act or omission in respect of which a determination could properly have been made by the Board of Directors of Federated that the Employee met the applicable standard of conduct prescribed for indemnification or reimbursement under the bylaws of Federated or the laws of Delaware, in each case in effect at the time of such act or omission, or (d) an act or omission with respect to which notice of termination is given more than twelve months after the earliest date on which any non-employee director of Federated who was not a party to such act or omission knew or should have known of such act or omission. 1.9 The term "Good Reason" means: A. The assignment to the Employee of any duties materially inconsistent with the Employee's position (including status, offices, titles and reporting requirements), authority, duties or responsibilities as contemplated in Article I of this Agreement, or any other action by the Employer which results in a material diminution in such position, authority, duties or responsibilities, excluding for this purpose an action not taken in bad faith and which is remedied by the Employer within ten (10) days after receipt of written notice thereof given by the Employee, provided that repeated instances of such action shall be evidence of the bad faith of the Employer; B. any material failure by the Employer to comply with any of the provisions of this Agreement, other than a failure not occurring in bad faith and which is remedied by the Employer within ten (10) days after receipt of written notice thereof given by the Employee, provided that repeated failures shall be evidence of the bad faith of the Employer; 4 6 C. failure of the Employee to be elected or reelected Chairman and Chief Executive Officer of the Federated or to be elected or reelected to membership on the Federated's Board of Directors; or D. any purported termination by the Employer of the Employee's employment otherwise than as expressly permitted by this Agreement. 1.10 LOCATION OF EMPLOYMENT. Employer shall not require Employee to be based in any office or location other than within the Cincinnati, Ohio Standard Metropolitan Statistical Area without his agreement, except for travel reasonably required in the performance of the Employee's responsibilities. ARTICLE II OTHER PROVISIONS ---------------- 2.1 PERFORMANCE OF DUTIES. The Employee agrees that during the Term (a) he will faithfully and in conformity with the directions of the Board of Directors of Federated, perform the duties of his employment hereunder, and that he will devote to the performance of said duties all such time and attention as they shall reasonably require, taking, however, from time to time (as the Employer agrees that he may) reasonable vacations; and (b) he will not, without the express consent of the Board of Directors of Federated, or persons to whom such authority is delegated by such Board of Directors become actively associated with or engaged in any competing business (as hereinafter defined) while he is employed by Employer or within one (1) year of the first to occur of (i) the expiration of the Term or (ii) the termination of his employment by the Employer for Cause or by the Employee other than for Good Reason prior to or at the end of the Term, and he will do nothing inconsistent with his duties to the Employer. Notwithstanding the foregoing, the aforesaid one (1) year period shall be shortened to whatever shorter period, if any, is adopted at any time subsequent to the date hereof by the Compensation Committee of the Board of Directors of Federated as the standard period 5 7 during which such non-compete provisions in the Employer's standard employment agreements shall apply. In the event that (i) the Employee is advised at any time by the Employer in writing that his services will no longer be required during the Term or (ii) the employment of the Employee is terminated by the Employee for Good Reason, Employee shall be free to become actively engaged with another business regardless of whether it is a competing business. Employee agrees that he will not disclose to anyone outside of the Employer, or use in other than the Employer's business, confidential information relating to the Employer's business, in any way obtained by him while employed by the Employer, unless authorized by the Employer in writing. It is understood that violation of this provision would cause irreparable harm to the Employer and that Employer may seek to enjoin any such violation or to take any other applicable action. The Employee also agrees that he will not engage in any activity which would violate the Conflict of Interest or Business Ethics Statement signed from time to time by the Employee. As used in this Section 2.1 a "competing business" shall be any business which: A. at the time of determination, is substantially similar to the whole or a substantial part of the business at the end of the period of active employment, conducted by Employer, or any of its subsidiaries, or subsidiaries of subsidiaries, or affiliates, or divisions, or substantially similar to some substantial part of said business; and B. at the time of determination, is operating a store or stores which, during its or their fiscal year preceding the determination, in the aggregate had aggregate net sales, including sales in leased and licensed departments, in excess of $10,000,000, which store or stores is or are located in a city or within a radius of twenty-five (25) miles from the outer limits of a city where Employer, or any of its subsidiaries, or subsidiaries of subsidiaries, or affiliates, or divisions is operating a store or stores which, during its or their fiscal year preceding the determination, in the aggregate had aggregate nets sales, including sales in leased and licensed departments, in excess of $10,000,000; and 6 8 C. had aggregate net sales at all its locations, including sales in leased and licensed departments and sales by its divisions, subsidiaries and affiliates, during its fiscal year preceding that in which the Employee made such an investment therein, or first rendered personal services thereto, following his termination of service, in excess of $25,000,000. ARTICLE III MISCELLANEOUS ------------- 3.1 ASSIGNMENT. This Agreement shall not be assignable by the Employer without the written consent of the Employee. The Employee may not assign, pledge, or encumber his interest in this Agreement, or any part thereof, without the written consent of the Employer. 3.2 GOVERNING LAW. This Agreement has been executed on behalf of the Employer by an officer of the Employer located in the City of Cincinnati, Ohio. This Agreement and all questions arising in connection herewith shall be governed by the internal substantive laws of the State of Ohio. The Employer and the Employee each consent to the jurisdiction of, and agree that any controversy between them arising out of this Agreement shall be brought in, the United States District Court for the Southern District of Ohio, Western Division; the Court of Common Pleas for Hamilton County, Ohio; or such other court venued within Hamilton County, Ohio as may have subject matter jurisdiction over the controversy. 3.3 SEVERABILITY. If any portion of this Agreement is held to be invalid or unenforceable, such holding shall not affect any other portion of this Agreement. 3.4 ENTIRE AGREEMENT. This Agreement comprises the entire agreement between the parties hereto and as of the date hereof, supersedes, cancels and annuls any and all prior agreements between the parties hereto. This Agreement may not be modified, renewed or extended orally, but only by a written instrument referring to this Agreement and executed by the parties hereto. 7 9 3.5 GENDER AND NUMBER. Words in the masculine herein may be interpreted as feminine or neuter, and words in the singular as plural, and vice versa, where the sense requires. 3.6 NOTICES. Any notice or consent required or permitted to be given under this Agreement shall be in writing and shall be effective when given by personal delivery or five business days after being sent by certified US mail, return receipt requested, to the Secretary of Federated Department Stores, Inc. at its principal place of business in the City of Cincinnati or to the Employee at his last known address as shown on the records of the Employer. 3.7 WITHHOLDING TAXES. The Employer may withhold from any amounts payable under this Agreement all federal, state, city or other taxes as shall be required pursuant to any law or governmental regulation or ruling. 3.8 WAIVER AND RELEASE. In consideration of the Employer's entering into this Agreement, and the receipt of other good and valuable consideration, the sufficiency of which is expressly acknowledged, the Employee, for himself and his successors, assigns, heirs, executors and administrators, hereby waives and releases and forever discharges the Employer and its affiliates and their officers, directors, agents, employees, shareholders, successors and assigns from all claims, demands, damages, actions and causes of action whatsoever which he now has on account of any matter, whether known or unknown to him and whether or not previously disclosed to the Employee or the Employer, that relates to or arises out of (a) any existing or former employment agreement (written or oral) entered into between the Employee and the Employer or any of its affiliates (or any amendment or supplement to any such agreement), (b) any agreement providing for a payment or payments or extension of the employment relationship triggered by a merger or sale or other disposition of the stock or assets or restructuring of the Employer or any affiliate of the Employer, or (c) any applicable severance plan. 3.9 ENFORCEMENT OF AGREEMENT. If the Employee incurs legal or other fees and expenses in an effort to establish entitlement to benefits under this Agreement, regardless of whether the Employee ultimately prevails, the Employer shall reimburse him for such fees and 8 10 expenses, unless a court of competent jurisdiction determines that the Employee made such effort in bad faith. Reimbursement of fees and expenses described in the preceding paragraph shall be made monthly during the course of any action upon the written submission of a request for reimbursement together with proof that the fees and expenses were incurred 3.10 MISCELLANEOUS. Except as specifically provided herein, all accounts payable pursuant to this Agreement shall be paid without reduction regardless of any amounts of salary, compensation or other amounts which may be paid or payable to Employee from any source or which Employee could have obtained upon seeking other employment; provided that the Company shall be permitted to make all payments pursuant to this Agreement net of any legally required tax withholdings. Employee shall not be required to seek other employment, and there shall be no offset to amounts due hereunder as a result of any salary, compensation or other amounts Employee may be paid from other sources. IN WITNESS WHEREOF, the parties hereto have hereunto and to a duplicate hereof set their signatures as of August 27, 1999. FEDERATED CORPORATE SERVICES, INC. By: /s/ DENNIS J. BRODERICK --------------------------------- Dennis J. Broderick Title: President JAMES M. ZIMMERMAN /s/ JAMES M. ZIMMERMAN --------------------------------- 9 11 EXHIBIT A to EMPLOYMENT AGREEMENT Entered into as of August 27, 1999 between FEDERATED CORPORATE SERVICES, INC. And JAMES M. ZIMMERMAN (All capitalized terms used in this Exhibit are defined as set forth in Agreement) ANNUAL BONUS: In respect of fiscal 1999, the annual bonus payable (if any) under the terms of the 1992 Incentive Bonus Plan (as such may be amended from time to time) of Federated Department Stores, Inc. (Federated) will be based on performance goals established for the senior executives of the Employer on an annual basis by the Board of Directors of Federated or a Committee thereof, with the amount of bonus equal to a sliding percent of Employee's annual base salary in effect as of the last day of the performance period based on performance against the targeted annual goals, as follows: PERFORMANCE AGAINST TARGET PAYOUT AS PERCENT OF ANNUAL SALARY (a) CORPORATE EBIT $ Below 95% of Target 0.0% 95% of Target 24.0% Target 50.0% 110% of Target 90.0% (b) CORPORATE SALES $ Below Target 0.0% Target 10.0% 101% of Target 34.0% 1 12 PERFORMANCE AGAINST TARGET PAYOUT AS PERCENT OF ANNUAL SALARY (c) CORPORATE ROGI % Below Target 0.0% Target 10.0% 1.0 ppt. above Target 34.0% For each year during the Term beginning with and including fiscal 2000, the annual bonus payable (if any) under the terms of the 1992 Incentive Bonus Plan (as such may be amended from time to time) of Federated Department Stores, Inc. (Federated) will be based on performance goals established for the senior executives of the employer on an annual basis by the Board of Directors of Federated or a Committee thereof, with the amount of bonus equal to a sliding percent of Employee's annual base salary in effect as of the last day of the performance period based on performance against the targeted annual goals, as follows: PERFORMANCE AGAINST TARGET PAYOUT AS PERCENT OF ANNUAL SALARY (a) CORPORATE EBIT $ Below 95% of Target 0.0% 95% of Target 34.0% Target 70.0% 110% of Target 126.0% (b) CORPORATE SALES $ Below Target 0.0% Target 15.0% 101% of Target 51.0% (c) CORPORATE ROGI % Below Target 0.0% Target 15.0% 1.0 ppt. above Target 51.0% The percent of base salary payable as the annual bonus is the aggregate of the above designated payout based on performance achieved under each of the performance components described 2 13 in (a), (b) and (c), above, except that if Corporate EBIT $ falls below 95% of Target, no bonus is payable for any component of the annual bonus plan, and failure to achieve the annual EBIT percent to target reduces the bonus otherwise payable in respect only of the above corporate EBIT $ performance component per the approved applicable executive compensation plan description. Any annual bonus payable hereunder shall be paid in the fiscal year following the annual performance period in respect of which the bonus is payable in accordance with Federated's 1992 Incentive Bonus Plan (as such may be amended from time to time). By operation of Federated's Supplementary Executive Retirement Plan, annual bonuses paid to Employee under Federated's 1992 Incentive Bonus Plan are included as eligible compensation under Federated's Pension Plan. LONG TERM PLAN: For the 1997 - 1999 three year performance period, the bonus payable (if any) under the terms of Federated's 1992 Incentive Bonus Plan (as such may be amended from time to time) will be based on performance goals established for the senior executives of Federated in respect of each such three-year performance period by the Board of Directors of Federated or a Committee thereof, with the amount of bonus equal to a sliding percent of Employee's annual base salary (prorated on an annual basis for any change in Employee's base salary occurring at any time during any such three-year period and determined for any such year in the three-year period based on the annual base salary in effect as of the last day of the fiscal year) based on performance against the targeted three-year goals, as follows: PERFORMANCE AGAINST TARGET PAYOUT AS PERCENT OF ANNUAL SALARY (a) CORPORATE EBIT $ Below 95% of Target 0.0% 95 % of Target 14.0% Target 30.0% 110% of Target 42.0% 120% of Target 54.0% 3 14 (b) PERFORMANCE VS PEERS RANKING #1 Ranking 36% #2 Ranking 31% #3 Ranking 25% #4 Ranking 20% #5 Ranking 10% #6 Ranking 0% The percent of base salary payable as the long term bonus in respect of the 1997-1999 performance period is the aggregate of the above designated payout based on performance achieved in respect of the performance components described in (a) and (b), above, except that if the three year Corporate EBIT $ falls below 95% of Target, no bonus is payable for any component of the long-term bonus, and failure to achieve the EBIT percent to target in year three reduces the bonus otherwise payable in respect only of the above corporate EBIT $ performance component per the approved applicable executive compensation plan description. For each three year performance period beginning with and including the 1998 - 2000 performance period, the bonus payable (if any) under the terms of Federated's 1992 Incentive Bonus Plan (as such may be amended from time to time) will be based on performance goals established for the senior executives of Federated in respect of each such three-year performance period by the Board of Directors of Federated or a Committee thereof, with the amount of bonus equal to a sliding percent of Employee's annual base salary (prorated on an annual basis for any change in Employee's base salary occurring at any time during any such three-year period and determined for any such year in the three-year period based on the annual base salary in effect as of the last day of the fiscal year) based on performance against the targeted three-year goals, as follows: 4 15 PERFORMANCE AGAINST TARGET PAYOUT AS PERCENT OF ANNUAL SALARY (a) CORPORATE EBIT $ Below 95% of Target 0.0% 95% of Target 24.0% Target 34.0% 110% of Target 75.0% PERFORMANCE AGAINST TARGET PAYOUT AS PERCENT OF ANNUAL SALARY (b) CORPORATE AVG. ROGI % Below Target 0.0% Target 16.0% 1.0 ppt. above target 37.0% The percent of base salary payable as the long-term bonus in respect of each three year performance period beginning and including the 1998-2000 performance period is the aggregate of the above designated payout based on performance achieved in respect of the performance components described in (a) and (b) above, except that if the three year Corporate EBIT $ falls below 95% of Target, no bonus is payable for any component of the long-term bonus, and failure to achieve the EBIT percent to target in year three reduces the bonus otherwise payable in respect only of the above corporate EBIT $ performance component per the approved applicable executive compensation description. Illustratively, in respect of the fiscal 1997 - 1999 performance period, assuming achievement of the 1997 -1999 goal at the 50% target level (i.e., Corporate EBIT $ achieved at target and #4 ranking versus peers), the long-term incentive payout in 2000 in respect of such three-year period would be $625,000 (50% (30% payout re corporate EBIT $ + 20% payout re peer performance) x $1,250,000 (the base salary in effect at the end of 1997 fiscal year). Employee shall be entitled to a pro rata portion of a long-term bonus, if any is payable under the terms of Federated's 1992 Incentive Bonus Plan (as such may be amended from time to time), for any three-year performance period commencing on or after fiscal 1997 5 16 but which performance period has not ended as of the end of Term. The pro rata payment is based on the length of Employee's service of employment within such three-year performance period. Illustratively, if the performance period covers the 1999-2001 fiscal years and the employment terminates on the last day of the 2000 fiscal year, Employee would have been employed for sixty-seven percent (67%) of the performance period and would be eligible for sixty- seven percent (67%) of any long-term bonus payable as provided above if and when any bonus is paid in respect of that period under the terms of Federated's 1992 Incentive Plan (as may be amended) based upon the performance goals established for the senior executives of the Employer for that period by the Board of Directors of Federated or a Committee thereof. Any long-term bonus payable hereunder shall be paid in the fiscal year following the three-year performance period in respect of which the bonus is payable in accordance with Federated's 1992 Incentive Bonus Plan. Any long-term bonus payable for any three-year performance period beginning with and including the 1998 - 2000 performance period will be paid 50% in cash and 50% in deferred stock credits in accordance with the approved applicable executive compensation plan description, subject, as provided in such plan, to Executive's election to allocate a portion or all of any cash payout to deferred stock credits. Any amounts deferred, including the required 50% deferral and any optional deferral above 50%, will include a 20% premium, also to be paid in deferred stock credits. STOCK OPTIONS: Federated shall grant, to Employee, effective August 27, 1999 (the "Grant Date"), options for 450,000 shares, with vesting of 112,500 shares on May 1, 2000 (the "Option Vesting Date"), 112,500 shares on the first anniversary of the Option Vesting Date, 112,500 shares on the second anniversary of the Option Vesting Date, and 112,500 shares on the third anniversary of the Option Vesting Date, except that 100% 6 17 vesting shall occur immediately upon the effective date of the termination of the employment of Employee (a) by Employer other than for Cause, (b) by Employee for Good Reason or (c) by Employer and Employee by mutual consent; the options will be issued at one hundred percent of the closing market price of Federated's common stock on the New York Stock Exchange as listed in THE WALL STREET JOURNAL on the trading day immediately preceding the Grant Date; the term of the grant shall expire ten years from the Grant Date; any options that are unvested as of the time Employee discontinues his employment with Employer shall continue to vest in accordance with the vesting schedule described above unless the Employee's employment is terminated for cause (as defined in the Non-Qualified Stock Option Agreement), except that if the Employee at any time prior to the third anniversary of the Option Vesting Date renders personal services to The May Department Stores Company, Dillard's, Inc., Saks, Inc., or Nordstrom, Inc., the grant of options, and all rights of the Employee with regard to any vested but unexercised options and any unvested options, shall terminate on the commencement of such engagement; the grant is subject to the terms of the attached form of Non-Qualified Stock Option Agreement with Federated. RESTRICTED STOCK AWARD: Federated shall grant to Employee, effective August 27, 1999 (the "Grant Date"), 100,000 restricted shares of Federated's Common Stock, with restrictions as to 25,000 shares lapsing on May 1, 2000 (the "Lapse Date") and as to 25,000 shares on each of the first, second and third anniversaries of the Lapse Date, except that 100% lapsing shall occur immediately upon the effective date of the termination of the employment of Employee (a) by Employer other than for Cause, (b) the Employee for Good Reason or (c) by Employer and Employee by mutual consent; the restrictions on any shares that have not lapsed as of the time the Employee discontinues his employment with Employer shall continue to lapse in accordance with the lapsing schedule described above unless the Employee's employment is terminated for cause (as defined in the Restricted Stock Agreement), except that if Employee at any time prior to the third anniversary of the Lapse Date renders personal services to The May Department Stores Company, Dillard's, Inc., Saks, Inc., or Nordstrom's, Inc., all shares of 7 18 restricted stock on which the restrictions have not lapsed shall be forfeited on the commencement of such engagement; the grant is subject to the terms of the attached form of Restricted Stock Agreement. JAMES M. ZIMMERMAN FEDERATED CORPORTE SERVICES, INC. /s/ James M. Zimmerman /s/ Dennis J. Broderick - ---------------------------------- ------------------------------ DENNIS J. BRODERICK PRESIDENT 8 EX-21 4 EXHIBIT 21 1

