JACOBSON STORES INC, 10-K405, 2000-04-13

JACOBSON STORES INC
10-K405, 2000-04-13
DEPARTMENT STORES

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FORM 10-K
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended January 29, 2000

Commission File No. 0-6319

JACOBSON STORES INC.
- -----------------------------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

Michigan 38-0686330
- -----------------------------------------------------------------------------
(STATE OF INCORPORATION) (I.R.S. EMPLOYER
IDENTIFICATION NO.)

3333 Sargent Road, Jackson, Michigan 49201-8847
- -----------------------------------------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)

Registrant's telephone number, including area code: 517-764-6400

Securities registered pursuant to Section 12(b) of the Act:

None

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $1 par value
Series A Preferred Stock Purchase Rights
6 3/4% Convertible Subordinated Debentures due 2011

INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO
SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS.
YES [X] NO [ ]

INDICATE BY CHECK MARK IF 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. [X]

STATE THE AGGREGATE MARKET VALUE OF THE VOTING AND NON-VOTING COMMON EQUITY
HELD BY NON-AFFILIATES COMPUTED BY REFERENCE TO THE PRICE AT WHICH THE COMMON
EQUITY WAS SOLD, OR THE AVERAGE BID AND ASKED PRICES OF SUCH COMMON EQUITY,
AS OF A SPECIFIED DATE WITHIN THE PAST 60 DAYS.
$25,649,000 as of March 1, 2000

(THE PERSONS CONSIDERED AFFILIATES FOR THE PURPOSE OF THE FOREGOING
COMPUTATION ARE IDENTIFIED ON PAGE 21 OF THIS REPORT.)

INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE REGISTRANT'S CLASSES
OF COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE.

Common Stock, $1 par value: 5,788,209 2/3 shares outstanding
as of March 1, 2000

DOCUMENTS INCORPORATED BY REFERENCE

LIST HEREUNDER THE FOLLOWING DOCUMENTS IF INCORPORATED BY REFERENCE AND THE
PART OF THE FORM 10-K INTO WHICH THE DOCUMENT IS INCORPORATED:

SPECIFIED PORTIONS OF PROXY STATEMENT FOR 2000 ANNUAL MEETING OF
SHAREHOLDERS, TO BE HELD MAY 25, 2000: PART III

JACOBSON STORES INC.
FORM 10-K
FISCAL YEAR ENDED JANUARY 29, 2000

INDEX
Page
----
PART I.

Item 1. Business. 1

Item 2. Properties. 7

Item 3. Legal Proceedings. 9

Item 4. Submission of Matters to a Vote of Security Holders. 9

Executive Officers of the Registrant. 10

PART II.

Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters. 12

Item 6. Selected Financial Data. 13

Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations. 13

Item 7A. Quantitative and Qualitative Disclosures About
Market Risk 21

Item 8. Financial Statements and Supplementary Data. 21

Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure. 21

PART III.

Item 10. Directors and Executive Officers of the Registrant. 22

Item 11. Executive Compensation. 22

Item 12. Security Ownership of Certain Beneficial Owners and
Management. 22

Item 13. Certain Relationships and Related Transactions. 22

PART IV.

Item 14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K. 23

SIGNATURES 28

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA F-1/F-20

FINANCIAL STATEMENT SCHEDULES S-1

INDEX OF EXHIBITS E-1/E-3

PART I

ITEM 1. BUSINESS.

INTRODUCTION

The registrant, Jacobson Stores Inc., a Michigan corporation and
successor to a business founded in 1868, operates specialty stores catering
to discerning customers with preferences for distinctive, quality
merchandise. The Company is committed to highly responsive service,
distinctive merchandise of high quality at a fair price, and a visually
appealing and immaculate setting. Each store features distinctive apparel and
accessories for women, men and children, as well as decorative accents for
the home.

The Company owns a substantial portion of the real property used
in its business, primarily through its consolidated, wholly-owned real estate
subsidiary, Jacobson Stores Realty Company ("Jacobson Realty"). The Company
also has a consolidated, wholly-owned finance subsidiary, Jacobson Credit
Corp. ("Jacobson Credit"). As used in this report, the terms "registrant",
"Company" and "Jacobson's" refer to Jacobson Stores Inc. and its subsidiaries
unless the context indicates otherwise.

The Company has stores in twenty-four cities in Michigan, Indiana,
Kansas, Kentucky, Ohio and Florida. The principal distribution functions are
performed at service centers in Jackson, Michigan and Winter Park, Florida.
Functions common to all stores, such as management coordination,
merchandising, sales promotion, data processing and accounting, are
centralized at the corporate headquarters in Jackson, Michigan.

MERCHANDISE AND MARKETING

Merchandise. Jacobson's is a specialty store offering fashion
leadership tailored to discerning, fashion-oriented customers through
distinctive, quality merchandise. Stores are merchandised with distinctive
apparel and accessories for women, men, and children, as well as decorative
accents for the home.

The percentage contribution to sales by major class of merchandise
for the last three fiscal years was as follows:
Year Ended
-------------------------------
January January January
2000 1999 1998
------- ------- -------
Women's apparel and accessories ...... 66.6% 66.0% 66.7%

Men's apparel and accessories ........ 13.7 13.5 13.6

Accessories for the home ............. 9.5 9.3 8.2

Children's apparel and accessories ... 7.7 7.9 7.7

Miscellaneous ........................ 2.5 3.3 3.8
----- ----- -----

100.0% 100.0% 100.0%
===== ===== =====

Personal Service. Jacobson's stores are fully staffed with
knowledgeable sales associates to ensure that customers receive highly
responsive service. Jacobson's sales associates are experienced and
well-trained through video presentations, seminars and close working
relationships with buyers and merchandise managers. Sales associates maintain
personal trade lists of their customers' sizes, colors, fashion preferences,
and important dates, and contact customers by telephone or personal note to
alert them to the arrival of new merchandise or to remind them of birthdays
or anniversaries. Management believes that personal relationships between
sales associates and their clientele promote customer loyalty and contribute
to the Company's growth. Jacobson's has a liberal return policy and accepts
merchandise purchased at Jacobson's for return or exchange if the customer is
not satisfied. Other special services include free gift wrapping and free
parking. All Jacobson's sales associates are compensated on some form of
commission program.

Sales Promotion. The Company principally uses newspaper and direct
mail, as well as in-store events and billing statement enclosures, to
stimulate sales. Advertising generally focuses on current fashions and
merchandise classifications. The Company's policy is to price merchandise
fairly and competitively and to limit its use of sale events to selected
special promotions and seasonal clearances. Management believes that its
pricing practices enhance credibility and customer loyalty. Jacobson's
in-store events include fashion shows and wardrobing seminars to communicate
fashion trends to customers.

Store Design. Jacobson's stores are designed to project an
attractive, comfortable atmosphere. All aspects of the store interiors and
fixturing are coordinated by the Company's store planning personnel, using
quality fixtures, carpeting, lighting and displays.

CREDIT POLICY

Jacobson's issues its own credit card as a customer service. The
Company offers two credit plans to its cardholders: an Option plan requiring
a minimum monthly payment of 20% of the outstanding balance; and an Extended
Payment plan available for purchases of furs, fine jewelry, china, crystal,
silver and furniture in the Company's one store which carries furniture.
Purchases charged under the Extended Payment plan and purchases of coats,
furs and children's outerwear charged under the Option plan are eligible for
90 days deferred billing.

Sales under Jacobson's credit plans averaged 36.0% of sales for
the last three fiscal years and accounted for 34.2% of the Company's sales in
fiscal 1999. In addition, sales under third party credit cards (VISA,
MasterCard, Discover Card and American Express) averaged 47.9% of sales for
the last three fiscal years and accounted for 50.0% of the Company's sales in
fiscal 1999. Accounts written off, net of recoveries, have averaged 0.6% of
credit sales over the last three years and totalled 0.5% of credit sales in
1999.

The Company maintains purchasing history on its 199,000 active
Jacobson's card holders as well as on third party charge customers, which
permits targeting of direct mail advertising and automatic increases in
credit limits of its cardholders.

OPERATIONS

The principal distribution services for its stores are performed
at regional service centers in Jackson, Michigan and Winter Park, Florida.
Functions common to all stores, such as management coordination,
merchandising, sales promotion, data processing and accounting, are
centralized at the corporate headquarters in Jackson, Michigan.

Jacobson's stores in Michigan are located in Birmingham, Grosse
Pointe, Livonia and Rochester (all suburbs of Detroit), Ann Arbor, East Grand
Rapids, East Lansing and Saginaw; in Indianapolis, Indiana; in Leawood,
Kansas; in Louisville, Kentucky; in Columbus and Toledo, Ohio; and in
Florida, in Boca Raton, Clearwater, Fort Myers, Jacksonville, Longwood,
Naples, North Palm Beach, Osprey, Sarasota, Tampa and Winter Park. Stores in
the Midwest range from 101,000 to 199,000 square feet. The Florida stores
range from 23,000 to 90,000 square feet.

Jacobson's stores generally are open seven days each week for 71
hours.

Annual sales, percentage increase in sales, average gross square
footage of stores in operation during the fiscal year, and approximate sales
per average gross square foot were as follows:

Year Ended
-----------------------------
January January January
2000 1999 1998
------- ------- -------
Net sales (in thousands) .................. $448,075 $444,305 $447,471

Percentage increase (decrease) in sales:
All stores ............................ 0.8% (0.7)% 3.5%
Comparable stores ..................... 0.8% 1.1% 7.3%

Average gross square footage (in
thousands) .............................. 2,349 2,356 2,387

Approximate sales per average gross
square foot ............................. $ 191 $ 189 $ 187

PURCHASING, CONTROL AND DISTRIBUTION OF INVENTORY

Jacobson's purchases merchandise from several thousand suppliers,
the largest of which accounted for approximately 6.0% of the Company's net
purchases during fiscal 1999. Merchandising decisions are directed by a
general merchandise manager, 9 divisional merchandise managers and 62 buyers
and divisional sales managers.

An on-line computerized merchandise information system provides
the Company's buyers with detailed reports of current sales and inventory
levels for each store, by department, class, vendor, style, color and size.
This system permits the Company's merchandising staff to analyze trends on a
daily basis, to identify fast-selling and slow-selling merchandise and to
respond to customer buying preferences when making reorder and markdown
decisions.

Merchandise is generally shipped directly from vendors to the
Company's regional service centers in Jackson, Michigan and in Winter Park,
Florida, where it is inspected for quality, priced and shipped to the stores
by Jacobson's fleet of trucks.

Jacobson's adopted the LIFO method of inventory valuation in 1968.
At the end of fiscal 1999, LIFO reserves totalled $16,898,000, or
approximately 15.5% of pre-LIFO inventory values. Physical inventories are
taken once each year. Inventory shrinkage at retail over the past three
fiscal years has averaged 1.4% of retail sales.

EXPANSION AND CONSOLIDATION

In November 1999, the Company completed a 17,000 square foot
expansion of its leased store in Naples, Florida.

In January 2000, the Company signed a lease for an 80,000 square
foot store under construction in Meridian Mall, Okemos, Michigan. This store
is targeted to open in October 2000 and will replace the Company's nearby
freestanding downtown East Lansing location. The Company sold its East
Lansing location in January 2000, but will continue to operate the present
store under a short-term lease until the Meridian Mall store opens.

In March 2000, the Company signed a lease for an 80,000 square
foot store that will anchor a new development, The Cascades at Isleworth, an
upscale specialty center to be constructed in southwest Orlando, Florida. The
store is targeted to open in the fall of 2001.

The Company reviews the performance of its less profitable
existing stores from time to time to determine whether it would be in the
Company's best interest to close any of these stores. Store closings could
have a significant impact on the Company's sales, expenses and capital
requirements and would likely entail significant one time charges to effect
the closing and to recognize any impairment of assets resulting from the
closing decision. In 1998, the Company sold closed facilities in Jackson and
Kalamazoo, Michigan. In 1999, the Company sold a closed facility in Dearborn,
Michigan.

REAL ESTATE POLICY

Jacobson's owns or has long-term leases of the real estate used in
the operation of its business. The Company owns 62.0% of the total square
footage used in its business. The Company maintains a continuing program of
property improvements and renewal of existing stores and support facilities.
At January 29, 2000, mortgage loans and related secured financings comprised
41.8% of consolidated debt.

COMPETITION

The specialty store business is highly competitive. The Company's
stores are in active competition with numerous other department and specialty
stores and with regional and national department store chains, some of which
are considerably larger than the Company and have substantially greater
financial and other resources. Jacobson's competes principally on the basis
of availability of fashion merchandise, quality, personalized service and
attractive store surroundings, as well as fair pricing and advertising. The
Company believes it is a respected retail merchandiser in the communities it
serves, and that its merchandising policies and reputation enable it to
maintain its competitive position.

ASSOCIATES

Due to its commitment to highly responsive customer service,
Jacobson's believes that its associates are among its key resources. The
Company emphasizes development programs for associates and promotion from
within. The Company employs approximately 4,200 associates, 3,100 full-time
and 1,100 part-time. During the holiday season, the number of associates
increases to approximately 4,700.

(a) GENERAL DEVELOPMENT OF BUSINESS.
Some of the principal developments affecting Jacobson's
store locations during fiscal 1999 are summarized on page 5 of this report
under the caption "Expansion and Consolidation".

In March 2000, The Company changed its fiscal year end to the
Saturday nearest January 31 from the last Saturday in January.

(b) INDUSTRY SEGMENTS AND LINES OF BUSINESS.
Jacobson's operates in a single industry, the specialty
store industry.

The percentage contribution to sales by major class of
merchandise for each of the last three fiscal years is set forth on page 2 of
this report.

(c) NARRATIVE DESCRIPTION OF BUSINESS.
The nature of Jacobson's business, the categories of
merchandise it sells, and the percentage contribution to sales by merchandise
category during the past three fiscal years, are set forth on pages 1-6 of
this report.

The specialty store business is seasonal. The holiday
season (from the day after Thanksgiving to January 1) generally accounts for
15-20% of Jacobson's net sales.

By reason of the seasonal nature of the business,
Jacobson's and others in the industry experience significant build-up of
inventory and accounts receivable at certain times of the year. To support
the seasonal requirements, the Company has a revolving credit line currently
permitting borrowings of up to $80,000,000 (which the Company may increase to
up to $100,000,000), subject to a borrowing base limitation and lender
reserves. Further information on this line of credit is set forth in "Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operations Liquidity and Capital Resources" on page 16 and in the Notes to
the Company's Consolidated Financial Statements for the three fiscal years
ended January 2000, filed as part of this report (see "Financing" on page
F-11).

Competitive conditions in the specialty store business are
discussed on page 5 of this report.

Information with respect to the Company's associates is
provided on page 6 of this report.

(d) FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS
AND EXPORT SALES. The registrant has no foreign operations and no material
export sales.

ITEM 2. PROPERTIES.

The following table shows the location and approximate size of
Jacobson's stores and its offices and principal warehouse and distribution
facilities; whether owned by the registrant or leased; and the expiration
dates (including renewal options) of principal real estate leases. The
majority of owned properties is subject to mortgages.

Jacobson's management considers that these properties, as well as
its furniture, fixtures, machinery and equipment, are well maintained,
suitable and adequate for their intended purposes, and in general fully
utilized.

<TABLE>
<CAPTION>
Approximate Expiration
Total Square Dates of
Feet of Principal
Locations Building(s) Ownership Leases
--------- ------------ --------- ----------
<S> <C> <C> <C>
MICHIGAN
Ann Arbor......................... 101,000 Owned ----
East Lansing...................... 117,000 Leased (1) 2001
Saginaw........................... 199,000 Partly owned (2) 1999
Grosse Pointe..................... 120,000 Owned ----
Birmingham........................ 179,000 Owned ----
East Grand Rapids................. 148,000 Owned ----
Rochester......................... 106,000 Partly owned (3) 2046
Livonia........................... 150,000 Owned ----
Corporate Headquarters and Regional
Service Center
(Jackson)...................... 238,000 Owned ----

<CAPTION>
Approximate Expiration
Total Square Dates of
Feet of Principal
Locations Building(s) Ownership Leases
--------- ------------ --------- ----------
<S> <C> <C> <C>
INDIANA
Indianapolis...................... 120,000 Leased 2048

KANSAS
Leawood........................... 120,000 Leased 2051

KENTUCKY
Louisville........................ 161,000 Leased 2036

OHIO
Toledo............................ 120,000 Owned ----
Columbus.......................... 119,000 Partly owned (4) 2079

FLORIDA
Sarasota.......................... 27,000 Partly owned (4) 2014
Winter Park....................... 23,000 Leased 2013
Longwood.......................... 49,000 Leased 2020
North Palm Beach.................. 90,000 Leased 2022
Osprey............................ 32,000 Leased 2025
Clearwater........................ 52,000 Leased 2039
Fort Myers........................ 51,000 Partly owned (5) 2085
Jacksonville...................... 82,000 Owned ----
Tampa............................. 48,000 Leased 2030
Naples............................ 63,000 Leased 2042
Boca Raton........................ 80,000 Leased 2052
Regional Service Center
(Winter Park).................. 84,000 Owned ----
<FN>

(1) Lease runs through earlier of 30 days after East Lansing operations move
to Meridian Mall or April 30, 2001.
(2) Approximately 29,000 square feet leased from month to month; balance
owned.
(3) Approximately 71,000 square feet and related parking area are owned. The
balance of the shopping center is leased, of which 35,000 square feet are
operated as part of Jacobson's store.
(4) Building is owned on leased land.
(5) Building is owned; land and parking area are leased.
</TABLE>

ITEM 3. LEGAL PROCEEDINGS.

