<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES AND EXCHANGE
ACT OF 1934
FOR THE TRANSITION PERIOD FROM ____________________ TO _________________
Commission file number: 1-12552
THE TALBOTS, INC. RETIREMENT SAVINGS VOLUNTARY PLAN
(Title of the Plan)
THE TALBOTS, INC.
(Issuer of the securities held)
DELAWARE 41-1111318
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
175 Beal Street, Hingham, Massachusetts 02043
- ---------------------------------------- -------------------
(Address of principal executive offices) (Zip Code)
(781) 749-7600
----------------------------------------------------
(Registrant's telephone number, including area code)
<PAGE> 2
========================================
THE TALBOTS, INC.
RETIREMENT SAVINGS
VOLUNTARY PLAN
Financial Statements as of and for the
Years Ended December 31, 1998 and 1997
and Supplemental Schedules as of and for
the Year Ended December 31, 1998 and
Independent Auditors' Report
<PAGE> 3
THE TALBOTS, INC.
RETIREMENT SAVINGS VOLUNTARY PLAN
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
PAGE
INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS AS OF AND FOR THE YEARS
ENDED DECEMBER 31, 1998 AND 1997:
Statements of Net Assets Available for Benefits,
with Fund Information 2
Statements of Changes in Net Assets Available for Benefits,
with Fund Information 3
Notes to Financial Statements 4-6
SUPPLEMENTAL SCHEDULES AS OF AND FOR THE YEAR
ENDED DECEMBER 31, 1998:
Item 27a - Schedule of Assets Held for Investment Purposes 7-13
Item 27d - Schedule of Reportable Transactions 14
Signatures 15
Exhibit I - Independent Auditors' Consent 16
Schedules required under the Employee Retirement Income Security Act of 1974,
other than the schedules listed above, are omitted because of the absence of the
conditions under which the schedules are required.
<PAGE> 4
INDEPENDENT AUDITORS' REPORT
Trustees of The Talbots, Inc.
Retirement Savings Voluntary Plan:
We have audited the accompanying statements of net assets available for
benefits, with fund information, of The Talbots, Inc. Retirement Savings
Voluntary Plan (the "Plan") as of December 31, 1998 and 1997, and the related
statements of changes in net assets available for benefits, with fund
information, 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 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, such financial statements present fairly, in all material
respects, the net assets available for benefits of the Plan at December 31, 1998
and 1997, and the changes in net assets available for benefits for the years
then ended in conformity with generally accepted accounting principles.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules listed in the
Table of Contents 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 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 plan benefits and changes in net assets available for plan
benefits of each fund. These schedules are the responsibility of plan
management. The supplemental schedules and fund information have been subjected
to the auditing procedures applied in our audits of the basic financial
statements and, in our opinion, are fairly stated in all material respects when
considered in relation to the basic financial statements taken as a whole.
/s/ DELOITTE & TOUCHE LLP
- -------------------------
June 16, 1999
<PAGE> 5
THE TALBOTS, INC.
RETIREMENT SAVINGS VOLUNTARY PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1998 AND 1997
================================================================================
<TABLE>
<CAPTION>
1998
--------------------------------------------------------------------------
FUND INFORMATION
----------------------------------------------------------
FIXED TALBOTS
INCOME EQUITY STOCK BALANCED
FUND FUND FUND FUND TOTAL
----------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments, at fair value:
Participant loans $ 1,783,871 $ -- $ -- $ -- $ 1,783,871
Other 9,962,772 27,496,422 7,275,889 16,861,993 61,597,076
----------- ----------- ---------- ----------- -----------
Total investments 11,746,643 27,496,422 7,275,889 16,861,993 63,380,947
Receivables:
Employer contributions receivable 81,348 302,879 49,342 161,912 595,481
Employee contributions receivable 75,459 280,278 43,120 140,139 538,996
Due from broker for investments sold -- 160,028 -- -- 160,028
Dividends and interest receivable -- 49,466 223 86,599 136,288
Other receivable -- 812 -- -- 812
----------- ----------- ---------- ----------- -----------
Total assets 11,903,450 28,289,885 7,368,574 17,250,643 64,812,552