Federated Department Stores, Inc. Subsidiary list as of 4/1/00 Corporate Name State of Incorporation Tradename(s) - ---------------------------------------------------------------------------------------------------------------- 22 East Advertising Agency, Inc. Florida 22 East Realty Corporation Florida Advertex Communications, Inc. Delaware Allied Stores General Real Estate Company Delaware Allied Stores International Sales Company, Inc. New York Allied Stores International, Inc. New York Allied Stores Marketing Corp. New York Andy's Garage Sale, Inc. Minnesota Arizona Mail Order, Inc. Delaware Astoria Realty, Inc. Delaware Atomic Living, Inc. Minnesota Axsys National Bank, N.A. N/A Bamrest Del, Inc. Delaware Bedford Fair Apparel, Inc. Delaware BFC Real Estate Company Delaware Bloomingdale's Atlantic City, Inc. Delaware Bloomingdale's By Mail Ltd. New York Bloomingdale's By Mail Bloomingdale's, Inc. Ohio Bloomingdale's Broadway Receivables, Inc. Delaware Broadway Stores, Inc. Delaware Burdines, Inc. Ohio Burdines Carter Hawley Hale Properties, Inc. California Cowie & Company, Limited New York Customer Communications Center, Inc. Minnesota Distribution Specialists, Inc. Minnesota Executive Placements Consultants, Inc. New York FACS Group, Inc. Ohio FACS Family Farm Gifts, Inc. Wisconsin FDS National Bank N/A Federated Brands, Inc. Delaware Federated Claims Administration, Inc. Ohio Federated Claims Services Group, Inc. Delaware Federated Corporate Services, Inc. Delaware Federated Logistics and Operations Federated Department Stores Foundation Ohio Federated Department Stores Insurance Company, Ltd. (99.99% ownership) Bermuda Federated Noteholding Corporation Delaware Federated Noteholding Corporation II Delaware

4/4/00 1 2

Federated Department Stores, Inc. Subsidiary list as of 4/1/00 Corporate Name State of Incorporation Tradename(s) - ---------------------------------------------------------------------------------------------------------------- Federated Retail Holdings, Inc. Delaware Federated Specialty Stores, Inc. Ohio Federated Stores Realty, Inc. Delaware Federated Systems Group, Inc. Delaware Federated Western Properties, Inc. Ohio Figi's Gifts, Inc. Wisconsin Figi's Mail Order Gifts, Inc. Wisconsin Figi's, Inc. Wisconsin Fingerhut (UK) Limited United Kingdom Fingerhut Business Services, Inc. Minnesota Fingerhut Companies, Inc. Minnesota Fingerhut Company Store, Inc. Minnesota Fingerhut Corporation Minnesota Fingerhut Funding Co. Delaware Fingerhut Marketing Services, Inc. Minnesota Fingerhut Receivables, Inc. Delaware Fingerhut Systems Services, Inc. Minnesota Finite Limited Hong Kong FSG Leasing Corp. Delaware Fulfillment Services Company Minnesota Hut Retail Services, Inc. Minnesota I. Magnin, Inc. Delaware Infochoice USA, Inc. Minnesota iTrust Insurance Agency, Inc. Arizona Jordan Marsh Insurance Agency, Inc. Massachusetts Jordan Servicenter, Inc. Delaware LM&B Catalog, Inc. Delaware Macy Financial, Inc. Delaware Macy's By Mail, Inc. New York Macy's By Mail Macy's Close-Out, Inc. Ohio Macy's Department Stores, Inc. Ohio Macy's East, Inc. Ohio Macy's Macy's Hamilton By Appointment, Inc. Delaware Macy's Puerto Rico, Inc. Puerto Rico Macy's Macy's Texas, Inc. Delaware Macy's Macy's West, Inc. Ohio Macy's Macy's.Com, Inc. New York Macy's.com Minnesota Telemarketing, Inc. Minnesota MOA Rest, Inc. Minnesota Nasstock, Inc. New York New Lines, inc. Minnesota Paramustock, Inc. New Jersey

05/15/98 2 3

Federated Department Stores, Inc. Subsidiary list as of 4/1/00 Corporate Name State of Incorporation Tradename(s) - ---------------------------------------------------------------------------------------------------------------- Popular Club Plan, Inc. New Jersey Popular Club Receivables, Inc. Delaware Prime II Receivables Corporation Delaware Prime Receivables Corporation Delaware R. H. Macy (France) S.A.R.L. France R. H. Macy Holdings (HK), Ltd. Delaware R. H. Macy Overseas Finance N.V. Netherland Antilles R. H. Macy Warehouse (HK), Ltd. Delaware Rich's Department Stores, Inc. Ohio Goldsmith's Lazarus Rich's Sabugo, Limited Hong Kong Seven Hills Funding Corporation Delaware Seven West Seventh, Inc. Delaware Stern's Department Stores, Inc. Ohio Stern's Tennessee Distribution, Inc. Minnesota Tennessee Telemarketing, Inc. Minnesota The Bon, Inc. Ohio The Bon The Bon Marche USA Direct/Guthy-Renker, Inc. (50% ownership) Minnesota Western Distribution, Inc. Minnesota Wiman Corporation Minnesota Wise Chat Limited Hong Kong YesDirect, Inc. Minnesota

