SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 11-K
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For fiscal year ended December 31, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___ to ___
Commission file number: 1-13536
A. Full title of the plan and the address of the plan, if
different from that of the issuer named below:
Federated Department Stores, Inc. Retirement Income
and Thrift Incentive Plan
B. Name of issuer of the securities held pursuant to the plan
and the address of its principal executive office:
Federated Department Stores, Inc.
151 West 34th Street
New York, New York 10001
and
7 West Seventh Street
Cincinnati, Ohio 45202
FEDERATED DEPARTMENT STORES, INC.
RETIREMENT INCOME AND THRIFT INCENTIVE PLAN
Financial Statements
December 31, 1996 and 1995
With Independent Auditors' Report Thereon
FEDERATED DEPARTMENT STORES, INC.
RETIREMENT INCOME AND THRIFT INCENTIVE PLAN
Index
Independent Auditors' Report
Statements of Net Assets Available for Benefits, with Fund
Information -
December 31, 1996 and 1995
Statements of Changes in Net Assets Available for Benefits,
with Fund Information -
Years Ended December 31, 1996 and 1995
Notes to Financial Statements
Independent Auditors' Report
Pension and Profit Sharing Committee
Federated Department Stores, Inc.
Retirement Income and Thrift Incentive Plan:
We have audited the accompanying statements of net assets
available for benefits of the Federated Department Stores,
Inc. Retirement Income and Thrift Incentive Plan (the
"Plan") as of December 31, 1996 and 1995, and the related
statements of changes in net assets available for benefits
for the years then ended. These financial statements are
the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audits 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 net assets
available for benefits of the Plan as of December 31, 1996
and 1995, and the changes in net assets available for
benefits for the years then ended in conformity with
generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion
on the basic financial statements taken as a whole. The Fund
Information in the statements of net assets available for
benefits and the statements of changes in net assets
available for benefits is presented for purposes of
additional analysis rather than to present the net assets
available for benefits and changes in net assets available
for benefits of each fund. The Fund Information has been
subjected to the auditing procedures applied in the audits
of the basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
May 30, 1997
<TABLE>
FEDERATED DEPARTMENT STORES, INC.
RETIREMENT INCOME AND THRIFT INCENTIVE PLAN
Statement of Net Assets Available for Benefits, with Fund Information
December 31, 1996
Thrift Incentive Fund
Fund A Fund B Fund C Fund D Total
<S> <C> <C> <C> <C> <C>
Assets:
Investments, at fair value (note 3) -
Participation in Master Trust $311,069,047 $205,204,044 $140,550,903 $28,639,172 $685,463,166
Receivables:
Employee contributions 2,075,082 1,828,675 1,565,220 198,098 5,667,075
Interest receivable 17,399 11,696 7,886 1,577 38,558
Due from (to) other funds (1,452,119) 731,904 630,725 89,490 -
Total receivables 640,362 2,572,275 2,203,831 289,165 5,705,633
Total assets 311,709,409 207,776,319 142,754,734 28,928,337 691,168,799
Liabilities:
Trustee and management fees payable 265,021 317,852 55,979 11,636 650,488
Excess employer contribution (5,466) - - 178,731 173,265
Total liabilities 259,555 317,852 55,979 190,367 823,753
Net assets available for benefits $311,449,854 $207,458,467 $142,698,755 $28,737,970 $690,345,046
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
FEDERATED DEPARTMENT STORES, INC.
RETIREMENT INCOME AND THRIFT INCENTIVE PLAN
Statement of Net Assets Available for Benefits, with Fund Information
December 31, 1995
Stability
Diversified Income Thrift Incentive Fund
Fund Fund Fund A Fund B Fund C Fund D Total
<S> <C> <C> <C> <C> <C> <C> <C>
Assets:
Investments, at fair value (note 3) -
Participation in Master Trust $143,822,947 $12,830,469 $230,187,959 $151,535,258 $90,648,217 $15,264,151 $644,289,001
Receivables:
Employer contributions - - - - - 33,739 33,739
Employee contributions - - 1,762,832 1,314,502 896,929 63,592 4,037,855
Total receivables - - 1,762,832 1,314,502 896,929 97,331 4,071,594
Net assets available for benefits $143,822,947 $12,830,469 $231,950,791 $152,849,760 $91,545,146 $15,361,482 $648,360,595
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
(Continued)
FEDERATED DEPARTMENT STORES, INC.
