<PAGE> 1
FORM 11-K
FOR ANNUAL REPORTS OF EMPLOYEE STOCK PURCHASE, SAVINGS
AND SIMILAR PLANS PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1997
-----------------------------------------------------
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [NO FEE REQUIRED]
For the transition period from _______________________ to _____________________
Commission file number _______________________________
A. Full title of the plan and the address of the plan, if different from that
of the issuer named below:
Thrift Incentive Plan
B. Name of issuer of the securities hold pursuant to the plan and the address
of its principal executive office:
Filene's Basement Corp. Stock Fund
40 Walnut Street
Wellesley, MA 02181
REQUIRED INFORMATION
The following financial statements shall be furnished for the plan:
1. An audited statement of financial condition as of the end of the latest
two fiscal years of the plan (or such lesser period as the plan has been in
existence).
2. An audited statement of income and changes in plan equity for each of
the latest three fiscal years of the plan (or such lesser period as the plan
has been in existence).
3. The statements required by Item 1 and 2 shall be prepared in accordance
with the applicable provisions of Article 6A of Regulation S-X.
4. In lieu of the requirements of Items 1-3 above, plans subject to
ERISA may file plan financial statements and schedules prepared in accordance
with the financial reporting requirements of ERISA. To the extent required by
ERISA, the plan financial statements shall be examined by an independent
accountant except that the "limited scope exemption" contained in Section
103(a)(3)(C) of ERISA shall not be available.
Note: A written consent of the accountant is required with respect to the
plan annual financial statements which have been incorporated by reference in a
registration statement on Form S-8 under the Securities Act of 1933. The consent
should be filed as an exhibit to this annual report. Such consent shall be
currently dated and manually signed.
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of
1934, the trustee (or other persons who administer the employee benefit plan)
have duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
Filene's Basement Thrift Incentive Plan
---------------------------------------
(Name of Plan)
Date June 30, 1998
/s/ Steven R. Siegel
---------------------------------------
<PAGE> 2
FILENE'S BASEMENT, INC.
THRIFT INCENTIVE PLAN
FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES
AS OF DECEMBER 31, 1997 AND 1996
TOGETHER WITH AUDITORS' REPORT
<PAGE> 3
FILENE'S BASEMENT, INC.
THRIFT INCENTIVE PLAN
INDEX
PAGE
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 1
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS AS OF
DECEMBER 31, 1997 AND 1996 2
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND
INFORMATION, FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996 3
NOTES TO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES 4-8
SCHEDULE I--ITEM 27a--SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AS OF DECEMBER 31, 1997 9
SCHEDULE II--ITEM 27d--SCHEDULE OF REPORTABLE TRANSACTIONS FOR THE
YEAR ENDED DECEMBER 31, 1997 10
<PAGE> 4
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Retirement Plan Committee of the
Filene's Basement, Inc. Thrift Incentive Plan:
We have audited the accompanying statements of net assets available for benefits
of the Filene's Basement, Inc. Thrift Incentive Plan (the Plan) as of December
31, 1997 and 1996, and the related statements of changes in net assets available
for benefits, with fund information, for the years then ended. These financial
statements and the schedules referred to below are the responsibility of the
Plan's management. Our responsibility is to express an opinion on these
financial statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
December 31, 1997 and 1996, and the changes in its net assets available for
benefits for the years ended December 31, 1997 and 1996, in conformity with
generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets held
for investment purposes as of December 31, 1997 and reportable transactions for
the year then ended are presented for the purpose of additional analysis and are
not a required part of the basic financial statements but are supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. The fund information in the statements of net assets available for
benefits and 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
supplemental schedules and fund information have been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, are fairly stated, in all material respects, in relation to the basic
financial statements taken as a whole.
Boston, Massachusetts
May 29, 1998
1
<PAGE> 5
FILENE'S BASEMENT, INC.
