<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 11-K
ANNUAL REPORTING PURSUANT TO SECTION 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
/X/ Annual report pursuant to Section 15 (d) of the Securities Exchange Act
of 1934 (No fee required, effective October 7, 1996)
For the fiscal year ended December 31, 1997
Or
/ / Transition report pursuant to Section 15 (d) of the Securities Exchange
Act of 1934 (No fee required)
For the transition period from ___________________ to ___________________
Commission file number 001-14346
A. Full title of the plan and the address of the plan, if different from that
of the issuer named below:
Saks Fifth Avenue Retirement Savings Plan
B. Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office
Saks Holdings, Inc.
12 East 49th Street
New York, New York 10017
<PAGE>
SAKS FIFTH AVENUE RETIREMENT SAVINGS PLAN
INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES
Page(s)
-------
Report of Independent Accountants 3
Financial Statements:
Statement of Net Assets Available for Benefits, with
Fund Information, as of December 31, 1997 4
Statement of Changes in Net Assets Available for
Benefits, with Fund Information, for the tax
year ended December 31, 1997. 5
Notes to Financial Statements 6-15
Supplemental Schedules:
Line 27a - Schedule of Assets Held for Investment
Purposes as of December 31, 1997 (Unaudited) 16
Line 27d - Schedule of Reportable Transactions for the year
ended December 31, 1997 (Unaudited) 18
Signature 19
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Plan Asset Committee
of the Saks Fifth Avenue Retirement Savings Plan:
We have audited the accompanying statements of net assets available for
benefits of the SAKS FIFTH AVENUE RETIREMENT SAVINGS PLAN (the "Plan") as of
December 31, 1997, and the related statement of changes in net assets
available for benefits for the year then ended. These financial statements
are the responsibility of the Plan's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the plan as
of December 31, 1997 and changes in net assets available for benefits for the
year then ended in conformity with generally accepted accounting principles.
Our audit was made for the purpose of forming an opinion on the financial
statements taken as a whole. The supplemental schedules, as listed in the
accompanying index on page 1, are presented for the purpose of additional
analysis and are not a required part of the basic financial statements, but
are supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. The information in the statement of net assets
available for benefits and the statement of changes in net assets available
for benefits is presented for purposes of additional analysis rather than to
present the net assets available for plan benefits and changes in net assets
available for plan benefits of each fund. The supplemental schedules and fund
information have been subjected to the auditing procedures applied in the
audit of the basic financial statements and, in our opinion, are fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
The schedule of reportable transactions that accompanies the Plan's financial
statements does not disclose the Historical cost of certain plan investments
sold during the Plan year. Disclosure of this information is required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure
under the Employee Retirement Income Security Act of 1974.
COOPERS & LYBRAND L.L.P.
New York, New York
June 12, 1998.
3
<PAGE>
Saks Fifth Avenue Retirement Savings Plan
Net Assets Available for Benefits, with Fund Information
As of December 31, 1997
<TABLE>
<CAPTION>
Asset
Interest U.S. Participant Asset Manager -
Income Equity Loan Balanced Magellan Manager Growth
Fund Index Fund Fund Fund Fund Fund Fund
---------- ----------- ---------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
Participant directed
investment in accounts
established by Fidelity
Management Trust Company,
at fair value $50,707,104 $27,507,535 $ 8,042,212 $24,152,973 $ 8,158,574 $11,635,824
Receivables:
Participant loans $ 5,878,480
Contributions 105,476 47,465 24,588 58,508 19,664 30,823
Other 24,499 9,134 2,510 9,720 2,589 4,006
----------- ----------- --------- ----------- ----------- ----------- -----------