----------- ----------- ---------- ----------- -----------
LIABILITIES:
Payable for investments purchased -- 175,300 -- 156,406 331,706
Accrued management fee 3,176 48,937 3,588 22,832 78,533
----------- ----------- ---------- ----------- -----------
Total liabilities 3,176 224,237 3,588 179,238 410,239
----------- ----------- ---------- ----------- -----------
NET ASSETS AVAILABLE FOR BENEFITS $11,900,274 $28,065,648 $7,364,986 $17,071,405 $64,402,313
=========== =========== ========== =========== ===========
<CAPTION>
1997
--------------------------------------------------------------------------
FUND INFORMATION
----------------------------------------------------------
FIXED TALBOTS
INCOME EQUITY STOCK BALANCED
FUND FUND FUND FUND TOTAL
----------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments, at fair value:
Participant loans $ 1,739,787 $ -- $ -- $ -- $ 1,739,787
Other 9,685,039 28,254,226 4,355,440 12,837,626 55,132,331
----------- ----------- ---------- ----------- -----------
Total investments 11,424,826 28,254,226 4,355,440 12,837,626 56,872,118
Receivables:
Employer contributions receivable 76,295 266,520 56,653 120,485 519,953
Employee contributions receivable -- -- -- -- --
Due from broker for investments sold -- 504,631 -- -- 504,631
Dividends and interest receivable 42 53,927 77 75,648 129,694
Other receivable -- 812 -- -- 812
----------- ----------- ---------- ----------- -----------
Total assets 11,501,163 29,080,116 4,412,170 13,033,759 58,027,208
----------- ----------- ---------- ----------- -----------
LIABILITIES:
Payable for investments purchased -- 417,045 -- -- 417,045
Accrued management fee 8,593 68,872 4,298 39,393 121,156
----------- ----------- ---------- ----------- -----------
Total liabilities 8,593 485,917 4,298 39,393 538,201
----------- ----------- ---------- ----------- -----------
NET ASSETS AVAILABLE FOR BENEFITS $11,492,570 $28,594,199 $4,407,872 $12,994,366 $57,489,007
=========== =========== ========== =========== ===========
</TABLE>
See notes to financial statements.
-2-
<PAGE> 6
THE TALBOTS, INC.
RETIREMENT SAVINGS VOLUNTARY PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND
INFORMATION
YEARS ENDED DECEMBER 31, 1998 AND 1997
================================================================================
<TABLE>
<CAPTION>
1998
-----------------------------------------------------------------------------
FUND INFORMATION
-------------------------------------------------------------
FIXED TALBOTS
INCOME EQUITY STOCK BALANCED
FUND FUND FUND FUND TOTAL
----------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
ADDITIONS:
Transfers $ (459,666) $ (332,970) $ (395,742) $ 1,188,378 $ --
Employer contributions 308,115 1,171,049 199,894 581,087 2,260,145
Employee contributions 943,325 3,527,416 621,638 1,634,005 6,726,384
Rollover contributions 804 25,130 1,783 4,346 32,063
Dividend and interest income 611,500 640,446 103,699 488,920 1,844,565
Net appreciation in fair value
of investments -- -- 2,986,821 1,754,310 4,741,131
----------- ----------- ---------- ----------- -----------
Total additions 1,404,078 5,031,071 3,518,093 5,651,046 15,604,288
----------- ----------- ---------- ----------- -----------
DEDUCTIONS:
Benefit payments 945,393 2,914,098 529,986 1,475,750 5,865,227
Investment management fee 50,981 292,573 30,993 98,257 472,804
Net depreciation in fair value
of investments -- 2,352,951 -- -- 2,352,951
----------- ----------- ---------- ----------- -----------
Total deductions 996,374 5,559,622 560,979 1,574,007 8,690,982
----------- ----------- ---------- ----------- -----------
INCREASE (DECREASE) 407,704 (528,551) 2,957,114 4,077,039 6,913,306
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 11,492,570 28,594,199 4,407,872 12,994,366 57,489,007
----------- ----------- ---------- ----------- -----------
End of year $11,900,274 $28,065,648 $7,364,986 $17,071,405 $64,402,313
=========== =========== ========== =========== ===========
<CAPTION>
1997
-----------------------------------------------------------------------------
FUND INFORMATION
-------------------------------------------------------------
FIXED TALBOTS
INCOME EQUITY STOCK BALANCED
FUND FUND FUND FUND TOTAL
----------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
ADDITIONS:
Transfers $ (41,322) $ 367,689 $ (629,376) $ 303,009 $ --
Employer contributions 338,775 1,070,221 267,891 493,038 2,169,925
Employee contributions 1,016,532 3,043,405 868,808 1,395,776 6,324,521
Rollover contributions 3,387 25,498 335 25,370 54,590
