Saks Fifth Avenue 2008 Annual Report Download

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
ÈAnnual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For Fiscal Year Ended: January 31, 2009
or
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from to
Commission File Number: 1-13113
SAKS INCORPORATED
(Exact Name of Registrant as Specified in Its Charter)
Tennessee 62-0331040
(State of Incorporation) (I.R.S. Employer Identification Number)
12 East 49th Street
New York, New York 10017
(Address of Principal Executive Offices) (Zip Code)
Registrant’s telephone number, including area code: (212) 940-5305
Securities Registered Pursuant to Section 12(b) of the Act:
Title of each class Name of Each Exchange on which registered
Common Shares, par value $0.10 and
Preferred Stock Purchase Rights
New York Stock Exchange
Securities Registered Pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes No È
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Exchange Act. Yes No È
Indicate by check mark if 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 ÈNo
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 the 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.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated
filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ÈAccelerated filer Non-accelerated filer
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act). Yes No È
The aggregate market value of the voting stock held by non-affiliates of the registrant as of August 1, 2008 (the last
business day of the registrant’s most recently completed second fiscal quarter) was approximately $1,428,944,248.
As of March 16, 2009, the number of shares of the registrant’s Common Stock outstanding was 141,367,217.
DOCUMENTS INCORPORATED BY REFERENCE
Applicable portions of the Saks Incorporated Proxy Statement for the 2009 Annual Meeting of Shareholders to be
held on June 3, 2009 are incorporated by reference into Part III of this Form 10-K.

Table of contents

  • Page 1
    ...Street New York, New York (Address of Principal Executive Offices) 10017 (Zip Code) Registrant's telephone number, including area code: (212) 940-5305 Securities Registered Pursuant to Section 12(b) of the Act: Title of each class Name of Each Exchange on which registered Common Shares, par value...

  • Page 2
    ...of Equity Securities ...Item 6. Selected Financial Data ...Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations ...Item 7A. Quantitative and Qualitative Disclosures About Market Risk ...Item 8. Financial Statements and Supplementary Data ...Item 9. Changes in...

  • Page 3
    ... office sales support functions for the Company, such as accounting, credit card administration, store planning, and information technology, principally are located in the Company's operations center in Jackson, Mississippi or in the SFA corporate offices in New York City. The Company's fiscal year...

  • Page 4
    ...and a distribution center located in Steele, Alabama. The Company realized a net loss of $12.8 million on the sale. As of January 31, 2009, the Company discontinued the operations of its CLL business, which consisted of 98 leased, mall-based specialty stores, targeting girls aged 4-12 years old. CLL...

  • Page 5
    ... to pass the appropriate records to accounting for invoice payment and reconciliation. Return Policy The Company offers its customers a fair and liberal return policy, consistent with other luxury retailers, at SFA stores, OFF 5th stores, and online at www.saks.com. Approximately 25% of merchandise...

  • Page 6
    ... promotional events targeted at specific customers who have purchasing patterns for certain brands, departments, and store locations. Proprietary Credit Cards HSBC offers proprietary credit card accounts to the Company's customers. Pursuant to a program agreement with a term of ten years expiring in...

  • Page 7
    ... operations, or liquidity. Reliance on Fifth Avenue Store The Company's Flagship SFA store located on Fifth Avenue in New York City accounted for approximately 21% of total Company sales in 2008 and plays a significant role in creating awareness for the Saks Fifth Avenue brand name. Customer Service...

  • Page 8
    ... Executive Officer with the New York Stock Exchange ("NYSE") in fiscal 2008 as required pursuant to Section 303A.12(a) of the NYSE Listed Company Manual, and the Company has filed the Sarbanes-Oxley Section 302 and Section 906 certifications of its principal executive officer and principal financial...

  • Page 9
    ...impact on the Company's results of operations. As a result of the sale of the SDSG businesses, the Company is focused on the luxury retail sector. SFA stores, OFF 5th stores and www.saks.com offer a wide assortment of luxury fashion apparel, shoes, accessories, jewelry, cosmetics and gift items. All...