(a) No material legal proceedings are pending to which Jacobson
Stores Inc. or any of its subsidiaries is a party or to which any of their
property is subject, other than ordinary routine litigation incidental to the
registrant's business, and no such proceeding is known by the registrant to
be contemplated.

(b) Not applicable.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

Not applicable.

EXECUTIVE OFFICERS OF THE REGISTRANT.

The table below sets forth the name and age of each executive
officer of the registrant, all positions and offices with Jacobson Stores
Inc. and its wholly-owned subsidiaries held by each such person, and the
period during which the officer has served in such positions. Each has been
elected to hold office until the 2001 Annual Meeting of the Board of
Directors (except in the case of retirement or other termination of
employment) and until a successor is elected and qualified.

Held
Office
Name Age Positions and Offices Since
---- --- --------------------- ------

P. Gerald Mills 71 Chairman of the Board, President, 1996
Chief Executive Officer, and
Director Jacobson Stores Inc. and
wholly-owned subsidiaries

Paul W. Gilbert 55 Vice Chairman of the Board, and 1993
Director, Jacobson Stores Inc. and
wholly-owned subsidiaries

James A. Rodefeld 61 Executive Vice President-Marketing & 1997
Stores, Jacobson Stores Inc.

Theodore R. Kolman 59 Senior Vice President- 1991
General Merchandise Manager,
Jacobson Stores Inc.

Beverly A. Rice 66 Senior Vice President-Fashion & 1997
Merchandising Strategy, Jacobson
Stores Inc.

Timothy J. Spalding 44 Vice President-Controller, 1991
Jacobson Stores Inc. and
wholly-owned subsidiaries

There is no arrangement or understanding between any of the
officers and any other person pursuant to which the officer was selected as
an officer, except that each of the executive officers is party to an
employment agreement with the Company pursuant to which he or she is required
to be elected to the offices with the Company he currently holds, or such
other capacity as the Board of Directors, or the Chief Executive Officer, as
applicable, deems advisable.

Each executive officer except Mr. Mills, Ms. Rice and Mr. Rodefeld
has held managerial or executive positions with Jacobson's for more than five
years.

P. Gerald Mills has served as Chairman of the Board and Chief
Executive Officer of the Company since October 1996, and also as President of
the Company since December 1996. Mr. Mills was Chairman and Chief Executive
Officer of Dayton Corporation, 1978-1981; Chairman and Chief Executive
Officer, the J. L. Hudson Company, 1981-1983; Chairman and Chief Executive
Officer, Dayton Hudson Department Store Company and Executive Vice President,
Dayton Hudson Corporation, 1983-1985; Chairman and Chief Executive Officer,
Millston Corporation, a specialty store retailer, 1986-1992; and was
self-employed as a business consultant from 1992-1996.

Paul W. Gilbert has been Vice Chairman of the Board of the Company
since 1993. Mr. Gilbert was Vice President and Controller of the Company,
1976-1984, Senior Vice President and Chief Financial Officer, 1984-1988,
Executive Vice President and Chief Financial Officer 1988-1993, and Treasurer
1991-1993.

James A. Rodefeld has been Executive Vice President-Marketing &
Stores since November 1997. Mr. Rodefeld was Chief Executive Officer,
Sycamore Stores, Inc., 1987-1992, was self-employed as a business consultant,
1992-1997, and Senior Vice President-Marketing of the Company, January to
November, 1997.

Theodore R. Kolman has been Senior Vice President-General
Merchandise Manager of the Company since 1991.

Beverly A. Rice has been Senior Vice President-Fashion and
Merchandising Strategy of the Company since January 1997. Ms. Rice was Vice
President, General Manager, N. Theobald, Inc., a specialties gift and home
store, 1988-1995, from which she retired.

Timothy J. Spalding has been Vice President-Controller since 1991.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.

The Company's Common Stock is traded on The Nasdaq National Market
tier of The Nasdaq Stock Market, under the symbol "JCBS."

The quarterly range of high and low sales price quotations of
Jacobson's Common Stock for each quarter of fiscal 1999 and 1998 are shown in
the following schedule:

Year Quarter High Low
---- ------- ---- ---
1999 4th $ 8 3/16 $ 5 3/16
---- 3rd 7 1/4 4
2nd 9 6 1/8
1st 8 1/2 5

1998 4th $ 9 3/4 $ 5 3/4
---- 3rd 13 3/4 6 1/2
2nd 15 3/8 13
1st 15 3/4 12 5/8

The approximate number of shareholders of record of Jacobson's
Common Stock as of March 1, 2000 was 1,190.

No dividends were paid in either of 1999 or 1998. The Company's
revolving credit loan facility limits cash dividends to 50.0% of net income
for the immediately preceding fiscal year, subject to a maximum of $.50 per
outstanding share per year and borrowing availability restrictions.

ITEM 6. SELECTED FINANCIAL DATA.

Selected financial data for fiscal 1995 through 1999 is as follows:

- --------------------------------------------------------------------------------------------
(in thousands except
per share data) 1999 1998 1997(1) 1996 1995
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales, including leased
departments.................... $448,075 $444,305 $447,471 $432,469 $414,267
Earnings (loss) before income
taxes.......................... 5,394 2,515 1,905 (17,289) (6,541)
Net earnings (loss)............... 3,506 1,635 1,214 (11,462) (4,206)
Total assets...................... 233,664 236,875 233,279 260,418 262,514
Long-term debt, less current
portion........................ 85,772 99,803 104,138 130,147 119,727

Per common share:
Net earnings (loss)--
Basic and Diluted........... $0.61 $ 0.28 $ 0.21 $ (1.98) $ (0.73)
Cash dividends................... -- -- -- 0.37 1/2 0.50
(1) 53 week year.
- --------------------------------------------------------------------------------------------
</TABLE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.

RESULTS OF OPERATIONS

The following table shows the percentage relationship to sales of the items
presented for the periods indicated.

- ------------------------------------------------------------------------
1999 1998 1997(1)
- ------------------------------------------------------------------------

Net sales................................... 100.0% 100.0% 100.0%
Gross profit................................ 33.8 33.6 32.7
Selling, general and administrative
expenses.................................. 31.1 31.3 31.0
Interest expense, net....................... 1.6 1.8 2.1
Non-recurring charge (credit)............... 0.3 - (0.1)
Gains on sale of property................... (0.4) (0.1) (0.7)
Earnings before income taxes................ 1.2 0.6 0.4
Net earnings................................ 0.8 0.4 0.3

(1) 53 week year.
- ------------------------------------------------------------------------

1999 versus 1998

Sales in 1999 totalled $448,075,000, an increase of 0.8% over
1998. Comparable store sales also increased 0.8%.

Women's apparel and accessories represented 66.6% of the Company's
total business in 1999. Other major components were men's 13.7%, children's
7.7%, home accessories 9.5%, and miscellaneous 2.5%.

The Company's gross profit percentage increased to 33.8% in 1999
from 33.6% in 1998, primarily due to higher maintained markup. A LIFO credit
in 1999 reduced cost of goods sold by $911,000 compared to a LIFO credit of
$824,000 in 1998.

Selling, general and administrative expenses decreased to 31.1% of
sales in 1999 from 31.3% in 1998. The decrease reflects primarily reduced
benefit expense (pension and workers' compensation insurance) and savings
from integration of the Company's Florida and Midwest buying offices,
partially offset by higher sales promotion expense.

Interest expense totalled 1.6% of sales in 1999 compared with 1.8%
in 1998, reflecting principally lower average borrowings and rates on the
revolving credit facility and reduced interest on other debt as the result of
scheduled debt maturities.

In 1999, the Company sold properties in Dearborn and East Lansing,
Michigan, at a combined pre-tax gain of $1,717,000 and recorded a one-time
pre-tax charge of $1,251,000 related to the write-off of an investment in a
cooperative buying group made several years ago. In 1998, the Company sold
properties in Jackson and Kalamazoo, Michigan, at a combined pre-tax gain of
$617,000.

1999 net earnings totalled $3,506,000, or 61 cents per common
share, compared with 1998 net earnings of $1,635,000, or 28 cents per share.
As a percentage of sales, net earnings were 0.8% in 1999 and 0.4% in 1998.
1999 results included after-tax gains on sales of property totalling
$1,133,000, or 20 cents per common share, and an after-tax charge related to
the write-off of an investment in a cooperative buying group totalling
$826,000, or 14 cents per common share. 1998 results included after-tax gains
on sales of property totalling $407,000, or 7 cents per common share.

1998 versus 1997

Sales in 1998 totalled $444,305,000, a decrease of 0.7% from 1997.
Comparable store sales increased 1.1%. The 1997 fiscal year included 53
weeks. On an equivalent 52 week basis, total sales increased 0.9% and
comparable store sales increased 2.7%. The overall 1998 sales decrease was
attributable to the extra week in 1997 and sales in stores closed in 1997.

Women's apparel and accessories represented 66.0% of the Company's
total business in 1998. Other major components were men's 13.5%, children's
7.9%, home accessories 9.3%, and miscellaneous 3.3%.

The Company's gross profit percentage increased to 33.6% in 1998
from 32.7% in 1997, primarily due to a LIFO credit which reduced cost of
goods sold by $824,000 in 1998 compared to a LIFO provision of $1,553,000 in
1997, and to higher maintained markup and lower markdowns.

Selling, general and administrative expenses increased to 31.3% of
sales in 1998 from 31.0% in 1997. The increase reflected primarily higher
sales promotion expense, partially offset by reduced benefit expense (pension
and health care).

Interest expense totalled 1.8% of sales in 1998 compared with 2.1%
in 1997, reflecting principally lower average borrowings and rates on the
revolving credit facility and reduced interest on other debt as the result of
scheduled debt maturities.

The Company established a $4,200,000 reserve in 1996 in connection
with the closing of three under-performing stores in March 1997. In 1997, the
Company recognized a $340,000 pre-tax credit to write-off the remaining
severance and benefit reserves after all payments were made and to adjust the
property and equipment reserve after sale of a portion of the related
property at greater than the original estimated value.

In 1998, the Company sold properties in Jackson and Kalamazoo,
Michigan, at a combined pre-tax gain of $617,000. In 1997, the Company
realized pre-tax gains on sales of property totalling $2,987,000, including
the sale of its Grosse Pointe Store for the Home and immaterial gains on the
sale of two non-operating properties.

1998 net earnings totalled $1,635,000, or 28 cents per common
share, compared with 1997 net earnings of $1,214,000, or 21 cents per share.
As a percentage of sales, net earnings were 0.4% in 1998 and 0.3% in 1997.
1998 results included after-tax gains on sales of property totalling
$407,000, or 7 cents per common share. 1997 results included after-tax gains
on sales of property and store closing reserve credits totalling $2,196,000,
or 38 cents per common share.

INFLATION

The Company cannot determine the precise effects of inflation on
its business. Because of inflation, historically the Company has experienced
increases in the cost of merchandise and in certain operating expenses. The
Company generally has been able to offset the effects of these increased
expenses by adjusting prices, by using the LIFO method for valuing all
merchandise inventories and by controlling expenses. The Company's ability to
adjust prices is limited by competitive pressures in its market areas. The
Department Store Inventory Price Indexes, published by the Bureau of Labor
Statistics (BLS), are used to measure inflation's impact on inventories in
the LIFO valuation. The BLS Index decreased 0.7% in 1999, 1.5% in 1998 and
0.5% in 1997.

LIQUIDITY AND CAPITAL RESOURCES

At January 29, 2000, the Company's current ratio was 2.07 to 1 and
working capital totalled $67,993,000, including $722,000 of cash and cash
equivalents. At January 30, 1999, the Company's current ratio was 2.37 to 1
and working capital totalled $76,094,000, including $2,929,000 of cash and
cash equivalents. At January 31, 1998, the Company's current ratio was 2.57
to 1 and working capital totalled $78,815,000, including $3,883,000 of cash
and cash equivalents.

The Company uses cash flows from operations and revolving credit
line borrowings to fund its seasonal working capital needs, debt service and
expenditures to modernize and refixture existing stores. To support its
present and planned working capital requirements, the Company has a
$100,000,000 revolving credit facility under a Revolving Credit Agreement
with a commercial lender. The revolving credit facility currently provides
for borrowings of up to $80,000,000, subject to a borrowing base limitation
and lender reserves. The Company may, at its option, increase the maximum
available borrowings under the revolving credit facility to up to
$100,000,000 in the aggregate, subject to the borrowing base limitation and
lender reserves. Loans under the facility bear interest at either or both of
two variable interest rate alternatives as chosen by the Company. One of the
interest rates may decrease if the Company meets specified performance
measures, which were not met in 1999. The facility also permits up to
$5,000,000 in letters of credit, which decrease the amount available for
loans.

Borrowings under the revolving credit facility mature on March 24,
2002. Each year, the Company may request a one-year extension of the maturity
date, subject to lender approval. Any party may terminate the facility as of
the maturity date by giving 90 days notice. The Company may also terminate
the facility early on 90 days notice if it pays a termination fee equal to
one-half of one percent a year (for what would have been the remaining term
of the facility) of the average daily balance of loans and letters of credit
under the facility since its inception. The facility carries a line of credit
fee equal to one-quarter of one percent a year of the excess of the aggregate
commitments under the facility (currently $80,000,000) over the amount of
loans and letters of credit outstanding and an agent's fee equal to $45,000 a
year. Borrowings under the facility are guaranteed by the Company's
subsidiaries and secured by accounts receivable, inventory and related
intangible assets and the proceeds thereof of the Company and its
subsidiaries.

The revolving credit facility limits cash dividends to 50 percent
of net income for the immediately preceding fiscal year, subject to a maximum
of $.50 per outstanding share per year and borrowing availability
restrictions. At January 29, 2000, the Company had borrowings at an interest
rate of 8.4% and outstanding letters of credit under this facility totalling
$26,956,000 and had $53,044,000 of borrowing availability under the borrowing
base calculated as of that date.

A part of the Company's financial strategy is to own, or obtain
long-term leases on, its properties. Capital expenditures to modernize and
refixture existing stores and support facilities generally are financed with
internally generated funds. Any new stores and major expansion projects
generally are financed by first mortgages or comparable financing through the
Company's consolidated, wholly-owned real estate subsidiary, Jacobson Stores
Realty Company, or through long-term leases.

The following tables provide information about the Company's fixed
and variable rate debt obligations that are sensitive to changes in interest
rates. The Company's fixed rate debt obligations include 6 3/4% Convertible
Subordinated Debentures due 2011, mortgage notes, collateral trust bonds and
obligations under capital leases. Variable rate obligations include
borrowings under the revolving credit facility and industrial development
revenue bond obligations. The tables present scheduled principal maturities
and related weighted average interest rates for each of the next five years,
aggregate subsequent maturities and market value of debt as of January 29,
2000 and January 30, 1999. Average interest rates are based on contractual
rates for fixed rate obligations and current rates for variable rate
obligations.