Dividend and interest income 613,704 588,132 99,635 407,796 1,709,267
Net appreciation in fair value
of investments -- 4,105,234 -- 1,856,544 5,961,778
----------- ----------- ----------- ----------- -----------
Total additions 1,931,076 9,200,179 607,293 4,481,533 16,220,081
----------- ----------- ----------- ----------- -----------
DEDUCTIONS:
Benefit payments 704,464 1,503,036 329,445 715,609 3,252,554
Investment management fee 45,518 274,823 35,325 108,387 464,053
Net depreciation in fair value
of investments -- -- 2,509,497 -- 2,509,497
----------- ----------- ----------- ----------- -----------
Total deductions 749,982 1,777,859 2,874,267 823,996 6,226,104
----------- ----------- ----------- ----------- -----------
INCREASE (DECREASE) 1,181,094 7,422,320 (2,266,974) 3,657,537 9,993,977
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 10,311,476 21,171,879 6,674,846 9,336,829 47,495,030
----------- ----------- ----------- ----------- -----------
End of year $11,492,570 $28,594,199 $ 4,407,872 $12,994,366 $57,489,007
=========== =========== =========== =========== ===========
</TABLE>
See notes to financial statements.
-3-
<PAGE> 7
THE TALBOTS, INC.
RETIREMENT SAVINGS VOLUNTARY PLAN
NOTES TO FINANCIAL STATEMENTS
================================================================================
1. DESCRIPTION OF THE PLAN
The following brief description of The Talbots, Inc. Retirement Savings
Voluntary Plan (the "Plan") is for general information purposes only.
Participants should refer to the Plan document for more complete
information.
GENERAL INFORMATION - The Plan is a defined contribution 401(k) plan
established by The Talbots, Inc. (the "Company") on January 1, 1989 and
amended and restated effective as of November 1, 1993 for the employees of
the Company. Employees are eligible to participate on the January 1, April
1, July 1 or October 1 coincident with or next following completion of one
year of service and attainment of age 21. State Street Bank and Trust
Company serves as trustee of the Plan. Watson Wyatt Worldwide serves as
the record keeper for the Plan. The Plan is subject to the provisions of
the Employee Retirement Income Security Act of 1974 ("ERISA").
PARTICIPATION - Once an employee becomes eligible to participate in the
Plan, he/she may elect to become a participant by entering into a
compensation reduction authorization agreement. This agreement provides
that the participant accept a reduction in compensation in an amount equal
to 1% to 15% of his/her compensation. The maximum employee deferral is the
lesser of 15% of the participant's compensation or $10,000 (for 1998)
indexed for inflation in accordance with the Internal Revenue Code.
CONTRIBUTIONS - During each plan year, the Company makes matching
contributions. The Company will determine each quarter the rate at which
the matching contribution, if any, will be made. The Company-matching
contribution for the periods covered by these financial statements was 50%
of the employee contribution up to 6% of the employee compensation.
Participants must be employed as of the last day of the quarter and have
made plan contributions in order to receive a matching contribution.
VESTING - All employee contributions are 100% vested. Company
contributions vest 20% after each year of service. Forfeitures are
reallocated on a pro rata basis to active participants, as employer
contributions, based on the participant's compensation.
BENEFIT ARRANGEMENTS - The Plan provides for the payment of a
participant's account balance to participants who have reached the later
of the normal retirement age of 65 or who have completed five years of
vesting service. A participant may also choose to withdraw his/her vested
account balance upon attainment of the early retirement age, or age
59 1/2. If the participant's service with the Company terminates other
than by reason of retirement, the participant may elect to receive his/her
vested account balance as soon as possible following termination of
employment. Distributions will be made in a lump sum, provided that no
payment may be made without the participant's consent before his/her
normal or early retirement age, if such payment would be in excess of
$3,500.
-4-
<PAGE> 8
1. DESCRIPTION OF THE PLAN (CONTINUED)
INVESTMENT OPTIONS - Employee and employer contributions are invested in
the following options:
Fixed Income Fund - Funds are invested in the Fidelity Managed Income
Portfolio. The fixed income fund also includes participant loans.