  • Page 10
    ... may have a material impact on the Company's business, its ability to source products, results of operations and financial condition in the future. The Company's flagship SFA New York store is especially susceptible to volatility in the financial markets and employment and compensation trends in the...

  • Page 11
    ... Company's results of operations and financial condition. The Company faces a number of risks in opening new stores. As part of its growth strategy, the Company could potentially increase the total number of stores, which may include opening new stores in both new and existing markets. The Company...

  • Page 12
    ... or damage to the Company's brand could have a material adverse effect on the Company's results of operations. The Company owns many trademarks and service marks including, but not limited to, "Saks Fifth Avenue," "SFA," "S5A," "The Fifth Avenue Club," "SAKSFIRST," "Clothes (Real)", "SFA Signature...

  • Page 13
    ... of proprietary credit cards to develop advertising and promotional events. The regulatory environment surrounding information security and privacy is increasingly demanding, with the frequent imposition of new and constantly changing requirements across business units. In addition, customers have...

  • Page 14
    ... the legal department of General Foods Corporation from 1983 to 1989 and an associate with the New York law firm of Summit, Rovins and Feldesman (and its predecessors), from 1980 to 1983. Jennifer S. De Winter was named Executive Vice President of Stores in June 2008. She joined Saks Fifth Avenue in...

  • Page 15
    ... and Saks Direct ...SFA and OFF 5th ... 5th Aberdeen, Maryland Ontario, California 514,000 120,000 Leased Leased The Company's principal administrative offices are as follows: Office Location of Facility Square Feet Owned/Leased Corporate Operations Center ...Corporate Office Headquarters and...

  • Page 16
    ... 20 to 30 years and include renewal options ranging from 5 to 20 years. OFF 5th leases typically have shorter terms. Owned Locations Number Gross Square Of Units Feet (in mil.) Leased Locations Number Gross Square Of Units Feet (in mil.) Total Gross Square Feet (in mil.) Store Name Number Of Units...

  • Page 17
    ...Securities. Market Information The Company's common stock trades on the New York Stock Exchange ("NYSE") under the symbol SKS. The prices in the table below represent the high and low sales prices for the stock as reported by the NYSE. Year Ended January 31, 2009 High Low Year Ended February 2, 2008...

  • Page 18
    ... fiscal years ended January 31, 2009 and February 2, 2008, the Company did not declare any dividends. Future dividends, if any, will be determined by the Company's Board of Directors in light of circumstances then existing, including earnings, financial requirements, and general business conditions...

  • Page 19
    ... program. The Company did not repurchase any shares of common stock during the fourth quarter of fiscal 2008. Item 6. Selected Financial Data. The selected financial data set forth below should be read in conjunction with Management's Discussion and Analysis of Financial Condition and Results...

  • Page 20
    ...5th stores are primarily located in upscale mixed-use and off-price centers and offer luxury apparel, shoes, and accessories, targeting the value-conscious customer. As of January 31, 2009, the Company operated 53 SFA stores with a total of approximately 5.9 million square feet and 51 OFF 5th stores...

  • Page 21
    ... evaluating opportunities to improve or close underproductive stores and open new stores. DISCONTINUED OPERATIONS On July 5, 2005, Belk acquired from the Company for approximately $622.7 million in cash substantially all of the assets directly involved in the Proffitt's business operations, plus...

  • Page 22
    ... January 31, 2009 is $13.6 million and is expected to be paid during the year ending January 30, 2010. These amounts and the results of operations of CLL are included in discontinued operations in the consolidated statements of income for fiscal year 2008. SAKS FIFTH AVENUE NEW ORLEANS STORE In late...

  • Page 23
    ...time gain on the curtailment of the Company's pension plan, and an insurance adjustment (credit) of $1.0 million, or $0.01 per share, related to the New Orleans store. The year ended February 3, 2007 included an extra week, creating a 53-week fiscal year that occurs every six years in the accounting...

  • Page 24
    ... ...Store sales and margin ...Operating expenses ...Impairments and dispositions ...Change ...2008 Operating Loss - Continuing Operations ... $ 102.9 (284.6) 53.2 (6.9) (238.3) $(135.4) For the year ended January 31, 2009, the Company's operating loss totaled $135.4 million, a 770 basis point...