Total assets 50,837,079 27,564,134 5,878,480 8,069,310 24,221,201 8,180,827 11,670,653
----------- ----------- --------- ----------- ----------- ----------- -----------
LIABILITIES:
Administrative expenses
payable 28,268 4,771 3,543 3,116 2,815 2,608
----------- ----------- --------- ----------- ----------- ----------- -----------
Total liabilities 28,268 4,771 3,543 3,116 2,815 2,608
----------- ----------- --------- ----------- ----------- ----------- -----------
Net assets available
for benefits $50,808,811 $27,559,363 $ 5,878,480 $ 8,065,767 $24,218,085 $ 8,178,012 $11,668,045
----------- ----------- --------- ----------- ----------- ----------- -----------
----------- ----------- --------- ----------- ----------- ----------- -----------
</TABLE>
<TABLE>
<CAPTION>
Asset
Manager - Growth &
Income SFA Stock Income Overseas Plan
Fund Fund Contrafund Fund Fund Total
---------- --------- ----------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Participant directed
investments in accounts
established by Fidelity
Management Trust
Company, at fair value $ 2,666,316 $ 362,982 $ 2,224,323 $3,037,373 $ 753,889 $139,249,105
Receivables:
Participant loans $ 5,878,480
Contributions 11,658 1,996 10,313 14,156 4,335 328,985
Other 1,253 60 1,328 1,092 276 56,467
----------- ----------- ----------- ---------- --------- -----------
Total assets 2,679,227 365,038 2,235,964 3,062,624 758,500 145,513,037
----------- ----------- ----------- ---------- --------- ------------
LIABILITIES:
Administrative expenses
payable 2,597 31 488 2,277 86 50,600
----------- ----------- ----------- ---------- --------- ------------
Total liabilities 2,597 31 488 2,277 86 50,600
----------- ----------- ----------- ---------- --------- ------------
Net assets available
for benefits $ 2,676,630 $ 365,007 $ 2,235,476 $3,050,347 $ 758,414 $145,462,437
----------- ----------- ----------- ---------- --------- ------------
----------- ----------- ----------- ---------- --------- ------------
</TABLE>
The accompanying Notes are an integral part of the financial statements.
4
<PAGE>
Saks Fifth Avenue Retirement Savings Plan
Statement of Changes in Net Assets Available for Benefits,
with Fund Information
For the year ended December 31, 1997
<TABLE>
<CAPTION>
Interest U.S. Participant Asset Manager
Income Equity Loan Balanced Magellan Manager Growth
Fund Index Fund Fund Fund Fund Fund Fund
----------- ------------- ------------ --------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Additions to net
assets attributed to:
Net appreciation
(depreciation) in the
fair value of investments $ 5,778,204 $ 520,997 $ 3,332,972 $ 760,065 $ 1,129,162
Interest income $ 3,223,859 84,660 20,020 84,780 31,223 37,371
Dividend income 583,945 949,346 1,525,736 702,020 1,200,810
Participant contributions 5,096,762 2,740,771 1,191,236 3,112,477 1,106,597 1,816,119
Employer contributions 824,786 391,385 170,934 436,252 169,677 270,332
----------- ------------ ---------- ----------- ------------ -----------
9,145,407 9,578,965 2,852,533 8,492,217 2,769,582 4,453,794
Deductions from net assets
attributed to:
Benefit and withdrawal
payments 5,491,050 1,506,721 $ 607,201 407,339 1,943,774 538,462 734,818
Administrative expenses 224,951 30,395 20,978 18,849 16,241 17,299
----------- ------------ ---------- ----------- ------------ ------------ ------------
3,429,406 8,041,849 (607,201) 2,424,216 6,529,594 2,214,879 3,701,677
Interfund transfers, net (3,892,187) 1,250,456 1,426,695 (434,805) (1,436,381) (620,919) (579,437)
----------- ------------ ---------- ----------- ------------ ------------ ------------
Net additions (462,781) 9,292,305 819,494 1,989,411 5,093,213 1,593,960 3,122,240
Net assets available
for benefits,
beginning of year 51,271,592 18,267,058 5,058,986 6,076,356 19,124,872 6,584,052 8,545,805
----------- ------------ ---------- ----------- ------------ ------------ ------------
Net assets available for
benefits, end of year $50,808,811 $ 27,559,363 $5,878,480 $ 8,065,767 $ 24,218,085 $ 8,178,012 $ 11,668,045
----------- ------------ ---------- ----------- ------------ ------------ ------------
----------- ------------ ---------- ----------- ------------ ------------ ------------