05/15/98 3 EX-22 5 EXHIBIT 22 1 Exhibit 22 INDEPENDENT AUDITORS' CONSENT The Board of Directors and Shareholders Federated Department Stores, Inc. We consent to the incorporation by reference in the registration statements (Nos. 333-44373, 333-77089, 333-22737 and 333-88242) on Form S-8 and the registration statements (Nos. 333-34321 and 333-76789) on Form S-3 of Federated Department Stores, Inc. of our report dated February 22, 2000, relating to the consolidated balance sheets of Federated Department Stores, Inc. and subsidiaries as of January 29, 2000 and January 30, 1999 and the related consolidated statements of income, changes in shareholders' equity and cash flows for the fifty-two week periods ended January 29, 2000, January 30, 1999, and January 31, 1998, which report appears in the January 29, 2000 annual report on Form 10-K of Federated Department Stores, Inc. KPMG LLP Cincinnati, Ohio April 14, 2000 EX-23 6 EXHIBIT 23 1 Exhibit 23 POWER OF ATTORNEY ----------------- The undersigned, a director and/or officer of Federated Department Stores, Inc., a Delaware corporation (the "Company"), hereby constitutes and appoints Dennis J. Broderick, John R. Sims and Padma Tatta Cariappa, or any of them, my true and lawful attorneys-in-fact and agents, each with full power of substitution and resubstitution, to do any and all acts and things in my name and behalf in my capacities as director and/or officer of the Company and to execute any and all instruments for me and in my name in the capacities indicated above, which said attorneys-in-fact and agents, or any of them, may deem necessary or advisable to enable the Company to comply with the Securities Act of 1934, as amended (the "Exchange Act"), and any rules, regulations, and requirements of the Securities and Exchange Commission (the "Commission"), in connection with an Annual Report on Form 10-K to be filed by the Company pursuant to Section 13 of the Exchange Act, including without limitation, power and authority to sign for me, in my name in the capacity or capacities referred to above, such Annual Report, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Commission, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitute or substitutes, or any one of them, shall do or cause to be done by virtue hereof. Dated: April 19, 2000 /s/ James M. Zimmerman -------------------------- James M. Zimmerman 2 POWER OF ATTORNEY ----------------- The undersigned, a director and/or officer of Federated Department Stores, Inc., a Delaware corporation (the "Company"), hereby constitutes and appoints Dennis J. Broderick, John R. Sims and Padma Tatta Cariappa, or any of them, my true and lawful attorneys-in-fact and agents, each with full power of substitution and resubstitution, to do any and all acts and things in my name and behalf in my capacities as director and/or officer of the Company and to execute any and all instruments for me and in my name in the capacities indicated above, which said attorneys-in-fact and agents, or any of them, may deem necessary or advisable to enable the Company to comply with the Securities Act of 1934, as amended (the "Exchange Act"), and any rules, regulations, and requirements of the Securities and Exchange Commission (the "Commission"), in connection with an Annual Report on Form 10-K to be filed by the Company pursuant to Section 13 of the Exchange Act, including without limitation, power and authority to sign for me, in my name in the capacity or capacities referred to above, such Annual Report, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Commission, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitute or substitutes, or any one of them, shall do or cause to be done by virtue hereof. Dated: April 19, 2000 /s/ Terry J. Lundgren --------------------- Terry J. Lundgren 3 POWER OF ATTORNEY ----------------- The undersigned, a director and/or officer of Federated Department Stores, Inc., a Delaware corporation (the "Company"), hereby constitutes and appoints Dennis J. Broderick, John R. Sims and Padma Tatta Cariappa, or any of them, my true and lawful attorneys-in-fact and agents, each with full power of substitution and resubstitution, to do any and all acts and things in my name and behalf in my capacities as director and/or officer of the Company and to execute any and all instruments for me and in my name in the capacities indicated above, which said attorneys-in-fact and agents, or any of them, may deem necessary or advisable to enable the Company to comply with the Securities Act of 1934, as amended (the "Exchange Act"), and any rules, regulations, and requirements of the Securities and Exchange Commission (the "Commission"), in connection with an Annual Report on Form 10-K to be filed by the Company pursuant to Section 13 of the Exchange Act, including without limitation, power and authority to sign for me, in my name in the capacity or capacities referred to above, such Annual Report, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Commission, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitute or substitutes, or any one of them, shall do or cause to be done by virtue hereof. Dated: April 19, 2000 /s/ Ronald W. Tysoe -------------------------- Ronald W. Tysoe 4 POWER OF ATTORNEY ----------------- The undersigned, a director and/or officer of Federated Department Stores, Inc., a Delaware corporation (the "Company"), hereby constitutes and appoints Dennis J. Broderick, John R. Sims and Padma Tatta Cariappa, or any of them, my true and lawful attorneys-in-fact and agents, each with full power of substitution and resubstitution, to do any and all acts and things in my name and behalf in my capacities as director and/or officer of the Company and to execute any and all instruments for me and in my name in the capacities indicated above, which said attorneys-in-fact and agents, or any of them, may deem necessary or advisable to enable the Company to comply with the Securities Act of 1934, as amended (the "Exchange Act"), and any rules, regulations, and requirements of the Securities and Exchange Commission (the "Commission"), in connection with an Annual Report on Form 10-K to be filed by the Company pursuant to Section 13 of the Exchange Act, including without limitation, power and authority to sign for me, in my name in the capacity or capacities referred to above, such Annual Report, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Commission, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitute or substitutes, or any one of them, shall do or cause to be done by virtue hereof. Dated: April 19, 2000 /s/ Karen M. Hoguet ------------------------- Karen M. Hoguet 5 POWER OF ATTORNEY ----------------- The undersigned, a director and/or officer of Federated Department Stores, Inc., a Delaware corporation (the "Company"), hereby constitutes and appoints Dennis J. Broderick, John R. Sims and Padma Tatta Cariappa, or any of them, my true and lawful attorneys-in-fact and agents, each with full power of substitution and resubstitution, to do any and all acts and things in my name and behalf in my capacities as director and/or officer of the Company and to execute any and all instruments for me and in my name in the capacities indicated above, which said attorneys-in-fact and agents, or any of them, may deem necessary or advisable to enable the Company to comply with the Securities Act of 1934, as amended (the "Exchange Act"), and any rules, regulations, and requirements of the Securities and Exchange Commission (the "Commission"), in connection with an Annual Report on Form 10-K to be filed by the Company pursuant to Section 13 of the Exchange Act, including without limitation, power and authority to sign for me, in my name in the capacity or capacities referred to above, such Annual Report, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Commission, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitute or substitutes, or any one of them, shall do or cause to be done by virtue hereof. Dated: April 19, 2000 /s/ Joel A. Belsky ------------------------- Joel A. Belsky 6 POWER OF ATTORNEY ----------------- The undersigned, a director and/or officer of Federated Department Stores, Inc., a Delaware corporation (the "Company"), hereby constitutes and appoints Dennis J. Broderick, John R. Sims and Padma Tatta Cariappa, or any of them, my true and lawful attorneys-in-fact and agents, each with full power of substitution and resubstitution, to do any and all acts and things in my name and behalf in my capacities as director and/or officer of the Company and to execute any and all instruments for me and in my name in the capacities indicated above, which said attorneys-in-fact and agents, or any of them, may deem necessary or advisable to enable the Company to comply with the Securities Act of 1934, as amended (the "Exchange Act"), and any rules, regulations, and requirements of the Securities and Exchange Commission (the "Commission"), in connection with an Annual Report on Form 10-K to be filed by the Company pursuant to Section 13 of the Exchange Act, including without limitation, power and authority to sign for me, in my name in the capacity or capacities referred to above, such Annual Report, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Commission, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitute or substitutes, or any one of them, shall do or cause to be done by virtue hereof. Dated: April 19, 2000 /s/ Meyer Feldberg --------------------------- Meyer Feldberg 7 POWER OF ATTORNEY ----------------- The undersigned, a director and/or officer of Federated Department Stores, Inc., a Delaware corporation (the "Company"), hereby constitutes and appoints Dennis J. Broderick, John R. Sims and Padma Tatta Cariappa, or any of them, my true and lawful attorneys-in-fact and agents, each with full power of substitution and resubstitution, to do any and all acts and things in my name and behalf in my capacities as director and/or officer of the Company and to execute any and all instruments for me and in my name in the capacities indicated above, which said attorneys-in-fact and agents, or any of them, may deem necessary or advisable to enable the Company to comply with the Securities Act of 1934, as amended (the "Exchange Act"), and any rules, regulations, and requirements of the Securities and Exchange Commission (the "Commission"), in connection with an Annual Report on Form 10-K to be filed by the Company pursuant to Section 13 of the Exchange Act, including without limitation, power and authority to sign for me, in my name in the capacity or capacities referred to above, such Annual Report, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Commission, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitute or substitutes, or any one of them, shall do or cause to be done by virtue hereof. Dated: April 19, 2000 /s/ Earl G. Graves, Sr. ----------------------- Earl G. Graves, Sr. 8 POWER OF ATTORNEY ----------------- The undersigned, a director and/or officer of Federated Department Stores, Inc., a Delaware corporation (the "Company"), hereby constitutes and appoints Dennis J. Broderick, John R. Sims and Padma Tatta Cariappa, or any of them, my true and lawful attorneys-in-fact and agents, each with full power of substitution and resubstitution, to do any and all acts and things in my name and behalf in my capacities as director and/or officer of the Company and to execute any and all instruments for me and in my name in the capacities indicated above, which said attorneys-in-fact and agents, or any of them, may deem necessary or advisable to enable the Company to comply with the Securities Act of 1934, as amended (the "Exchange Act"), and any rules, regulations, and requirements of the Securities and Exchange Commission (the "Commission"), in connection with an Annual Report on Form 10-K to be filed by the Company pursuant to Section 13 of the Exchange Act, including without limitation, power and authority to sign for me, in my name in the capacity or capacities referred to above, such Annual Report, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Commission, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitute or substitutes, or any one of them, shall do or cause to be done by virtue hereof. Dated: April 19, 2000 /s/ George V. Grune -------------------------- George V. Grune 9 POWER OF ATTORNEY ----------------- The undersigned, a director and/or officer of Federated Department Stores, Inc., a Delaware corporation (the "Company"), hereby constitutes and appoints Dennis J. Broderick, John R. Sims and Padma Tatta Cariappa, or any of them, my true and lawful attorneys-in-fact and agents, each with full power of substitution and resubstitution, to do any and all acts and things in my name and behalf in my capacities as director and/or officer of the Company and to execute any and all instruments for me and in my name in the capacities indicated above, which said attorneys-in-fact and agents, or any of them, may deem necessary or advisable to enable the Company to comply with the Securities Act of 1934, as amended (the "Exchange Act"), and any rules, regulations, and requirements of the Securities and Exchange Commission (the "Commission"), in connection with an Annual Report on Form 10-K to be filed by the Company pursuant to Section 13 of the Exchange Act, including without limitation, power and authority to sign for me, in my name in the capacity or capacities referred to above, such Annual Report, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Commission, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitute or substitutes, or any one of them, shall do or cause to be done by virtue hereof. Dated: April 19, 2000 /s/ Sara Levinson --------------------------- Sara Levinson 10 POWER OF ATTORNEY ----------------- The undersigned, a director and/or officer of Federated Department Stores, Inc., a Delaware corporation (the "Company"), hereby constitutes and appoints Dennis J. Broderick, John R. Sims and Padma Tatta Cariappa, or any of them, my true and lawful attorneys-in-fact and agents, each with full power of substitution and resubstitution, to do any and all acts and things in my name and behalf in my capacities as director and/or officer of the Company and to execute any and all instruments for me and in my name in the capacities indicated above, which said attorneys-in-fact and agents, or any of them, may deem necessary or advisable to enable the Company to comply with the Securities Act of 1934, as amended (the "Exchange Act"), and any rules, regulations, and requirements of the Securities and Exchange Commission (the "Commission"), in connection with an Annual Report on Form 10-K to be filed by the Company pursuant to Section 13 of the Exchange Act, including without limitation, power and authority to sign for me, in my name in the capacity or capacities referred to above, such Annual Report, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Commission, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitute or substitutes, or any one of them, shall do or cause to be done by virtue hereof. Dated: April 19, 2000 /s/ Joseph Neubauer --------------------------- Joseph Neubauer 11 POWER OF ATTORNEY ----------------- The undersigned, a director and/or officer of Federated Department Stores, Inc., a Delaware corporation (the "Company"), hereby constitutes and appoints Dennis J. Broderick, John R. Sims and Padma Tatta Cariappa, or any of them, my true and lawful attorneys-in-fact and agents, each with full power of substitution and resubstitution, to do any and all acts and things in my name and behalf in my capacities as director and/or officer of the Company and to execute any and all instruments for me and in my name in the capacities indicated above, which said attorneys-in-fact and agents, or any of them, may deem necessary or advisable to enable the Company to comply with the Securities Act of 1934, as amended (the "Exchange Act"), and any rules, regulations, and requirements of the Securities and Exchange Commission (the "Commission"), in connection with an Annual Report on Form 10-K to be filed by the Company pursuant to Section 13 of the Exchange Act, including without limitation, power and authority to sign for me, in my name in the capacity or capacities referred to above, such Annual Report, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Commission, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitute or substitutes, or any one of them, shall do or cause to be done by virtue hereof. Dated: April 19, 2000 /s/ Joseph A. Pichler --------------------------- Joseph A. Pichler 12 POWER OF ATTORNEY ----------------- The undersigned, a director and/or officer of Federated Department Stores, Inc., a Delaware corporation (the "Company"), hereby constitutes and appoints Dennis J. Broderick, John R. Sims and Padma Tatta Cariappa, or any of them, my true and lawful attorneys-in-fact and agents, each with full power of substitution and resubstitution, to do any and all acts and things in my name and behalf in my capacities as director and/or officer of the Company and to execute any and all instruments for me and in my name in the capacities indicated above, which said attorneys-in-fact and agents, or any of them, may deem necessary or advisable to enable the Company to comply with the Securities Act of 1934, as amended (the "Exchange Act"), and any rules, regulations, and requirements of the Securities and Exchange Commission (the "Commission"), in connection with an Annual Report on Form 10-K to be filed by the Company pursuant to Section 13 of the Exchange Act, including without limitation, power and authority to sign for me, in my name in the capacity or capacities referred to above, such Annual Report, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Commission, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitute or substitutes, or any one of them, shall do or cause to be done by virtue hereof. Dated: April 19, 2000 /s/ Karl M. Von Der Heyden -------------------------------- Karl M. von der Heyden 13 POWER OF ATTORNEY ----------------- The undersigned, a director and/or officer of Federated Department Stores, Inc., a Delaware corporation (the "Company"), hereby constitutes and appoints Dennis J. Broderick, John R. Sims and Padma Tatta Cariappa, or any of them, my true and lawful attorneys-in-fact and agents, each with full power of substitution and resubstitution, to do any and all acts and things in my name and behalf in my capacities as director and/or officer of the Company and to execute any and all instruments for me and in my name in the capacities indicated above, which said attorneys-in-fact and agents, or any of them, may deem necessary or advisable to enable the Company to comply with the Securities Act of 1934, as amended (the "Exchange Act"), and any rules, regulations, and requirements of the Securities and Exchange Commission (the "Commission"), in connection with an Annual Report on Form 10-K to be filed by the Company pursuant to Section 13 of the Exchange Act, including without limitation, power and authority to sign for me, in my name in the capacity or capacities referred to above, such Annual Report, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Commission, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitute or substitutes, or any one of them, shall do or cause to be done by virtue hereof. Dated: April 19, 2000 /s/ Craig E. Weatherup -------------------------------- Craig E. Weatherup 14 POWER OF ATTORNEY ----------------- The undersigned, a director and/or officer of Federated Department Stores, Inc., a Delaware corporation (the "Company"), hereby constitutes and appoints Dennis J. Broderick, John R. Sims and Padma Tatta Cariappa, or any of them, my true and lawful attorneys-in-fact and agents, each with full power of substitution and resubstitution, to do any and all acts and things in my name and behalf in my capacities as director and/or officer of the Company and to execute any and all instruments for me and in my name in the capacities indicated above, which said attorneys-in-fact and agents, or any of them, may deem necessary or advisable to enable the Company to comply with the Securities Act of 1934, as amended (the "Exchange Act"), and any rules, regulations, and requirements of the Securities and Exchange Commission (the "Commission"), in connection with an Annual Report on Form 10-K to be filed by the Company pursuant to Section 13 of the Exchange Act, including without limitation, power and authority to sign for me, in my name in the capacity or capacities referred to above, such Annual Report, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Commission, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitute or substitutes, or any one of them, shall do or cause to be done by virtue hereof. Dated: April 19, 2000 /s/ Marna C. Whittington ------------------------------ Marna C. Whittington EX-27 7 EXHIBIT 27

<ARTICLE> 5 <MULTIPLIER> 1,000,000 <PERIOD-TYPE> YEAR <FISCAL-YEAR-END> JAN-29-2000 <PERIOD-START> JAN-31-1999 <PERIOD-END> JAN-29-2000 <CASH> 218 <SECURITIES> 0 <RECEIVABLES> 4,313 <ALLOWANCES> 0 <INVENTORY> 3,589 <CURRENT-ASSETS> 8,522 <PP&E> 6,828 <DEPRECIATION> 0 <TOTAL-ASSETS> 17,692 <CURRENT-LIABILITIES> 4,552 <BONDS> 4,589 <PREFERRED-MANDATORY> 0 <PREFERRED> 0 <COMMON> 0 <OTHER-SE> 0 <TOTAL-LIABILITY-AND-EQUITY> 17,692 <SALES> 17,716 <TOTAL-REVENUES> 0 <CGS> 0 <TOTAL-COSTS> 10,443 <OTHER-EXPENSES> 5,572 <LOSS-PROVISION> 0 <INTEREST-EXPENSE> 368 <INCOME-PRETAX> 1,346 <INCOME-TAX> 551 <INCOME-CONTINUING> 0 <DISCONTINUED> 0 <EXTRAORDINARY> 0 <CHANGES> 0 <NET-INCOME> 795 <EPS-BASIC> 3.78 <EPS-DILUTED> 3.62 <F1>Supplies and prepaid expenses 230 Deferred income tax assets 172 <F2>Intangible assets - net 1,735 Other assets 607 <F3>Deferred income taxes 1,444 Other liabilities 555 Shareholders' Equity 6,552 <F4>Interest income 13

-----END PRIVACY-ENHANCED MESSAGE-----

EX-10.46

   1


                                                                   Exhibit 10.46


                        FEDERATED DEPARTMENT STORES, INC.

                            1992 INCENTIVE BONUS PLAN

                (AS AMENDED AND RESTATED AS OF DECEMBER 10, 1999)


         Federated Department Stores, Inc., a Delaware corporation (the
"Company"), hereby amends and restates this 1992 Incentive Bonus Plan (this
"Bonus Plan") effective, subject to the provisions of Section 14, as of December
10, 1999.

         1. PURPOSE. The purpose of this Bonus Plan is to promote the attainment
of the Company's performance goals by providing incentive compensation for
certain designated key executives and employees of the Company and its
Subsidiaries.

         2. DEFINITIONS. As used in this Bonus Plan, the following terms have
the following meanings when used herein with initial capital letters:

         (a) "Annual Incentive Award" means the incentive bonus earned by a
Participant pursuant to Section 5.

         (b) "Board" means the Board of Directors of the Company or, pursuant to
any delegation by the Board to the Compensation Committee pursuant to Section
12, the Compensation Committee.

         (c) "Chief Executive Officer" means the Chief Executive Officer of the
Company.

         (d) "Chief Operating Officer" means the Chief Operating Officer of the
Company.