Equity Fund - Funds are invested in common stock of various companies,
with residual amounts invested in a short-term investment fund.
Talbots Stock Fund - Funds are invested in Talbots, Inc. common stock,
with residual amounts invested in a short-term investment fund.
Balanced Fund - Funds are invested in fixed income securities,
corporate debt and common stock of various companies, with remaining
amounts invested in a short-term investment fund.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING - The financial statements of the Plan are prepared on
the accrual basis of accounting. Purchases and sales of securities are
recorded on the trade date basis. Interest income is recorded on the
accrual basis. Dividends are recorded on the ex-dividend date on the
accrual basis.
VALUATION OF INVESTMENTS - The investments of the Plan are stated at fair
value. Fair values of "other investments" were determined by closing
prices for those securities traded on national stock exchanges, at the
average of bid and ask quotations for those securities traded in the
over-the-counter market at net asset value for the Fidelity Managed Income
Portfolio and at fair value as determined by the trustee for any
restricted securities. Participant loans are recorded at cost, which
approximates fair value.
BENEFIT PAYMENTS - Benefit payments to participants are recorded when
paid. As of December 31, 1998, $384,921 has been allocated to accounts of
persons who elected to withdraw from the Plan, but have not yet been paid.
ADMINISTRATIVE PLAN EXPENSES - Most expenses incurred in administering the
Plan, including those necessary for the administration of the Trust, are
paid out of the principal or income of the Trust unless paid by the
Company at its sole discretion. For the years ended December 31, 1998 and
1997, the Company did not pay any material administrative expenses of the
Plan. Investment management fees incurred by the funds are paid out of the
assets of the individual funds.
ESTIMATES - The preparation of financial statements in conformity with
generally accepted accounting principles requires the plan administrator
to make estimates and assumptions that affect certain reported amounts and
disclosures. Accordingly, actual results may differ from those estimates.
-5-
<PAGE> 9
3. INVESTMENTS
Investments that represent 5% or more of net assets available for benefits
at December 31, 1998 and 1997 were as follows:
<TABLE>
<CAPTION>
IDENTITY OF ISSUE 1998 1997
---------- ----------
<S> <C> <C>
United States Treasury Notes (various
interest rates and maturities) $3,381,874 $3,383,894
State Street Short Term Investment -- 3,786,277
Fidelity Managed Income Portfolio 9,962,772 9,685,039
The Talbots, Inc. Common Stock 7,238,244 4,301,280
</TABLE>
During 1998 and 1997, the Plan's investments (including gains and losses
on investments bought and sold, as well as held during the year)
appreciated in value by $2,381,980 and $3,452,281, respectively, as
follows:
<TABLE>
<CAPTION>
NET APPRECIATION
-------------------------
1998 1997
---------- ----------
<S> <C> <C>
At fair value:
Government Notes and Bonds $ 43,480 $ 37,459
Corporate Notes and Bonds 7,371 5,549
Common Stock 2,331,129 3,409,273
---------- ----------
Total $2,381,980 $3,452,281
========== ==========
</TABLE>
4. PLAN TERMINATION
In the event of termination of the Plan, or complete discontinuance of
contributions thereto by the Company, the rights of all employees shall be
fully vested and nonforfeitable. Following termination of the Plan,
subject to reasonable administrative delays, all benefits under the Plan
shall be paid in conformity with the standard benefit distribution
policies of the Plan.
5. TAX STATUS OF THE PLAN
The Plan obtained a favorable determination letter in 1995 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
(the "Code"). The plan administrator believes that the Plan is currently
designed and being operated in compliance with the applicable requirements
of the Code. Accordingly, no provision for income taxes has been included
in the Plan's financial statements.
* * * * * *
-6-
<PAGE> 10
THE TALBOTS, INC.