THRIFT INCENTIVE PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
INVESTMENTS, AT FAIR VALUE:
CMA Money Fund $ 205,917 $ 26,015
Merrill Lynch RP Trust 1,759,124 2,052,879
Merrill Lynch Capital Fund 2,200,880 2,744,407
Putnam Growth & Income Fund 4,028,174 2,875,148
AIM Value Fund 2,609,871 2,463,692
John Hancock Special Equities Fund Class A 1,542,538 1,764,195
Filene's Basement Corp. Stock Fund 117,604 127,578
----------- -----------
Total investments 12,464,108 12,053,914
----------- -----------
RECEIVABLES:
Contributions receivable-
Employer 201,396 250,490
Employee -- 62,178
----------- -----------
Total receivables 201,396 312,668
----------- -----------
OTHER ASSETS:
Accrued income 287 357
----------- -----------
Total other assets 287 357
----------- -----------
LIABILITIES:
Excess employee contributions payable 38,924 101,927
----------- -----------
Total liabilities 38,924 101,927
----------- -----------
NET ASSETS AVAILABLE FOR BENEFITS $12,626,867 $12,265,012
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE> 6
FILENE'S BASEMENT, INC.
THRIFT INCENTIVE PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND
INFORMATION, FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
------------------------------------ Fund Information -----------------------------------
JOHN
HANCOCK
MERRILL MERRILL PUTNAM SPECIAL
CMA MONEY LYNCH RP LYNCH GROWTH & AIM VALUE EQUITIES
FUND TRUST CAPITAL FUND INCOME FUND FUND FUND CLASS A
<S> <C> <C> <C> <C> <C> <C>
ADDITIONS (DEDUCTIONS):
Employee contributions $ 1,511,444 $ -- $ -- $ -- $ -- $ --
Employer contributions -- -- -- -- -- --
Net transfers between funds 1,979,512 (400,323) (1,033,333) 425,220 (404,542) (244,834)
Rollovers 83,998 -- -- -- -- --
Participant withdrawals (3,484,337) -- -- -- -- --
Return of excess contributions 101,927 (5,080) (15,738) (22,029) (36,057) (21,716)
Trustee fees (13,390) -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Total additions (deductions) 179,154 (405,403) (1,049,071) 403,191 (440,599) (266,550)
INTEREST AND DIVIDEND INCOME 748 111,648 193,535 520,315 265,989 318
NET REALIZED AND UNREALIZED APPRECIATION
(DEPRECIATION) OF INVESTMENTS -- -- 312,009 229,520 320,789 44,575
----------- ----------- ----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS 179,902 (293,755) (543,527) 1,153,026 146,179 (221,657)
BALANCE, BEGINNING OF YEAR 26,015 2,052,879 2,744,407 2,875,148 2,463,692 1,764,195
----------- ----------- ----------- ----------- ----------- -----------
BALANCE, END OF YEAR $ 205,917 $ 1,759,124 $ 2,200,880 $ 4,028,174 $ 2,609,871 $ 1,542,538
=========== =========== =========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
------------------------------------ Fund Information -----------------------------------
FILENE'S
BASEMENT EXCESS
CORP. STOCK CONTRIBUTIONS ACCRUED CONTRIBUTIONS
FUND RECEIVABLE INCOME PAYABLE TOTAL 1997 TOTAL 1996
<S> <C> <C> <C> <C> <C> <C>
ADDITIONS (DEDUCTIONS):
Employee contributions $ -- $ -- $ -- $ -- $ 1,511,444 $ 1,401,740
Employer contributions -- 201,396 -- -- 201,396 250,490
Net transfers between funds (8,675) (312,668) (357) -- -- --
Rollovers -- -- -- -- 83,998 24,239
Participant withdrawals -- -- -- 101,927 (3,382,410) (1,180,944)
Return of excess contributions (1,307) -- -- (38,924) (38,924) (101,927)
Trustee fees -- -- -- -- (13,390) (17,485)
--------- --------- ----- --------- ------------ ------------
Total additions (deductions) (9,982) (111,272) (357) 63,003 (1,637,886) 376,113
INTEREST AND DIVIDEND INCOME 44 -- 287 -- 1,092,884 840,298
NET REALIZED AND UNREALIZED APPRECIATION (36) -- -- -- 906,857 436,555
(DEPRECIATION) OF INVESTMENTS --------- --------- ----- --------- ------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS (9,974) (111,272) (70) 63,003 361,855 1,652,966
BALANCE, BEGINNING OF YEAR 127,578 312,668 357 (101,927) 12,265,012 10,612,046
--------- --------- ----- --------- ------------ ------------
BALANCE, END OF YEAR $ 117,604 $ 201,396 $ 287 $ (38,924) $ 12,626,867 $ 12,265,012
========= ========= ===== ========= ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 7
FILENE'S BASEMENT, INC.