         (e) "Chief Merchandising Officer" means the Chief Merchandising Officer
of the Company.

         (f) "Code" means the Internal Revenue Code of 1986, as amended from
time to time.

         (g) "Compensation Committee" means a committee appointed by the Board
in accordance with the By-Laws of the Company consisting of at least three
Non-Employee Directors.

         (h) "Covered Employee" means a Participant who is, or is determined by
the Board to be likely to become, a "covered employee" within the meaning of
Section 162(m) of the Code (or any successor provision).

         (i) "Long-Term Incentive Award" means the incentive bonus, if any,
earned by a Participant pursuant to Section 6.

         (j) "Non-Employee Director" means a Director of the Company who is not
a full-time employee of the Company or any Subsidiary.

         (k) "Operating Unit" means the Company as a whole and each other
individual subsidiary, division, store, or other business unit of the Company in
which individuals employed thereby or therein have been approved to participate
in this Bonus Plan by the Board.

         (l) "Participant" means a person who is designated by the Chief
Executive Officer, the Chief Operating Officer, or the Chief Merchandising
Officer, with the approval of the Board, to receive benefits under this Bonus
Plan and who is at the time an officer, executive, or other employee of the
Company or any one or more of its Subsidiaries, or who has agreed to commence
serving in any of such capacities.



   2

         (m) "Performance Goal" means the target level of performance for each
Performance Period for the Company as a whole and for each Operating Unit of the
Company and, where applicable, for an individual Participant, in each case as
established by the Board pursuant to Section 4. The Performance Goals applicable
to any Annual Incentive Award or Long-Term Incentive Award made to a Covered
Employee will be based solely upon one or more of the following measures of
performance:

                  (1)      total sales;

                  (2)      comparable store sales;

                  (3)      gross margin;

                  (4)      operating or other expenses;

                  (5)      earnings before interest and taxes ("EBIT");

                  (6)      earnings before interest, taxes, depreciation and
                           amortization;

                  (7)      net income;

                  (8)      earnings per share;

                  (9)      cash flow;

                  (10)     return on investment (determined with reference to
                           one or more categories of income or cash flow and one
                           or more categories of assets, capital or equity); and

                  (11)     stock price appreciation.

Such Performance Goals may be expressed with respect to the Company or one or
more other Operating Units and may be expressed in terms of absolute levels or
percentages or ratios expressing relationships between two or more of the
foregoing measures of performance (e.g., EBIT as a percentage of total sales),
period-to-period changes, relative to business plans or budgets, or relative to
one or more other companies or one or more indices. The two immediately
preceding sentences are intended to comply with the exception from Section
162(m) of the Code for qualified performance-based compensation, and will be
construed, applied, and administered accordingly.

         (n) "Performance Period" means, in the case of determining Annual
Incentive Awards pursuant to Section 5, one fiscal year of the Company, and in
the case of determining Long-Term Incentive Awards pursuant to Section 6, a
period determined by the Board not longer than five consecutive fiscal years of
the Company. The initial Performance Period under this Bonus Plan in either case
will commence on February 2, 1992 and terminate, in the case of Annual Incentive
Awards and Long-Term Incentive Awards, on such date or dates as the Board may
determine. Any new Performance Period in each case would commence on the first
day of each fiscal year of the Company.

         (o) "Retirement" means a Participant's voluntary termination of
employment with the Company on or after attainment of age 65, or such other age
as may from time to time be established as the normal retirement date under the
Company's principal retirement benefit plan in which the Participant is a
participant, and before being informed by the Company that his or her employment
will be terminated.



                                       2
   3


         (p) "Rule 16b-3" means Rule 16b-3 promulgated under the Securities
Exchange Act of 1934, as amended (or any successor rule substantially to the
same effect), as in effect from time to time.

         (q) "Subsidiary" has the meaning specified in Rule 405 promulgated
under the Securities Act of 1933, as amended (or under any successor rule
substantially to the same effect).

         3. ELIGIBILITY. (a) Except as otherwise provided in this Section 3, an
employee of the Company or one of its Subsidiaries will become a Participant for
a particular Performance Period (i) in respect of Annual Incentive Awards if
such employee (x) is an executive of the Company (including without limitation a
store principal, general merchandise manager, divisional merchandise manager,
store manager, senior vice president, or other vice president or elected officer
of the Company or another Operating Unit) on or as of the first day of the
Performance Period, (y) is recommended for participation by the Chief Executive
Officer, the Chief Operating Officer, or the Chief Merchandising Officer or any
designee thereof, and (z) is approved as a Participant by the Board, and (ii) in
respect of Long-Term Incentive Awards if such employee has overall
responsibility for day-to-day and long-term achievement of results of the
Company or is in a key broad-based strategy formulation and decision-making
position of the Company or another Operating Unit selected by the Board to
participate in this Bonus Plan, in each case as specifically determined by the
Chief Executive Officer, the Chief Operating Officer, or the Chief Merchandising
Officer and approved by the Board on or as of the first day of the Performance
Period.

         (b) An executive employee who first becomes eligible to participate
after the beginning of a particular Performance Period will become a Participant
for such Performance Period only in accordance with this Section 3(b). The Chief
Executive Officer, the Chief Operating Officer, or the Chief Merchandising
Officer may, with the approval of the Board, allow participation for a portion
of such Performance Period for such employee on such terms and conditions as the
Chief Executive Officer, the Chief Operating Officer, or the Chief Merchandising
Officer (with such approval) may determine. In the event that at any time during
any Performance Period with respect to Annual Incentive Awards an executive
employee is first hired by the Company or a Subsidiary, or is promoted by the
Company or any such Subsidiary to a position in a different Operating Unit and
as a result thereof becomes eligible to participate in this Bonus Plan, then,
except as otherwise determined by the Board or as otherwise provided in Section
10, such employee will be entitled to be a Participant for purposes of Annual
Incentive Awards, which will be prorated on the basis of the number of months of
such employee's participation during such Performance Period to the aggregate
number of months in such Performance Period. In the event that within the first
thirty months of any Performance Period with respect to Long-Term Incentive
Awards an executive employee is first hired by the Company or a Subsidiary, or
is promoted by the Company or any such Subsidiary to a position in a different
Operating Unit and as a result thereof becomes eligible to participate in this
Bonus Plan, then, except as otherwise determined by the Board or as otherwise
provided in Section 10, such employee will be entitled to be a Participant for
purposes of Long-Term Incentive Awards, which will be prorated on the basis of
the ratio of the number of months of such employee's participation during such
Performance Period to the aggregate number of months in such Performance Period.

         (c) The Board may, in its discretion, allow an executive employee who
is not otherwise eligible to participate in this Bonus Plan to be treated as a
Participant for all or a portion of any Performance Period on such basis as the
Board may determine.

         4. PERFORMANCE GOALS. (a) The Board will approve for each Performance
Period the applicable Performance Goals for the Company and each other Operating
Unit, as well as for individual Participants in this Bonus Plan, where
appropriate, based upon the consolidated business plan of the Company. Such
Performance Goals will not be adjusted during a Performance Period, except that
such Performance Goals may be so adjusted to prevent dilution or enlargement of
any


                                       3
   4

Annual Incentive Award or Long-Term Incentive Award as a result of extraordinary
events or circumstances as determined by the Board or to exclude the effects of
extraordinary, unusual or nonrecurring events, changes in accounting principles,
discontinued operations, acquisitions, divestitures and material restructuring
charges; provided, however, in the case of a Covered Employee, that no such
adjustment will be made if the effect of such adjustment would be to cause the
related compensation to fail to qualify as "performance-based compensation"
within the meaning of Section 162(m) of the Code.

         (b) Prior to the beginning of each Performance Period, the Chief
Executive Officer, the Chief Operating Officer, or the Chief Merchandising
Officer or any designee thereof will (i) notify each eligible employee who has
been selected to participate in this Bonus Plan that he or she is a Participant
under this Bonus Plan for such Performance Period and (ii) communicate in
writing to each Participant the minimum, maximum, and target Performance Goals
applicable to such Participant for the Company and each other Operating Unit for
such Performance Period, and the corresponding minimum, maximum, and target
levels of Annual Incentive Awards and Long-Term Incentive Awards for performance
by the Participant with respect to such Performance Goals.

         5. ANNUAL INCENTIVE AWARDS. (a) Subject to Section 4, unless changed by
the Board, each eligible Participant may earn Annual Incentive Awards as
hereinafter provided. Each Operating Unit's actual performance during a
particular Performance Period will be measured against the Performance Goals
established therefor by the Board in accordance with Section 4. In the event
such Operating Unit's performance for the Performance Period (A) is below the
minimum Performance Goal established therefor, no Annual Incentive Awards will
be paid to Participants in respect thereof, (B) is equal to the minimum
Performance Goal established therefor, the minimum level of Annual Incentive
Awards will be paid to Participants in respect thereof, (C) is equal to the
target Performance Goal established therefor, the target level of Annual
Incentive Awards will be paid to Participants in respect thereof, (D) is equal
to or greater than the maximum Performance Goal established therefor, the
maximum level of Annual Incentive Awards will be paid to Participants in respect
thereof, and (E) is between any two of the Performance Goal levels described in
the immediately preceding clauses (B), (C), and (D), the level of Annual
Incentive Awards to be paid to Participants in respect thereof will be a level
interpolated by the Board between the corresponding levels of Annual Incentive
Awards paid in respect of such Performance Goal levels.

         (b) Except in the case of a Covered Employee, the Annual Incentive
Award determined pursuant to Section 5(a) may be modified by the Board to
recognize a Participant's individual performance or in other circumstances
deemed appropriate by the Board.

         (c) Notwithstanding any other provision of this Bonus Plan to the
contrary, in no event will an Annual Incentive Award paid to any Participant for
a fiscal year exceed $2.0 million.

         6. LONG-TERM INCENTIVE AWARDS. (a) Unless changed by the Board, each
eligible Participant may earn Long-Term Incentive Awards as hereinafter
provided. Each Operating Unit's actual performance during a particular
Performance Period will be measured against the Performance Goals established
therefor by the Board in accordance with Section 4. In the event such Operating
Unit's performance for such Performance Period (A) is below the minimum
Performance Goal established therefor, no Long-Term Incentive Awards will be
paid to Participants in respect thereof, (B) is equal to the minimum Performance
Goal established therefor, the minimum level of Long-Term Incentive Awards will
be paid to Participants in respect thereof, (C) is equal to the target
Performance Goal established therefor, the target level of Long-Term Incentive
Awards will be paid to Participants in respect thereof, (D) is equal to or
greater than the maximum Performance Goal established therefor, the maximum
level of Long-Term Incentive Awards will be paid to Participants in respect
thereof, and (E) is between any two of the Performance Goal levels described in
the immediately preceding clauses (B), (C), and (D), the level of Long-Term
Incentive Awards to be paid to Participants in respect thereof will be a level
interpolated by the Board


                                       4
   5

between the corresponding levels of Long-Term Incentive Awards paid in respect
of such Performance Goal levels.

         (b) Except in the case of a Covered Employee, the Long-Term Incentive
Award determined pursuant to Section 6(a) may be modified by the Board to
recognize a Participant's individual performance or in other circumstances
deemed appropriate by the Board.

         (c) Notwithstanding any other provision of this Bonus Plan to the
contrary, in no event will a Long-Term Incentive Award paid to any Participant
for a Performance Period exceed $3.0 million.

         7. PAYMENT OF AWARDS. Annual Incentive Awards and Long-Term Incentive
Awards will be paid to Participants in respect of any particular Performance
Period (i) in cash and/or Company equity (including stock options, stock credits
or equity equivalents), (ii) in a lump sum and/or in deferred payments or
grants, and (iii) on the date(s) and other terms, including any premium in
respect of any non-cash payments or deferred payments or grants, in each case as
determined by the Board at the time that Performance Goals are established for a
particular Performance Period. All Annual Incentive Awards and Long-Term
Incentive Awards that are paid in cash will be paid in U.S. dollars. The Company
may deduct from any payment such amounts as may be required to be withheld under
any federal, state, or local tax laws.

         8. TERMINATION OF EMPLOYMENT. If a Participant terminates employment
with the Company and its Subsidiaries before the last day of a Performance
Period due to death, disability, or Retirement with the consent of the Company,
the Participant's Annual Incentive Awards and Long-Term Incentive Awards will be
prorated on the basis of the ratio of the number of months of participation
during the Performance Period to which the Annual Incentive Awards and Long-Term
Incentive Awards relate to the aggregate number of months in such Performance
Period. If a Participant's employment with the Company and its Subsidiaries is
terminated by the Company or any such Subsidiary before the last day of a
Performance Period for any reason other than for Cause (as hereinafter defined),
the Participant's Annual Incentive Awards and Long-Term Incentive Awards will be
prorated on the basis of the ratio of the number of months of participation
during the Performance Period to which the Annual Incentive Awards and the
Long-Term Incentive Awards relate to the aggregate number of months in such
Performance Period, unless otherwise determined by the Board. Except as
otherwise provided in this Section 8, if a Participant's employment with the
Company and its Subsidiaries is terminated before the last day of a Performance
Period for any reason, the Participant will not be entitled to any Annual
Incentive Award or Long-Term Incentive Award for such Performance Period unless
otherwise determined by the Board. For purposes of this Agreement, "Cause" means
any act of dishonesty, fraud, or willful misconduct by a Participant in the
performance of the Participant's duties as an employee of the Company, or any
conviction of a Participant for any felony involving moral turpitude.

         9. CHANGE IN CONTROL. In connection with any actual or potential change
in control of the Company, whether as a result of any stock acquisition, merger,
or other business combination transaction, or any restructuring or
recapitalization of the Company, then the Board will take all such actions
hereunder as it may determine to be necessary or appropriate to treat
Participants equitably hereunder, including without limitation the modification
or waiver of applicable Performance Goals, Performance Periods, Annual Incentive
Awards, or Long-Term Incentive Awards, notwithstanding the terms of any initial
award, and whether to establish or fund a trust or other arrangement intended to
secure the payment of such awards.

         10. TRANSFERS AND CHANGES IN RESPONSIBILITIES. (a) If a Participant's
responsibilities materially change or the Participant is transferred during a
Performance Period to another Operating Unit or to a position that is not
designated or eligible to participate in this Bonus Plan, the Company may, as
determined by the Board, either (i) continue the Participant's participation in
this Bonus Plan and, except in the case of a Covered Employee, as of the date of
such change or transfer,


                                       5

   6

establish new performance awards (as determined pursuant to Section 10(b)) in
respect of Annual Incentive Awards and/or Long-Term Incentive Awards, as the
case may be, for the Participant with respect to his or her new position, or
(ii) terminate the Participant's participation in this Bonus Plan in respect of
Annual Incentive Awards and/or Long-Term Incentive Awards, as the case may be,
and, as of the date of such change or transfer, the Participant's Annual
Incentive Awards and/or Long-Term Incentive Awards, as the case may be, would be
prorated on the basis of the ratio of the number of months of the Participant's
participation during the Performance Period to which such Annual Incentive
Awards and/or Long-Term Incentive Awards, as the case may be, relate to the
aggregate number of months in such Performance Period.