RETIREMENT SAVINGS VOLUNTARY PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1998
================================================================================
<TABLE>
<CAPTION>
(c)UNITS/ (e)CURRENT
(a) (b)IDENTITY OF ISSUE SHARES (d)COST VALUE
<S> <C> <C> <C>
FIXED INCOME FUND
* PARTICIPANT LOANS
(Ranging from 7.0% to 10.0% interest rates;
various maturity dates through July 1, 2007) 1,783,871 $1,783,871 $1,783,871
---------- ----------
Total Participant Loans 1,783,871 1,783,871
---------- ----------
REGISTERED INVESTMENT COMPANY
Fidelity Managed Income Portfolio 9,962,772 9,962,772 9,962,772
---------- ----------
Total Registered Investment Company 9,962,772 9,962,772
---------- ----------
Total Fixed Income Fund 11,746,643 11,746,643
---------- ----------
EQUITY FUND
SHORT TERM INVESTMENT FUND
* State Street Short Term Investment Fund 1,625,345 1,625,345 1,625,345
---------- ---------
Total Short Term Investment Fund 1,625,345 1,625,345
---------- ---------
COMMON STOCK
Archstone Community Tr. 32,057 695,458 649,154
Bowater Inc. 11,300 583,552 468,244
Champion International Corp. 11,500 543,777 465,750
Chris Craft Inds. Inc. 16,304 589,676 785,649
Conseco Inc. 13,324 237,637 406,382
Cooper Tire and Rubber Co. 34,200 797,156 698,963
Cyprus Amax Minerals Co. 46,300 868,353 463,000
Duke Rlty. Invts. Inc. 35,400 551,961 823,050
EEX Corp. 29,713 802,318 207,991
Entergy Corp. 20,000 623,794 622,500
Federal Home Loan Mtg. Corp. 19,500 395,842 1,256,531
Fleetwood Enterprises Inc. 23,700 620,218 823,575
Healthcare Realty Tr. 17,600 493,142 389,400
Hollinger International Inc. 55,500 792,225 773,531
LTV Corp. New 33,500 429,486 192,625
Meditrust 34,100 912,569 511,500
MBIA Inc. 21,900 957,615 1,435,819
NCR Corp. 37,100 1,217,493 1,548,925
New England Elec. Sys. 13,500 470,758 649,687
(Continued)
</TABLE>
-7-
<PAGE> 11
THE TALBOTS, INC.
RETIREMENT SAVINGS VOLUNTARY PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1998
================================================================================
<TABLE>
<CAPTION>
(c)UNITS/ (e)CURRENT
(a) (b)IDENTITY OF ISSUE SHARES (d)COST VALUE
<S> <C> <C> <C>
EQUITY FUND (CONTINUED)
COMMON STOCK (CONTINUED)
Nucor Corp. 12,900 587,929 557,925
OM Group Inc. 21,300 469,945 777,450
PP&L Res Inc. 24,600 621,990 685,725
Parker Drilling Co. 62,100 425,539 197,944
Pinnacle West Cap Corp. 23,200 780,280 983,100
Reinsurance Group Amer Inc. 9,850 233,254 689,500
Santa Fe Energy Res Inc. 32,600 207,834 236,350
Sbarro Inc. 13,700 366,909 358,769
Seagate Technology 36,100 901,355 1,092,025
Silicon Graphics 21,600 282,248 278,100
SunAmerica Inc. 18,850 286,446 1,545,700
Tidewater Inc. 16,500 535,540 382,594
Trigon Healthcare Inc. 24,600 594,702 917,888
Triton Energy LTD 27,600 1,191,188 219,075
Trizec Hahn Corp. 37,100 610,781 760,550
Unifi Inc. 15,800 456,029 309,087
Warnaco Group Inc. 34,800 853,330 878,700
Washington Real Estate Invt Tr 22,200 360,013 413,475
Wellman Inc. 28,400 618,613 289,325
Wellpoint Health Networks Inc. 12,937 580,657 1,125,519
---------- ----------
Total Common Stock 23,547,612 25,871,077
---------- ----------
Total Equity Fund 25,172,957 27,496,422
---------- ----------
TALBOTS STOCK FUND
SHORT TERM INVESTMENT FUND
* State Street Short Term Investment Fund 37,645 37,645 37,645
---------- ----------
Total Short Term Investment Fund 37,645 37,645
---------- ----------
COMMON STOCK
* Talbots, Inc. 230,701 5,449,234 7,238,244
---------- ----------
Total Common Stock 5,449,234 7,238,244
---------- ----------
Total Talbots Stock Fund 5,486,879 7,275,889
---------- ----------
BALANCED FUND
SHORT TERM INVESTMENT FUND
* State Street Short Term Investment Fund 747,109 747,109 747,109
---------- ----------
Total Short Term Investment Fund 747,109 747,109
---------- ----------
(Continued)
</TABLE>
-8-
<PAGE> 12
THE TALBOTS, INC.