</TABLE>
<TABLE>
<CAPTION>
Asset
Manager Growth &
Income SFA Stock Income Overseas Plan
Fund Fund Contrafund Fund Fund Total
------------- ------------- ------------ ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Additions to net assets attributed
to:
Net appreciation (depreciation)
in the
fair value of investments $ 119,684 $ (55,160) $ 48,965 $ 245,650 $ 184 $11,880,723
Interest income 8,830 1,575 7,037 6,682 1,926 3,507,963
Dividend income 172,834 192,985 100,460 38,076 5,466,212
Participant contributions 555,013 102,397 392,664 489,678 217,453 16,821,167
Employer contributions 82,434 12,082 48,994 60,195 23,420 2,490,491
------------ ---------- ----------- ---------- ------- ----------
938,795 60,894 690,645 902,665 ? 40,166,556
Deductions from net assets
attributed to:
Benefit and withdrawal payments 197,111 54,035 74,878 55,838 24,561 11,635,788
Administrative expenses 16,476 147 1,048 3,807 232 350,423
------------ ---------- ----------- ---------- ------- ----------
725,208 6,712 614,719 843,020 502,266 28,180,345
Interfund transfers, net (401,949) 358,295 1,620,757 2,207,327 502,148
------------ ---------- ----------- ---------- ------- ----------
Net increase (decrease) 323,259 365,007 2,235,476 3,050,347 758,414 28,180,345
Net assets available for benefits,
beginning of year 2,353,371 117,282,092
------------ ---------- ----------- ---------- ------- -----------
Net assets available for
benefits, end of year $ 2,676,630 $ 365,007 $ 2,235,476 $3,050,347 758,414 145,462,437
------------ ---------- ----------- ---------- ------- -----------
------------ ---------- ----------- ---------- ------- -----------
</TABLE>
5
<PAGE>
SAKS FIFTH AVENUE RETIREMENT SAVINGS PLAN
NOTES to FINANCIAL STATEMENTS
1. Description of the Plan:
The following brief description of the Saks Fifth Avenue Retirement Savings
Plan (the "Plan") is provided for general information purposes only.
Participants should refer to the Plan document for a more complete
desription.
General
The Plan is a defined contribution plan covering substantially all
employees of Saks & Company and its Subsidiaries (the "Company"). The Plan
is subject to the provisions of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA").
Investment Options
Investment options may be changed, added or deleted from the Plan at the
election of the Plan Asset Committee (the "Committee"). In 1997, the
Committee added four investment options to the Plan: The Saks Fifth
Avenue Stock Fund, the Contrafund, the Growth and Income Fund and the
Overseas Fund.
Participants may elect to invest their contributions in any one or a
combination of the following investment options: the Interest Income
Fund, the U.S. Equity Index Fund, the Balanced Fund, the Magellan Fund,
the Asset Manager Fund, the Asset Manager-Growth Fund, the Asset
Manager-Income Fund, the Saks Fifth Avenue Stock Fund, the Contrafund,
the Growth & Income Fund and the Overseas Fund. The Interest Income Fund
is invested in individual guaranteed investment contracts ("GICs"), an
open-end commingled pool of investment contracts (Managed Income
Portfolio II), individual asset-backed investment contracts and short
term investments. The U.S. Equity Index Fund is invested primarily in
equity securities in a wide range of companies. The Balanced Fund is
invested in a diversified portfolio of fixed income and equity
securities. The Magellan Fund invests in equity securities, and
securities convertible to equity. The Asset Manager, Asset
Manager-Growth, and Asset Manager-Income Funds all invest, to differing
degrees, in domestic and foreign equities, fixed income and short-term
instruments. The Saks Fifth Avenue Stock Fund invests in Saks Holdings,
Inc. Common Stock and is measured in units of participation rather than
in shares of Saks Holding, Inc. Common Stock. The Contrafund is a growth
fund that invests mainly in equity securities of companies where value
is not fully recognized by the public. The Growth & Income Fund is
invested in equity securities that combine current income and capital
appreciation. The Overseas Fund is invested primarily in the equity
securities of companies whose principal activities are outside of the
United States.