THRIFT INCENTIVE PLAN
NOTES TO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES
DECEMBER 31, 1997
(1) PLAN DESCRIPTION
The following description of the Filene's Basement, Inc. Thrift Incentive
Plan (the Plan) provides only general information. Refer to the Plan
document or the summary Plan description for more complete information. The
Plan was established on August 1, 1988 and is a defined-contribution plan,
qualified under Section 401(k) of the Internal Revenue Code (IRC), covering
substantially all employees of Filene's Basement, Inc. (the Company). The
Plan is subject to the provisions of the Employee Retirement Income
Security Act of 1974 (ERISA).
Eligibility
Each employee may participate in the Plan the first day of the calendar
quarter after completing 1,000 hours of service in a 12 consecutive month
period.
Employee Contributions
Participants may elect to make contributions between 1% and 10%, in whole
percentages, of their compensation, on either a pretax or after-tax basis,
subject to Internal Revenue Service (IRS) limitations. All participant
contributions are 100% vested when made. Participants are permitted to
increase or decrease their salary-deferral percentage at the beginning of
each calendar quarter, may reallocate their investments between funds at
the beginning of each calendar quarter and may choose to terminate
contributions at any time.
Employer Contributions
The Company contributes to the Plan an amount equal to 20% to 40%, as
determined each year at the discretion of the Company, of the first 5%
contributed by participants who are employees on the last day of the Plan
year (December 31). For the Plan year ended December 31, 1997, the
contribution percentage was 20%.
Vesting
Participants are fully vested in their contributions and the earnings
thereon. Vesting in employer matching contributions is based on years of
continuous service as detailed in the following schedule:
COMPLETED YEARS OF CREDITED SERVICE PERCENTAGE VESTED
Less than 1 0%
At least 1 but less than 2 33
At least 2 but less than 3 66
3 and over 100
4
<PAGE> 8
FILENE'S BASEMENT, INC.
THRIFT INCENTIVE PLAN
NOTES TO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES
DECEMBER 31, 1997
(Continued)
Upon termination from the Plan, a participant's nonvested employer
contributions are forfeited and used to reduce subsequent employer
contributions.
Upon the death, disability or retirement of a participant, he or she will
be deemed 100% vested in Company contributions and related earnings
regardless of actual service.
Benefits
Benefits are recorded when paid. Benefits provided by the Plan are paid
from net assets available for benefits. A Plan participant is entitled to
his or her contributions and related income and his or her vested portion
of the Company's contributions and related income at the time of
termination. The Plan disburses benefits to participants upon retirement,
termination or disability, or to a participant's beneficiary upon death in
a lump-sum amount equal to the net value of the participant's account or in
a single payment of whole shares of employer stock for the portion of the
participant's account invested in the Employer Stock Fund. Participants who
joined the Plan prior to January 1, 1995 may elect to receive their
benefits in the form of either a single life annuity, a single life annuity
over 10 years, a joint and survivor annuity or a monthly annuity.
Participants with an account balance of $3,500 or less receive a lump-sum
distribution. Participants may be entitled to a hardship withdrawal of
their benefits if they qualify under the criteria established by the Plan.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
These financial statements are presented in accordance with the accrual
method of accounting. Purchases and sales of investments are reflected on a
trade date basis.