         (b) If in the event of such a change or transfer the Participant's
participation in this Bonus Plan in respect of Annual Incentive Awards and/or
Long-Term Incentive Awards, as the case may be, is not terminated pursuant to
Section 10(a)(ii), then the Participant's Annual Incentive Awards and/or
Long-Term Incentive Awards, as the case may be, will be prorated on the basis of
the number of months of service by the Participant at each Operating Unit during
the Performance Period.

         11. SECURITY OF PAYMENT OF BENEFITS. Unless otherwise determined by the
Board, all Annual Incentive Awards and Long-Term Incentive Awards will be paid
from the Company's general assets, and nothing contained in this Bonus Plan will
require the Company to set aside or hold in trust any funds for the benefit of
any Participant, who will have the status of a general unsecured creditor of the
Company.

         12. ADMINISTRATION OF THE PLAN. (a) This Bonus Plan will be
administered by the Board, which may from time to time delegate all or any part
of its authority under this Bonus Plan to the Compensation Committee.

         (b) The Board will take such actions as are required to be taken by it
hereunder, may take the actions permitted to be taken by it hereunder, and will
have the authority from time to time to interpret this Bonus Plan and to adopt,
amend, and rescind rules and regulations for implementing and administering this
Bonus Plan. All such actions will be in the sole discretion of the Board and,
when taken, will be final, conclusive, and binding. Without limiting the
generality or effect of the foregoing, the interpretation and construction by
the Board of any provision of this Bonus Plan or of any agreement, notification,
or document evidencing the grant of benefits payable to Participants and any
determination by the Board in its sole discretion pursuant to any provision of
this Bonus Plan or any provision of such agreement, notification, or document
will be final and conclusive. Without limiting the generality or effect of any
provision of the Certificate of Incorporation of the Company, neither the Chief
Executive Officer, the Chief Operating Officer, or the Chief Merchandising
Officer nor any member of the Board will be liable for any action or
determination made in good faith.

         (c) The provisions of Sections 5 and 6 will be interpreted as
authorizing the Board, in taking any action under or pursuant to this Bonus
Plan, to take any action it determines in its sole discretion to be appropriate,
subject only to the express limitations therein contained, and no authorization
in either such Section or any other provision of this Bonus Plan is intended or
may be deemed to constitute a limitation on the authority of the Board.

         (d) The existence of this Bonus Plan or any right granted or other
action taken pursuant hereto will not affect the authority of the Board or the
Company to take any other action, including in respect of the grant or award of
any annual or long-term bonus or other right or benefit, whether or not
authorized by this Bonus Plan, subject only to limitations imposed by applicable
law as from time to time applicable thereto.

         13. MISCELLANEOUS. (a) This Bonus Plan will not confer upon any
Participant any right with respect to continuance of employment or other service
with the Company or any Subsidiary,


                                       6

   7

nor will it interfere in any way with any right the Company or any Subsidiary
would otherwise have to terminate or modify the terms of such Participant's
employment or other service at any time.

         (b) Except as otherwise provided in this Bonus Plan, no right or
benefit under this Bonus Plan will be subject to anticipation, alienation, sale,
assignment, pledge, encumbrance, or charge, and any attempt to anticipate,
alienate, sell, assign, pledge, encumber, or charge such right or benefit will
be void. No such right or benefit will in any manner be liable for or subject to
the debts, liabilities, or torts of a Participant.

         (c) This Bonus Plan may be amended or terminated from time to time by
the Board. In the event this Bonus Plan is terminated before the last day of a
Performance Period, Annual Incentive Awards and Long-Term Incentive Awards
payable for such Performance Period will be prorated on the basis of the ratio
of the number of months in such Performance Period prior to such termination to
the aggregate number of months in such Performance Period and will be paid only
after the end of such Performance Period, which will be deemed to continue until
the expiration thereof as if this Bonus Plan had not been terminated.

         (d) If any provision in this Bonus Plan is held to be invalid or
unenforceable, no other provision of this Bonus Plan will be affected thereby.

         (e) This Bonus Plan will be governed by and construed in accordance
with applicable United States federal law and, to the extent not preempted by
such federal law, in accordance with the laws of the State of Delaware, without
giving effect to the principles of conflict of laws thereof.

         14. EFFECTIVENESS. The amendment and restatement of this Bonus Plan set
forth herein will become effective as of December 10, 1999.



                                       7

EX-10.50

   1
                                                                   Exhibit 10.50


                              EMPLOYMENT AGREEMENT


                       Entered into as of August 27, 1999


                                     between


                       FEDERATED CORPORATE SERVICES, INC.


                                       and



                               JAMES M. ZIMMERMAN

   2

                              EMPLOYMENT AGREEMENT
                              --------------------

                  THIS AGREEMENT, made in the City of Cincinnati and State of
Ohio, as of the 27th day of August, 1999 (the "Agreement Effective Date"),
between Federated Corporate Services, Inc., a Delaware corporation (hereinafter
called the "Employer"), and James M. Zimmerman of Cincinnati, Ohio (hereinafter
called the "Employee").

                                    RECITALS
                                    --------

                  Employer and Employee are parties to an Employment Agreement
dated as of March 10, 1997.

                  Employer and Employee are desirous of entering into a new
employment agreement with a term commencing on May 1, 1999.

                  IT IS AGREED by and between the parties hereto as follows:

                                    ARTICLE I
                                    ---------

                                   EMPLOYMENT
                                   ----------

                  1.1 TERM AND DUTIES. The Employer agrees to and does employ
the Employee to perform the duties of Chairman of the Board ("Chairman") and
Chief Executive Officer of Federated Department Stores, Inc. ("Federated") in
accordance with the terms of this Agreement. The period (the "Term") of such
employment shall begin on May 1, 1999 and shall end on the later of April 30,
2003 or such later date as agreed by the Employer and Employee. The duties of
the Employee shall be those commensurate with the office of Chairman of the
Board and Chief Executive Officer of Federated. In such capacity he shall have
general charge of the business and affairs of Federated. Neither the Employee's
title nor any of his functions shall be changed without his consent. While it is
understood that the right to elect directors and officers of Federated is by law
vested in the stockholders and directors of Federated, it is nevertheless
mutually contemplated, subject to such rights, that the Employee shall, at all
times



                                       1
   3

during his employment, be Chairman of the Board and Chief Executive Officer of
Federated and shall be a member of the Board of Directors of Federated.

                  1.2 COMPENSATION. In consideration of Employee's services
during the Term, the Employer agrees to (a) pay the Employee an annual salary in
the amount of One Million Two Hundred Fifty Thousand Dollars ($1,250,000) ("Base
Salary"), (b) permit the Employee to participate in Federated's annual and
long-term bonus programs as set forth on Exhibit A and (c) grant the Employee
stock options as set forth on Exhibit A. Nothing in this Agreement shall
preclude or in any way affect the grant by the Employer or the receipt by the
Employee of increases in such salary or any such bonuses or other forms of
additional compensation, including additional equity or equity-based awards, any
such salary and/or bonus increases and additional compensation, contingent or
otherwise, to be determined solely in the discretion of the Board of Directors
of the Employer or persons to whom such authority is delegated by such Board of
Directors. The Employee's salary shall never be reduced during the Term without
the Employee's consent.

                  1.3 PAYMENT SCHEDULE. The Base Salary specified in Section
1.2(a) hereof shall be payable as current salary, in installments not less
frequently than monthly, and at the same rate for any fraction of a month
unexpired at the end of the Term.

                  1.4 EXPENSES. During the Term the Employee shall be allowed
reasonable traveling expenses and shall be furnished office space, assistance
and accommodations suitable to the character of his position with Federated and
adequate for the performance of his duties hereunder.

                  1.5 BENEFITS. The Employee and/or the Employee's family, as
the case may be, shall be eligible for participation in and shall receive all
benefits under savings and retirement programs, welfare benefit plans, fringe
benefit programs and perquisites provided by the Employer and its affiliates
(including, for example, without limitation, medical, prescription, dental,
disability, salary continuance, executive life, group life, accidental death and
travel accident insurance plans and programs, use of an automobile, financial
counseling, and suitable



                                       2
   4

business and country club memberships), at least as favorable as the most
favorable of such plans and programs provided to key executives of Federated in
effect from time to time.

                  1.6 TERMINATION IN CASE OF DISABILITY. The Employee shall not
be in breach of this Agreement if he shall fail to perform his duties hereunder
because of physical or mental disability. If for a continuous period of 12
months during the Term the Employee fails to render services to the Employer
because of the Employee's physical or mental disability, the Board or its
delegate may end the Term prior to its stated termination date. If there should
be any dispute between the parties as to the Employee's physical or mental
disability at any time, such question shall be settled by the opinion of an
impartial reputable physician agreed upon for the purpose by the parties or
their representatives, or failing agreement within 10 days of a written request
therefor by either party to the other, then one designated by the then president
of the local Academy of Medicine. The written opinion of such physician as to
the matter in dispute shall be final and binding on the parties.

                  1.7 TERMINATION OF SERVICES. If, prior to the end of the Term,
(a) the Employer shall terminate the Employee's employment other than for Cause,
or (b) the Executive shall terminate his employment for Good Reason, then the
Employer shall immediately thereupon pay the Employee in a lump sum in cash (a)
the full amount of salary that would be payable to the Employee under Section
1.2 and (b) the aggregate of the target level annual bonus for which the
Employee is eligible under the Employer's 1992 Incentive Bonus Plan as set forth
in Exhibit A for each year remaining in the Term following such termination.
Employee shall be credited with vesting and benefit service through the
remainder of the Term.

                  1.8 TERMINATION FOR CAUSE. The Employer may terminate the
employment of the Employee and this Agreement and all of its obligations
hereunder, except for obligations accrued but unpaid to the effective date of
termination, for Cause upon notice given pursuant to this Section. As used in
this Agreement, the term "Cause" shall mean (a) the willful breach of duty by
the Employee in the course of his employment, (b) the Employee's habitual
neglect of his duties, (c) a material willful breach by the Employee of his
duties under this Agreement which



                                       3
   5

breach is not cured by the Employee within ten (10) days of receipt of written
notice thereof from the Employer to the Employee, or (d) the Employee's final
conviction of a felony, which conviction is nonappealable or for which the
period of filing an appeal has expired. "Cause" shall not include (a) bad
judgment or negligence of the Employee (other than his habitual neglect of
duty), or (b) any act or omission believed by the Employee in good faith to have
been in or not opposed to the interests of the Employer (without intent of
gaining therefrom directly or indirectly a profit to which he was not legally
entitled) and reasonably believed by the Employee not to have been improper or
unlawful, or (c) any act or omission in respect of which a determination could
properly have been made by the Board of Directors of Federated that the Employee
met the applicable standard of conduct prescribed for indemnification or
reimbursement under the bylaws of Federated or the laws of Delaware, in each
case in effect at the time of such act or omission, or (d) an act or omission
with respect to which notice of termination is given more than twelve months
after the earliest date on which any non-employee director of Federated who was
not a party to such act or omission knew or should have known of such act or
omission.


                  1.9 The term "Good Reason" means:

                      A. The assignment to the Employee of any duties materially
inconsistent with the Employee's position (including status, offices, titles and
reporting requirements), authority, duties or responsibilities as contemplated
in Article I of this Agreement, or any other action by the Employer which
results in a material diminution in such position, authority, duties or
responsibilities, excluding for this purpose an action not taken in bad faith
and which is remedied by the Employer within ten (10) days after receipt of
written notice thereof given by the Employee, provided that repeated instances
of such action shall be evidence of the bad faith of the Employer;

                  B. any material failure by the Employer to comply with any of
the provisions of this Agreement, other than a failure not occurring in bad
faith and which is remedied by the Employer within ten (10) days after receipt
of written notice thereof given by the Employee, provided that repeated failures
shall be evidence of the bad faith of the Employer;



                                       4
   6

                  C. failure of the Employee to be elected or reelected Chairman
and Chief Executive Officer of the Federated or to be elected or reelected to
membership on the Federated's Board of Directors; or

                  D. any purported termination by the Employer of the Employee's
employment otherwise than as expressly permitted by this Agreement.

                  1.10 LOCATION OF EMPLOYMENT. Employer shall not require
Employee to be based in any office or location other than within the Cincinnati,
Ohio Standard Metropolitan Statistical Area without his agreement, except for
travel reasonably required in the performance of the Employee's
responsibilities.

                                   ARTICLE II
                                OTHER PROVISIONS
                                ----------------

                  2.1 PERFORMANCE OF DUTIES. The Employee agrees that during the
Term (a) he will faithfully and in conformity with the directions of the Board
of Directors of Federated, perform the duties of his employment hereunder, and
that he will devote to the performance of said duties all such time and
attention as they shall reasonably require, taking, however, from time to time
(as the Employer agrees that he may) reasonable vacations; and (b) he will not,
without the express consent of the Board of Directors of Federated, or persons
to whom such authority is delegated by such Board of Directors become actively
associated with or engaged in any competing business (as hereinafter defined)
while he is employed by Employer or within one (1) year of the first to occur of
(i) the expiration of the Term or (ii) the termination of his employment by the
Employer for Cause or by the Employee other than for Good Reason prior to or at
the end of the Term, and he will do nothing inconsistent with his duties to the
Employer.
                  Notwithstanding the foregoing, the aforesaid one (1) year
period shall be shortened to whatever shorter period, if any, is adopted at any
time subsequent to the date hereof by the Compensation Committee of the Board of
Directors of Federated as the standard period



                                       5
   7

during which such non-compete provisions in the Employer's standard employment
agreements shall apply.

                  In the event that (i) the Employee is advised at any time by
the Employer in writing that his services will no longer be required during the
Term or (ii) the employment of the Employee is terminated by the Employee for
Good Reason, Employee shall be free to become actively engaged with another
business regardless of whether it is a competing business.
                  Employee agrees that he will not disclose to anyone outside of
the Employer, or use in other than the Employer's business, confidential
information relating to the Employer's business, in any way obtained by him
while employed by the Employer, unless authorized by the Employer in writing. It
is understood that violation of this provision would cause irreparable harm to
the Employer and that Employer may seek to enjoin any such violation or to take
any other applicable action. The Employee also agrees that he will not engage in
any activity which would violate the Conflict of Interest or Business Ethics
Statement signed from time to time by the Employee.
                  As used in this Section 2.1 a "competing business" shall be
any business which:

                  A. at the time of determination, is substantially similar to
the whole or a substantial part of the business at the end of the period of
active employment, conducted by Employer, or any of its subsidiaries, or
subsidiaries of subsidiaries, or affiliates, or divisions, or substantially
similar to some substantial part of said business; and
                  B. at the time of determination, is operating a store or
stores which, during its or their fiscal year preceding the determination, in
the aggregate had aggregate net sales, including sales in leased and licensed
departments, in excess of $10,000,000, which store or stores is or are located
in a city or within a radius of twenty-five (25) miles from the outer limits of
a city where Employer, or any of its subsidiaries, or subsidiaries of
subsidiaries, or affiliates, or divisions is operating a store or stores which,
during its or their fiscal year preceding the determination, in the aggregate
had aggregate nets sales, including sales in leased and licensed departments, in
excess of $10,000,000; and



                                       6
   8

                  C. had aggregate net sales at all its locations, including
sales in leased and licensed departments and sales by its divisions,
subsidiaries and affiliates, during its fiscal year preceding that in which the
Employee made such an investment therein, or first rendered personal services
thereto, following his termination of service, in excess of $25,000,000.