- ------------------------------------------------------------------------------
Fixed Rate Obligations Variable Rate Obligations
---------------------- -------------------------
Amount Average Amount Average
(in thousands) Maturing Interest Rate Maturing Interest Rate
- ------------------------------------------------------------------------------
As of January 29, 2000:
2000...................... $ 3,076 7.5% $ 316 5.3%
2001...................... 12,642 7.8 317 5.3
2002...................... 3,281 7.1 25,385 8.3
2003...................... 8,015 7.8 420 5.3
2004...................... 3,181 7.0 421 5.3
Thereafter ............... 25,378 6.7 6,732 5.3
------- -------
Total debt maturities..... $55,573 7.2% $33,591 7.6%
======= =======
Market value of debt at
January 29, 2000........ $47,300 $33,600
======= =======
- ------------------------------------------------------------------------------

As of January 30, 1999:
1999...................... $ 3,377 7.4% $ 342 3.9%
2000...................... 3,869 7.3 316 3.7
2001...................... 12,626 7.8 35,193 7.4
2002...................... 3,268 7.1 318 3.7
2003...................... 8,007 7.8 420 3.7
Thereafter ............... 28,632 6.8 7,154 3.7
------- -------
Total debt maturities..... $59,779 7.2% $43,743 6.7%
======= =======
Market value of debt at
January 30, 1999........ $55,900 $43,700
======= =======

- ------------------------------------------------------------------------------

In 1999, the maturity date of the revolving credit facility was extended by
one year to March 24, 2002. In addition, in 1999, the Company repaid
$9,809,000 under the revolving credit facility and paid $812,000 of the 2000
sinking fund obligation on the 6 3/4% Convertible Subordinated Debentures.

CASH FLOWS

Cash and cash equivalents decreased $2,207,000 in 1999, $954,000
in 1998 and $988,000 in 1997. Cash flows are impacted by operating, investing
and financing activities. In 1999, operating activities provided $16,962,000
of cash compared to $12,254,000 provided in 1998 and $24,518,000 provided in
1997. The increase in 1999 compared to 1998 reflects primarily increased
earnings, a smaller increase in merchandise inventories and a greater
increase in accounts payable. The decrease in 1998 compared to 1997 reflects
primarily cash generated from store closings in 1997, partially offset by
increased earnings in 1998, a greater increase in accounts payable in 1998
and payments against store closing reserves in 1997.

Investing activities used cash of $4,811,000 in 1999 and
$8,721,000 in 1998, and provided cash of $881,000 in 1997. Investing
activities included capital expenditures for modernization and refixturing of
existing stores and support facilities totalling $9,374,000, $10,095,000 and
$4,114,000 in 1999, 1998, and 1997, respectively. Proceeds from sales of
property totalled $4,492,000, $1,001,000 and $4,068,000 in 1999, 1998 and
1997, respectively. There were no new capital lease obligations in 1999, 1998
or 1997.

Financing activities used cash of $14,358,000 in 1999, $4,487,000
in 1998 and $26,387,000 in 1997. In 1999, the Company repaid $9,809,000 under
its Revolving Credit Agreement, purchased and retired $2,072,000 of 6 3/4%
Convertible Subordinate Debentures, satisfying its 1999 annual sinking fund
payment plus $812,000 of the 2000 sinking fund payment, and used $2,476,000
to service current maturities of long-term debt. In 1998, the Company repaid
$157,000 under its Revolving Credit Agreement, purchased and retired
$2,160,000 of 6 3/4% Convertible Subordinated Debentures, satisfying its 1998
annual sinking fund payment plus $465,000 of the 1999 sinking fund payment,
and used $2,271,000 to service current maturities of long-term debt. In 1997,
the Company borrowed $49,500,000 under its current Revolving Credit Agreement
to repay the then outstanding principal balance under its former Credit
Agreement. Also in 1997, the Company repaid $13,968,000 under its current
Revolving Credit Agreement, prepaid $5,642,000 of principal on a mortgage
obligation, purchased and retired $1,755,000 of 6 3/4% Convertible
Subordinated Debentures, satisfying its annual sinking fund payment, and used
$5,022,000 to service current maturities of long-term debt. The Company did
not pay a cash dividend in 1999, 1998 or 1997.

The Company believes its cash flows from operations, along with
its borrowing capacity and access to financial markets are adequate to fund
its operations and debt maturities.

CORPORATE DEVELOPMENT

The Company reviews the performance of its less profitable stores
from time to time to determine whether it would be in the Company's best
interest to close any of these stores. Store closings could have a
significant impact on the Company's sales, expenses and capital requirements
and would likely entail additional significant one-time charges to effect the
closing and to recognize any impairment of assets resulting from the closing
decision. In 1998, the Company sold closed facilities in Jackson and
Kalamazoo, Michigan. In 1999, the Company sold a closed facility in Dearborn,
Michigan.

In November 1999, the Company completed a 17,000 square foot
expansion of its leased store in Naples, Florida.

In January, 2000, the Company signed a lease for an 80,000 square
foot store under construction in Meridian Mall, Okemos, Michigan. This store
is targeted to open in October 2000 and will replace the Company's nearby
freestanding downtown East Lansing location. The Company sold its East
Lansing location in January 2000, but will continue to operate the present
store under a short-term lease until the Meridian Mall store opens.

In March 2000, the Company changed its fiscal year end to the
Saturday nearest January 31st from the last Saturday in January.

In 1999, the Company completed replacement, testing and
implementation of all key systems affected by the Year 2000 issue. The
substantial majority of costs to replace non-compliant systems with Year
2000-compliant systems software and hardware would have been incurred
regardless of the Year 2000 issue to meet current business needs and take
advantage of new lower cost technology platforms. The Company spent
approximately $800,000 in internal development costs related to Year 2000
readiness, principally for payroll costs of its internal information systems
staff, in 1998 and 1999. These system replacement and internal costs were
funded primarily through cash flows from operations.

Each of the above statements regarding future revenues, expenses
or business plans (including statements regarding the sufficiency of the
Company's capital resources to fund future operations) may be a "forward
looking statement" within the meaning of the Securities Exchange Act of 1934.
Such statements are subject to important factors and uncertainties that could
cause actual results to differ materially from those in the forward-looking
statement, including the continued support of the Company's trade creditors
and factors, the risks inherent in the level of the Company's long-term debt
compared to its equity, the risk of unanticipated operating expenses, general
trends in retail clothing apparel purchasing, especially during the Christmas
season, and the factors set forth in this Management's Discussion and
Analysis of Financial Condition and Results of Operations.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

- ------------------------------------------------------------------------------
Fixed Rate Obligations Variable Rate Obligations
---------------------- -------------------------
Amount Average Amount Average
(in thousands) Maturing Interest Rate Maturing Interest Rate
- ------------------------------------------------------------------------------
As of January 29, 2000:
2000....................... $ 3,076 7.5% $ 316 5.3%
2001....................... 12,642 7.8 317 5.3
2002....................... 3,281 7.1 25,385 8.3
2003....................... 8,015 7.8 420 5.3
2004....................... 3,181 7.0 421 5.3
Thereafter ................ 25,378 6.7 6,732 5.3
------- -------
Total debt maturities...... $55,573 7.2% $33,591 7.6%
======= =======
Market value of debt at
January 29, 2000......... $47,300 $33,600
======= =======
- ------------------------------------------------------------------------------

As of January 30, 1999:
1999....................... $ 3,377 7.4% $ 342 3.9%
2000....................... 3,869 7.3 316 3.7
2001....................... 12,626 7.8 35,193 7.4
2002....................... 3,268 7.1 318 3.7
2003....................... 8,007 7.8 420 3.7
Thereafter ................ 28,632 6.8 7,154 3.7
------- -------
Total debt maturities...... $59,779 7.2% $43,743 6.7%
======= =======
Market value of debt at
January 30, 1999......... $55,900 $43,700
======= =======

- ------------------------------------------------------------------------------

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The following financial statements and supplementary financial
information are filed as part of this report on pages F-1 through F-20:

Consolidated Statements of Earnings, Three Fiscal Years Ended
January 29, 2000.
Consolidated Statements of Cash Flows, Three Fiscal Years Ended
January 29, 2000.
Consolidated Balance Sheets, January 29, 2000, January 30, 1999
and January 31, 1998.
Consolidated Statements of Shareholders' Equity, Three Fiscal
years Ended January 29, 2000.
Notes to Consolidated Financial Statements.
Summary of Significant Accounting Policies.
Quarterly Information (Unaudited).
Report of Independent Public Accountants.

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.

ITEM 11. EXECUTIVE COMPENSATION.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

The information called for by Part III is incorporated by
reference from those portions of the registrant's definitive proxy statement
for its 2000 Annual Meeting of Shareholders to be held May 25, 2000, filed
with the Securities and Exchange Commission pursuant to Regulation 14A within
120 days after the end of the fiscal year covered by this Form 10-K,
appearing under the following captions:

"Voting Securities and Principal Holders Thereof" (pages 1-3,
inclusive, of the proxy statement).

"Election of Directors" (pages 4-8, inclusive, thereof).

"Executive Compensation" (pages 9-17, inclusive, thereof); but
excluding from this incorporation by reference everything
appearing under the captions "Compensation Committee Report
on Executive Compensation" and "Performance Graph" (pages
14-17, inclusive, thereof).

Information with respect to executive officers of the Company is
set forth on pages 10-11 of this report.

For the purpose of stating the aggregate market value of voting
stock held by non-affiliates on the cover of this report, the registrant
considers that the directors of the registrant, the executive officers listed
on page 10 of this report, the Jacobson's Retirement Savings & Profit Sharing
Plan, the Jacobson Pension Plan, and The Jacobson Stores Foundation are
affiliates, and that all other shareholders are non-affiliates. This
statement is without prejudice to the classification of any shareholder at
other times or for other purposes.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

(a) The following financial statements, financial statement
schedules, and exhibits are filed as part of this report:

Page
(1) FINANCIAL STATEMENTS: ----

Consolidated Statements of Earnings, Three Fiscal
Years Ended January 29, 2000. F-1

Consolidated Statements of Cash Flows, Three Fiscal
Years Ended January 29, 2000. F-2

Consolidated Balance Sheets, January 29, 2000,
January 30, 1999, and January 31, 1998. F-3

Consolidated Statements of Shareholders' Equity,
Three Fiscal Years Ended January 29, 2000. F-4

Notes to Consolidated Financial Statements. F-5/
F-15

Summary of Significant Accounting Policies. F-16/
F-17

Quarterly Information (Unaudited). F-18/
F-19

Report of Independent Public Accountants. F-20

(2) FINANCIAL STATEMENT SCHEDULES:

Schedule VIII - Valuation and Qualifying Accounts
and Reserves, Year Ended January 29, 2000. S-1

All schedules, except as set forth above, have been omitted since the
information required to be submitted has been included in the consolidated
financial statements or notes thereto or has been omitted as not applicable
or not required.

(3) EXHIBITS:

Each management contract or compensatory plan required to be filed
as an exhibit pursuant to Item 14(c) of this report is indicated by an
asterisk (*).

4(a) Amendment to Revolving Credit Agreement, dated January 21,
2000.

10(a)* Amendment to Employment Agreement, between Jacobson Stores
Inc. and P. Gerald Mills, dated April 10, 2000.

10(b)* Amendment to Employment Agreement, between Jacobson Stores
Inc. and Paul W. Gilbert, dated April 10, 2000.

10(c)* Amendment to Employment Agreement, between Jacobson Stores
Inc. and James A. Rodefeld, dated April 10, 2000.

10(d)* Executive Employment Agreement, dated as of April 11, 2000,
between Jacobson Stores Inc. and Theodore R. Kolman.

10(e)* Executive Employment Agreement, dated as of April 8, 2000,
between Jacobson Stores Inc. and Beverly A. Rice.

10(f)* Jacobson Stores Inc. Management Incentive Plan, dated
March 23, 2000.

23 Consent of Arthur Andersen LLP.

27 Financial Data Schedule.

In addition, the previously-filed exhibits listed below are
incorporated herein by reference. (All references are to Securities and
Exchange Commission File #0-6319 unless otherwise noted.)

<TABLE>
<CAPTION>
Current Identification of
Exhibit Description of Exhibit Prior Filing
- ------- ---------------------- -----------------
<C> <C> <C>
3(i)(a) Restated Articles of Incorporation, Exhibit 19(a) to Form 10-Q,
Jacobson Stores Inc., as amended and Quarter Ended April 29,
restated May 25, 1989. 1989.

3(i)(b) Certificate of Designation, Preferences and Exhibit 3(a) to Form 10-Q,
Rights of Preferred Stock of Jacobson Quarter Ended October 29, 1988.
Stores Inc.

3(ii) By-laws, Jacobson Stores Inc., as Exhibit 3(ii) to Form 10-Q,
amended November 20, 1997. Quarter Ended October 25,
1997.

4(b) Revolving Credit Agreement, dated as Exhibit 4(c) to Form 10-K,
of March 24, 1997, between Jacobson Year Ended January 25, 1997.
Stores Inc. and The CIT Group/Business
Credit, as agent.

<CAPTION>
Current Identification of
Exhibit Description of Exhibit Prior Filing
- ------- ---------------------- -----------------
<C> <C> <C>
4(c) Amendment to Revolving Credit Agreement, Exhibit 4 to Form 10-Q,
dated June 8, 1998. Quarter Ended August 1, 1998.

4(d) Election under Section 780, Michigan Exhibit 28 to Form 10-Q,
Business Corporation Act. Quarter Ended October 27, 1984.

4(e) Indenture dated as of December 15, File #33-10532:
1986 between Jacobson Stores Inc. Exhibit 4(a) to Form S-2
and National Bank of Detroit, as (Amendment No. 1), filed
Trustee. December 12, 1986.

4(f) Rights Agreement dated as of October 9, Exhibit I to Form 8-A, dated
1998 between Jacobson Stores Inc. and October 26, 1998.
Norwest Bank Minnesota, N.A., as
Rights Agent.

10(g)* Employment Agreement, dated as of Exhibit 10(a) to Form 10-Q,
June 11, 1998, between Jacobson Stores Inc. Quarter Ended May 2, 1998.
and P. Gerald Mills.

10(h)* Amendment to Employment Agreement Exhibit 10(a) to Form 10-K,
between Jacobson Stores Inc. and Year Ended January 30, 1999.
P. Gerald Mills, dated April 7, 1999.

10(i)* Employment Agreement, dated as of Exhibit 10(b) to Form 10-Q,
June 11, 1998, between Jacobson Stores Inc. Quarter Ended May 2, 1998.
and Paul W. Gilbert.

10(j)* Amendment to Employment Agreement Exhibit 10(b) to Form 10-K,
between Jacobson Stores Inc. and Year Ended January 30, 1999.
Paul W. Gilbert, dated April 7, 1999.

10(k)* Employment Agreement, dated as of Exhibit 10(c) to Form 10-Q,
June 11, 1998, between Jacobson Stores Inc. Quarter Ended May 2, 1998.
and James A. Rodefeld.

10(l)* Amendment to Employment Agreement Exhibit 10(c) to Form 10-K,
between Jacobson Stores Inc., and Year Ended January 30, 1999.
James A. Rodefeld, dated April 7, 1999.

10(m)* Executive Employment Agreement, dated Exhibit 10(d) to Form 10-K,
as of April 12, 1999, between Jacobson Year Ended January 30, 1999.
Stores Inc. and Theodore R. Kolman.

<CAPTION>
Current Identification of
Exhibit Description of Exhibit Prior Filing
- ------- ---------------------- -----------------
<C> <C> <C>
10(n)* Executive Employment Agreement, dated Exhibit 10(a) to Form 10-Q,
as of July 6, 1998, between Jacobson Quarter Ended October 31,
Stores Inc. and George P. Kelly. 1998.

10(o)* Release and Waiver Agreement, dated Exhibit 10 to Form 10-Q,
as of March 29, 1999, between George Quarter Ended May 1, 1999.
Kelly and Jacobson Stores Inc.

10(p)* Executive Employment Agreement, dated Exhibit 10(d) to Form 10-K
as of April 15, 1998, between Jacobson Year Ended January 31, 1998.
Stores Inc. and Herman J. Heinle.

10(q)* Release and Waiver Agreement dated Exhibit 10 to Form 10-Q,
May 26, 1998, between Jacobson Stores Inc. Quarter Ended August 1, 1998.
and Herman J. Heinle.

10(r)* Split Dollar Agreement, dated January 31, Exhibit 10(k) to Form 10-K
1992, between Jacobson Stores Inc. and Year Ended January 27, 1996.
Paul W. Gilbert.

10(s)* Jacobson Stores Inc. Deferred Compensation Exhibit 10(e) to Form 10-K,
Plan Amended and Restated Effective Year Ended January 30, 1999.
January 28, 1999.

10(t)* Jacobson Stock Option Plan of 1994. Exhibit A to Proxy Statement in
connection with the Annual
Meeting of Shareholders held on
May 26, 1994.

10(u)* First Amendment to Jacobson Stock Exhibit 10(m) to Form 10-K,
Option Plan of 1994. Year Ended January 27, 1996.

10(v)* Second Amendment to Jacobson Stock Exhibit 10(b) to Form 10-Q,
Option Plan of 1994. Quarter Ended July 26, 1997.

10(w)* Third Amendment to Jacobson Stock Exhibit A to Proxy Statement
Option Plan of 1994. dated April 10, 1998 in connec-
tion with Annual Meeting of
Shareholders held May 28, 1998.