Plan Administrator and Trustee
The Plan is sponsored by the Company and administered on a day-to-day basis
by the plan administrator, who was appointed by the Board of Directors of
the Company. The Committee, appointed by the Board of Directors of the
Company, was established to oversee the investment of plan assets. The
Fidelity Management Trust Company ("the Trustee") was appointed by the
Committee and acts as Trustee, recordkeeper and investment manager of the
Plan at the direction of the Committee.
6
Continued
<PAGE>
SAKS FIFTH AVENUE RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
Eligibility
Generally, an employee, subject to certain exceptions, may elect to
participate in the Plan after completing 12 months of employment, during
which time he or she has at least 1,000 hours of service and has attained
age 21.
Contributions
Participants may elect for regular payroll deductions, ranging from 1% to a
maximum of 16% of compensation, as defined, to be contributed to the Plan
on a before- or after-tax basis, or both. No participant shall be permitted
to elect before-tax contributions under the Plan during any calendar year
in excess of the amount prescribed by the Secretary of the Treasury under
the Internal Revenue Code (the "Code") ($9,500 for 1997). Participants may
also contribute amounts representing distributions from other qualified
defined benefit or contribution plans ("rollover contributions") provided
such contributions meet the requirements of the Plan Document.
Company matching contributions must comply with applicable provisions of
the Code and are remitted to the Trustee after each pay period. The
Company's matching contribution rate is 25% of the first 6% of compensation
contributed to the Plan by a participant. This matching rate may be
increased at the discretion of the Company's Board of Directors.
At December 31,1997 contributions receivable consisted of participant
contributions of $282,482 and a Company matching contribution of $46,503.
Participant Accounts
Participants may elect to invest in one or more of the eleven investment
options in 1% increments. The contribution rate, investment mix and
contribution allocation can be changed by the participant on any business
day. Transfers of existing investments between funds is also permissible
upon election. The net investment gain or loss for each of the investment
funds is allocated daily to each participant's elective and matching
accounts in the proportion which each such account bears to the total of
each corresponding fund.
Payment of Benefits
Generally, a participant is entitled to his or her daily total account
balance coincident with or immediately following age 65. Additionally, a
participant is entitled to the full value of his or her account as of the
valuation date coincident with or immediately following disability.
Upon the death of a participant, the beneficiary will receive the full
value of his or her account as of the valuation date coincident with or
immediately following the date of death. Benefits are recorded when paid.
7
Continued
<PAGE>
SAKS FIFTH AVENUE RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
Vesting
The Company matching account vests according to the following schedule:
<TABLE>
<CAPTION>
Years of Vesting Service Percent Vested
--------------------------------- ---------------------
<S> <C>
Less than 2 years 0%
2 but less than 3 25%
3 but less than 4 50%
4 but less than 5 75%
5 years or more 100%
</TABLE>
Employee contributions, including rollover contributions, are always fully
vested.
Forfeitures
Participants who terminate employment, but have not become fully vested,
forfeit the unvested balances in their accounts. In accordance with the
Plan document, the forfeiture amount is applied toward Company matching
contributions. Forfeitures aggregated $184,683 for the year ended December
31, 1997.
Withdrawals
A participant may withdraw all or a portion of the value of his or her
after-tax contribution account or rollover account. The withdrawal may not
be more frequent than once every three months.
Upon attaining age 59-1/2, a participant may withdraw all or a portion of
his or her vested account balances. Additionally, a participant may
withdraw from his or her before-tax contribution account and Company
matching account, to the extent vested, for financial hardship. Generally,
these hardship withdrawals must be for at least $500 and may not be more
frequent than once every three months. Participant contributions to the
Plan will be suspended for 12 months after making a hardship withdrawal.
Loans
A participant may borrow from the vested portion of his or her account. The
minimum amount of any loan is $1,000. The maximum amount of a loan is equal
to the lesser of $50,000, or 50% of the vested value of his or her account
less any other outstanding loans. Only two loans are permitted at a time.