  • Page 25
    ... due to aggressive markdowns taken in the fourth quarter of 2008 as the Company initiated promotional activities in an effort to stimulate consumer demand and reduce inventory levels. NET SALES For the year ended January 31, 2009, total sales decreased 6.0% to $3,029.7 million from $3,224.1 million...

  • Page 26
    ... February 2, 2008, the Company's operating income totaled $102.9 million, a 370 basis point improvement from an operating loss of $15.3 million for the year ended February 3, 2007. Operating income was driven by a 11.9% increase in comparable store sales and expense management which resulted in a 25

  • Page 27
    ... by store and enhancements to the merchandise planning and allocation process. NET SALES For the year ended February 2, 2008, total sales increased 11.6% to $3,224.1 million from $2,888.4 million for the year ended February 3, 2007. The fiscal year ended February 3, 2007 included an extra week...

  • Page 28
    ... for new and existing stores, invest in technology and distribution centers and service debt. The Company anticipates that cash on hand, cash generated from operating activities and borrowings under its revolving credit facility will be sufficient to sustain its current level of operations. Cash...

  • Page 29
    ... repurchased approximately 0.5 million shares of its common stock at an average price of $14.51 and a total cost of approximately $6.5 million. During the year ended February 2, 2008, the Company repurchased approximately 1.7 million shares of its common stock at an average price of $15.95 and...

  • Page 30
    ... million of store operating cash at January 31, 2009 and February 2, 2008, respectively, cash was invested principally in various money market funds. There was no restricted cash at January 31, 2009 and February 2, 2008. At January 31, 2009, the Company had $156.7 million of direct borrowings under...

  • Page 31
    ... and access to various capital markets to repay these notes at maturity. On April 12, 2007, the Company announced the results of its modified "Dutch Auction" tender offer to purchase a portion of its 8.25% senior notes due November 15, 2008 for an aggregate purchase price not to exceed $100 million...

  • Page 32
    ... per year. The Company is obligated to fund a cash balance pension plan. The Company's current policy is to maintain at least the minimum funding requirements specified by the Employee Retirement Income Security Act of 1974. The Company expects funding requirements of up to $1.0 million in 2009. As...

  • Page 33
    ... party financial institution. As part of the transaction, for a term of ten years expiring in 2013 and pursuant to a program agreement, HSBC established and owns proprietary credit card accounts for customers of the Company's operating subsidiaries, retains the benefits and risks associated with...

  • Page 34
    ... a traditional proprietary credit card when used at any SFA or OFF 5th store and at Saks Direct or as a MasterCard card when used at any unaffiliated location that accepts MasterCard cards. HSBC establishes and owns the co-brand accounts, retains the benefits and sales associated with the ownership...

  • Page 35
    ...-in, first-out" (LIFO) method. The new method of accounting had no impact on the fiscal years ending January 31, 2009, February 2, 2008, and February 3, 2007 as the LIFO value exceeded the FIFO market value and inventory had been adjusted to reflect FIFO market value in all periods. Under the retail...

  • Page 36
    ... the carrying value of store assets is assessed upon the occurrence of certain events (e.g., opening a new store near an existing store or announcing plans for a store closing) and, absent certain triggering events, annually during the fourth quarter. The recoverability assessment requires judgment...

  • Page 37
    ... the consolidated balance sheets for contingent percentage of sales lease provisions when the Company determines that it is probable that the specified levels will be reached during the fiscal year. INCOME AND OTHER TAXES The majority of the Company's deferred tax assets at January 31, 2009 consist...

  • Page 38
    ...2008, the pension plans are valued annually as of the Company's fiscal year-end balance sheet date. In prior years, the pension plans were valued annually on November 1st. The projected unit credit method is utilized in recognizing the pension liabilities. In September 2006, the Financial Accounting...