10(x)* Jacobson Stores Inc. Management Exhibit 10(f) to Form 10-K,
Incentive Plan, dated March 25, 1999. Year Ended January 30, 1999.

21 Schedule of Subsidiaries. Exhibit 21 to Form 10-K, Year
Ended January 27, 1996.
</TABLE>

With the exception of Exhibits 4(a), 4(b), 4(c) and 4(e),
instruments defining the rights of holders of long-term debt of the
registrant and its subsidiaries have been omitted. The amount of debt
authorized under each such omitted instrument is less than 10% of the total
assets of the registrant and its subsidiaries on a consolidated basis. The
registrant agrees to furnish a copy of any such instrument to the Securities
and Exchange Commission upon request.

In addition to Exhibits 10(a) through 10(e) and 10(g) to 10(r),
inclusive, the registrant has an employment agreement with one other
executive officer, which is not considered material in amount or
significance.

(b) The Company did not file any reports on Form 8-K during its
fourth fiscal quarter ended January 29, 2000.

(d) See Item 14(a)(2).

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.

DATE: April 10, 2000 JACOBSON STORES INC.

By: /s/ P. Gerald Mills
---------------------------------------
P. Gerald Mills, Chairman of the Board,
President and Chief Executive Officer

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 and on the dates indicated.

JACOBSON STORES INC. Date
----

By: /s/ P. Gerald Mills April 10, 2000
-------------------------------------
P. Gerald Mills, Chairman of the
Board, President and Chief
Executive Officer, and Director
(Principal Executive Officer)

By: /s/ Paul W. Gilbert April 10, 2000
-------------------------------------
Paul W. Gilbert, Vice Chairman
of the Board, and Director
(Principal Financial Officer)

By: /s/ Timothy J. Spalding April 10, 2000
-------------------------------------
Timothy J. Spalding, Vice
President and Controller
(Principal Accounting Officer)

JACOBSON STORES INC. Date
----

By: /s/ Herbert S. Amster April 10, 2000
-------------------------------------
Herbert S. Amster, Director

By: /s/ Leslie E. Dietzman April 10, 2000
-------------------------------------
Leslie E. Dietzman, Director

By: /s/ Herman S. Kohlmeyer, Jr. April 10, 2000
-------------------------------------
Herman S. Kohlmeyer, Jr., Director

By: /s/ Kathleen McCree Lewis April 10, 2000
-------------------------------------
Kathleen McCree Lewis, Director

By: /s/ Michael T. Monahan April 10, 2000
-------------------------------------
Michael T. Monahan, Director

By: /s/ M. Marnette Perry April 10, 2000
-------------------------------------
M. Marnette Perry, Director

By: /s/ Philip H. Power April 10, 2000
-------------------------------------
Philip H. Power, Director

By: /s/ Richard Z. Rosenfeld April 10, 2000
-------------------------------------
Richard Z. Rosenfeld, Director

By: /s/ Robert L. Rosenfeld April 10, 2000
-------------------------------------
Robert L. Rosenfeld, Director

By: /s/ James L. Wolohan April 10, 2000
-------------------------------------
James L. Wolohan, Director

JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

Year Ended
-------------------------------------
January 29, January 30, January 31,
(in thousands except per share data) 2000 1999 1998(1)
- ------------------------------------------------------------------------------

NET SALES .............................. $ 448,075 $ 444,305 $ 447,471
--------- --------- ---------

COSTS AND EXPENSES:
Cost of merchandise sold, buying
and occupancy expenses ........... 296,412 295,272 300,918
Selling, general and administrative
expenses ......................... 139,458 139,220 138,797
Interest expense, net ............... 7,277 7,915 9,178
Non-recurring charge (credit) ....... 1,251 -- (340)
Gains on sale of property ........... (1,717) (617) (2,987)
--------- --------- ---------

Total costs and expenses ..... 442,681 441,790 445,566
--------- --------- ---------

EARNINGS BEFORE INCOME TAXES ........... 5,394 2,515 1,905

PROVISION FOR INCOME TAXES ............. 1,888 880 691
--------- --------- ---------

NET EARNINGS ........................... $ 3,506 $ 1,635 $ 1,214
========= ========= =========

EARNINGS PER COMMON SHARE:
Basic and Diluted ................... $ 0.61 $ 0.28 $ 0.21
========= ========= =========
(1) 53 week year.

- ------------------------------------------------------------------------------

The accompanying notes (pages F-5 through F-15) and summary of significant
accounting policies (pages F-16 and F-17) are an integral part of these
statements.

F-1

JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

Year Ended
-------------------------------------
January 29, January 30, January 31,
(in thousands) 2000 1999 1998(1)
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings ................................... $ 3,506 $ 1,635 $ 1,214
Gains on sale of property ...................... (1,717) (617) (2,987)
Non-recurring charge (credit) .................. 1,251 -- (340)
Adjustments to reconcile net earnings
to cash provided by operating activities:
Depreciation and amortization .............. 8,425 8,429 9,128
Deferred taxes ............................. (947) (74) 263
Other liabilities .......................... (377) (337) 570
Change in:
Receivables from customers, net ........ 9 1,973 7,586
Merchandise inventories ................ (1,451) (4,379) 8,800
Prepaid expenses and other assets ...... (102) (37) 1,590
Accounts payable and accrued expenses .. 7,137 5,579 (2,521)
Accrued income taxes ................... 1,228 82 1,215
-------- -------- --------
Net cash provided by operating
activities ...................... 16,962 12,254 24,518
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property ................. 4,492 1,001 4,068
Additions to property and equipment ............ (9,374) (10,095) (4,114)
Other non-current assets ....................... 71 373 927
-------- -------- --------
Net cash provided by (used in)
investing activities ............ (4,811) (8,721) 881
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Additions to long-term debt .................... -- -- 49,500
Reduction of long-term debt .................... (14,358) (4,588) (75,887)
Proceeds from exercise of stock options ........ -- 101 --
-------- -------- --------

Net cash used in financing
activities ...................... (14,358) (4,487) (26,387)
-------- -------- --------
DECREASE IN CASH AND CASH EQUIVALENTS ............. (2,207) (954) (988)
Cash and cash equivalents, beginning of year ... 2,929 3,883 4,871
-------- -------- --------
CASH AND CASH EQUIVALENTS, END OF YEAR ............ $ 722 $ 2,929 $ 3,883
======== ======== ========
<FN>
(1) 53 week year
- -----------------------------------------------------------------------------------------
</TABLE>

SUPPLEMENTARY CASH FLOW INFORMATION
The Company considers all short-term investments with a maturity at date of
purchase of three months or less to be cash equivalents.

Interest paid (net of interest capitalized) was $7,302,000 in 1999,
$7,948,000 in 1998 and $9,330,000 in 1997. The Company paid income taxes
totalling $1,607,000 in 1999 and $872,000 in 1998. The Company received
income tax refunds totalling $782,000 in 1997.

The accompanying notes (pages F-5 through F-15) and summary of significant
accounting policies (pages F-16 and F-17) are an integral part of these
statements.

F-2

JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

Year Ended
-------------------------------------
January 29, January 30, January 31,
(in thousands) 2000 1999 1998(1)
- ------------------------------------------------------------------------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ......... $ 722 $ 2,929 $ 3,883
Receivables from customers, net ... 32,142 32,151 34,124
Merchandise inventories ........... 91,905 90,454 86,075
Prepaid expenses and other
assets .. ....................... 1,472 1,370 1,333
Deferred taxes .................... 5,494 4,894 3,696
--------- --------- ---------
Total current assets ...... 131,735 131,798 129,111
--------- --------- ---------
PROPERTY AND EQUIPMENT, NET ........... 83,163 84,989 83,707
--------- --------- ---------
OTHER ASSETS .......................... 18,766 20,088 20,461
--------- --------- ---------
$ 233,664 $ 236,875 $ 233,279
========= ========= =========

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt .. $ 3,392 $ 3,719 $ 3,972
Accounts payable ................... 39,968 34,769 32,108
Accrued expenses ................... 18,712 16,774 13,856
Accrued income taxes ............... 1,670 442 360
--------- --------- ---------
Total current liabilities.. 63,742 55,704 50,296
--------- --------- ---------
LONG-TERM DEBT ........................ 85,772 99,803 104,138
--------- --------- ---------
DEFERRED TAXES ........................ 6,039 6,386 5,262
--------- --------- ---------
OTHER LIABILITIES ..................... 3,668 4,045 4,382
--------- --------- ---------
SHAREHOLDERS' EQUITY:
Common stock ....................... 5,975 5,975 5,966
Paid-in surplus .................... 7,201 7,201 7,109
Retained earnings .................. 61,666 58,160 56,525
Treasury stock ..................... (399) (399) (399)
--------- --------- ---------
74,443 70,937 69,201
--------- --------- ---------
$ 233,664 $ 236,875 $ 233,279
========= ========= =========
- ------------------------------------------------------------------------------

The accompanying notes (pages F-5 through F-15) and summary of significant
accounting policies (pages F-16 and F-17) are an integral part of these
statements.

F-3

JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

Common Paid-in Retained Treasury
(in thousands except number of shares) Stock Surplus Earnings Stock
- ------------------------------------------------------------------------------
BALANCE, January 25, 1997 ............. $5,966 $7,109 $55,311 $(399)

FIFTY-TWO WEEKS ENDED January 31, 1998:
Net earnings ....................... -- -- 1,214 --
------ ------ ------- -----

BALANCE, January 31,1998 .............. 5,966 7,109 56,525 (399)

FIFTY-TWO WEEKS ENDED January 30, 1999:
Net earnings ....................... -- -- 1,635 --
Exercise of stock options .......... 9 92 -- --
------ ------ ------- -----

BALANCE, January 30, 1999 ............. 5,975 7,201 58,160 (399)
------ ------ ------- -----

FIFTY-TWO WEEKS ENDED January 29, 2000:
Net earnings ....................... -- -- 3,506 --
------ ------ ------- -----

BALANCE, January 29, 2000 ............. $5,975 $7,201 $61,666 $(399)
====== ====== ======= =====
- ------------------------------------------------------------------------------

PREFERRED STOCK
Authorized 1,000,000 shares, $1 par value; no shares outstanding at January
31, 1998, January 30, 1999 and January 29, 2000.

COMMON STOCK
Authorized 15,000,000 shares, $1 par value; 5,966,2212/3 shares issued at
January 31, 1998 and 5,975,4092/3 shares issued at January 30, 1999 and
January 29, 2000. Shares issued include 187,200 shares in treasury a
January 31, 1998, January 30, 1999 and January 29, 2000.

The accompanying notes (pages F-5 through F-15) and summary of significant
accounting policies (pages F-16 and F-17) are an integral part of these
statements.

F-4

JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

INTEREST EXPENSE

Components of net interest expense are summarized below:

- ------------------------------------------------------------------------------
(in thousands) 1999 1998 1997
- ------------------------------------------------------------------------------
Revolving Credit line .................... $2,794 $3,089 $3,630
Real estate obligations .................. 2,652 2,891 3,083
Long-term debt ........................... 1,885 2,060 2,452
Capital lease obligations ................ 22 40 77
------ ------ ------
7,353 8,080 9,242
Less interest earned on
short-term investments ................. 8 65 64
Less interest capitalized on
properties under development ........... 68 100 --
------ ------ ------
$7,277 $7,915 $9,178
====== ====== ======
- ------------------------------------------------------------------------------

NON-RECURRING CHARGE (CREDIT)
In the fourth quarter of 1999, the Company recorded a one-time charge
totalling $1,251,000 to fully reserve its investment in a cooperative buying
group made several years ago.

In early 1997, the Company closed three underperforming Michigan stores and
incurred a related $4,200,000 pre-tax charge in fiscal 1996. Store closing
reserve activity was as follows:

- ------------------------------------------------------------------------------
(in thousands) 1999 1998 1997
- ------------------------------------------------------------------------------
Reserve at beginning of year ............. $ 125 $ 2,623 $ 4,200
Reserve related to properties sold ....... -- (2,210) --
Payments against reserve ................. (125) (288) (1,237)
Credit against reserve ................... -- -- (340)
------- ------- -------

Reserve at end of year ................... $ -- $ 125 $ 2,623
======= ======= =======
- ------------------------------------------------------------------------------

At January 29, 2000, all closed facilities have been sold and all closing
costs incurred. Store closing credits totalled $224,000 after-tax in 1997.

GAINS ON SALE OF PROPERTY

In fiscal 1999, the Company sold properties in Dearborn and East Lansing,
Michigan, at a combined after-tax gain totalling $1,133,000. In fiscal 1998,
the Company sold properties in Jackson and Kalamazoo, Michigan at a combined
after-tax gain totalling $407,000. In 1997, the Company sold its Store for
the Home in Grosse Pointe, Michigan and two non-operating properties at a
combined after-tax gain totalling $1,972,000.

ADVERTISING EXPENSE

The Company expenses advertising costs the first time the advertising takes
place. Advertising expense totalled $18,705,000 in 1999, $17,566,000 in 1998
and $16,735,000 in 1997.

F-5

TAXES

The provision for income taxes consisted of:

- ------------------------------------------------------------------------------
(in thousands) 1999 1998 1997
- ------------------------------------------------------------------------------
Currently payable .......... $ 2,835 $ 954 $ 428
Deferred ................... (947) (74) 263
------- ----- -----
$ 1,888 $ 880 $ 691
======= ===== =====
- ------------------------------------------------------------------------------

Income taxes as a percent of earnings before income taxes differed from the
statutory Federal income tax rate as follows:

- ------------------------------------------------------------------------------
(percent of earnings before income taxes) 1999 1998 1997
- ------------------------------------------------------------------------------
Statutory Federal income tax rate .......... 34.0% 34.0% 34.0%
Other ...................................... 1.0 1.0 2.3
---- ---- ----
35.0% 35.0% 36.3%
==== ==== ====
- ------------------------------------------------------------------------------

Deferred income taxes represent temporary differences in the recognition of
certain items for income tax and financial reporting purposes and are
classified as current or non-current in the consolidated balance sheets based
on the classification of the assets and liabilities which gave rise to the
temporary differences. The components of the net deferred income tax
liability at January 29,2000, January 30, 1999 and January 31, 1998, were as
follows:

- ------------------------------------------------------------------------------
January January January
(in thousands) 2000 1999 1998
- ------------------------------------------------------------------------------
Deferred tax liabilities:
Accelerated depreciation ............. $2,192 $2,658 $3,292
Additional pension cost
deductible for tax purposes ........ 5,184 5,152 5,208
Other ................................ 204 216 354
------ ------ ------
7,580 8,026 8,854
------ ------ ------
Deferred tax assets:
Store closing reserves ............... -- -- 906
Accrued employee benefits ............ 1,578 1,592 1,029
Accrued vacation pay ................. 1,326 1,292 1,283
Additional inventory
capitalized for tax purposes ....... 1,096 991 980
Alternative minimum tax credit
carryforward ....................... -- -- 962
Deferred rent ........................ 1,026 1,031 944
Other ................................ 2,009 1,628 1,184
------ ------ ------
7,035 6,534 7,288
------ ------ ------

Net deferred tax liability ............... $ 545 $1,492 $1,566
====== ====== ======
- ------------------------------------------------------------------------------

The Company believes it is more likely than not that deferred tax assets will
be used to offset future tax obligations. Accordingly, the Company has not
recorded a related valuation allowance.

Taxes other than income taxes were as follows:

- ------------------------------------------------------------------------------
(in thousands) 1999 1998 1997
- ------------------------------------------------------------------------------
Payroll taxes ............................ $ 8,235 $ 8,087 $ 8,195
Real estate and personal property taxes .. 4,493 4,185 4,337
Other taxes .............................. 1,198 1,061 913
------- ------- -------

$13,926 $13,333 $13,445
======= ======= =======
- ------------------------------------------------------------------------------

F-6

CUSTOMER CREDIT AND RECEIVABLES

Credit sales under Jacobson credit plans were 34.2% of total sales in 1999,
35.7% in 1998 and 38.1% in 1997. Credit plans consist of option and extended
payment accounts.