Loans are collateralized by the balance in the participant's account.
Interest rates are determined by the plan administrator. For the year ended
December 31, 1997, interest rates were determined to be the prime rate as
of the first day of the month the loan is initiated, plus 1%. Generally,
the repayment period is not less than six months or more than five years,
except that a loan to purchase a primary residence may have a term
exceeding five years.
Continued
8
<PAGE>
SAKS FIFTH AVENUE RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
Administrative Expenses
Expenses incurred with respect to the administration of the Plan are paid
from the assets of the Plan to the extent allowed under ERISA. To the
extent such expenses are not paid by the Plan, they are paid by the
Company.
2. Summary of Significant Accounting Policies:
Basis of Presentation
The accompanying financial statements of the Plan have been prepared on the
accrual basis of accounting in accordance with generally accepted
accounting principles. As previously noted, the Plan added the Saks
Fifth Avenue Stock Fund as an investment option in the current year.
This addition became effective as of January 2, 1997 and therefore a
"New Plan" was deemed to have come into existence at that time under the
provisions of the Securities and Exchange Commission.
Risks and Uncertainties
The Plan provides for various investment options in any combination of
stocks, bonds, fixed income securities, mutual funds and other investment
securities. Generally all investments are exposed to various risks, such as
interest rate, market and credit. Due to the level of risk associated with
certain investments and the level of uncertainty related to changes in the
value of investments, it is at least reasonably possible that changes in
risks in the near term could materially affect participants' account
balances, and the amounts reported in the statement of net assets available
for plan benefits and the statement of changes in net assets available for
plan benefits.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make significant
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
Valuation of Investments and Income Recognition
Investments in guaranteed investment contracts are stated at contract
value, which approximates fair value, as reported by the trustee. The
average yield for the Interest Income Fund for 1997 was 6.11%. At December
31, 1997 the crediting interest rates of the investment contracts ranged
from 5.16% to 8.03%. Generally, contract value represents contributions
made under the contract, plus interest at the contract rate, less funds
used to purchase annuities, withdrawals made pursuant to contract terms
and administration expenses charged by the companies entering into the
contracts with the Plan.
Investments in the Trustee's Magellan, Balanced, U.S. Equity Index, Asset
Manager, Asset Manager-Growth, Asset Manager-Income, Contrafund, Growth
and Income and Overseas Funds are listed on an exchange and valued at the
latest quoted market prices. Investments in the company's own stock are
valued at the latest quoted market prices.
9
Continued
<PAGE>
SAKS FIFTH AVENUE RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
Short-term investments are reflected at original cost. Accreted discount on
investments is included in interest income. The value of investments at
original cost plus the amount of accreted discount approximates fair value.
Loans to participants are valued at cost which approximates fair value.
Purchases and sales of securities are recorded on a trade-date basis.
Interest income is recorded on the accrual basis and dividends are recorded
on the ex-dividend date.
The Plan presents in the statement of changes in net assets available for
benefits, with fund information, the net appreciation (depreciation) in the
fair value of its investments, which consists of the realized gains or
losses and the unrealized appreciation (depreciation) on those investments.
Participants are exposed to credit loss in the event of non-performance by
the Trustee or nonperformance by the companies in which the investments are
placed.
Set forth below are the major categories of investments at December 31,
1997:
<TABLE>
<CAPTION>
1997
--------------------------------------------------------------
Per Share
Unit Value Fair
Shares Value (a)
-------------- ------------- -----------------------------
<S> <C> <C> <C>
Interest Income Fund 50,707,104 $ 1.00 $ 50,707,104 (b)
U.S. Equity Index fund 786,379 34.98 27,507,535 (b)
Balanced Fund 526,667 15.27 8,042,212 (b)
Magellan Fund 253,521 95.27 24,152,973 (b)
Asset Manager Fund 444,609 18.35 8,158,574 (b)
Asset Manager-Growth Fund 629,644 18.48 11,635,824 (b)
Asset Manager-Income Fund 218,909 12.18 2,666,316
SFA Stock Fund 48,919 7.42 362,982
Contrafund 47,701 46.63 2,224,323
Growth & Income Fund 79,721 38.10 3,037,373
Overseas Fund 23,168 32.54 753,889
-----------------------------
Total at fair market value $ 139,249,105
-----------------------------
-----------------------------
Total at cost $ 122,342,595
-----------------------------
-----------------------------
</TABLE>
(a) Reported at contract value with respect to GICs.