RETIREMENT SAVINGS VOLUNTARY PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1998
================================================================================
<TABLE>
<CAPTION>
(c)UNITS/ (e)CURRENT
(a) (b)IDENTITY OF ISSUE SHARES (d)COST VALUE
<S> <C> <C> <C>
BALANCED FUND (CONTINUED)
FIXED INCOME
Fed Hm Ln Pc (9.0%, 1/1/07) 15,612 16,422 16,088
Fed Hm Ln Pc (8.0%, 8/1/17) 23,514 24,109 24,288
FNMA Pool (6.0%, 4/1/24) 37,589 35,674 37,166
FNMA Pool (6.0%, 4/1/28) 73,662 71,958 72,695
Federal Home Ln Mtg PC Gtd (6.0%, 11/15/05) 38,877 37,814 38,792
Federal National Mortgage Assoc. (6%, 5/15/08) 240,000 255,624 253,349
Govt Natl Mtg Assn GTD Remic (7.0%, 1/16/07) 46,644 46,987 46,673
IMC Home Equity Ln TR (6.41%, 4/20/18) 125,000 124,993 124,960
United States Treasury Notes (7.5%, 11/15/01) 325,000 345,625 349,475
United States Treasury Notes (6.375%, 8/15/02) 390,000 407,535 411,388
United States Treasury Notes (6.25%, 2/15/03) 20,000 19,849 21,150
United States Treasury Notes (6.875%, 7/31/99) 235,000 239,648 237,900
United States Treasury Notes (7.25%, 8/15/04) 295,000 324,016 331,645
United States Treasury Notes (7.875%, 11/15/04) 135,000 157,298 156,410
United States Treasury Notes (7.75%, 11/30/99) 350,000 363,399 359,517
United States Treasury Notes (7.75%, 12/31/99) 15,000 16,392 15,447
United States Treasury Notes (7.75%, 1/31/00) 100,000 105,788 103,172
United States Treasury Notes (6.25%, 5/31/00) 135,000 135,072 137,890
United States Treasury Notes (5.75%, 10/31/00) 300,000 295,547 305,718
United States Treasury Notes (6.5%, 10/15/06) 315,000 352,377 349,404
United States Treasury Notes (6.125%, 12/31/01) 100,000 101,406 104,062
United States Treasury Notes (6.25%, 5/31/99) 135,000 136,129 135,843
United States Treasury Notes (5.75%, 11/30/02) 350,000 364,297 362,852
--------- ---------
Total Fixed Income 3,977,959 3,995,884
--------- ---------
CORPORATE DEBT
Premier Auto Tr (5.77%, 1/6/02) 140,000 140,000 140,655
American Gen Fin Corp. (6.88%, 1/15/00) 125,000 126,885 126,648
(Continued)
</TABLE>
-9-
<PAGE> 13
THE TALBOTS, INC.
RETIREMENT SAVINGS VOLUNTARY PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1998
================================================================================
<TABLE>
<CAPTION>
(c)UNITS/ (e)CURRENT
(a) (b)IDENTITY OF ISSUE SHARES (d)COST VALUE
<S> <C> <C> <C>
BALANCED FUND (CONTINUED)
CORPORATE DEBT (CONTINUED)
Associates Corp. North America (7.75%, 2/15/05) 50,000 53,486 55,290
Bear Stearns Cos. Inc. (6.625%, 10/1/04) 120,000 121,166 123,295
BellSouth Telecomm Inc. (5.85%, 11/15/45) 65,000 63,515 65,965
Commercial Cr Group Inc. (6.0%, 4/15/00) 125,000 125,305 125,920
Cooper Indust Inc. Mtn BE (6.38%, 5/8/08) 150,000 150,000 155,286
Kimco Rlty Corp. (7.06%, 7/14/09) 65,000 65,000 64,211
Spieker Pptys LP (6.75%, 1/15/08) 100,000 99,170 98,021
Tyco Intl Group (6.375%, 6/15/05) 245,000 246,617 249,748
Weingarten Rlty Invs Mtn (6.9%, 11/24/08) 50,000 49,571 49,989
--------- ---------
Total Corporate Debt 1,240,715 1,255,028
--------- ---------
COMMON STOCK
Abbott Labs 2,800 89,684 137,200
American Express Co. 1,600 86,720 164,000
American Greetings Corp. 2,200 57,926 90,338
Ameritech Corp. 3,000 91,553 190,125
AMR Corp. Del 1,800 129,295 106,875
Associates First Cap Corp. 1,680 65,174 71,190
AT&T Corp. 3,500 132,641 265,125
Ball Corp. 2,600 102,456 118,950
BankAmerica Corp. 1,631 94,213 98,064
BankOne Corp. 1,500 84,652 76,594
Baxter Intl Inc. 300 17,474 19,294
Bear Stearns Cos. Inc. 1,800 58,383 67,388
BellSouth Corp. 3,200 50,748 159,600
Becton Dickinson 2,000 84,745 85,375
Best Buy Co. Inc. 2,800 138,243 171,850
Brinker Intl. Inc. 2,200 43,032 63,525
Chase Manhattan Corp. New 2,380 56,470 168,980
Cigna Corp. 2,500 175,025 193,281
(Continued)
</TABLE>
-10-
<PAGE> 14
THE TALBOTS, INC.