Revenues and direct costs associated with the Company's credit program are
summarized below

- ------------------------------------------------------------------------------
(in thousands) 1999 1998 1997
- ------------------------------------------------------------------------------
Finance charge revenues and fees ......... $5,400 $5,650 $6,185
------ ------ ------
Cost of credit operation:
Credit and collection administration .. 1,250 1,274 1,392
Allocated interest expense ............ 2,352 2,543 2,922
Provision for doubtful accounts, net
of recoveries ....................... 793 885 993
Provision for income taxes ............ 342 322 299
------ ------ ------
4,737 5,024 5,606
------ ------ ------
Net income from credit program ........... $ 663 $ 626 $ 579
====== ====== ======
As a percent of credit sales .......... 0.4% 0.4% 0.3%
====== ====== ======
- ------------------------------------------------------------------------------

The finance charge rate assessed under the Company's credit plans is 20.4%.
Allocated interest expense is computed at the average rate of interest
incurred on the Revolving Credit line applied to the average total
receivables from customers. The average rate was 7.8% in 1999, 8.0% in 1998
and 8.3% in 1997.

Receivables from customers at year-end were as follows:

- ------------------------------------------------------------------------------
January January January
(in thousands) 2000 1999 1998
- ------------------------------------------------------------------------------
Receivables from customers ............. $32,701 $32,749 $34,761
Less reserve for doubtful accounts ..... 559 598 637
------- ------- -------

$32,142 $32,151 $34,124
======= ======= =======
- ------------------------------------------------------------------------------

Accounts written off, net of recoveries, were $833,000 in 1999, $924,000 in
1998 and $1,106,000 in 1997 (0.54%, 0.58% and 0.65%, respectively, of credit
sales).

MERCHANDISE INVENTORIES

All merchandise inventories are valued at cost, which is lower than market,
as determined by the retail last-in, first-out (LIFO) method. At year-end,
merchandise inventories were as follows

Inventories at first-in,
first-out (FIFO) cost ... $108,803 $108,263 $104,708
Less LIFO reserves ........ 16,898 17,809 18,633
-------- -------- --------
$ 91,905 $ 90,454 $ 86,075
======== ======== ========
- ------------------------------------------------------------------------------

F-7

LONG-TERM LEASES

At January 29, 2000, the Company was obligated under non-cancelable long-term
leases for certain stores or portions of stores, and for certain fixtures and
equipment. Many of the leases contain renewal options. Most require payment
of taxes, insurance, and other costs applicable to the property and some
require additional rentals based on percentages of sales, which are recorded
as rental expense for both capital and operating leases.

Future minimum rental commitments as of January 29, 2000, for all
non-cancelable leases which had a remaining term of more than one year were
as follows:

- -----------------------------------------------------------------------------
Operating Capital
(in thousands) Leases Leases
- -----------------------------------------------------------------------------
2000 ................................... $ 9,077 $ 76
2001 ................................... 9,496 76
2002 ................................... 9,375 8
2003 ................................... 8,994 --
2004 ................................... 8,882 --
Thereafter ............................. 110,042 --
-------- ----
Total minimum lease payments ........... $155,866 160
========
Less imputed interest .................. 15
----
Capital lease obligations, including
current maturities of $66 ............ $145
====
- -----------------------------------------------------------------------------

Capital leases are treated as installment purchases of depreciable property
and included in the consolidated balance sheets as property and equipment
while the related lease obligations are included in long-term debt. Interest
based on these obligations and amortization based on the lease terms are
charged to current operations in lieu of rental expense. All other leases are
considered operating leases and are accounted for by recording rental expense
over the terms of the leases.

Rental expense (net of rental income) was as follows:
- -----------------------------------------------------------------------------
(in thousands) 1999 1998 1997
- -----------------------------------------------------------------------------
Buildings and improvements:
Operating leases:
Minimum rent ............... $7,685 $7,146 $7,003
Percentage rent ............ 1,491 1,188 1,652
Capital leases:
Percentage rent ............ 163 273 272
------ ------ ------
$9,339 $8,607 $8,927
====== ====== ======
Fixtures and equipment:
Operating leases ............... $ 949 $ 927 $ 864
====== ====== ======
- -----------------------------------------------------------------------------

F-8

PROPERTY AND EQUIPMENT

Property and equipment at year-end are set forth below:

- -----------------------------------------------------------------------------
January January January
(in thousands) 2000 1999 1998
- -----------------------------------------------------------------------------
Land and improvements ...................... $ 8,085 $ 8,439 $ 8,496
Buildings and improvements ................. 86,248 88,702 87,948
Furniture, fixtures and equipment .......... 57,271 55,113 49,710
Leasehold improvements ..................... 13,848 12,742 13,038
Construction in progress ................... 5,561 3,636 3,384
Capital leases ............................. 9,186 9,232 9,232
-------- -------- --------
180,199 177,864 171,808
Less accumulated depreciation and
amortization ............................. 97,036 92,875 88,101
-------- -------- --------
$ 83,163 $ 84,989 $ 83,707
======== ======== ========
- -----------------------------------------------------------------------------
Depreciation and amortization amounted to $8,425,000 in 1999, $8,429,000 in
1998 and $9,128,000 in 1997.

CAPITAL AND MAINTENANCE EXPENDITURES

Capital expenditures, including amounts under capital leases, for the past
three years are summarized below:

- -----------------------------------------------------------------------------
Stores and Store Support Facilities
(in thousands) Modernization and Equipment Total
------------- ------------- -----
1999......................... $7,909 $1,465 $ 9,374
1998......................... 7,573 2,522 10,095
1997......................... 1,332 2,782 4,114
- -----------------------------------------------------------------------------

Stores and store modernization expenditures include those made for the
acquisition of land, buildings and improvements, and related fixtures and
equipment for new stores and expansion and re-fixturing of existing stores.
Support facilities and equipment expenditures relate to information systems
and corporate office and service center facilities.

Repairs and maintenance expense totalled $1,928,000 in 1999, $1,879,000 in
1998 and $1,972,000 in 1997.

RETIREMENT PLANS

The Company has a trusteed non-contributory defined benefit pension plan
covering substantially all of its employees. Benefits under the plan are
based on a final average pay formula. Service cost and the projected benefit
obligation under the projected unit credit actuarial method reflect the
impact of estimated increases in compensation on future pension benefits.
Unrecognized pension costs and credits, including actuarial gains and losses,
are amortized over the average remaining service period of those employees
expected to receive pension benefits. Pension credit was $94,000 in 1999.
Pension expense was $162,000 in 1998 and $1,775,000 in 1997. The Company's
funding policy satisfies the minimum funding requirements of the Employee
Retirement Income Security Act of 1974 and the Internal Revenue Code of 1986.
Pension plan assets are managed by independent investment managers.

F-9

Net periodic pension expense (credit) was as follows:

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
(in thousands) 1999 1998 1997
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Components of Net Pension Expense (Credit):
Service cost for benefits earned during
the year ........................................ $ 1,386 $ 1,657 $ 2,341
Interest cost on projected benefit obligation ...... 3,888 3,759 3,868
Expected return on assets .......................... (5,686) (5,383) (4,906)
Net amortization and deferral ...................... 318 129 472
-------- -------- --------
Net pension expense (credit) ....................... $ (94) $ 162 $ 1,775
======== ======== ========
- ---------------------------------------------------------------------------------------
</TABLE>

Changes in the projected benefit obligation, plan assets and reconciliation
of the funded status of the plan were as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
December 31,
-------------------------------
(in thousands) 1999 1998 1997
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Change in Projected Benefit Obligation:
Projected benefit obligation at
beginning of year ............................. $ 59,317 $ 53,059 $ 52,724
Service cost for benefits earned during
the year ...................................... 1,386 1,657 2,341
Interest cost on projected benefit
obligation .................................... 3,888 3,759 3,868
Amendments ...................................... -- -- (470)
Actuarial (gain) loss ........................... (7,231) 4,022 (2,756)
Benefits paid ................................... (3,141) (3,180) (2,648)
-------- -------- --------
Projected benefit obligation at
end of year ......................... $ 54,219 $ 59,317 $ 53,059
======== ======== ========
Change in Plan Assets:
Fair value of plan assets at beginning of year .. $ 69,888 $ 70,257 $ 58,357
Actual return on plan assets .................... 23,967 2,811 13,259
Employer contribution ........................... -- -- 1,289
Benefits paid ................................... (3,141) (3,180) (2,648)
-------- -------- --------
Fair value of plan assets at end
of year ............................. $ 90,714 $ 69,888 $ 70,257
======== ======== ========
Reconciliation of Funded Status:
Funded status ................................... $ 36,495 $ 10,571 $ 17,198
Unrecognized net actuarial (gain) loss .......... (21,342) 4,488 (1,977)
-------- -------- --------

Net prepaid pension cost(1) ........... $ 15,153 $ 15,059 $ 15,221
======== ======== ========
<FN>
(1) Included in other assets on the consolidated balance sheets.
- ---------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
Actuarial Assumptions 1999 1998 1997
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Discount rate:
Beginning of year ............................... 6 3/4% 7 1/4% 7 1/2%
End of year ..................................... 7 3/4 6 3/4 7 1/4
Expected return on plan assets ..................... 9 9 9
Rate of increase in compensation ................... 5 5 5
- ---------------------------------------------------------------------------------------
</TABLE>

The Company contributed and charged to expense $288,000 in 1999, $277,000 in
1998 and $263,000 in 1997 for multi-employer pension plans. These
contributions were determined in accordance with the provisions of negotiated
labor contracts and generally are based on the number of hours worked. Under
the provisions of the Multi-Employer Pension Plan Amendments Act of 1980, if
the Company should substantially or totally withdraw from a multi-employer
pension fund, it would be required to continue contributions to such plan to
the extent of its portion of the plan's unfunded vested liability. Management
has no plans to terminate operations that would subject the Company to such
liability.

F-10

The Company has a qualified salary deferral plan under Internal Revenue Code
Section 401(k). All employees of the Company who have completed one year of
service and are at least age 21 are eligible to participate in this plan.
Under this plan, the Company may elect to match 20% of the first 3% of
employee contributions per participant. These matching contributions vest
immediately. The charges to operations for matching contributions to the plan
were $336,000 in 1999, $330,000 in 1998 and $351,000 in 1997.

ACCRUED EXPENSES

Accrued expenses at year-end were as follows:

FINANCING

The Company has a $100,000,000 revolving credit facility under a Revolving
Credit Agreement with a commercial lender. The revolving credit facility
provides for borrowings of up to $80,000,000, subject to a borrowing base
limitation and lender reserves. The Company may, at its option, increase the
maximum available borrowings under the facility to up to $100,000,000 in the
aggregate, subject to the borrowing base limitation and lender reserves.
Loans under the facility bear interest at either or both of two variable
interest rate alternatives as chosen by the Company. One of the interest
rates may decrease if the Company meets specified performance measures, which
were not met in 1999. The facility also permits up to $5,000,000 in letters
of credit, which decrease the amount available for loans.

Borrowings under the Revolving Credit facility mature on March 24, 2002. Each
year, the Company may request a one-year extension of the maturity date,
subject to lender approval. Any party may terminate the facility as of the
maturity date by giving 90 days notice. The Company may also terminate the
facility early upon 90 days notice if it pays a termination fee equal to
one-half of one percent a year (for what would have been the remaining term
of the facility) of the average daily balance of loans and letters of credit
under the facility since its inception. The facility carries a line of credit
fee equal to one-quarter of one percent a year of the excess of the aggregate
commitments under the facility (currently $80,000,000) over the amount of
loans and letters of credit outstanding and an agent's fee of $45,000 a year.
Borrowings under the facility are guaranteed by the Company's subsidiaries
and secured by accounts receivable, inventory and related intangible assets
and the proceeds thereof of the Company and its subsidiaries.

Revolving Credit line borrowings and interest rates for the past three years
were as follows:
- -----------------------------------------------------------------------------
(in thousands) 1999 1998 1997
- -----------------------------------------------------------------------------
Maximum amount outstanding .............. $51,645 $55,974 $54,899
Daily weighted average amount
outstanding............................ 36,071 38,801 43,277
Daily weighted average interest rate .... 7.8% 8.0% 8.3%
- -----------------------------------------------------------------------------

F-11

At year-end, long-term debt, less current maturities, consisted of the
following:

- -----------------------------------------------------------------------------
January January January
(in thousands) 2000 1999 1998
- -----------------------------------------------------------------------------
6 3/4% Convertible Subordinated Debentures
due 2011 ............................... $25,875 $ 27,600 $ 29,325
Mortgage notes and collateral trust bonds
due through 2013, at rates from
5.89% to 8.36% ......................... 26,543 28,657 30,582
Industrial development revenue bond
obligations, due through 2015, at
variable rates below prime ............ 8,209 8,526 8,868
Notes under Revolving Credit line, at a
blended rate below prime .............. 25,066 34,875 35,032
------- -------- --------
85,693 99,658 103,807

Capital lease obligations ................ 79 145 331
------- -------- --------
$85,772 $ 99,803 $104,138
======= ======== ========
- -----------------------------------------------------------------------------

The 6 3/4% Convertible Subordinated Debentures are convertible to shares of
the Company's common stock at any time prior to maturity, unless previously
redeemed, at $32.67 per share, subject to adjustment in certain events. The
debentures are redeemable at the option of the Company at par. Mandatory
annual sinking fund payments of $1,725,000 are required each December 15. At
January 29, 2000, 820,000 shares of authorized common stock were reserved for
conversion.

The Company's current loan agreements include, among other things, covenants
requiring minimum working capital and minimum net worth, and restricting
capital expenditures, capital stock redemptions and dividend payments. The
Revolving Credit Agreement limits cash dividends to 50.0% of net income for
the immediately preceding fiscal year, subject to a maximum of $.50 per
outstanding share per year and borrowing availability restrictions.

Aggregate maturities of long-term debt for the next five years are as
follows:

- -----------------------------------------------------------------------------
Capital
Long-Term Lease
(in thousands) Debt Obligations(1) Total
- -----------------------------------------------------------------------------
2000 .............................. $ 3,326 $ 66 $ 3,392
2001 .............................. 12,887 72 12,959
2002 .............................. 28,659 7 28,666
2003 .............................. 8,435 -- 8,435
2004 .............................. 3,602 -- 3,602

(1) Excluding imputed interest.
- -----------------------------------------------------------------------------

Based on the quoted market price of the 6 3/4% Convertible Subordinated
Debentures due 2011 and on the current rates offered to the Company for other
long-term debt of similar remaining maturities, the estimated fair value of
total long-term debt, excluding capital lease obligations, was less than the
carrying value by approximately $8,200,000 at January 29, 2000, $4,000,000 at
January 30, 1999 and $6,500,000 at January 31, 1998.

F-12

STOCK OPTIONS

At January 29, 2000, 820,125 shares of Jacobson Stores Inc. common stock were
reserved for issuance under a stock option plan adopted in 1994 and options
for an additional 573,687 shares were available for grant to directors and
employees.

The Company follows the disclosure requirements of Statement of Financial
Accounting Standards 123, "Accounting for Stock-Based Compensation", but
continues to account for these plans under APB Opinion No. 25, under which no
compensation cost has been recognized. Had compensation cost for these plans
been determined in accordance with SFAS No. 123 in 1999, the Company would
have had net earnings of $2,952,000 ($0.51per share). Under SFAS No. 123, in
1998 the Company would have had net earnings of $776,000 ($0.13 per share)
and in 1997 the Company's net earnings and earnings per common share would
have been $501,000 ($0.09 per share).

Option activity for the past three years was as follows:

- ------------------------------------------------------------------------------
Number Weighted Average
of Shares Option Price
- ------------------------------------------------------------------------------
Options outstanding at January 25, 1997 (including
exercisable options for 239,350 shares) ....... 395,600 $ 10.33

Activity during 1997:
Granted ....................................... 357,000 8.93
Expired ....................................... 131,850 12.33
-------
Options outstanding at January 31, 1998 (including
exercisable options for 304,313 shares) ....... 620,750 9.14

Activity during 1998:
Granted ....................................... 173,000 13.66
Exercised ..................................... 9,188 11.01
Expired ....................................... 49,687 11.50
-------
Options outstanding at January 30, 1999 (including
exercisable options for 456,907 shares) ....... 734,875 10.02

Activity during 1999:
Granted ....................................... 126,500 6.47
Expired ....................................... 41,250 10.79
-------
Options outstanding at January 29, 2000 (including
exercisable options for 542,375 shares) ....... 820,125 $ 9.42
======= =======
- ------------------------------------------------------------------------------
The weighted average fair value of options granted in 1999, 1998 and 1997
totalled $3.91, $7.87 and $6.18, respectively. The fair value of each option
grant is estimated on the date of grant using the Black-Scholes option
pricing model. The weighted average assumptions used in valuing the option
grants for 1999, 1998 and 1997, respectively, were expected life, 9.73, 9.88
and 9.94 years; interest rate, 5.33%, 5.60% and 6.73%; and volatility (the
measure by which the stock price has fluctuated or will be expected to
fluctuate during the period), 41.46%, 34.93% and 37.07%.