(b) Investments which represent more than 5% of net assets available for plan
benefits.
(c) The Saks Fifth Avenue Stock Fund is measured in "units" of participation
rather than in shares of Saks Holdings, Inc. Common Stock.
Continued
10
<PAGE>
SAKS FIFTH AVENUE RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
3. Loans Receivable:
Loans receivable at December 31, 1997 reported by the Trustee did not
include a reduction of $56,467 for principal payments made by
participants to the Company before December 31, 1997, but not remitted to
the Trustee as of that date. Such payments are reflected in the December
31, 1997 statement of net assets available for benefits as a reduction in
loan receivables and an increase in other receivables.
Continued
11
<PAGE>
SAKS FIFTH AVENUE RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
4. Guaranteed Investment Contracts:
At December 31, 1997 investments in GICs consisted of the following:
<TABLE>
<CAPTION>
1997
-------------------
<S> <C>
Guaranteed investment contracts:
Combined Insurance
(contract #CG-1040) maturing on September 30, 1999,
bearing interest at 6.22% $ 3,549,476
Lincoln National
(contract #GA 09596) maturing on September 29, 1998,
bearing interest at 5.16% 3,494,686
New York Life
(contract #GA 30372) maturing on March 31, 1999,
bearing interest at 6.14% 4,572,233
Ohio National Life Insurance Company (contract #GA 5723) maturing on
March 31, 1999,
bearing interest at 6.08% 2,511,134
Peoples Security Life
(contract #BDA00562FR-00) maturing on September 30,
1998, bearing interest at 6.10% 3,540,488
Principal Mutual
(contract #41517701) maturing on September 30, 1999,
bearing interest at 8.03% 2,557,529
Sun Life of Canada
(contract #S-0854-G) maturing on September 30, 1999,
bearing interest at 5.80% 3,267,357
Protective Life
(contract #GA-1195) maturing on September 30, 1998,
bearing interest at 6.08% 2,780,478
-------------------
Total guaranteed investment contracts $ 26,273,381
-------------------
-------------------
</TABLE>
Interest rates stated in connection with the GICs are net of the annual
rate charged for administrative expenses.
Continued
12
<PAGE>
SAKS FIFTH AVENUE RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
5. Short-Term Investments:
At December 31, 1997 Short-term investments consisted of the following:
<TABLE>
<CAPTION>
1997
------------------
<S> <C>
Short-term investments:
Fidelity STIF
(Cash Portfolio) open maturity, bearing interest at 5.63% $ 1,472,506
Deutsche Bank ABS
(DISCV932A/SAKS1) maturing on January 15, 1998,
bearing interest at 7.21% 2,467,293
Deutsche Bank ABS
(CCT916/SAKS2) maturing on May 7, 1998,
bearing interest at 7.20% 2,287,227
Fidelity Managed Income Portfolio II
(633-MIP 2) open maturity, bearing interest at 6.13% 10,904,856
Peoples Security Life ABS
(BDA0020ITR-02) maturing on February 18, 1998,
bearing interest at 5.97% 2,481,729
Peoples Security Life ABS
(BDA0020ITR-04) maturing on January 15, 1998,
bearing interest at 5.97% 2,383,189
Peoples Security Life ABS
(BDA0020ITR-05) maturing on February 17, 1998,
bearing interest at 5.69% 2,436,923
------------------
Total short-term investments $ 24,433,723
------------------
------------------
</TABLE>
6. Plan Termination:
Although it has not expressed any intention to terminate the Plan, the
Company has the right to do so at any time subject to the provisions of
ERISA. In the event of the termination of the Plan, the account balances of
participants shall be nonforfeitable.