RETIREMENT INCOME AND THRIFT INCENTIVE PLAN
Statement of Changes in Net Assets Available for Benefits, with Fund Information
Year Ended December 31, 1996
Stability
Diversified Income Thrift Incentive Fund
Fund Fund Fund A Fund B Fund C Fund D Total
<S> <C> <C> <C> <C> <C> <C> <C>
Additions:
Net investment income -
Plan interest in Master Trust
investment income (Note 3) $ 10,094,132 $ 377,306 $ 14,370,016 $ 23,216,545 $ 22,186,244 $ 3,866,753 $ 74,110,996
Contributions:
Employer 154,891 - 5,704 151 543 4,863,971 5,025,260
Employee - - 13,638,546 11,480,075 9,242,959 910,092 35,271,672
Total contributions 154,891 - 13,644,250 11,480,226 9,243,502 5,774,063 40,296,932
Total additions 10,249,023 377,306 28,014,266 34,696,771 31,429,746 9,640,816 114,407,928
Deductions -
Distributions 8,612,913 1,928,594 37,509,690 14,771,088 7,940,164 1,661,026 72,423,475
Interfund transfers (145,459,057) (11,279,179) 88,994,487 34,683,024 27,664,027 5,396,698 -
Net increase (decrease) (143,822,947) (12,830,469) 79,499,063 54,608,707 51,153,609 13,376,488 41,984,451
Net assets available for benefits:
Beginning of year 143,822,947 12,830,469 231,950,791 152,849,760 91,545,146 15,361,482 648,360,595
End of year $ - $ - $311,449,854 $207,458,467 $142,698,755 $28,737,970 $690,345,046
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
(Continued)
FEDERATED DEPARTMENT STORES, INC.
RETIREMENT INCOME AND THRIFT INCENTIVE PLAN
Statement of Changes in Net Assets Available for Benefits, with Fund Information
Year Ended December 31, 1995
Stability
Diversified Income Thrift Incentive Fund
Fund Fund Fund A Fund B Fund C Fund D Total
<S> <C> <C> <C> <C> <C> <C> <C>
Additions:
Net investment income -
Plan interest in Master Trust
investment income (Note 3) $ 33,434,616 $ 1,220,110 $ 19,879,755 $ 37,022,253 $24,872,815 $ 2,032,764 $118,462,313
Contributions:
Employer - - 24,155 11,702 4,674 5,034,217 5,074,748
Employee - - 13,111,812 14,579,661 9,578,634 542,517 37,812,624
Total contributions - - 13,135,967 14,591,363 9,583,308 5,576,734 42,887,372
Total additions 33,434,616 1,220,110 33,015,722 51,613,616 34,456,123 7,609,498 161,349,685
Deductions -
Distributions 25,989,769 5,886,209 51,438,577 20,217,307 10,480,554 1,364,739 115,377,155
Interfund transfers (1,485,771) 1,410,438 396,867 (1,556,900) 695,014 540,352 -
Net increase (decrease) 5,959,076 (3,255,661) (18,025,988) 29,839,409 24,670,583 6,785,111 45,972,530
Net assets available for benefits:
Beginning of year 137,863,871 16,086,130 249,976,779 123,010,351 66,874,563 8,576,371 602,388,065
End of year $143,822,947 $12,830,469 $231,950,791 $152,849,760 $91,545,146 $15,361,482 $648,360,595
The accompanying notes are an integral part of these financial statements.
</TABLE>
(Continued)
FEDERATED DEPARTMENT STORES, INC.
RETIREMENT INCOME AND THRIFT INCENTIVE PLAN
Notes to Financial Statements
December 31, 1996 and 1995
1. Description of the Plan
The following brief description of the Federated Department
Stores, Inc. Retirement Income and Thrift Incentive Plan (the
"Plan") is provided for general information purposes only.
Participants should refer to the Plan document for more
complete information.
General
The Plan is sponsored by Federated Department Stores, Inc.