At January 29, 2000, 505,375 of the outstanding options have exercise prices
that range between $5.13-$9.13, with a weighted average exercise price of
$7.92. Of these options, 382,875 options are exercisable, with a weighted
average exercise price of $8.37 and a weighted average contractual maturity
of 7.0 years. The remaining 314,750 outstanding options have exercise prices
that range between $9.63-$14.38, with a weighted average exercise price of
$11.83. Of these options, 159,500 options are exercisable, with a weighted
average exercise price of $11.21 and a weighted average contractual maturity
of 6.3 years.

F-13

PREFERRED STOCK PURCHASE RIGHTS

The Company has a Rights Agreement, under which a Right is attached to each
of the Company's Common Shares. Each Right, when it becomes exercisable,
entitles the registered holder to purchase from the Company one one-hundredth
of a share of Series A preferred Stock at an exercise price of $100, subject
to adjustment. The Company has reserved 100,000 shares of Series A Preferred
Stock for issuance on the exercise of the Rights. The Rights trade with the
Company's Common Shares until they become exercisable, which occurs on the
date of public announcement that any person or group has acquired, or 10 days
(or such later date as the Board of Directors may determine) after the
commencement of, or public announcement of an intention to commence, an offer
to acquire beneficial ownership of 20% or more of the Company's Common Shares
(subject to certain exceptions, including an offer to buy all shares that is
approved by the Company's disinterested directors). After the Rights become
exercisable, each Right (except those of the acquiring person or group) will
entitle the holder to purchase upon exercise of the Right, at the then
current exercise price of the Right, Company Common Shares having an average
market value of twice the current exercise price of the Right. Alternatively,
if the Company is acquired in a merger or other business combination or if
more than 50% of its assets or earning power are sold to an acquiring person
or in a transaction in which all holders of Common Shares are not treated
alike, each Right (except those of the acquiring person or group) will
entitle the holder to purchase, upon exercise, at the then current exercise
price of the Right, common shares of the acquiring company having an average
market value of twice the current exercise price of the Right. The Rights may
be redeemed by the Company for one cent per Right prior to the date a person
or group acquires 20% or more of the Company's Common Shares, and will expire
on October 25, 2008, unless extended or earlier redeemed by the Board of
Directors.

EARNINGS PER SHARE

Basic earnings per common share are computed by dividing reported earnings
available to common shareholders by weighted average common shares
outstanding. Diluted earnings per common share give effect to dilutive
potential common shares. Earnings per common share are calculated as follows:

- -----------------------------------------------------------------------------
(dollars and shares in thousands) 1999 1998 1997
- -----------------------------------------------------------------------------
Earnings available to common shareholders .... $3,506 $1,635 $1,214
====== ====== ======

Weighted average common shares outstanding ... 5,788 5,784 5,779
Dilutive stock options ....................... -- 118 44
------ ------ ------
Shares used to calculate diluted earnings
per common share ........................ 5,788 5,902 5,823
====== ====== ======
Earnings per common share:
Basic ..................................... $ .61 $ .28 $ .21
Diluted ................................... .61 .28 .21
====== ====== ======
- -----------------------------------------------------------------------------

Potential common shares attributable to stock options or assumed conversion
of debentures are reported in the above table only if dilutive. Potential
shares represented by anti-dilutive stock options totalled 810,000, 152,000
and 165,000 in 1999, 1998 and 1997, respectively.

The Company's 6 3/4% Convertible Subordinated Debentures due 2011 represent
potential common shares for computation of diluted earnings per share, but
are anti-dilutive for 1999, 1998 and 1997. Assumed conversion of the
debentures would have added 847,000, 925,000 and 972,000 to shares used to
calculate diluted earnings per share in 1999, 1998 and 1997, respectively.

F-14

CONDENSED BALANCE SHEETS

Condensed balance sheets of Jacobson Stores Realty Company and merchandising
operations are shown below:

- -----------------------------------------------------------------------------
January January January
(in thousands) 2000 1999 1998
- -----------------------------------------------------------------------------
JACOBSON STORES REALTY COMPANY
- -----------------------------------------------------------------------------
Current assets ....................... $ 220 $ 71 $ 182
Advances to Jacobson Stores Inc. ..... 33,116 28,607 26,141
Property and equipment, net .......... 39,089 43,245 46,933
Investments and other assets ......... 2,208 2,334 2,461
-------- -------- --------
Assets ....................... $ 74,633 $ 74,257 $ 75,717
======== ======== ========

Current liabilities .................. $ 4,100 $ 3,447 $ 3,929
Long-term debt ....................... 34,542 36,637 38,571
Other liabilities .................... 1,055 1,476 1,891
Equity of Jacobson Stores Inc. ....... 34,936 32,697 31,326
-------- -------- --------
Liabilities and Equity ....... $ 74,633 $ 74,257 $ 75,717
======== ======== ========

- -----------------------------------------------------------------------------
JACOBSON STORES INC. (merchandising operations)
- -----------------------------------------------------------------------------
Current assets ....................... $131,575 $131,787 $130,235
Property and equipment, net .......... 44,074 41,744 36,774
Investments and other assets ......... 19,716 20,972 21,278
-------- -------- --------
Assets ....................... $195,365 $194,503 $188,287
======== ======== ========

Current liabilities .................. $ 59,702 $ 52,320 $ 47,673
Long-term debt ....................... 51,230 63,166 65,567
Other liabilities .................... 9,710 10,070 8,931
Advances from subsidiaries ........... 41,640 37,131 34,665
Shareholders' equity ................. 33,083 31,816 31,451
-------- -------- --------
Liabilities and Equity ....... $195,365 $194,503 $188,287
======== ======== ========

Jacobson Credit Corp. had no financial activity in 1999, 1998 or 1997. Its
balance sheet includes Advances to Jacobson Stores Inc. and offsetting Equity
of Jacobson Stores Inc. totalling $8,524,000.

F-15

JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF REPORTING. Jacobson Stores Inc. operates specialty department stores
in 24 cities in Michigan, Indiana, Kansas, Kentucky, Ohio and Florida. The
consolidated financial statements include the accounts of the Company and two
wholly-owned subsidiaries, Jacobson Stores Realty Company and Jacobson Credit
Corp. All significant inter-company transactions and balances have been
eliminated.

FISCAL YEAR. Fiscal years 1999 and 1998 consisted of 52 weeks ended January
29, 2000 and January 30, 1999, respectively. Fiscal year 1997 consisted of 53
weeks and ended January 31, 1998. In March 2000, the Company changed its
fiscal year end to the Saturday nearest January 31 from the last Saturday in
January.

SALES. Sales are net of returns. Restaurant and alteration revenues are
reflected as a reduction of cost of merchandise sold. Finance charge revenues
are recorded as income when earned and are reflected as a reduction of
selling, general and administrative expenses.

RECEIVABLES FROM CUSTOMERS. An account is reviewed for write-off if payment
of 20% (one full monthly payment) has not been received during the previous
four month period or if it is otherwise determined that the account is
uncollectible.

MERCHANDISE INVENTORIES. All merchandise inventories are valued at cost,
which is lower than market, as determined by the retail last-in, first-out
(LIFO) method.

PROPERTY AND EQUIPMENT. Property and equipment are recorded at cost. Major
replacements and improvements are charged to the property and equipment
accounts. Maintenance, repairs and minor replacements are charged to expense
as incurred. When assets are sold, retired, or fully depreciated, their cost
and related accumulated depreciation and amortization are removed from the
property and equipment accounts, and any gain or loss is reflected in the
consolidated statements of earnings.

DEPRECIATION AND AMORTIZATION. Depreciation and amortization are provided on
the straight-line basis over the estimated useful lives of the property and
equipment, or over the respective lease terms, if such periods are shorter.
Buildings and improvements are depreciated over ten to forty years.
Furniture, fixtures and equipment are depreciated over five to ten years.

CAPITALIZATION OF INTEREST. Interest expense incurred on properties under
development is capitalized to reflect properly the costs of properties up to
the time they are ready for their intended use. The amounts capitalized are
then amortized over the respective lives of the depreciable assets.

PRE-OPENING EXPENSES. Expenditures of a non-capital nature associated with
opening a new store are charged to expense as incurred.

INCOME TAXES. Deferred income taxes result from differences between the tax
basis of an asset or liability and its reported amount in the consolidated
financial statements (temporary differences) and are adjusted for changes in
tax laws and rates.

F-16

EARNINGS PER SHARE. Basic earnings per share are computed by dividing
reported earnings available to common shareholders by weighted average common
shares outstanding. Diluted earnings per share give effect to potential
common shares represented by stock options and the Company's 6 3/4%
Convertible Subordinated Debentures due 2011, except if anti-dilutive. If
dilutive, the debentures would be converted to common stock in the
computation of diluted earnings per share with a corresponding increase in
net earnings to reflect reduction in related interest expense, net of income
taxes.

FINANCIAL INSTRUMENTS. With the exception of long-term debt and shareholders'
equity, the Company records all financial instruments, including cash
equivalents, receivables from customers and accounts payable, at or in
amounts approximating market value.

USE OF ESTIMATES. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts
of revenues and expenses for the fiscal year. Actual results could differ
from those estimates.

RECLASSIFICATIONS. Certain amounts in prior year financial statements have
been reclassified to conform to the 1999 presentation. None of these
reclassifications affected net earnings.

OPERATING SEGMENTS. The Company sells women's, men's and children's apparel
and accessories, as well as home accessories, at its store locations. The
Company's decision makers evaluate each store's operating performance. Under
this organization, the operating segments have been aggregated into one
reportable segment. The accounting policies of the operating segments are the
same as those described in this Summary of Significant Accounting Policies.

F-17

JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
QUARTERLY INFORMATION (unaudited)

OPERATING RESULTS
The unaudited quarterly operating results shown below were prepared using the
same accounting policies that are applied to the annual data.

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
Quarter
--------------------------------------------
(in thousands, except per share data) First Second Third Fourth
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1999
- ----
Net sales ............................. $113,959 $ 94,186 $ 94,380 $ 145,550
Cost of merchandise sold, buying and
occupancy expenses ................. 73,697 68,609 60,684 93,422
Selling, general and administrative
expenses ............................ 34,391 31,132 34,554 39,381
Interest expense, net ................. 1,804 1,773 1,697 2,003
Non-recurring charge .................. -- -- -- 1,251
Gains on sale of property ............. -- (523) -- (1,194)
Earnings (loss) before income taxes ... 4,067 (6,805) (2,555) 10,687
Net earnings (loss) ................... 2,644 (4,423) (1,661) 6,946
Earnings (loss) per common share:
Basic .............................. $ .46 $ (.76) $ (.29) $ 1.20
Diluted ............................ .46 (.76) (.29) 1.20

1998
- ----
Net sales ............................. $114,825 $ 95,256 $ 95,636 $ 138,588
Cost of merchandise sold, buying and
occupancy expenses ................. 72,762 70,184 63,099 89,227
Selling, general and administrative
expenses ............................ 36,204 31,390 35,165 36,461
Interest expense, net ................. 1,948 1,978 1,881 2,108
Gains on sale of property ............. -- -- (659) 42
Earnings (loss) before income taxes ... 3,911 (8,296) (3,850) 10,750
Net earnings (loss) ................... 2,542 (5,392) (2,503) 6,988
Earnings (loss) per common share:
Basic .............................. $ .44 $ (.93) $ (.43) $ 1.21
Diluted ............................ .42 (.93) (.43) 1.21

1997
- ----
Net sales ............................. $111,908 $ 95,938 $ 94,715 $ 144,910
Cost of merchandise sold, buying and
occupancy expenses ................. 72,314 72,381 59,587 96,636
Selling, general and administrative
expenses ............................ 33,800 30,561 34,421 40,015
Interest expense, net ................. 2,448 2,289 2,148 2,293
Non-recurring credit .................. -- (340) -- --
Gains on sale of property ............. -- -- -- (2,987)
Earnings (loss) before income taxes ... 3,346 (8,953) (1,441) 8,953
Net earnings (loss) ................... 2,175 (5,819) (937) 5,795
Earnings (loss) per common share:
Basic .............................. $ .38 $ (1.00) $ (.16) $ 1.00
Diluted ............................ .38 (1.00) (.16) .98
- --------------------------------------------------------------------------------------
</TABLE>

F-18

The Company's business is seasonal in nature. Traditionally, a higher
proportion of sales and net earnings is generated in the fourth quarter
(which includes the Christmas season). The anticipated effective annual tax
rate is used to compute income taxes on a quarterly basis. The gross margins
used in calculating cost of goods sold for interim periods include an
allocation of the estimated annual LIFO provision, which cannot be determined
precisely until the year-end inventory value is known and the Bureau of Labor
Statistics Department Store Index is published in February.

The impact of LIFO on earnings per share as it was reported and as it would
have been had the actual charge (benefit) been known when the quarterly
allocations were made is shown below.

- -----------------------------------------------------------------------------
As Reported As Reallocated
--------------------------- --------------------------------
Quarter 1999 1998 1997 1999 1998 1997
- -----------------------------------------------------------------------------
1st $ .04 $ .04 $.04 $ (.03) $(.02) $.04
2nd .03 .03 .03 (.02) (.02) .04
3rd .03 .03 .03 (.02) (.02) .04
4th (.20) (.19) .08 (.03) (.03) .06
----- ----- ---- ----- ----- ----

$(.10) $(.09) $.18 $(.10) $(.09) $.18
===== ===== ==== ===== ===== ====
- -----------------------------------------------------------------------------

F-19

JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Jacobson Stores Inc.:

We have audited the accompanying consolidated balance sheets of JACOBSON
STORES INC. (a Michigan corporation) and subsidiaries as of January 29,
2000, January 30, 1999 and January 31, 1998 and the related consolidated
statements of earnings, shareholders' equity and cash flows for each of
the three fiscal years in the period ended January 29, 2000. These
financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. 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 financial statements referred to above present
fairly, in all material respects, the financial position of Jacobson
Stores Inc. and subsidiaries as of January 29, 2000, January 30, 1999
and January 31, 1998 and the results of their operations and their cash
flows for each of the three fiscal years in the period ended January 29
2000, in conformity with accounting principles generally accepted in the
United States.

/s/ ARTHUR ANDERSEN LLP
-----------------------

Detroit, Michigan
March 3, 2000

F-20

JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES

SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

JANUARY 29, 2000
(in thousands)

Column A Column B Column C Column D Column E

Amounts
Charged Deductions
Balance (Credited) For Balance
Beginning to Costs & Amounts End of
Description of Period Expenses Paid Period
----------- --------- -------- ---- ------
<S> <C> <C> <C> <C>
53 WEEKS ENDED JANUARY 31, 1998:

Store Closing Costs -
Severance and related benefits $ 900 $ (200) $ (700) $ --
Reserve to state property and
equipment at estimated fair value 2,350 (140) -- 2,210
Expense to hold closed facilities
pending disposition 950 -- (537) 413
------- ------- ------- ------
$ 4,200 $ (340) $(1,237) $2,623
======= ======= ======= ======
52 WEEKS ENDED JANUARY 30, 1999:

Store Closing Costs -
Reserve to state property and
equipment at estimated fair value $ 2,210 $(2,210) $ -- $ --
Expense to hold closed facilities
pending disposition 413 -- (288) 125
------- ------- ------- ------
$ 2,623 $(2,210) $ (288) $ 125
======= ======= ======= ======
52 WEEKS ENDED JANUARY 29, 2000:

Store Closing Costs -
Reserve to state property and
equipment at estimated fair value $ -- $ -- $ -- $ --
Expense to hold closed facilities
pending disposition 125 -- 125 --
------- ------- ------- ------
$ 125 $ -- $ 125 $ --
======= ======= ======= ======
</TABLE>

S-1

EXHIBITS

4(a) Amendment to Revolving Credit Agreement, dated January 21,
2000.

10(a) Amendment to Employment Agreement, between Jacobson Stores
Inc. and P. Gerald Mills, dated April 10, 2000.

10(b) Amendment to Employment Agreement, between Jacobson Stores
Inc. and Paul W. Gilbert, dated April 10, 2000.

10(c) Amendment to Employment Agreement, between Jacobson Stores
Inc. and James A. Rodefeld, dated April 10, 2000.

10(d) Executive Employment Agreement, dated as of April 11, 2000,
between Jacobson Stores Inc. and Theodore R. Kolman.

10(e) Executive Employment Agreement, dated as of April 8, 2000,
between Jacobson Stores Inc. and Beverly A. Rice.

10(f) Jacobson Stores Inc. Management Incentive Plan, dated
March 23, 2000.

23 Consent of Arthur Andersen LLP.

27 Financial Data Schedule.

In addition, the previously-filed exhibits listed below are
incorporated herein by reference. (All references are to Securities and
Exchange Commission File #0-6319 unless otherwise noted.)