Continued
13
<PAGE>
SAKS FIFTH AVENUE RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
7. Reconciliation of Financial Statements to the Form 5500:
The following is a reconciliation of net assets available for benefits per
the financial statements to Form 5500:
<TABLE>
<CAPTION>
1997
-------------------
<S> <C>
Net assets available for benefits
per the financial statements $ 145,462,437
Amounts allocated to withdrawing participants (206,447)
-------------------
Net assets available for benefits
per Form 5500 $ 145,255,990
-------------------
-------------------
</TABLE>
The following is a reconciliation of benefits paid to participants per the
financial statements to the Form 5500:
<TABLE>
<CAPTION>
Year Ended
December 31, 1997
----------------------
<S> <C>
Benefits paid to participants per the financial statements $ 11,635,788
Add, Amounts allocated to withdrawing participants at December 31, 1997 (206,447)
Less, Amounts allocated to withdrawing participants at December 31, 1996 57,056
----------------------
Benefits paid to participants per Form 5500 $ 11,486,397
----------------------
----------------------
</TABLE>
Amounts allocated to withdrawing participants are recorded on the Form 5500
for benefit claims that were processed and approved for payment before
December 31, 1997, but have not been paid as of that date.
8. Tax Status:
On September 22, 1995, the Company received a favorable determination
letter from the Internal Revenue Service as to the qualified tax-exempt
status of the Plan under Section 401(a) of the Code. This status exempts
the Plan from Federal income taxes. The plan administrator believes that
the Plan continues to qualify and operate in compliance with applicable
requirements of the Internal Revenue Code.
Continued
14
<PAGE>
SAKS FIFTH AVENUE RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
9. Related Party Transactions:
Certain Plan investments represent shares in mutual funds or a short term
investment fund managed by Fidelity Management Trust Company, the Trustee,
which is, therefore, a party-in-interest. At December 31, 1997, fees paid
by the Plan to the Trustee for the investment-management and record-keeping
services amounted to $346,232. The amount owed by the Plan to the Trustee
at December 31, 1997 was $50,600.
10. Subsequent Events:
Effective March 6, 1998, the following new investment option was added to
the Plan: Fidelity Low-Priced Stock Fund.
15
<PAGE>
SAKS FIFTH AVENUE RETIREMENT SAVINGS PLAN
Line 27a - SCHEDULE of ASSETS HELD for INVESTMENT PURPOSES
As of December 31, 1997
<TABLE>
<CAPTION>
Number of
Shares or
Principal Fair
Amount (1) Description Cost (2) Value
--------------- ------------------------------------------------------------------ ---------------- ----------------
<S> <C> <C> <C>
Fidelity Mutual funds:
253,521 Magellan Fund $ 20,254,454 $ 24,152,973 (3)
786,379 U.S. Equity Index Fund 18,256,115 27,507,535 (3)
526,667 Balanced Fund 7,233,121 8,042,212 (3)
444,609 Asset Manager Fund 7,105,977 8,158,574 (3)
629,644 Asset Manager-Growth Fund 10,115,388 11,635,824 (3)
218,909 Asset Manager-Income Fund 2,496,977 2,666,316
48,919 SFA Stock Fund 406,972 362,982
47,701 Contrafund 2,189,755 2,224,323
79,721 Growth & Income Fund 2,808,872 3,037,373
23,168 Overseas Fund 767,860 753,889
---------------- ----------------
Total Fidelity mutual funds 71,635,491 88,542,001
---------------- ----------------
Guaranteed investment contracts:
Combined Insurance #CG-1040, 6.22%,
matures 9/30/99 3,549,476 3,549,476
New York Life #GA30372, 6.14%, matures on 3/31/99 4,572,233 4,572,233
Ohio National Life #GA 5723, 6.08%, matures on 3/31/99 2,511,134 2,511,134
Peoples Security Life #BDA00562FR-00, 6.10%,
matures on 9/30/98 3,540,488 3,540,488
Principal Mutual #41517701, 8.03%, matures 9/30/99 2,557,529 2,557,529