(the "Company"). The Plan consists of two parts: a retirement
income plan and a thrift incentive plan. The Plan was adopted
in 1953 and is subject to the provisions of the Employee
Retirement Income Security Act of 1974 ("ERISA") and U.S. tax
law.
Eligibility and Vesting
Employees are generally eligible for participation in the Plan
after one year of service of at least 1,000 hours.
Participants are immediately 100% vested in their own and the
Company's contributions.
Participant Accounts
An account is maintained for each participant in the Plan
which shows the participant's separate interest in the
Retirement Income and Thrift Incentive portions of the Plan.
At the end of each year, the Company's contributions are
allocated to individual accounts for participants who did not
make a withdrawal of basic (first 5% of compensation) savings
during the year, in the proportion that each participant's
basic savings made and not withdrawn during the year bears to
the aggregate amounts of basic savings made and not withdrawn
by all participants during the year. Additional voluntary
contributions (any contributions in excess of 5% of
compensation) do not participate in the Company's allocation.
Company contributions are made at year end only to persons who
are active participants on the last day of the year. At the
end of each month, investment earnings for each fund are
allocated to individual accounts on amounts not withdrawn
during the month in the proportion that each such
participant's interest at the beginning of the month bears to
the total of all such participants' interests in that fund at
the beginning of such month less withdrawals.
Retirement Income
Retirement Income interests represent Company contributions to
the Retirement Income portion of the Plan prior to January 1,
1984 and the earnings on such contributions. A defined
benefit pension plan (the "Pension Plan") was adopted as of
January 1, 1984. With the Pension Plan in place, the Company
continues to make contributions to the Thrift Incentive
portion of the Plan as described below and has the right to
make additional contributions to the Retirement Income portion
of the Plan.
(Continued)
FEDERATED DEPARTMENT STORES, INC.
RETIREMENT INCOME AND THRIFT INCENTIVE PLAN
Notes to Financial Statements - Continued
December 31, 1996 and 1995
Thrift Incentive
The Thrift Incentive portion of the Plan provides for
voluntary contributions by participating employees and for
Company contributions matching a portion of the participant's
contributions.
Participants may elect to contribute to the Thrift Incentive
portion of the Plan an amount equal to 1% to 10% (subject to
certain limitations) of the participant's eligible
compensation. Alternatively, a participant may elect to make
these contributions (subject to certain limitations) on a pre-
tax basis pursuant to Section 401(k) of the Internal Revenue
Code. Contributions up to 5% of eligible compensation are
basic savings which are eligible for matching Company
contributions. For 1984 and subsequent years, the Company's
annual contribution is an amount equal to the greater of 2% of
the Company's income before federal income taxes from
participating divisions or the amount necessary to match 20%
of participants' basic savings. The Company contributed 20%
of participants' basic savings for the years ended December
31, 1996 and 1995.
Participants are permitted to make withdrawals of their after-
tax contributions to the Thrift Incentive portion of the Plan
at any time. Withdrawals of pre-tax contributions are subject
to the hardship rules of Section 401 of the Internal Revenue
Code. At termination, participants may elect to receive the
balance of their account either in a lump sum or an annuity
contract.
2. Summary of Significant Accounting Policies
a) Master Trust
Effective January 1, 1995, the Plan entered into the Federated
Department Stores, Inc. Defined Contribution Plan Master Trust
(the "Master Trust") Agreement with Mellon Bank (the "Trustee").
The Company changed the Master Trust Trustee to Chase Manhattan
Bank effective January 1, 1996. Under the terms of the Master
Trust, the Trustee serves as Trustee custodian for the Master
Trust which was established for the investment of assets of the
Plan and of the Federated Savings Plan for Employees of Lazarus
PA, Inc., (the "Lazarus PA Plan") also sponsored by the Company.
The Federated Department Stores, Inc. Pension and Profit
Sharing Committee selects a diversified group of investment
managers who determine purchases and sales of investments
for their respective portions of the assets allocated to
them to manage in the Master Trust.
b) Basis of Presentation
The accompanying financial statements of the Plan have been
prepared on the accrual basis of accounting.
c) Investments
The fair value of the Plan's participation in the Master
Trust is based on the beginning of year value of the Plan's
participation in the Master Trust plus allocated investment
income and actual contributions, less actual distributions
and allocated administrative expenses.