RETIREMENT SAVINGS VOLUNTARY PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1998
================================================================================
<TABLE>
<CAPTION>
(c)UNITS/ (e)CURRENT
(a) (b)IDENTITY OF ISSUE SHARES (d)COST VALUE
<S> <C> <C> <C>
BALANCED FUND (CONTINUED)
COMMON STOCK (CONTINUED)
Cisco Systems 1,550 94,865 143,860
Citigroup 1,000 50,060 49,688
Coastal Corp. 3,900 98,561 136,988
Coca Cola Co. 1,800 89,072 120,600
Coca Cola Enterprises 2,500 88,838 89,375
Colgate Palmolive 800 73,154 74,300
Continental Airls Inc. 900 31,266 30,150
Dean Foods Co. 1,900 102,951 77,543
Dell Computer Corp. 2,700 67,016 197,606
Disney Walt Co. 2,300 65,525 69,000
Dole Food Inc. 2,700 126,662 81,000
Donnelley RR & Sons Co. 1,400 61,947 61,337
Dow Chemicals 1,100 108,554 100,031
EMC Corp Mass 1,300 64,591 110,500
Express Scripts Inc. 1,800 73,054 120,825
Exxon Corp. 1,400 99,809 102,375
Federal National Mtg. Assoc. 1,100 75,660 81,400
Federal Home Loan Mtg. Corp. 900 55,292 57,994
Fifth Third Bancorp 1,400 91,609 99,838
Fleet Financial Group Inc. 2,600 112,269 116,188
Ford Motor Co. 3,900 194,781 228,881
Gannett Inc. 1,800 120,146 116,100
General Electric Co. 4,600 309,236 469,200
General Motors Corp. 1,000 38,935 39,687
GPU Inc. 1,500 48,340 66,281
Hershey Food Corp. 400 29,224 24,875
Hewlett Packard Co. 1,400 81,459 95,638
Hillenbrand Inds Inc. 1,000 46,560 56,875
Home Depot 1,300 56,628 79,544
Intel Corp. 2,300 86,459 272,694
International Business Machines Corp. 2,200 126,331 405,625
Johnson & Johnson 1,200 44,960 100,650
Jones Apparel Group Inc. 2,000 55,372 44,125
Keycorp 1,600 52,398 51,200
Lockheed Martin Corp. 700 71,317 59,325
Lowes Cos. Inc. 1,600 63,333 81,900
(Continued)
</TABLE>
-11-
<PAGE> 15
THE TALBOTS, INC.