                                   ARTICLE III
                                  MISCELLANEOUS
                                  -------------

                  3.1 ASSIGNMENT. This Agreement shall not be assignable by the
Employer without the written consent of the Employee. The Employee may not
assign, pledge, or encumber his interest in this Agreement, or any part thereof,
without the written consent of the Employer.
                  3.2 GOVERNING LAW. This Agreement has been executed on behalf
of the Employer by an officer of the Employer located in the City of Cincinnati,
Ohio. This Agreement and all questions arising in connection herewith shall be
governed by the internal substantive laws of the State of Ohio. The Employer and
the Employee each consent to the jurisdiction of, and agree that any controversy
between them arising out of this Agreement shall be brought in, the United
States District Court for the Southern District of Ohio, Western Division; the
Court of Common Pleas for Hamilton County, Ohio; or such other court venued
within Hamilton County, Ohio as may have subject matter jurisdiction over the
controversy.
                  3.3 SEVERABILITY. If any portion of this Agreement is held to
be invalid or unenforceable, such holding shall not affect any other portion of
this Agreement.
                  3.4 ENTIRE AGREEMENT. This Agreement comprises the entire
agreement between the parties hereto and as of the date hereof, supersedes,
cancels and annuls any and all prior agreements between the parties hereto. This
Agreement may not be modified, renewed or extended orally, but only by a written
instrument referring to this Agreement and executed by the parties hereto.



                                       7
   9

                  3.5 GENDER AND NUMBER. Words in the masculine herein may be
interpreted as feminine or neuter, and words in the singular as plural, and vice
versa, where the sense requires.
                  3.6 NOTICES. Any notice or consent required or permitted to be
given under this Agreement shall be in writing and shall be effective when given
by personal delivery or five business days after being sent by certified US
mail, return receipt requested, to the Secretary of Federated Department Stores,
Inc. at its principal place of business in the City of Cincinnati or to the
Employee at his last known address as shown on the records of the Employer.
                  3.7 WITHHOLDING TAXES. The Employer may withhold from any
amounts payable under this Agreement all federal, state, city or other taxes as
shall be required pursuant to any law or governmental regulation or ruling.
                  3.8 WAIVER AND RELEASE. In consideration of the Employer's
entering into this Agreement, and the receipt of other good and valuable
consideration, the sufficiency of which is expressly acknowledged, the Employee,
for himself and his successors, assigns, heirs, executors and administrators,
hereby waives and releases and forever discharges the Employer and its
affiliates and their officers, directors, agents, employees, shareholders,
successors and assigns from all claims, demands, damages, actions and causes of
action whatsoever which he now has on account of any matter, whether known or
unknown to him and whether or not previously disclosed to the Employee or the
Employer, that relates to or arises out of (a) any existing or former employment
agreement (written or oral) entered into between the Employee and the Employer
or any of its affiliates (or any amendment or supplement to any such agreement),
(b) any agreement providing for a payment or payments or extension of the
employment relationship triggered by a merger or sale or other disposition of
the stock or assets or restructuring of the Employer or any affiliate of the
Employer, or (c) any applicable severance plan.
                  3.9 ENFORCEMENT OF AGREEMENT. If the Employee incurs legal or
other fees and expenses in an effort to establish entitlement to benefits under
this Agreement, regardless of whether the Employee ultimately prevails, the
Employer shall reimburse him for such fees and




                                       8
   10

expenses, unless a court of competent jurisdiction determines that the Employee
made such effort in bad faith.

                  Reimbursement of fees and expenses described in the preceding
paragraph shall be made monthly during the course of any action upon the written
submission of a request for reimbursement together with proof that the fees and
expenses were incurred

                  3.10 MISCELLANEOUS. Except as specifically provided herein,
all accounts payable pursuant to this Agreement shall be paid without reduction
regardless of any amounts of salary, compensation or other amounts which may be
paid or payable to Employee from any source or which Employee could have
obtained upon seeking other employment; provided that the Company shall be
permitted to make all payments pursuant to this Agreement net of any legally
required tax withholdings. Employee shall not be required to seek other
employment, and there shall be no offset to amounts due hereunder as a result of
any salary, compensation or other amounts Employee may be paid from other
sources.
                  IN WITNESS WHEREOF, the parties hereto have hereunto and to a
duplicate hereof set their signatures as of August 27, 1999.

                                         FEDERATED CORPORATE SERVICES, INC.

                                         By:   /s/  DENNIS J. BRODERICK
                                               ---------------------------------
                                               Dennis J. Broderick
                                         Title: President



                                         JAMES M. ZIMMERMAN


                                               /s/  JAMES M. ZIMMERMAN
                                               ---------------------------------



                                       9
   11

                                    EXHIBIT A

                                       to
                              EMPLOYMENT AGREEMENT

                   Entered into as of August 27, 1999 between

                       FEDERATED CORPORATE SERVICES, INC.

                                       And

                               JAMES M. ZIMMERMAN

(All capitalized terms used in this Exhibit are defined as set forth in
Agreement)

ANNUAL BONUS:              In respect of fiscal 1999, the annual bonus payable
                           (if any) under the terms of the 1992 Incentive Bonus
                           Plan (as such may be amended from time to time) of
                           Federated Department Stores, Inc. (Federated) will be
                           based on performance goals established for the senior
                           executives of the Employer on an annual basis by the
                           Board of Directors of Federated or a Committee
                           thereof, with the amount of bonus equal to a sliding
                           percent of Employee's annual base salary in effect as
                           of the last day of the performance period based on
                           performance against the targeted annual goals, as
                           follows:

                           PERFORMANCE AGAINST TARGET        PAYOUT AS PERCENT
                                                             OF ANNUAL SALARY
                     (a)   CORPORATE EBIT $
                           Below 95% of Target                     0.0%
                           95% of Target                          24.0%
                           Target                                 50.0%
                           110% of Target                         90.0%

                     (b)   CORPORATE SALES $
                           Below Target                            0.0%
                           Target                                 10.0%
                           101% of Target                         34.0%



                                       1
   12


                           PERFORMANCE AGAINST TARGET        PAYOUT AS PERCENT
                                                             OF ANNUAL SALARY
                     (c)   CORPORATE ROGI  %
                           Below Target                            0.0%
                           Target                                 10.0%
                           1.0 ppt. above Target                  34.0%

                           For each year during the Term beginning with and
                           including fiscal 2000, the annual bonus payable (if
                           any) under the terms of the 1992 Incentive Bonus Plan
                           (as such may be amended from time to time) of
                           Federated Department Stores, Inc. (Federated) will be
                           based on performance goals established for the senior
                           executives of the employer on an annual basis by the
                           Board of Directors of Federated or a Committee
                           thereof, with the amount of bonus equal to a sliding
                           percent of Employee's annual base salary in effect as
                           of the last day of the performance period based on
                           performance against the targeted annual goals, as
                           follows:

                           PERFORMANCE AGAINST TARGET        PAYOUT AS PERCENT
                                                             OF ANNUAL SALARY
                     (a)   CORPORATE EBIT $
                           Below 95% of Target                     0.0%
                           95% of Target                          34.0%
                           Target                                 70.0%
                           110% of Target                        126.0%

                     (b)   CORPORATE SALES $
                           Below Target                            0.0%
                           Target                                 15.0%
                           101% of Target                         51.0%

                     (c)   CORPORATE ROGI  %
                           Below Target                            0.0%
                           Target                                 15.0%
                           1.0 ppt. above Target                  51.0%

                           The percent of base salary payable as the annual
                           bonus is the aggregate of the above designated payout
                           based on performance achieved under each of the
                           performance components described



                                       2
   13

                           in (a), (b) and (c), above, except that if Corporate
                           EBIT $ falls below 95% of Target, no bonus is payable
                           for any component of the annual bonus plan, and
                           failure to achieve the annual EBIT percent to target
                           reduces the bonus otherwise payable in respect only
                           of the above corporate EBIT $ performance component
                           per the approved applicable executive compensation
                           plan description.

                           Any annual bonus payable hereunder shall be paid in
                           the fiscal year following the annual performance
                           period in respect of which the bonus is payable in
                           accordance with Federated's 1992 Incentive Bonus Plan
                           (as such may be amended from time to time).

                           By operation of Federated's Supplementary Executive
                           Retirement Plan, annual bonuses paid to Employee
                           under Federated's 1992 Incentive Bonus Plan are
                           included as eligible compensation under Federated's
                           Pension Plan.

LONG TERM PLAN:            For the 1997 - 1999 three year performance period,
                           the bonus payable (if any) under the terms of
                           Federated's 1992 Incentive Bonus Plan (as such may be
                           amended from time to time) will be based on
                           performance goals established for the senior
                           executives of Federated in respect of each such
                           three-year performance period by the Board of
                           Directors of Federated or a Committee thereof, with
                           the amount of bonus equal to a sliding percent of
                           Employee's annual base salary (prorated on an annual
                           basis for any change in Employee's base salary
                           occurring at any time during any such three-year
                           period and determined for any such year in the
                           three-year period based on the annual base salary in
                           effect as of the last day of the fiscal year) based
                           on performance against the targeted three-year goals,
                           as follows:

                           PERFORMANCE AGAINST TARGET        PAYOUT AS PERCENT
                                                             OF ANNUAL SALARY
                     (a)   CORPORATE EBIT $
                           Below 95% of Target                     0.0%
                           95 % of Target                         14.0%
                           Target                                 30.0%
                           110% of Target                         42.0%
                           120% of Target                         54.0%



                                       3
   14

                     (b)   PERFORMANCE VS PEERS RANKING
                           #1 Ranking                             36%
                           #2 Ranking                             31%
                           #3 Ranking                             25%
                           #4 Ranking                             20%
                           #5 Ranking                             10%
                           #6 Ranking                              0%


                           The percent of base salary payable as the long term
                           bonus in respect of the 1997-1999 performance period
                           is the aggregate of the above designated payout based
                           on performance achieved in respect of the performance
                           components described in (a) and (b), above, except
                           that if the three year Corporate EBIT $ falls below
                           95% of Target, no bonus is payable for any component
                           of the long-term bonus, and failure to achieve the
                           EBIT percent to target in year three reduces the
                           bonus otherwise payable in respect only of the above
                           corporate EBIT $ performance component per the
                           approved applicable executive compensation plan
                           description.


                           For each three year performance period beginning with
                           and including the 1998 - 2000 performance period, the
                           bonus payable (if any) under the terms of Federated's
                           1992 Incentive Bonus Plan (as such may be amended
                           from time to time) will be based on performance goals
                           established for the senior executives of Federated in
                           respect of each such three-year performance period by
                           the Board of Directors of Federated or a Committee
                           thereof, with the amount of bonus equal to a sliding
                           percent of Employee's annual base salary (prorated on
                           an annual basis for any change in Employee's base
                           salary occurring at any time during any such
                           three-year period and determined for any such year in
                           the three-year period based on the annual base salary
                           in effect as of the last day of the fiscal year)
                           based on performance against the targeted three-year
                           goals, as follows:



                                       4
   15

                           PERFORMANCE AGAINST TARGET        PAYOUT AS PERCENT
                                                             OF ANNUAL SALARY
                     (a)   CORPORATE EBIT $
                           Below 95% of Target                     0.0%
                           95% of  Target                         24.0%
                           Target                                 34.0%
                           110% of Target                         75.0%

                           PERFORMANCE AGAINST TARGET        PAYOUT AS PERCENT
                                                             OF ANNUAL SALARY
                     (b)   CORPORATE AVG. ROGI  %
                           Below Target                            0.0%
                           Target                                 16.0%
                           1.0 ppt. above target                  37.0%

                           The percent of base salary payable as the long-term
                           bonus in respect of each three year performance
                           period beginning and including the 1998-2000
                           performance period is the aggregate of the above
                           designated payout based on performance achieved in
                           respect of the performance components described in
                           (a) and (b) above, except that if the three year
                           Corporate EBIT $ falls below 95% of Target, no bonus
                           is payable for any component of the long-term bonus,
                           and failure to achieve the EBIT percent to target in
                           year three reduces the bonus otherwise payable in
                           respect only of the above corporate EBIT $
                           performance component per the approved applicable
                           executive compensation description.

                           Illustratively, in respect of the fiscal 1997 - 1999
                           performance period, assuming achievement of the 1997
                           -1999 goal at the 50% target level (i.e., Corporate
                           EBIT $ achieved at target and #4 ranking versus
                           peers), the long-term incentive payout in 2000 in
                           respect of such three-year period would be $625,000
                           (50% (30% payout re corporate EBIT $ + 20% payout re
                           peer performance) x $1,250,000 (the base salary in
                           effect at the end of 1997 fiscal year).

                           Employee shall be entitled to a pro rata portion of a
                           long-term bonus, if any is payable under the terms of
                           Federated's 1992 Incentive Bonus Plan (as such may be
                           amended from time to time), for any three-year
                           performance period commencing on or after fiscal 1997



                                       5
   16

                           but which performance period has not ended as of the
                           end of Term. The pro rata payment is based on the
                           length of Employee's service of employment within
                           such three-year performance period. Illustratively,
                           if the performance period covers the 1999-2001 fiscal
                           years and the employment terminates on the last day
                           of the 2000 fiscal year, Employee would have been
                           employed for sixty-seven percent (67%) of the
                           performance period and would be eligible for sixty-
                           seven percent (67%) of any long-term bonus payable as
                           provided above if and when any bonus is paid in
                           respect of that period under the terms of Federated's
                           1992 Incentive Plan (as may be amended) based upon
                           the performance goals established for the senior
                           executives of the Employer for that period by the
                           Board of Directors of Federated or a Committee
                           thereof.

                           Any long-term bonus payable hereunder shall be paid
                           in the fiscal year following the three-year
                           performance period in respect of which the bonus is
                           payable in accordance with Federated's 1992 Incentive
                           Bonus Plan. Any long-term bonus payable for any
                           three-year performance period beginning with and
                           including the 1998 - 2000 performance period will be
                           paid 50% in cash and 50% in deferred stock credits in
                           accordance with the approved applicable executive
                           compensation plan description, subject, as provided
                           in such plan, to Executive's election to allocate a
                           portion or all of any cash payout to deferred stock
                           credits. Any amounts deferred, including the required
                           50% deferral and any optional deferral above 50%,
                           will include a 20% premium, also to be paid in
                           deferred stock credits.