(Continued)
FEDERATED DEPARTMENT STORES, INC.
RETIREMENT INCOME AND THRIFT INCENTIVE PLAN
Notes to Financial Statements - Continued
December 31, 1996 and 1995
Other investments are reported at fair value as determined
by quoted market prices on an active market. Corporate
bonds are valued based on yields currently available on
comparable securities of issuers with similar credit
ratings. Purchases and sales of securities are recorded on
a trade-date basis. Realized gains and losses on the sale
of securities are reported on the average cost method.
Cash equivalents include highly liquid fixed-income
securities with a maturity of one year or less.
Dividend income is recorded on the ex-dividend date. Income
from other investments is recorded as earned on an accrual
basis.
d) Insurance Contracts
Insurance contracts are valued at contract value, which
represents contributions made under the contract, plus
interest earned, less benefits paid and expenses charged.
e) Use of Estimates
The Plan administrator has made a number of estimates and
assumptions relating to the preparation of these financial
statements. Actual results could differ from these
estimates and assumptions.
f) Reclassifications
Certain 1995 amounts have been reclassified to conform with
the 1996 presentation.
3. Investments
All of the Plan's investments are included in the Master Trust
which was established for the investment of assets of the Plan
and of the Lazarus PA Plan. Each participating plan has an
undivided interest in the Master Trust. The assets of the
Master Trust are held by the Trustee. At December 31, 1996
and 1995, the Plan's interest in the net assets of the Master
Trust was approximately 99.2% and 99.1%, respectively.
Investment income and administrative expense relating to the
Master Trust are allocated to the individual plans based upon
monthly balances invested by each plan.
The Trustee under the Master Trust, in accordance with the
trust agreement, invests all contributions to the Plan among
several investment funds. The funds are:
Diversified Fund - This fund is composed of employer
contributions to the Retirement Income portion of the Plan
and certain amounts transferred when certain plans were
merged, together with the net earnings thereon. All
amounts in this fund are invested in corporate equity and
fixed-income securities, government fixed-income securities
and common/collective trusts. This fund was discontinued
during 1996 and the balance of the fund was transferred to
the Thrift Incentive portion of the Plan. Participants
could elect to redirect their balances to any of the four
Thrift Incentive funds. In the event the participants
declined this election, their balances were directed to
Fund A.
(Continued)
FEDERATED DEPARTMENT STORES, INC.
RETIREMENT INCOME AND THRIFT INCENTIVE PLAN
Notes to Financial Statements - Continued
December 31, 1996 and 1995
Stability Income Fund - This fund consists of balances in
the Retirement Income portion of the Plan of participants
who were at least 60 years of age prior to December 31,
1986, or who have attained age 55 and who have completed at
least ten years of service and have elected to transfer all
or part of their balance out of the Diversified Fund. All
amounts in this fund are invested in short-term, fixed-
income corporate and government bonds. This fund was
discontinued during 1996 and the balance of the fund was
transferred to the Thrift Incentive portion of the Plan.
Participants could elect to redirect their balances to any
of the four Thrift Incentive funds. In the event the
participants declined this election, their balances were
directed to Fund A.
Thrift Incentive Funds - These funds include Company and
participants' contributions to the Thrift Incentive portion
of the Plan, together with the net earnings thereon. The
amounts in these funds are invested in four separate
investment options as directed by the participants. Fund A
is invested in fixed-income investments and insurance
contracts. Fund B is composed of common/collective trusts
which invest in a varying mixture of equity securities and
fixed income instruments. Fund C is invested in an equity
index fund consisting principally of shares of companies
included in the S&P 500 Composite Stock Price Index. Fund
D was established on April 1, 1994 and is invested in the
common stock of the Company. Company contributions are
directed to Fund D. Participants may elect to redirect the
value of Company contributions to other investment options
permitted pursuant to the Plan provisions.