Investments
Investments are stated at fair value as determined by the trustee of the
Plan, Merrill Lynch Trust Company of America. Gains and losses on sales of
investments are based on the specific cost of the investments sold. The
Plan presents in the statement of changes in net assets the net
appreciation (depreciation) in the fair value of its investments, which
consists of the realized gains or losses and the unrealized appreciation
(depreciation) on those investments. Investment income is recorded in the
year it is earned. Plan expenses are recognized as incurred.
5
<PAGE> 9
FILENE'S BASEMENT, INC.
THRIFT INCENTIVE PLAN
NOTES TO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES
DECEMBER 31, 1997
(Continued)
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. Actual results could differ from
those estimates.
(3) PLAN INVESTMENTS AND TRUSTEE CHANGE
As of February 1, 1996, there was a change in the Plan's trustee from Fleet
Bank, N.A. to Merrill Lynch Trust Company of America. In connection with
this change, investment choices for Plan participants were expanded from
five to seven.
At the date of transfer, all participant balances were transferred to the
CMA Money Market Fund. Realized gains and losses upon transfer are included
in 1996 net investment income. Listed below are the current seven fund
types and their strategies.
FUND TYPE STRATEGY
CMA Money Fund Seeks current income, preservation of capital
and liquidity from money market instruments.
Merrill Lynch RP Trust Seeks current income and
preservation of capital through investment in
highly rated asset-backed securities.
Merrill Lynch Capital Fund Seeks the highest
investment return by allocating its assets
among equity, debt and convertible securities.
Putnam Growth & Income Fund Seeks capital growth and current income
primarily through large cap common stocks.
AIM Value Fund Seeks growth of capital by
investing in common stocks undervalued
relative to the overall market.
John Hancock Special
Equities Fund Class A Seeks long-term capital appreciation through
investments in common stocks.
Filene's Basement Corp.
Stock Fund Seeks to increase employee ownership in the
Company through investment in its common
stock.
6
<PAGE> 10
FILENE'S BASEMENT, INC.
THRIFT INCENTIVE PLAN
NOTES TO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES
DECEMBER 31, 1997
(Continued)
(4) TAX STATUS
The Plan obtained its latest determination letter on October 25, 1995, in
which the IRS stated that the Plan was in compliance with the applicable
design requirements of the IRC. The Plan has been amended since receiving
its determination letter. However, the Plan administrator and the Plan's
legal counsel believe that the Plan is designed and currently being
operated in compliance with the applicable requirements of the IRC.
(5) TRUSTEE FEES AND ADMINISTRATIVE EXPENSES
Trustee fees are paid by the Plan. Administrative expenses are paid by the
Company.
(6) PLAN TERMINATION
Although the Company has not expressed any intent to do so, it has the
right under the Plan to terminate the Plan, subject to the provisions set
forth in ERISA. Upon termination, all participants become 100% vested in
their entire account balance.
(7) INVESTMENTS IN EXCESS OF FIVE PERCENT OF PLAN ASSETS
The fair value of individual investments representing 5% or more of the
Plan's net assets at December 31, 1997 and 1996 are as follows:
1997 1996
AIM Value Fund $2,609,871 $2,463,692
John Hancock Special Equities Fund Class A 1,542,538 1,764,195
Merrill Lynch Capital Fund 2,200,880 2,744,407
Putnam Growth & Income Fund 4,028,174 2,875,148
Merrill Lynch RP Trust 1,759,124 2,052,879
7
<PAGE> 11
FILENE'S BASEMENT, INC.