STOCK OPTIONS:             Federated shall grant, to Employee, effective August
                           27, 1999 (the "Grant Date"), options for 450,000
                           shares, with vesting of 112,500 shares on May 1, 2000
                           (the "Option Vesting Date"), 112,500 shares on the
                           first anniversary of the Option Vesting Date, 112,500
                           shares on the second anniversary of the Option
                           Vesting Date, and 112,500 shares on the third
                           anniversary of the Option Vesting Date, except that
                           100%



                                       6
   17

                           vesting shall occur immediately upon the effective
                           date of the termination of the employment of Employee
                           (a) by Employer other than for Cause, (b) by Employee
                           for Good Reason or (c) by Employer and Employee by
                           mutual consent; the options will be issued at one
                           hundred percent of the closing market price of
                           Federated's common stock on the New York Stock
                           Exchange as listed in THE WALL STREET JOURNAL on the
                           trading day immediately preceding the Grant Date; the
                           term of the grant shall expire ten years from the
                           Grant Date; any options that are unvested as of the
                           time Employee discontinues his employment with
                           Employer shall continue to vest in accordance with
                           the vesting schedule described above unless the
                           Employee's employment is terminated for cause (as
                           defined in the Non-Qualified Stock Option Agreement),
                           except that if the Employee at any time prior to the
                           third anniversary of the Option Vesting Date renders
                           personal services to The May Department Stores
                           Company, Dillard's, Inc., Saks, Inc., or Nordstrom,
                           Inc., the grant of options, and all rights of the
                           Employee with regard to any vested but unexercised
                           options and any unvested options, shall terminate on
                           the commencement of such engagement; the grant is
                           subject to the terms of the attached form of
                           Non-Qualified Stock Option Agreement with Federated.


RESTRICTED STOCK AWARD:    Federated shall grant to Employee, effective August
                           27, 1999 (the "Grant Date"), 100,000 restricted
                           shares of Federated's Common Stock, with restrictions
                           as to 25,000 shares lapsing on May 1, 2000 (the
                           "Lapse Date") and as to 25,000 shares on each of the
                           first, second and third anniversaries of the Lapse
                           Date, except that 100% lapsing shall occur
                           immediately upon the effective date of the
                           termination of the employment of Employee (a) by
                           Employer other than for Cause, (b) the Employee for
                           Good Reason or (c) by Employer and Employee by mutual
                           consent; the restrictions on any shares that have not
                           lapsed as of the time the Employee discontinues his
                           employment with Employer shall continue to lapse in
                           accordance with the lapsing schedule described above
                           unless the Employee's employment is terminated for
                           cause (as defined in the Restricted Stock Agreement),
                           except that if Employee at any time prior to the
                           third anniversary of the Lapse Date renders personal
                           services to The May Department Stores Company,
                           Dillard's, Inc., Saks, Inc., or Nordstrom's, Inc.,
                           all shares of



                                       7
   18

                           restricted stock on which the restrictions have not
                           lapsed shall be forfeited on the commencement of such
                           engagement; the grant is subject to the terms of the
                           attached form of Restricted Stock Agreement.


JAMES M. ZIMMERMAN                                FEDERATED CORPORTE
                                                  SERVICES, INC.

/s/  James M. Zimmerman                           /s/  Dennis J. Broderick
- ----------------------------------                ------------------------------
                                                  DENNIS J. BRODERICK
                                                  PRESIDENT



                                       8

EX-21

   1




                                         Federated Department Stores, Inc.
                                           Subsidiary list as of 4/1/00

                       Corporate Name                     State of Incorporation         Tradename(s)
- ----------------------------------------------------------------------------------------------------------------
                                                                                   
22 East Advertising Agency, Inc.                               Florida
22 East Realty Corporation                                     Florida
Advertex Communications, Inc.                                  Delaware
Allied Stores General Real Estate Company                      Delaware
Allied Stores International Sales Company, Inc.                New York
Allied Stores International, Inc.                              New York
Allied Stores Marketing Corp.                                  New York
Andy's Garage Sale, Inc.                                       Minnesota
Arizona Mail Order, Inc.                                       Delaware
Astoria Realty, Inc.                                           Delaware
Atomic Living, Inc.                                            Minnesota
Axsys National Bank, N.A.                                      N/A
Bamrest Del, Inc.                                              Delaware
Bedford Fair Apparel, Inc.                                     Delaware
BFC Real Estate Company                                        Delaware
Bloomingdale's Atlantic City, Inc.                             Delaware
Bloomingdale's By Mail Ltd.                                    New York                  Bloomingdale's By Mail
Bloomingdale's, Inc.                                           Ohio                      Bloomingdale's
Broadway Receivables, Inc.                                     Delaware
Broadway Stores, Inc.                                          Delaware
Burdines, Inc.                                                 Ohio                      Burdines
Carter Hawley Hale Properties, Inc.                            California
Cowie & Company, Limited                                       New York
Customer Communications Center, Inc.                           Minnesota
Distribution Specialists, Inc.                                 Minnesota
Executive Placements Consultants, Inc.                         New York
FACS Group, Inc.                                               Ohio                      FACS
Family Farm Gifts, Inc.                                        Wisconsin
FDS National Bank                                              N/A
Federated Brands, Inc.                                         Delaware
Federated Claims Administration, Inc.                          Ohio
Federated Claims Services Group, Inc.                          Delaware
Federated Corporate Services, Inc.                             Delaware                  Federated Logistics and
                                                                                         Operations
Federated Department Stores Foundation                         Ohio
Federated Department Stores Insurance
  Company, Ltd. (99.99% ownership)                             Bermuda
Federated Noteholding Corporation                              Delaware
Federated Noteholding Corporation II                           Delaware



4/4/00                                    1
   2




                                         Federated Department Stores, Inc.
                                           Subsidiary list as of 4/1/00

                       Corporate Name                     State of Incorporation         Tradename(s)
- ----------------------------------------------------------------------------------------------------------------
                                                                                   
Federated Retail Holdings, Inc.                                Delaware
Federated Specialty Stores, Inc.                               Ohio
Federated Stores Realty, Inc.                                  Delaware
Federated Systems Group, Inc.                                  Delaware
Federated Western Properties, Inc.                             Ohio
Figi's Gifts, Inc.                                             Wisconsin
Figi's Mail Order Gifts, Inc.                                  Wisconsin
Figi's, Inc.                                                   Wisconsin
Fingerhut (UK) Limited                                         United Kingdom
Fingerhut Business Services, Inc.                              Minnesota
Fingerhut Companies, Inc.                                      Minnesota
Fingerhut Company Store, Inc.                                  Minnesota
Fingerhut Corporation                                          Minnesota
Fingerhut Funding Co.                                          Delaware
Fingerhut Marketing Services, Inc.                             Minnesota
Fingerhut Receivables, Inc.                                    Delaware
Fingerhut Systems Services, Inc.                               Minnesota
Finite Limited                                                 Hong Kong
FSG Leasing Corp.                                              Delaware
Fulfillment Services Company                                   Minnesota
Hut Retail Services, Inc.                                      Minnesota
I. Magnin, Inc.                                                Delaware
Infochoice USA, Inc.                                           Minnesota
iTrust Insurance Agency, Inc.                                  Arizona
Jordan Marsh Insurance Agency, Inc.                            Massachusetts
Jordan Servicenter, Inc.                                       Delaware
LM&B Catalog, Inc.                                             Delaware
Macy Financial, Inc.                                           Delaware
Macy's By Mail, Inc.                                           New York                  Macy's By Mail
Macy's Close-Out, Inc.                                         Ohio
Macy's Department Stores, Inc.                                 Ohio
Macy's East, Inc.                                              Ohio                      Macy's
Macy's Hamilton By Appointment, Inc.                           Delaware
Macy's Puerto Rico, Inc.                                       Puerto Rico               Macy's
Macy's Texas, Inc.                                             Delaware                  Macy's
Macy's West, Inc.                                              Ohio                      Macy's
Macy's.Com, Inc.                                               New York                  Macy's.com
Minnesota Telemarketing, Inc.                                  Minnesota
MOA Rest, Inc.                                                 Minnesota
Nasstock, Inc.                                                 New York
New Lines, inc.                                                Minnesota
Paramustock, Inc.                                              New Jersey



05/15/98                                2
   3




                                         Federated Department Stores, Inc.
                                           Subsidiary list as of 4/1/00

                       Corporate Name                     State of Incorporation         Tradename(s)
- ----------------------------------------------------------------------------------------------------------------
                                                                                   
Popular Club Plan, Inc.                                        New Jersey
Popular Club Receivables, Inc.                                 Delaware
Prime II Receivables Corporation                               Delaware
Prime Receivables Corporation                                  Delaware
R. H. Macy (France) S.A.R.L.                                   France
R. H. Macy Holdings (HK), Ltd.                                 Delaware
R. H. Macy Overseas Finance N.V.                               Netherland Antilles
R. H. Macy Warehouse (HK), Ltd.                                Delaware
Rich's Department Stores, Inc.                                 Ohio                      Goldsmith's
                                                                                         Lazarus
                                                                                         Rich's
Sabugo, Limited                                                Hong Kong
Seven Hills Funding Corporation                                Delaware
Seven West Seventh, Inc.                                       Delaware
Stern's Department Stores, Inc.                                Ohio                      Stern's
Tennessee Distribution, Inc.                                   Minnesota
Tennessee Telemarketing, Inc.                                  Minnesota
The Bon, Inc.                                                  Ohio                      The Bon
                                                                                         The Bon Marche
USA Direct/Guthy-Renker, Inc. (50% ownership)                  Minnesota
Western Distribution, Inc.                                     Minnesota
Wiman Corporation                                              Minnesota
Wise Chat Limited                                              Hong Kong
YesDirect, Inc.                                                Minnesota




05/15/98                                3

EX-22

   1
                                                                      Exhibit 22


                         INDEPENDENT AUDITORS' CONSENT

The Board of Directors and Shareholders
Federated Department Stores, Inc.

We consent to the incorporation by reference in the registration statements
(Nos. 333-44373, 333-77089, 333-22737 and 333-88242) on Form S-8 and the
registration statements (Nos. 333-34321 and 333-76789) on Form S-3 of Federated
Department Stores, Inc. of our report dated February 22, 2000, relating to the
consolidated balance sheets of Federated Department Stores, Inc. and
subsidiaries as of January 29, 2000 and January 30, 1999 and the related
consolidated statements of income, changes in shareholders' equity and cash
flows for the fifty-two week periods ended January 29, 2000, January 30, 1999,
and January 31, 1998, which report appears in the January 29, 2000 annual
report on Form 10-K of Federated Department Stores, Inc.


                                    KPMG LLP

Cincinnati, Ohio
April 14, 2000

EX-23

   1
                                                                      Exhibit 23



                                POWER OF ATTORNEY
                                -----------------



         The undersigned, a director and/or officer of Federated Department
Stores, Inc., a Delaware corporation (the "Company"), hereby constitutes and
appoints Dennis J. Broderick, John R. Sims and Padma Tatta Cariappa, or any of
them, my true and lawful attorneys-in-fact and agents, each with full power of
substitution and resubstitution, to do any and all acts and things in my name
and behalf in my capacities as director and/or officer of the Company and to
execute any and all instruments for me and in my name in the capacities
indicated above, which said attorneys-in-fact and agents, or any of them, may
deem necessary or advisable to enable the Company to comply with the Securities
Act of 1934, as amended (the "Exchange Act"), and any rules, regulations, and
requirements of the Securities and Exchange Commission (the "Commission"), in
connection with an Annual Report on Form 10-K to be filed by the Company
pursuant to Section 13 of the Exchange Act, including without limitation, power
and authority to sign for me, in my name in the capacity or capacities referred
to above, such Annual Report, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Commission, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or their
substitute or substitutes, or any one of them, shall do or cause to be done by
virtue hereof.



Dated:   April 19, 2000                               /s/ James M. Zimmerman
                                                      --------------------------
                                                      James M. Zimmerman


   2




                                POWER OF ATTORNEY
                                -----------------



         The undersigned, a director and/or officer of Federated Department
Stores, Inc., a Delaware corporation (the "Company"), hereby constitutes and
appoints Dennis J. Broderick, John R. Sims and Padma Tatta Cariappa, or any of
them, my true and lawful attorneys-in-fact and agents, each with full power of
substitution and resubstitution, to do any and all acts and things in my name
and behalf in my capacities as director and/or officer of the Company and to
execute any and all instruments for me and in my name in the capacities
indicated above, which said attorneys-in-fact and agents, or any of them, may
deem necessary or advisable to enable the Company to comply with the Securities
Act of 1934, as amended (the "Exchange Act"), and any rules, regulations, and
requirements of the Securities and Exchange Commission (the "Commission"), in
connection with an Annual Report on Form 10-K to be filed by the Company
pursuant to Section 13 of the Exchange Act, including without limitation, power
and authority to sign for me, in my name in the capacity or capacities referred
to above, such Annual Report, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Commission, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or their
substitute or substitutes, or any one of them, shall do or cause to be done by
virtue hereof.



Dated:   April 19, 2000                           /s/ Terry J. Lundgren
                                                     ---------------------
                                                      Terry J. Lundgren

   3


                               POWER OF ATTORNEY
                               -----------------


         The undersigned, a director and/or officer of Federated Department
Stores, Inc., a Delaware corporation (the "Company"), hereby constitutes and
appoints Dennis J. Broderick, John R. Sims and Padma Tatta Cariappa, or any of
them, my true and lawful attorneys-in-fact and agents, each with full power of
substitution and resubstitution, to do any and all acts and things in my name
and behalf in my capacities as director and/or officer of the Company and to
execute any and all instruments for me and in my name in the capacities
indicated above, which said attorneys-in-fact and agents, or any of them, may
deem necessary or advisable to enable the Company to comply with the Securities
Act of 1934, as amended (the "Exchange Act"), and any rules, regulations, and
requirements of the Securities and Exchange Commission (the "Commission"), in
connection with an Annual Report on Form 10-K to be filed by the Company
pursuant to Section 13 of the Exchange Act, including without limitation, power
and authority to sign for me, in my name in the capacity or capacities referred
to above, such Annual Report, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Commission, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or their
substitute or substitutes, or any one of them, shall do or cause to be done by
virtue hereof.