The following table presents the fair values or contract values
of investments and total net assets for the Master Trust at
December 31, 1996 and 1995:
1996 1995
Assets:
Investments at fair value:
Cash and cash equivalents $ 39,839,098 $ 18,087,401
U. S. government securities 68,486,345 106,828,383
Corporate debt instruments 60,779,347 61,405,982
Preferred stock - 133,239
Common stock 28,689,775 72,012,053
Foreign government securities 2,050,615 4,967,180
Common/collective trusts 339,497,225 278,246,438
Total investments at fair value 539,342,405 541,680,676
Insurance contracts at contract value 163,004,655 111,880,590
Total investments 702,347,060 653,561,266
Non interest bearing cash 5,264 -
Receivables:
Securities sold - 282,364
Accrued interest, dividend and
other income 4,811,746 2,313,919
Other receivables 37,376 -
Total receivables 4,849,122 2,596,283
Total assets 707,201,446 656,157,549
(Continued)
FEDERATED DEPARTMENT STORES, INC.
RETIREMENT INCOME AND THRIFT INCENTIVE PLAN
Notes to Financial Statements - Continued
December 31, 1996 and 1995
1996 1995
Accrued liabilities:
Due to broker for securities purchased 15,917,026 5,651,352
Accrued administrative expenses - 501,650
Total accrued liabilities 15,917,026 6,153,002
Total net assets $ 691,284,420 $ 650,004,547
Net investment income for the Master Trust for the years ended
December 31, 1996 and 1995 is as follows:
1996 1995
Net appreciation in fair value of
investments:
Cash and cash equivalents $ (523) $ (5,610)
U.S. government securities (2,319,416) 8,514,007
Corporate debt instruments (864,389) 1,564,391
Preferred stock (3,450) 9,323
Common stock 10,072,511 19,583,368
Foreign government securities 9,635 13,001
Miscellaneous securities (472,962) -
Common/collective trusts 39,908,759 60,910,182
Net appreciation in fair
value of investments 46,330,165 90,588,662
Interest 27,339,508 24,425,834
Dividends 4,062,055 4,337,912
Other - 2,856,868
Total investment income 77,731,728 122,209,276
Administrative expenses (2,841,013) (2,561,490)
Net investment income $ 74,890,715 $ 119,647,786
4. Plan Termination
Although the Company has not expressed any intent to terminate
the Plan, it may do so at any time. In the event the Plan is
terminated, the Company would have no further obligation to
make contributions, and all sums credited to individual
accounts (after expenses) would be distributed to
participants.
5. Federal Income Taxes
The Plan obtained its latest determination letter on June 18,
1996, in which the Internal Revenue Service stated that the
Plan, as then designed, was in compliance with the applicable
requirements of the Internal Revenue Code. While the Plan has
been amended since receiving such determination letter, the
Plan administrator and the Plan's tax counsel believe that the
Plan is currently designed and being operated in compliance
with the applicable requirements of the Internal Revenue Code.
Therefore, no provision for income taxes has been included in
the Plan's financial statements.
(Continued)
FEDERATED DEPARTMENT STORES, INC.
RETIREMENT INCOME AND THRIFT INCENTIVE PLAN
Notes to Financial Statements - Continued
December 31, 1996 and 1995
The Plan's testings, subject to the provisions of the Internal
Revenue Code, have not been completed for the current year.
However, the Plan's sponsor believes that the Plan is
currently in compliance.
6. Administrative Expenses
The Plan pays reasonable and necessary expenses incurred for
the ongoing administration of the Plan.
7. Subsequent Event
Effective April 1, 1997, all previously existing tax-qualified
savings plans maintained by the Company for Company employees
were merged into the Plan. Concurrently, the Plan was amended
and renamed the Federated Department Stores, Inc. Profit
Sharing 401(k) Investment Plan (the "401(k) Plan").
Participants in the Plan became fully vested participants in
the 401(k) Plan as of such date.
Pursuant to the requirements of the Securities Exchange Act of
1934, the members of the Pension and Profit Sharing Committee (which is
the administrative committee for the Federated Department Stores, Inc.
Retirement Income and Thrift Incentive Plan) have duly caused this annual
report to be signed on its behalf by the undersigned hereunto duly
authorized.
FEDERATED DEPARTMENT STORES, INC.
RETIREMENT INCOME AND THRIFT
INCENTIVE PLAN
Dated: June 30, 1997 By: /s/ John R. Sims
John R. Sims
Chairman of the Pension and
Profit Sharing Committee