RETIREMENT SAVINGS VOLUNTARY PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1998
================================================================================
<TABLE>
<CAPTION>
(c)UNITS/ (e)CURRENT
(a) (b)IDENTITY OF ISSUE SHARES (d)COST VALUE
<S> <C> <C> <C>
BALANCED FUND (CONTINUED)
COMMON STOCK (CONTINUED)
Lucent Technologies Inc. 1,200 49,536 131,925
Marriott Intl. Inc. 2,400 66,144 69,600
Maytag Corp. 1,000 50,810 62,250
McKesson HBOC Inc. 1,200 113,622 94,875
MCN Energy Group Inc. 3,900 84,359 74,344
Media One Group Inc. 700 31,586 32,900
Mellon Bank Corp. 2,400 131,244 165,000
Merck & Co Inc. 2,100 127,284 309,750
Microsoft Corp. 3,000 186,768 416,063
MidAmerican Energy Hldgs Co. 3,300 67,336 88,688
Mobil Corp. 2,400 120,322 209,100
Morgan Stanley Dean Witter 700 48,255 49,700
Owens Corning 1,800 67,233 63,787
PacifiCorp. 1,700 34,740 35,806
Philip Morris Cos. Inc. 4,400 119,550 235,400
Proctor & Gamble Co. 1,100 101,541 100,443
Pfizer Inc. 700 80,948 87,500
RPM Inc. Ohio 7,100 119,557 113,600
Reliance Group Hldgs Inc. 2,900 37,512 37,338
Royal Dutch Pete Co. 2,100 64,016 100,537
Safeway Inc. 4,800 183,833 292,500
Sara Lee Corp. 2,000 29,633 56,375
SBC Communications Inc. 5,100 221,481 273,488
Schering Plough Corp. 2,000 101,185 110,500
(Continued)
</TABLE>
-12-
<PAGE> 16
THE TALBOTS, INC.
RETIREMENT SAVINGS VOLUNTARY PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1998
================================================================================
<TABLE>
<CAPTION>
(c)UNITS/ (e)CURRENT
(a) (b)IDENTITY OF ISSUE SHARES (d)COST VALUE
<S> <C> <C> <C>
BALANCED FUND (CONTINUED)
COMMON STOCK (CONTINUED)
Southtrust Corp. 1,350 30,654 49,866
Sprint Corp. 1,100 77,247 92,535
Texaco Inc. 3,300 196,210 174,900
Textron Inc. 500 17,515 37,969
TV Guide Inc. 3,500 47,041 82,688
Tyco Intl Ltd New 2,700 161,624 203,681
United Stationers Inc. 1,100 38,257 28,600
United Technologies Corp. 900 53,399 97,875
USG Corp. 1,100 37,603 56,031
US TR Corp. 1,100 75,004 83,600
USX U S Stl Group 2,200 83,884 50,600
Valero Energy Corp. 3,100 95,861 65,875
Warner-Lambert Co. 2,300 168,449 172,931
Xerox Corp. 800 67,448 94,400
----------- -----------
Total Common Stock 8,003,359 10,863,972
----------- -----------
Total Balanced Fund 13,969,142 16,861,993
----------- -----------
TOTAL INVESTMENTS $56,375,621 $63,380,947
=========== ===========
* Party-in-interest
(Concluded)
</TABLE>
-13-
<PAGE> 17
THE TALBOTS, INC.
RETIREMENT SAVINGS VOLUNTARY PLAN
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
YEAR ENDED DECEMBER 31, 1998
================================================================================
<TABLE>
<CAPTION>
(h)CURRENT VALUE
OF ASSET ON
(a)IDENTITY OF (b)DESCRIPTION (c)PURCHASE (d)SELLING (g) COST OF TRANSACTION (i)NET GAIN
PARTY INVOLVED OF ASSETS PRICE PRICE ASSET DATE OR (LOSS)
<S> <C> <C> <C> <C> <C> <C>
SERIES OF TRANSACTIONS
State Street Bank and
Trust Company Short Term Investment Fund $21,971,311 $ -- $21,971,311 $21,971,311 $ --
-- 23,769,683 23,769,683 23,769,683 --
</TABLE>
-14-
<PAGE> 18
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees have duly caused this report to be signed on its behalf by the
undersigned.
THE TALBOTS, INC. RETIREMENT SAVINGS VOLUNTARY PLAN
Dated: June 29, 1999 PLAN ADMINISTRATOR
By Administrative Committee
By: /s/ Edward L. Larsen
-------------------------------
Edward L. Larsen
Administrative Committee Member
By: /s/ Stuart M. Stolper
-------------------------------
Stuart M. Stolper
Administrative Committee Member
-15-
<PAGE> 1
EXHIBIT 1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement No.
33-72086 of The Talbots, Inc. on Form S-8 of our report dated June 16, 1999,
appearing in this Annual Report on Form 11-K of The Talbots, Inc. Retirement
Savings Voluntary Plan for the year ended December 31, 1998.
/s/ DELOITTE & TOUCHE LLP
- -------------------------
Boston, Massachusetts
June 28, 1999
-16-