Dated:   April 19, 2000                              /s/ Ronald W. Tysoe
                                                     --------------------------
                                                     Ronald W. Tysoe



   4




                                POWER OF ATTORNEY
                                -----------------


         The undersigned, a director and/or officer of Federated Department
Stores, Inc., a Delaware corporation (the "Company"), hereby constitutes and
appoints Dennis J. Broderick, John R. Sims and Padma Tatta Cariappa, or any of
them, my true and lawful attorneys-in-fact and agents, each with full power of
substitution and resubstitution, to do any and all acts and things in my name
and behalf in my capacities as director and/or officer of the Company and to
execute any and all instruments for me and in my name in the capacities
indicated above, which said attorneys-in-fact and agents, or any of them, may
deem necessary or advisable to enable the Company to comply with the Securities
Act of 1934, as amended (the "Exchange Act"), and any rules, regulations, and
requirements of the Securities and Exchange Commission (the "Commission"), in
connection with an Annual Report on Form 10-K to be filed by the Company
pursuant to Section 13 of the Exchange Act, including without limitation, power
and authority to sign for me, in my name in the capacity or capacities referred
to above, such Annual Report, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Commission, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or their
substitute or substitutes, or any one of them, shall do or cause to be done by
virtue hereof.



Dated:   April 19, 2000                              /s/ Karen M. Hoguet
                                                     -------------------------
                                                     Karen M. Hoguet



   5





                                POWER OF ATTORNEY
                                -----------------


         The undersigned, a director and/or officer of Federated Department
Stores, Inc., a Delaware corporation (the "Company"), hereby constitutes and
appoints Dennis J. Broderick, John R. Sims and Padma Tatta Cariappa, or any of
them, my true and lawful attorneys-in-fact and agents, each with full power of
substitution and resubstitution, to do any and all acts and things in my name
and behalf in my capacities as director and/or officer of the Company and to
execute any and all instruments for me and in my name in the capacities
indicated above, which said attorneys-in-fact and agents, or any of them, may
deem necessary or advisable to enable the Company to comply with the Securities
Act of 1934, as amended (the "Exchange Act"), and any rules, regulations, and
requirements of the Securities and Exchange Commission (the "Commission"), in
connection with an Annual Report on Form 10-K to be filed by the Company
pursuant to Section 13 of the Exchange Act, including without limitation, power
and authority to sign for me, in my name in the capacity or capacities referred
to above, such Annual Report, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Commission, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or their
substitute or substitutes, or any one of them, shall do or cause to be done by
virtue hereof.



Dated:   April 19, 2000                              /s/ Joel A. Belsky
                                                     -------------------------
                                                     Joel A. Belsky





   6



                               POWER OF ATTORNEY
                               -----------------


         The undersigned, a director and/or officer of Federated Department
Stores, Inc., a Delaware corporation (the "Company"), hereby constitutes and
appoints Dennis J. Broderick, John R. Sims and Padma Tatta Cariappa, or any of
them, my true and lawful attorneys-in-fact and agents, each with full power of
substitution and resubstitution, to do any and all acts and things in my name
and behalf in my capacities as director and/or officer of the Company and to
execute any and all instruments for me and in my name in the capacities
indicated above, which said attorneys-in-fact and agents, or any of them, may
deem necessary or advisable to enable the Company to comply with the Securities
Act of 1934, as amended (the "Exchange Act"), and any rules, regulations, and
requirements of the Securities and Exchange Commission (the "Commission"), in
connection with an Annual Report on Form 10-K to be filed by the Company
pursuant to Section 13 of the Exchange Act, including without limitation, power
and authority to sign for me, in my name in the capacity or capacities referred
to above, such Annual Report, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Commission, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or their
substitute or substitutes, or any one of them, shall do or cause to be done by
virtue hereof.



Dated:   April 19, 2000                              /s/ Meyer Feldberg
                                                     ---------------------------
                                                     Meyer Feldberg





   7




                                POWER OF ATTORNEY
                                -----------------


         The undersigned, a director and/or officer of Federated Department
Stores, Inc., a Delaware corporation (the "Company"), hereby constitutes and
appoints Dennis J. Broderick, John R. Sims and Padma Tatta Cariappa, or any of
them, my true and lawful attorneys-in-fact and agents, each with full power of
substitution and resubstitution, to do any and all acts and things in my name
and behalf in my capacities as director and/or officer of the Company and to
execute any and all instruments for me and in my name in the capacities
indicated above, which said attorneys-in-fact and agents, or any of them, may
deem necessary or advisable to enable the Company to comply with the Securities
Act of 1934, as amended (the "Exchange Act"), and any rules, regulations, and
requirements of the Securities and Exchange Commission (the "Commission"), in
connection with an Annual Report on Form 10-K to be filed by the Company
pursuant to Section 13 of the Exchange Act, including without limitation, power
and authority to sign for me, in my name in the capacity or capacities referred
to above, such Annual Report, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Commission, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or their
substitute or substitutes, or any one of them, shall do or cause to be done by
virtue hereof.



Dated:   April 19, 2000                              /s/ Earl G. Graves, Sr.
                                                     -----------------------
                                                     Earl G. Graves, Sr.





   8




                                POWER OF ATTORNEY
                                -----------------


         The undersigned, a director and/or officer of Federated Department
Stores, Inc., a Delaware corporation (the "Company"), hereby constitutes and
appoints Dennis J. Broderick, John R. Sims and Padma Tatta Cariappa, or any of
them, my true and lawful attorneys-in-fact and agents, each with full power of
substitution and resubstitution, to do any and all acts and things in my name
and behalf in my capacities as director and/or officer of the Company and to
execute any and all instruments for me and in my name in the capacities
indicated above, which said attorneys-in-fact and agents, or any of them, may
deem necessary or advisable to enable the Company to comply with the Securities
Act of 1934, as amended (the "Exchange Act"), and any rules, regulations, and
requirements of the Securities and Exchange Commission (the "Commission"), in
connection with an Annual Report on Form 10-K to be filed by the Company
pursuant to Section 13 of the Exchange Act, including without limitation, power
and authority to sign for me, in my name in the capacity or capacities referred
to above, such Annual Report, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Commission, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or their
substitute or substitutes, or any one of them, shall do or cause to be done by
virtue hereof.



Dated:   April 19, 2000                              /s/ George V. Grune
                                                     --------------------------
                                                     George V. Grune




   9




                                POWER OF ATTORNEY
                                -----------------


         The undersigned, a director and/or officer of Federated Department
Stores, Inc., a Delaware corporation (the "Company"), hereby constitutes and
appoints Dennis J. Broderick, John R. Sims and Padma Tatta Cariappa, or any of
them, my true and lawful attorneys-in-fact and agents, each with full power of
substitution and resubstitution, to do any and all acts and things in my name
and behalf in my capacities as director and/or officer of the Company and to
execute any and all instruments for me and in my name in the capacities
indicated above, which said attorneys-in-fact and agents, or any of them, may
deem necessary or advisable to enable the Company to comply with the Securities
Act of 1934, as amended (the "Exchange Act"), and any rules, regulations, and
requirements of the Securities and Exchange Commission (the "Commission"), in
connection with an Annual Report on Form 10-K to be filed by the Company
pursuant to Section 13 of the Exchange Act, including without limitation, power
and authority to sign for me, in my name in the capacity or capacities referred
to above, such Annual Report, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Commission, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or their
substitute or substitutes, or any one of them, shall do or cause to be done by
virtue hereof.



Dated:   April 19, 2000                              /s/ Sara Levinson
                                                     ---------------------------
                                                     Sara Levinson


   10



                                POWER OF ATTORNEY
                                -----------------


         The undersigned, a director and/or officer of Federated Department
Stores, Inc., a Delaware corporation (the "Company"), hereby constitutes and
appoints Dennis J. Broderick, John R. Sims and Padma Tatta Cariappa, or any of
them, my true and lawful attorneys-in-fact and agents, each with full power of
substitution and resubstitution, to do any and all acts and things in my name
and behalf in my capacities as director and/or officer of the Company and to
execute any and all instruments for me and in my name in the capacities
indicated above, which said attorneys-in-fact and agents, or any of them, may
deem necessary or advisable to enable the Company to comply with the Securities
Act of 1934, as amended (the "Exchange Act"), and any rules, regulations, and
requirements of the Securities and Exchange Commission (the "Commission"), in
connection with an Annual Report on Form 10-K to be filed by the Company
pursuant to Section 13 of the Exchange Act, including without limitation, power
and authority to sign for me, in my name in the capacity or capacities referred
to above, such Annual Report, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Commission, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or their
substitute or substitutes, or any one of them, shall do or cause to be done by
virtue hereof.



Dated:   April 19, 2000                              /s/ Joseph Neubauer
                                                     ---------------------------
                                                     Joseph Neubauer



   11




                                POWER OF ATTORNEY
                                -----------------


         The undersigned, a director and/or officer of Federated Department
Stores, Inc., a Delaware corporation (the "Company"), hereby constitutes and
appoints Dennis J. Broderick, John R. Sims and Padma Tatta Cariappa, or any of
them, my true and lawful attorneys-in-fact and agents, each with full power of
substitution and resubstitution, to do any and all acts and things in my name
and behalf in my capacities as director and/or officer of the Company and to
execute any and all instruments for me and in my name in the capacities
indicated above, which said attorneys-in-fact and agents, or any of them, may
deem necessary or advisable to enable the Company to comply with the Securities
Act of 1934, as amended (the "Exchange Act"), and any rules, regulations, and
requirements of the Securities and Exchange Commission (the "Commission"), in
connection with an Annual Report on Form 10-K to be filed by the Company
pursuant to Section 13 of the Exchange Act, including without limitation, power
and authority to sign for me, in my name in the capacity or capacities referred
to above, such Annual Report, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Commission, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or their
substitute or substitutes, or any one of them, shall do or cause to be done by
virtue hereof.



Dated:   April 19, 2000                              /s/ Joseph A. Pichler
                                                     ---------------------------
                                                     Joseph A. Pichler


   12


                                POWER OF ATTORNEY
                                -----------------


         The undersigned, a director and/or officer of Federated Department
Stores, Inc., a Delaware corporation (the "Company"), hereby constitutes and
appoints Dennis J. Broderick, John R. Sims and Padma Tatta Cariappa, or any of
them, my true and lawful attorneys-in-fact and agents, each with full power of
substitution and resubstitution, to do any and all acts and things in my name
and behalf in my capacities as director and/or officer of the Company and to
execute any and all instruments for me and in my name in the capacities
indicated above, which said attorneys-in-fact and agents, or any of them, may
deem necessary or advisable to enable the Company to comply with the Securities
Act of 1934, as amended (the "Exchange Act"), and any rules, regulations, and
requirements of the Securities and Exchange Commission (the "Commission"), in
connection with an Annual Report on Form 10-K to be filed by the Company
pursuant to Section 13 of the Exchange Act, including without limitation, power
and authority to sign for me, in my name in the capacity or capacities referred
to above, such Annual Report, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Commission, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or their
substitute or substitutes, or any one of them, shall do or cause to be done by
virtue hereof.



Dated:   April 19, 2000                         /s/ Karl M. Von Der Heyden
                                                --------------------------------
                                                Karl M. von der Heyden




   13




                                POWER OF ATTORNEY
                                -----------------


         The undersigned, a director and/or officer of Federated Department
Stores, Inc., a Delaware corporation (the "Company"), hereby constitutes and
appoints Dennis J. Broderick, John R. Sims and Padma Tatta Cariappa, or any of
them, my true and lawful attorneys-in-fact and agents, each with full power of
substitution and resubstitution, to do any and all acts and things in my name
and behalf in my capacities as director and/or officer of the Company and to
execute any and all instruments for me and in my name in the capacities
indicated above, which said attorneys-in-fact and agents, or any of them, may
deem necessary or advisable to enable the Company to comply with the Securities
Act of 1934, as amended (the "Exchange Act"), and any rules, regulations, and
requirements of the Securities and Exchange Commission (the "Commission"), in
connection with an Annual Report on Form 10-K to be filed by the Company
pursuant to Section 13 of the Exchange Act, including without limitation, power
and authority to sign for me, in my name in the capacity or capacities referred
to above, such Annual Report, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Commission, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or their
substitute or substitutes, or any one of them, shall do or cause to be done by
virtue hereof.



Dated:   April 19, 2000                         /s/ Craig E. Weatherup
                                                --------------------------------
                                                Craig E. Weatherup





   14




                                POWER OF ATTORNEY
                                -----------------


         The undersigned, a director and/or officer of Federated Department
Stores, Inc., a Delaware corporation (the "Company"), hereby constitutes and
appoints Dennis J. Broderick, John R. Sims and Padma Tatta Cariappa, or any of
them, my true and lawful attorneys-in-fact and agents, each with full power of
substitution and resubstitution, to do any and all acts and things in my name
and behalf in my capacities as director and/or officer of the Company and to
execute any and all instruments for me and in my name in the capacities
indicated above, which said attorneys-in-fact and agents, or any of them, may
deem necessary or advisable to enable the Company to comply with the Securities
Act of 1934, as amended (the "Exchange Act"), and any rules, regulations, and
requirements of the Securities and Exchange Commission (the "Commission"), in
connection with an Annual Report on Form 10-K to be filed by the Company
pursuant to Section 13 of the Exchange Act, including without limitation, power
and authority to sign for me, in my name in the capacity or capacities referred
to above, such Annual Report, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Commission, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or their
substitute or substitutes, or any one of them, shall do or cause to be done by
virtue hereof.



Dated:   April 19, 2000                           /s/ Marna C. Whittington
                                                  ------------------------------
                                                  Marna C. Whittington

EX-27

 

<ARTICLE> 5
<MULTIPLIER> 1,000,000

                             
<PERIOD-TYPE>                   YEAR
<FISCAL-YEAR-END>                          JAN-29-2000
<PERIOD-START>                             JAN-31-1999
<PERIOD-END>                               JAN-29-2000
<CASH>                                             218
<SECURITIES>                                         0
<RECEIVABLES>                                    4,313
<ALLOWANCES>                                         0
<INVENTORY>                                      3,589
<CURRENT-ASSETS>                                 8,522
<PP&E>                                           6,828
<DEPRECIATION>                                       0
<TOTAL-ASSETS>                                  17,692
<CURRENT-LIABILITIES>                            4,552
<BONDS>                                          4,589
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                          0
<COMMON>                                             0
<OTHER-SE>                                           0
<TOTAL-LIABILITY-AND-EQUITY>                    17,692
<SALES>                                         17,716
<TOTAL-REVENUES>                                     0
<CGS>                                                0
<TOTAL-COSTS>                                   10,443
<OTHER-EXPENSES>                                 5,572
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                                 368
<INCOME-PRETAX>                                  1,346
<INCOME-TAX>                                       551
<INCOME-CONTINUING>                                  0
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                       795
<EPS-BASIC>                                       3.78
<EPS-DILUTED>                                     3.62

<F1>Supplies and prepaid expenses                  230
Deferred income tax assets                         172
<F2>Intangible assets - net                      1,735
Other assets                                       607
<F3>Deferred income taxes                        1,444
Other liabilities                                  555
Shareholders' Equity                             6,552
<F4>Interest income                                 13