<TABLE>
<CAPTION>
Current Identification of
Exhibit Description of Exhibit Prior Filing
- ------- ---------------------- -----------------
<S> <C> <C>
3(i)(a) Restated Articles of Incorporation, Exhibit 19(a) to Form 10-Q,
Jacobson Stores Inc., as amended and Quarter Ended April 29,
restated May 25, 1989. 1989.

3(i)(b) Certificate of Designation, Preferences and Exhibit 3(a) to Form 10-Q,
Rights of Preferred Stock of Jacobson Quarter Ended October 29, 1988.
Stores Inc.

3(ii) By-laws, Jacobson Stores Inc., as Exhibit 3(ii) to Form 10-Q,
amended November 20, 1997. Quarter Ended October 25,
1997.

4(b) Revolving Credit Agreement, dated as Exhibit 4(c) to Form 10-K,
of March 24, 1997, between Jacobson Year Ended January 25, 1997.
Stores Inc. and The CIT Group/Business
Credit, as agent.

E-1

<CAPTION>
Current Identification of
Exhibit Description of Exhibit Prior Filing
- ------- ---------------------- -----------------
<S> <C> <C>
4(c) Amendment to Revolving Credit Agreement, Exhibit 4 to Form 10-Q,
dated June 8, 1998. Quarter Ended August 1, 1998.

4(d) Election under Section 780, Michigan Exhibit 28 to Form 10-Q,
Business Corporation Act. Quarter Ended October 27, 1984.

4(f) Rights Agreement dated as of October 9, Exhibit I to Form 8-A, dated
1998 between Jacobson Stores Inc. and October 26, 1998.
Norwest Bank Minnesota, N.A., as
Rights Agent.

10(g) Employment Agreement, dated as of Exhibit 10(a) to Form 10-Q,
June 11, 1998, between Jacobson Stores Inc. Quarter Ended May 2, 1998.
and P. Gerald Mills.

10(h) Amendment to Employment Agreement Exhibit 10(a) to Form 10-K,
between Jacobson Stores Inc. and Year Ended January 30, 1999.
P. Gerald Mills, dated April 7, 1999.

10(i) Employment Agreement, dated as of Exhibit 10(b) to Form 10-Q,
June 11, 1998, between Jacobson Stores Inc. Quarter Ended May 2, 1998.
and Paul W. Gilbert.

10(j) Amendment to Employment Agreement Exhibit 10(b) to Form 10-K,
between Jacobson Stores Inc. and Year Ended January 30, 1999.
Paul W. Gilbert, dated April 7, 1999.

10(k) Employment Agreement, dated as of Exhibit 10(c) to Form 10-Q,
June 11, 1998, between Jacobson Stores Inc. Quarter Ended May 2, 1998.
and James A. Rodefeld.

10(l) Amendment to Employment Agreement Exhibit 10(c) to Form 10-K,
between Jacobson Stores Inc., and Year Ended January 30, 1999.
James A. Rodefeld, dated April 7, 1999.

10(m) Executive Employment Agreement, dated Exhibit 10(d) to Form 10-K,
as of April 12, 1999, between Year Ended January 30, 1999.
Jacobson Stores Inc. and Theodore R.
Kolman.

10(n) Executive Employment Agreement, dated as Exhibit 10(a) to Form 10-Q,
of July 6, 1998, between Jacobson Stores Inc. Quarter Ended October 31,
and George P. Kelly. 1998.

E-2

<CAPTION>
Current Identification of
Exhibit Description of Exhibit Prior Filing
- ------- ---------------------- -----------------
<S> <C> <C>
10(o) Release and Waiver Agreement, dated as of Exhibit 10 to Form 10-Q,
March 29, 1999, between George Kelly and Quarter Ended May 1, 1999.
Jacobson Stores Inc.

10(p) Executive Employment Agreement, dated as of Exhibit 10(d) to Form 10-K
April 15, 1998, between Jacobson Stores Inc. Year Ended January 31, 1998.
and Herman J. Heinle.

10(q) Release and Waiver Agreement dated Exhibit 10 to Form 10-Q,
May 26, 1998, between Jacobson Stores Inc. Quarter Ended August 1, 1998.
and Herman J. Heinle.

10(r) Split Dollar Agreement, dated January 31, Exhibit 10(k) to Form 10-K
1992, between Jacobson Stores Inc. and Year Ended January 27, 1996.
Paul W. Gilbert.

10(s) Jacobson Stores Inc. Deferred Compensation Exhibit 10(e) to Form 10-K,
Plan Amended and Restated Effective Year Ended January 30, 1999.
January 28, 1999.

10(t) Jacobson Stock Option Plan of 1994. Exhibit A to Proxy Statement
in connection with the Annual Meeting
of Shareholders held on May 26, 1994.

10(u) First Amendment to Jacobson Stock Exhibit 10(m) to Form 10-K,
Option Plan of 1994. Year Ended January 27, 1996.

10(v) Second Amendment to Jacobson Stock Exhibit 10(b) to Form 10-Q,
Option Plan of 1994. Quarter Ended July 26, 1997.

10(w) Third Amendment to Jacobson Stock Exhibit A to Proxy Statement
Option Plan of 1994. dated April 10, 1998 in connec-
tion with Annual Meeting of
Shareholders held May 28, 1998.

10(x) Jacobson Stores Inc. Management Exhibit 10(f) to Form 10-K,
Incentive Plan, dated March 25, 1999. Year Ended January 30, 1999.

21 Schedule of Subsidiaries. Exhibit 21 to Form 10-K, Year
Ended January 27, 1996.
</TABLE>

E-3

Exhibit 4(a)

AMENDMENT TO REVOLVING CREDIT AGREEMENT

January 21, 2000

Jacobson Stores Inc.
3333 Sargent Road
Jackson, Michigan 49201

Re: Revolving Credit Agreement dated as of March 24, 1997, as
amended (the "Loan Agreement"), among Jacobson Stores Inc.
(the "Borrower"), the Lenders described therein and The CIT
Group/Business Credit, Inc., as Agent (the "Agent") for the
Lenders

Ladies and Gentlemen:

Reference is made to the Loan Agreement. All capitalized terms used herein
and not defined shall have the meanings given to such terms in the Loan
Agreement.

This letter shall confirm the agreement of the Borrower and Agent, on behalf
of the Lenders, to amend the Loan Agreement in the following manner:

1. The first sentence of Section 8.04(b) of the Loan Agreement is
amended by (a) deleting the word "and" set forth immediately before clause
(v) of such sentence, and (b) adding at the end of such sentence a new clause
(vi) which reads as follows:

"(vi) the Borrower may sell real estate owned by the Borrower to
unrelated third parties in connection with sale-leaseback
transactions relating to such real estate, provided that the
Borrower continues to occupy such real estate after such sale".

2. Section 8.07 of the Loan Agreement is amended by (a) deleting
clause (i) thereof in its entirety and (b) deleting the phrase "and
$12,000,000 for each fiscal year thereafter" set forth in clause (ii)
thereof, and inserting in its place the phrase ", $13,000,000 for the fiscal
years ending January, 2000 and January 2001, $16,000,000 for the fiscal year
ending January, 2002 and $18,000,000 for each fiscal year thereafter".

3. Section 8.08 of the Loan Agreement is amended and restated in
its entirety to read as follows:

Jacobson Stores Inc.
January 21, 2000
Page 2

"8.08 Capital Expenditures. Make or be committed to
make, or permit any of its Subsidiaries to make or be committed to
make, any capital expenditure (by purchase or capitalized lease)
for fixed or capital assets other than expenditures (including
obligations under Capitalized Leases) which would not cause the
aggregate amount of all such expenditures to exceed (i)
$10,000,000 for the fiscal year ending January 31, 2000, (ii)
$20,000,000 for the fiscal year ending January 31, 2001, (iii)
$22,500,000 for the fiscal year ending January 31, 2002 and (iv)
$25,000,000 for each fiscal year thereafter. In addition, the
portion of such capital expenditures paid for in cash by the
Borrower shall not exceed the Maximum Permitted Amount. For
purposes of this Section 8.08, the term "Maximum Permitted Amount"
shall mean (i) $25,000,000 (or the maximum amount of total capital
expenditures set forth above, if less) if Availability of at least
$30,000,000 (computed assuming that the Activated Revolving Credit
Commitments are $100,000,000) exists at all times during such
fiscal year and for sixty (60) days after such fiscal year ends
after giving effect to such expenditure (ii) $15,000,000 if
Availability of at least $20,000,000 (computed assuming that the
Activated Revolving Credit Commitments are $100,000,000) exists at
all times during such fiscal year and for sixty (60) days after
such fiscal year ends after giving effect to such expenditure and
(iii) $10,000,000 at all other times, provided in each case no
Event of Default or Potential Default shall have occurred and be
continuing."

All references to the Loan Agreement, whether set forth in the Loan Agreement
itself or in any of the other Loan Documents, shall be deemed to be
references to the Loan Agreement as amended hereby.

Except as expressly amended by the terms of this letter, the Loan Agreement
shall remain unmodified and in full force and effect. Please acknowledge your
agreement to the terms of this letter by executing this letter on the
following page and returning it to the undersigned. In addition, we request
that all guarantors execute this letter where indicated below to confirm that
their respective guaranties shall continue in full force and effect
notwithstanding the agreements of the Borrower and Agent set forth in this
letter.

Very truly yours,

THE CIT GROUP/BUSINESS CREDIT,
INC., as Agent for the Lenders

By: /S/ Bond Harberts
Its: Assistant Vice President
------------------------

Exhibit 10(a)

AMENDMENT TO EMPLOYMENT AGREEMENT

THIS AMENDMENT TO EMPLOYMENT AGREEMENT ("Amendment") is entered
into as of April 10, 2000, between JACOBSON STORES INC., a Michigan
corporation of Jackson, Michigan (the "Company"), and P. GERALD MILLS, of
Chelsea, Michigan ("Mills").

THE PARTIES HEREBY AGREE that the restated Employment Agreement
between them dated as of June 11, 1998, as amended effective April 11, 1999
(the "Agreement"), is further amended effective April 16, 2000, as follows:

Compensation. The phrase "Three Hundred Fifty Thousand Dollars
($350,000)" in paragraph 2 of the amended Agreement is amended to
read "Four Hundred Twenty-Five Thousand Dollars ($425,000)".

Except as expressly amended hereby, the Agreement shall continue
in full force and effect.

IN THE PRESENCE OF: JACOBSON STORES INC.

/s/ Dana J. Collins By: /s/ Paul W. Gilbert
- --------------------------- ---------------------------------
Paul W. Gilbert
Its: Vice Chairman of the Board

/s/ Timothy J. Spalding /s/ P. Gerald Mills
- --------------------------- -------------------------------------
P. Gerald Mills

Exhibit 10(b)

AMENDMENT TO EMPLOYMENT AGREEMENT

Compensation. The phrase "Three Hundred Fifty Thousand Dollars
($350,000)" in paragraph 2 of the amended Agreement is amended to read "Four
Hundred Thousand Dollars ($400,000)".

Except as expressly amended hereby, the Agreement shall continue
in full force and effect.

IN THE PRESENCE OF: JACOBSON STORES INC.

/s/ Dana J. Collins By: /s/ P. Gerald Mills
- --------------------------- ---------------------------------
P. Gerald Mills
Its: Chairman of the Board and
Chief Executive Officer

/s/ Timothy J. Spalding /s/ Paul W. Gilbert
- --------------------------- -------------------------------------
Paul W. Gilbert

Exhibit 10(c)

AMENDMENT TO EMPLOYMENT AGREEMENT

Compensation. The phrase "Two Hundred Fifty Thousand Dollars
($250,000)" in paragraph 2 of the amended Agreement is amended to read "Three
Hundred Thousand Dollars ($300,000)".

Except as expressly amended hereby, the Agreement shall continue
in full force and effect.

IN THE PRESENCE OF: JACOBSON STORES INC.

/s/ Dana J. Collins By: /s/ P. Gerald Mills
- --------------------------- ---------------------------------
P. Gerald Mills
Its: Chairman of the Board and
Chief Executive Officer

/s/ Timothy J. Spalding /s/ James A. Rodefeld
- --------------------------- -------------------------------------
James A. Rodefeld

Exhibit 10(d)

EXECUTIVE EMPLOYMENT AGREEMENT

THIS AGREEMENT is entered into April 11 2000, between JACOBSON
STORES INC., a Michigan corporation, of Jackson, Michigan (the "Company"),
and Theodore R. Kolman the "Associate").

THE PARTIES AGREE AS FOLLOWS:

1. Employment and Term. The Company employs Associate as Senior
Vice President-General Merchandise Manager,and Associate agrees to serve in
that capacity and/or in such other capacity or capacities as the Chief
Executive Officer of the Company deems advisable, commencing April 16, 2000,
and continuing through April 14, 2001, unless terminated sooner pursuant to
the provisions of paragraph 4, for the salary and on the terms set forth
herein.

2. Compensation. Subject to the provisions of paragraph 4, the
Company agrees to pay Associate salary at an annual rate of $ 185,000, in
bi-weekly or other regular periodic installments no less frequent than
monthly.

3. Duties. Associate agrees, as long as employment by the Company
continues, to devote Associate's entire time and best efforts to furthering
the interests of the Company; to comply with all regulations and policies of
the Company; and to perform the duties requested by any officers and
executives of the Company to whom the Associate is directed to report.

4. Termination. Associate's employment under this Agreement shall
terminate on the earliest to occur of the following: (1) immediately upon
Associate's death, (2) at the Company's option, immediately when notice to
Associate of such termination is given after Associate's permanent incapacity
(established to the reasonable satisfaction of the Chief Executive Officer of
the Company), (3) at the Company's option, immediately when notice to
Associate of such termination is given (for any reason or for no reason and
regardless of whether there is good cause for such termination), (4) 30 days
after notice of such termination is given to the Company by Associate, and
(5) April 14, 2001. Notice will be deemed to be given on the earliest of (1)
when delivered, or (2) three business days after mailed by certified or
registered mail, postage prepaid, return receipt requested, or (3) one
business day after sent by recognized overnight courier, if to Associate, to
Associate's address on the Company's corporate records, and if to the
Company, to the address of its principal executive offices. The following
events during the term of this Agreement shall have the following respective
effects on the obligations of the Company pursuant hereto:

(a) If employment is terminated due to Associate's death
or permanent incapacity, the Company shall have no obligation to pay any
salary or other amounts or benefits under this Agreement or otherwise for any
period after the date of termination of employment, but benefits may continue
to the extent provided in any wage continuation program, insurance, or other
Associate benefit plans that are generally applicable to all Associates of
the Company and that are maintained by the Company at that time.

(b) Except as otherwise provided in paragraph 4(c), if
employment is terminated by the Company (for any reason or for no reason and
regardless of whether there is good cause for such termination), or if
Associate resigns or retires before or at the expiration of the term, the
Company shall have no obligation to pay any salary or other amounts or
benefits under this Agreement or otherwise for any period after the date of
termination of employment, but benefits may continue to the extent provided
in any severance program, wage

continuation program, insurance, or other Associate benefit plans that are
generally applicable to all Associates of the Company and that are maintained
by the Company at that time.

(c) If (1) a "Change in Control" (as defined below)
occurs during the term of Associate's employment under this Agreement, and
(2) either Associate terminates Associate's employment with the "Entity" (as
defined below) for "Good Reason" (as defined below) or the "Entity"
terminates Associate's employment without "Cause" (as defined below), both
within one year after the Change in Control, Associate will receive an amount
equal to Associate's annual salary at the rate set forth in paragraph 2 for
the period from the date of such termination through the date that is 24
months after the date such Change in Control occurs. Such payments shall be
made at the times provided in paragraph 2. The Company may withhold from such
payments all federal, state, city and other taxes to the extent such taxes
are required to be withheld by applicable law. The Company's obligation to
pay the salary continuation payments provided in this paragraph 4(c) shall
survive the expiration of the term.