THRIFT INCENTIVE PLAN
NOTES TO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES
DECEMBER 31, 1997
(Continued)
(8) RECONCILIATION OF FINANCIAL STATEMENT TO FORM 5500
The following is a reconciliation of net assets available for benefits per
the financial statements to the Form 5500 at December 31, 1997 and 1996:
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Net assets available for benefits per the financial $12,626,867 $12,265,012
statements
Amounts allocated to withdrawing participants 255,931 252,984
----------- -----------
Net assets available for benefits per the Form 5500 $12,370,936 $12,012,028
=========== ===========
</TABLE>
The following is a reconciliation of benefits paid to participants per the
financial statements to the Form 5500 for the year ended December 31, 1997
and 1996:
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Benefits paid to participants per the financial $3,382,410 $1,180,944
statements
Add--Amounts allocated to withdrawing participants 255,931 252,984
at year-end
Less--Accumulated amounts allocated to withdrawing participants 252,984 --
at year end ---------- ----------
prior year-end
Benefits paid to participants per the Form 5500 $3,385,357 $1,433,928
========== ==========
</TABLE>
(9) LIABILITIES
Amounts contributed to the Plan from highly compensated employees in excess
of the IRS-approved limit were $38,924 in 1997 and $101,927 in 1996. All
such amounts were refunded to the participants within the time allowed by
the IRS.
8
<PAGE> 12
SCHEDULE I
PLAN NO.: 002
E.I.N.: 04-3016731
FILENE'S BASEMENT, INC.
THRIFT INCENTIVE PLAN
ITEM 27a--SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
DESCRIPTION OF ASSETS ENDING
UNITS OF
PARTICIPATION COST FAIR VALUE
<S> <C> <C> <C>
CMA(a) Money Fund 62,933 $ 62,933 $ 205,917
Merrill Lynch(a) RP Trust 1,772,185 1,772,185 1,759,124
Merrill Lynch(a) Capital Fund 63,905 2,014,313 2,200,880
Putnam Growth & Income Fund 206,168 3,848,713 4,028,174
AIM Value Fund 80,514 2,312,297 2,609,871
John Hancock Special Equities Fund Class A 59,529 1,453,845 1,542,538
Filene's Basement Corp. Stock Fund(a) 29,401 265,908 117,604
----------- -----------
$11,730,194 $12,464,108
=========== ===========
</TABLE>
(a)Represents a party-in-interest to the Plan.
The accompanying notes are an integral part of these supplemental schedules.
9
<PAGE> 13
SCHEDULE II
PLAN NO.: 002
E.I.N.: 04-3016731
FILENE'S BASEMENT, INC.
THRIFT INCENTIVE PLAN
ITEM 27d--SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
NUMBER OF DESCRIPTION OF ASSETS PURCHASE SELLING COST NET GAIN
TRANSACTIONS PRICE PRICE (LOSS)
<S> <C> <C> <C> <C> <C>
AIM Value Fund-
31 Purchased $ 867,158 $ - $ - $ -
22 Sold - 1,041,367 870,294 171,073
John Hancock Special Equities Fund Class A-
25 Purchased 477,466 - - -
26 Sold - 743,244 792,330 (49,086)
Merrill Lynch(a) RP Trust-
278 Purchased 374,591 - - -
28 Sold - 655,285 655,285 -
Merrill Lynch(a) Capital Fund-
30 Purchased 578,109 - - -
25 Sold - 1,432,371 1,292,365 140,006
Putnam Growth & Income Fund-
38 Purchased 2,035,246 - - -
22 Sold - 1,111,384 955,561 155,823
CMA(a) Money Fund-
351 Purchased 6,901,115 - - -
244 Sold - 6,864,191 6,864,191 -
</TABLE>
(a)Represents a party-in-interest to the Plan.
The accompanying notes are an integral part of these supplemental schedules.
10
<PAGE> 1
EXHIBIT 99.1
------------
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference of our report, dated May 29, 1998, included in Filene's Basement
Inc.'s Employee Thrift Incentive Plan Annual Report on Form 11-K for the year
ended December 31, 1997 into the Company's previously filed Registration
Statements on Form S-8 (File No. 33-41513), Form S-8 (File No. 33-40667), Form
S-8 (File No. 33-40668), and Form S-8 (File No. 33-40669).
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Boston, Massachusetts
June 26, 1998