Protective Life Insurance Company
#GA-1195, 6.08%, matures 9/30/98 2,780,478 2,780,478
Sun Life of Canada #S-0854-G, 5.80%
matures 9/30/99 3,267,357 3,267,357
Lincoln National #GA09596, 5.16%, matures 9/29/98 3,494,686 3,494,686
---------------- ----------------
Total guaranteed investment contracts 26,273,381 26,273,381
---------------- ----------------
</TABLE>
16
Continued
<PAGE>
SAKS FIFTH AVENUE RETIREMENT SAVINGS PLAN
LINE 27A - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
As of December 31, 1997
<TABLE>
<CAPTION>
Description Cost Fair Value
----------- ---- ----------
<S> <C> <C>
Short-term investments $ 24,433,723 $ 24,433,723
Total investments $ 122,342,595 $ 139,249,105
------------------ -------------------
------------------ -------------------
Loans to participants:
Saks Fifth Avenue Retirement
Savings Plan participant loans at -- 5,878,480
various interest rates ------------------ -------------------
------------------ -------------------
</TABLE>
(1) These assets held for investment purposes are held with a party-in-interest.
(2) GIC's are stated at contract value. Generally, the contract value and cost
of the GICs represent contributions made under the contract, plus interest
at the contract rate, less funds used to purchase annuities, withdrawals
made pursuant to contract terms and administration expenses charged by the
companies entering into the contracts with the Plan.
(3) Represents 5% or more of the net assets available for plan benefits.
17
<PAGE>
SAKS FIFTH AVENUE RETIREMENT SAVINGS PLAN
TRANSACTIONS IN EXCESS OF 5% OF THE CURRENT VALUE OF PLAN ASSETS
LINE 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
For the year ended December 31, 1997
<TABLE>
<CAPTION>
Total Fair Value
Cost of of Assets Sale
Description of Asset Assets Purchased Proceeds Net Gain
--------------------------------------------- ---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Fidelity US Equity Index:
Units purchased in 252 transactions $ 9,199,829
Units sold in 248 transactions * $ 5,702,443 *
---------------- ---------------- ----------------
$ 9,199,829 $ 5,702,443
---------------- ----------------
---------------- ----------------
Fidelity Magellan Fund:
Units purchased in 252 transactions $ 7,643,037
Units sold in 246 transactions * $ 5,894,225 *
---------------- ---------------- ----------------
$ 7,643,037 $ 5,894,225
---------------- ----------------
---------------- ----------------
Asset Manager-Growth Fund:
Units purchased in 252 transactions $ 4,714,415
Units sold in 233 transactions * $ 2,727,007 *
---------------- ---------------- ----------------
$ 4,714,415 $ 2,727,007
---------------- ----------------
---------------- ----------------
Collective Short-Terms:
Fidelity FMTC Institutional Money Market:
Units purchased in 245 transactions $ 18,411,345 $ 18,411,345
Units sold in 257 transactions 18,820,349 $ 18,820,349
---------------- ---------------- ---------------
$ 37,231,694 $ 18,411,345 $ 18,820,349
---------------- ---------------- ---------------
---------------- ---------------- ---------------
Fidelity IPL Commingled Pool:
Units purchased in 245 transactions $ 4,200,000 $ 4,200,000
Units sold in 257 transactions 2,305,200 $ 2,305,200
---------------- ---------------- ---------------
$ 6,505,200 $ 4,200,000 $ 2,305,200
---------------- ---------------- ----------------
---------------- ---------------- ----------------
</TABLE>
* The Historical cost of investments cannot be determined as the information is
not available from the ordinary business records maintained by Fidelity
management Trust Company.
18
<PAGE>
Signature
Saks Fifth Avenue Retirement Savings Plan
(Name of Plan)
Date June 29, 1998 By /s/ Mark E. Hood
------------------------ ------------------------------------
Mark E. Hood
Senior Vice President
Chief Financial Officer
19