(i) For purposes of this Agreement, a "Change in
Control" occurs on the first day any one or more of the following
occurs:

(A) any person (as such term is used in Sections
13(d) and 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")), together with all
affiliates and associates of such person (as such terms
are defined in Rule 12b-2 under the Exchange Act) but
excluding all "Excluded Persons" (as defined in paragraph
4(c)(ii)), becomes the direct or indirect beneficial owner
(within the meaning of Rule 13d-3 under the Exchange Act)
of securities of the Company representing (A) 20% or more
of the combined voting power of all of the Company's
outstanding securities entitled to vote generally in the
election of the Company's directors, or (B) 20% or more of
the combined shares of the Company's capital stock then
outstanding, all except in connection with any merger,
consolidation, reorganization or share exchange involving
the Company;

(B) the consummation of any merger,
consolidation, reorganization or share exchange involving
the Company, unless the holders of the Company's capital
stock outstanding immediately before such transaction own
more than 50% of the combined outstanding shares of
capital stock and have more than 50% of the combined
voting power in the surviving entity after such
transaction and they own such securities in substantially
the same proportions (relative to each other) as they
owned the Company's capital stock immediately before such
transaction;

(C) the consummation of any sale or other
disposition (in one transaction or a series of related
transactions) of all, or substantially all, of the
Company's assets to a person whose acquisition of 20% or
more of the combined shares of the Company's capital stock
then outstanding would have caused a Change in Control
under paragraph 4(c)(i)(A); or

- 2 -

(D) the "Continuing Directors" (as defined in
paragraph 4(c)(iii)) cease to be a majority of the
Company's directors.

A determination by the Company's Continuing Directors (by
resolution of at least a majority of the Continuing Directors) as
to whether a Change in Control has occurred for purposes of this
Agreement, the date on which it has occurred or both shall be
conclusive for purposes of this Agreement.

(ii) For purposes of this Agreement, the "Excluded
Persons" are (1) Associate, (2) any "group" (as that term is used
in Section 13(d) of the Exchange Act and the rules thereunder)
that includes Associate or in which Associate is, or has agreed to
become, an equity participant, (3) any entity in which Associate
is, or has agreed to become, an equity participant, (4) the
Company, (5) any subsidiary of the Company, (6) any Associate
benefit plan of the Company or any subsidiary of the Company or
the related trust, (7) any entity to the extent it is holding
capital stock of the Company for or pursuant to the terms of any
Associate benefit plan of the Company or any subsidiary of the
Company, and (8) any director, officer or beneficial owner of at
least 10% of the Company's outstanding Common Stock as of the date
of this Agreement. For purposes of this Agreement, Associate shall
not be deemed an "equity participant" in any group or entity (1)
in which Associate owns for investment purposes only no more than
5% of the stock of a publicly-traded entity whose stock is either
listed on a national stock exchange or quoted in The NASDAQ
National Market, if Associate is not otherwise affiliated with
such group or entity, or (2) if Associate's participation is
fully-disclosed to, and approved by, the Company's Chief Executive
Officer before the Change in Control occurs.

(iii) For purposes of this Agreement, the "Continuing
Directors" are the directors of the Company as of the date of this
Agreement, and any person who subsequently becomes a director if
such person is appointed to be a director by a majority of the
Continuing Directors or if such person's initial nomination for
election or initial election as a director is recommended or
approved by a majority of the Continuing Directors.

(iv) Termination of Associate's employment for "Good
Reason" means Associate's voluntary termination of employment with
the Entity after a Change in Control as a result of (1) any
decrease by the Entity (without Associate's consent) in
Associate's salary from Associate's salary immediately before such
Change in Control; provided, that no such decrease shall
constitute "Good Reason" if such decrease is applied in the same
manner to all officers or Associates at the same employment level
as Associate (such as all officers or all store managers, as the
case may be), (2) a substantial change by the Entity (without
Associate's consent) in Associate's duties or responsibilities
from Associate's duties and responsibilities immediately before
such Change in Control, or (3) any requirement by the Entity (to
which Associate does not consent) that Associate change
Associate's primary place of business. "Good Reason" will not
include Associate's death, permanent incapacity or Retirement (as
defined below), or Associate's resignation other than as provided
in the preceding sentence. For purposes of this Agreement,
"Retirement" means Associate's retirement from the Entity in
accordance with the Entity's normal policies.

(v) The Entity's termination of Associate's
employment without "Cause" means a termination other than for (1)
Associate's continued failure either to (A) devote substantially
full time to Associate's employment duties (except because of
Associate's illness or disability) or (B) make a good faith effort
to perform Associate's employment duties; (2) any other willful
act or omission which Associate knew, or had reason to know, would
materially injure the Entity; or (3) Associate's conviction of a
felony involving dishonesty or fraud.

- 3 -

(vi) For purposes of this Agreement, the "Entity"
shall mean both (1) the Company and (2) in connection with a
Change in Control defined in paragraph 4(c)(i)(B) or paragraph
4(c)(i)(C), the survivor of the merger, consolidation,
reorganization or share exchange involving the Company and the
buyer of all, or substantially all, of the Company's assets, if
such additional entity described in this clause (2) (if other than
the Company) has offered to employ Associate on such terms that
would not constitute "Good Reason" for termination of Associate's
employment if imposed by the Company. Therefore, for purposes of
this paragraph 4(c), Associate shall not be deemed to have
terminated Associate's employment with the Entity for "Good
Reason" and the "Entity" shall not be deemed to have terminated
Associate's employment without "Cause" unless such actions are
taken by all entities included within the definition of "Entity".
In addition, for purposes of this paragraph 4(c), Associate shall
not be deemed to have terminated Associate's employment with the
Entity for "Good Reason" and the "Entity" shall not be deemed to
have terminated Associate's employment without "Cause" if (1) the
survivor of the merger, consolidation, reorganization or share
exchange involving the Company and the buyer of all, or
substantially all, of the Company's assets has offered to employ
Associate on such terms that would not constitute "Good Reason"
for termination of Associate's employment if imposed by the
Company, (2) Associate refuses such employment, and (3) the
Company terminates Associate's employment for any reason or for no
reason.

(d) The severance benefits provided in this paragraph 4
are exclusive and in lieu of any other severance benefits to which Associate
may be entitled, except for any benefits under the terms of any stock options
or restricted stock agreements Associate may have.

(e) There is not, nor will there be unless in writing
signed by both Associate and the Company, any express or implied agreement as
to Associate's continued employment by the Company after the end of the term
of Associate's employment under this Agreement. Associate's subsequent
employment with the Company, if any, will be employment "at will", and the
provisions of this Agreement will not apply to any such employment.

5. Previous Agreements Superseded. This Agreement supersedes all
previous employment agreements between the parties.

6. Miscellaneous Provisions. This Agreement may be amended only
by written agreement signed by either the Chairman or Vice Chairman of the
Company. It shall be construed according to the laws of Michigan, and shall
be binding on and enforceable by the parties and their successors in
interest.

IN THE PRESENCE OF: JACOBSON STORES INC.

/s/ Timothy J. Spalding By: /s/ P. Gerald Mills
- ---------------------------- -----------------------------------
Its Chairman of the Board and Chief
COMPANY Executive Officer

/s/ Dana J. Collins /s/ Theodore R. Kolman
- ---------------------------- -----------------------------------
ASSOCIATE

- 4 -

Exhibit 10(e)

EXECUTIVE EMPLOYMENT AGREEMENT

THIS AGREEMENT is entered into April 8, 2000, between JACOBSON STORES INC., a
Michigan corporation, of Jackson, Michigan (the "Company"), and Beverly A.
Rice the "Associate").

THE PARTIES AGREE AS FOLLOWS:

1. Employment and Term. The Company employs Associate as Senior
Vice President-Fashion & Merchandising Strategy, and Associate agrees to
serve in that capacity and/or in such other capacity or capacities as the
Chief Executive Officer of the Company deems advisable, commencing April 16,
2000, and continuing through April 14, 2001, unless terminated sooner
pursuant to the provisions of paragraph 4, for the salary and on the terms
set forth herein.

2. Compensation. Subject to the provisions of paragraph 4, the
Company agrees to pay Associate salary at an annual rate of $150,000,
in bi-weekly or other regular periodic installments no less frequent than
monthly.

(i) For purposes of this Agreement, a "Change in
Control" occurs on the first day any one or more of the following
occurs:

(A) any person (as such term is used in
Sections 13(d) and 14(d)(2) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")), together
with all affiliates and associates of such person (as
such terms are defined in Rule 12b-2 under the Exchange
Act) but excluding all "Excluded Persons" (as defined in
paragraph 4(c)(ii)), becomes the direct or indirect
beneficial owner (within the meaning of Rule 13d-3 under
the Exchange Act) of securities of the Company
representing (A) 20% or more of the combined voting power
of all of the Company's outstanding securities entitled
to vote generally in the election of the Company's
directors, or (B) 20% or more of the combined shares of
the Company's capital stock then outstanding, all except
in connection with any merger, consolidation,
reorganization or share exchange involving the Company;

(C) the consummation of any sale or
other disposition (in one transaction or a series of
related transactions) of all, or substantially all, of
the Company's assets to a person whose acquisition of 20%
or more of the combined shares of the Company's capital
stock then outstanding would have caused a Change in
Control under paragraph 4(c)(i)(A); or

- 2 -

(D) the "Continuing Directors" (as
defined in paragraph 4(c)(iii)) cease to be a majority of
the Company's directors.

A determination by the Company's Continuing Directors (by
resolution of at least a majority of the Continuing Directors)
as to whether a Change in Control has occurred for purposes of
this Agreement, the date on which it has occurred or both shall
be conclusive for purposes of this Agreement.

(ii) For purposes of this Agreement, the
"Excluded Persons" are (1) Associate, (2) any "group" (as that
term is used in Section 13(d) of the Exchange Act and the rules
thereunder) that includes Associate or in which Associate is, or
has agreed to become, an equity participant, (3) any entity in
which Associate is, or has agreed to become, an equity
participant, (4) the Company, (5) any subsidiary of the Company,
(6) any Associate benefit plan of the Company or any subsidiary
of the Company or the related trust, (7) any entity to the
extent it is holding capital stock of the Company for or
pursuant to the terms of any Associate benefit plan of the
Company or any subsidiary of the Company, and (8) any director,
officer or beneficial owner of at least 10% of the Company's
outstanding Common Stock as of the date of this Agreement. For
purposes of this Agreement, Associate shall not be deemed an
"equity participant" in any group or entity (1) in which
Associate owns for investment purposes only no more than 5% of
the stock of a publicly-traded entity whose stock is either
listed on a national stock exchange or quoted in The NASDAQ
National Market, if Associate is not otherwise affiliated with
such group or entity, or (2) if Associate's participation is
fully-disclosed to, and approved by, the Company's Chief
Executive Officer before the Change in Control occurs.

(iii) For purposes of this Agreement, the
"Continuing Directors" are the directors of the Company as of
the date of this Agreement, and any person who subsequently
becomes a director if such person is appointed to be a director
by a majority of the Continuing Directors or if such person's
initial nomination for election or initial election as a
director is recommended or approved by a majority of the
Continuing Directors.

(iv) Termination of Associate's employment for
"Good Reason" means Associate's voluntary termination of
employment with the Entity after a Change in Control as a result
of (1) any decrease by the Entity (without Associate's consent)
in Associate's salary from Associate's salary immediately before
such Change in Control; provided, that no such decrease shall
constitute "Good Reason" if such decrease is applied in the same
manner to all officers or Associates at the same employment
level as Associate (such as all officers or all store managers,
as the case may be), (2) a substantial change by the Entity
(without Associate's consent) in Associate's duties or
responsibilities from Associate's duties and responsibilities
immediately before such Change in Control, or (3) any
requirement by the Entity (to which Associate does not consent)
that Associate change Associate's primary place of business.
"Good Reason" will not include Associate's death, permanent
incapacity or Retirement (as defined below), or Associate's
resignation other than as provided in the preceding sentence.
For purposes of this Agreement, "Retirement" means Associate's
retirement from the Entity in accordance with the Entity's
normal policies.

(v) The Entity's termination of Associate's
employment without "Cause" means a termination other than for
(1) Associate's continued failure either to (A) devote
substantially full time to Associate's employment duties (except
because of Associate's illness or disability) or (B) make a good
faith effort to perform Associate's employment duties; (2) any
other willful act or omission which Associate knew, or had
reason to know, would materially injure the Entity; or (3)
Associate's conviction of a felony involving dishonesty or
fraud.

- 3 -

(vi) For purposes of this Agreement, the "Entity"
shall mean both (1) the Company and (2) in connection with a
Change in Control defined in paragraph 4(c)(i)(B) or paragraph
4(c)(i)(C), the survivor of the merger, consolidation,
reorganization or share exchange involving the Company and the
buyer of all, or substantially all, of the Company's assets, if
such additional entity described in this clause (2) (if other
than the Company) has offered to employ Associate on such terms
that would not constitute "Good Reason" for termination of
Associate's employment if imposed by the Company. Therefore, for
purposes of this paragraph 4(c), Associate shall not be deemed
to have terminated Associate's employment with the Entity for
"Good Reason" and the "Entity" shall not be deemed to have
terminated Associate's employment without "Cause" unless such
actions are taken by all entities included within the definition
of "Entity". In addition, for purposes of this paragraph 4(c),
Associate shall not be deemed to have terminated Associate's
employment with the Entity for "Good Reason" and the "Entity"
shall not be deemed to have terminated Associate's employment
without "Cause" if (1) the survivor of the merger,
consolidation, reorganization or share exchange involving the
Company and the buyer of all, or substantially all, of the
Company's assets has offered to employ Associate on such terms
that would not constitute "Good Reason" for termination of
Associate's employment if imposed by the Company, (2) Associate
refuses such employment, and (3) the Company terminates
Associate's employment for any reason or for no reason.

5. Previous Agreements Superseded. This Agreement supersedes all
previous employment agreements between the parties.

IN THE PRESENCE OF: JACOBSON STORES INC.

/s/ James K. Delaney By: /s/ P. Gerald Mills
- ----------------------------- -----------------------------------
Its Chairman of the Board and Chief
COMPANY Executive Officer

/s/ Debra Cowling /s/ Beverly A. Rice
- ----------------------------- -----------------------------------
ASSOCIATE

- 4 -

Exhibit 10(f)

JACOBSON STORES INC.

Management Incentive Plan

Senior management incentives are based on accomplishing the key goals of our
business plan. Incentives are structured to strive for excellence.

The management incentive plan is designed to:

o foster an awareness of the Company's objective of consistent,
profitable operation.

o motivate senior management to meet the shorter term needs of
shareholders without sacrificing long-term profitability.

o encourage senior management to "stretch" for higher levels of
performance in the future.

o establish target incentives for each participant so that each person
is aware of what payout percentages can be expected with various
levels of accomplishment.

o encourage retention of key employees.

The principal features of the plan include:

o participation limited to salaried officers of the Company.

o specific performance criteria and weightings established at the
beginning of the year for each participant (at the most senior
level, primary emphasis placed on corporate goal achievement; at the
VP-Staff level, primary emphasis placed on individual goal
achievement).

o potential payout as a percent of the base salary of each participant
as follows:

Threshold Target Maximum

Chairman/CEO/President 0% 35% 52.2%
Vice Chairman 0 30 45
EVP - Marketing & Stores 0 30 45
SVPs 0 25 37.5
VP - Regional Director of Stores 0 20 30
VP - DMM 0 20 30
VP - Operations 0 20 30
VP - Staff Positions 0 15 22.5

EXHIBIT 23

ARTHUR ANDERSEN LLP

Consent of Independent Public Accountants

As independent public accountants, we hereby consent to the incorporation of
our report included in this Form 10-K, into the Company's previously filed
Form S-8 Registration Statements File Nos. 033-53469, 333-31989 and 333-59031
and Form S-2 File No. 33-10532.

/s/ Arthur Andersen LLP
------------------------
ARTHUR ANDERSEN LLP

Detroit, Michigan
April 10, 2000

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF JACOBSON STORES INC. AND CONSOLIDATED SUBSIDIARIES
FOR THE YEAR ENDED JANUARY 29, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000

<S> <C>
<FISCAL-YEAR-END> JAN-29-2000
<PERIOD-START> JAN-31-1999
<PERIOD-END> JAN-29-2000
<PERIOD-TYPE> YEAR
<CASH> 722
<SECURITIES> 0
<RECEIVABLES> 32,701
<ALLOWANCES> 559
<INVENTORY> 91,905
<CURRENT-ASSETS> 131,735
<PP&E> 180,199
<DEPRECIATION> 97,036
<TOTAL-ASSETS> 233,664
<CURRENT-LIABILITIES> 63,742
<BONDS> 85,772
<COMMON> 5,975
0
0
<OTHER-SE> 68,468
<TOTAL-LIABILITY-AND-EQUITY> 233,664
<SALES> 448,075
<TOTAL-REVENUES> 448,075
<CGS> 296,412
<TOTAL-COSTS> 296,412
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 793
<INTEREST-EXPENSE> 7,277
<INCOME-PRETAX> 5,394
<INCOME-TAX> 1,888
<INCOME-CONTINUING> 3,506
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,506
<EPS-BASIC> 0.61
<EPS-DILUTED> 0.61

</TABLE>