  • Page 39
    ... or annual pension expense. NEW ACCOUNTING PRONOUNCEMENTS On February 3, 2008, the Company adopted the provisions of SFAS No. 157, "Fair Value Measurements" ("SFAS No. 157"), which clarifies the principle that fair value should be based on the assumptions market participants would use when pricing...

  • Page 40
    ... for fiscal years ending after December 15, 2009. For the Company, FSP FAS 132R-1 will be effective for the fiscal year ending January 30, 2010 and will result in additional disclosures related to the assets of defined benefit pension plans in notes to the Company's consolidated financial statements...

  • Page 41
    ... of proprietary credit card loyalty programs; appropriate inventory management; effective expense control; successful operation of the Company's proprietary credit card strategic alliance with HSBC Bank Nevada, N.A.; geo-political risks; the performance of the financial markets; changes in interest...

  • Page 42
    ... supervision and with the participation of the Company's management, including the Chief Executive Officer and Chief Financial Officer, the Company conducted an evaluation of the effectiveness of the design and operation of the Company's internal control over financial reporting as of the end of the...

  • Page 43
    ... OVER FINANCIAL REPORTING There were no changes in the Company's internal control over financial reporting that occurred during the quarter ended January 31, 2009 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting...

  • Page 44
    ... Item 1C of this report under "Executive Officers of the Registrant." The information required by this Item with respect to compliance with Section 16(a) of the Exchange Act by the Company's directors, executive officers and persons who own more than 10% of the Company's common stock is set forth in...

  • Page 45
    ... appearing at page E-1 are filed as exhibits to this report. (c) Financial Statement Schedule Schedule II - Valuation and Qualifying Accounts All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are either included in the...

  • Page 46
    ... authorized on March 23, 2009. SAKS INCORPORATED By: /S/ KEVIN G. WILLS Kevin G. Wills Executive Vice President and Chief Financial Officer Pursuant to the requirements of the Securities and Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant...

  • Page 47
    ...by reference from the Exhibits to the Form 10-Q of Saks Incorporated for the quarterly period ended May 3, 2008) Indenture, dated as of December 2, 1998, among Saks Incorporated, the Subsidiary Guarantors, and The First National Bank of Chicago, as trustee (7 1⁄ 2% Notes due 2010) (incorporated by...

  • Page 48
    ...*Third Supplemental Indenture, dated as of June 23, 2004, among Saks Incorporated, the Subsidiary Guarantors and J.P. Morgan Trust Company, National Association, successor-in-interest to Bank One Trust Company, National Association, as Trustee (9 7⁄ 8% Notes due 2011) Registration Rights Agreement...

  • Page 49
    ..., 2004, among Saks Incorporated, the Subsidiary Guarantors and the Bank of New York, as Trustee (7% Notes due 2013) Registration Rights Agreement, dated as of December 8, 2003, among Saks Incorporated, certain of its subsidiaries named therein, Citigroup Global Markets Inc., Goldman, Sachs & Company...

  • Page 50
    ...; Wachovia Bank, National Association, JPMorgan Chase Bank and General Electric Capital Corporation, as Co-Documentation Agents; and the other financial institutions party thereto, as lenders (incorporated by reference from the Exhibits to the Form 10-K of Saks Incorporated for the fiscal year ended...

  • Page 51
    ... Nevada, National Association (incorporated by reference from the Exhibits to the Form 10-K of Saks Incorporated for the fiscal year ended February 2, 2008) Amendment to Servicing Agreement between Household Corporation and Jackson Office Properties, Inc., as successor to McRae's, Inc., and Program...

  • Page 52
    ... filed on May 18, 2005) Form of Saks Incorporated Performance Share Agreement pursuant to Saks Incorporated 2004 Long-Term Incentive Plan (incorporated by reference from the Exhibits to the Form 10-K of Saks Incorporated for the fiscal year ended February 2, 2008) 51 10.13 10.14 10.15 10...

  • Page 53
    ...19, 2007) *Amendment to Employment Agreement between Saks Incorporated and Kevin G. Wills, Executive Vice President and Chief Financial Officer, dated as of December 18, 2008 Form of Stock Option Agreement with respect to the Saks Incorporated 2004 Long-Term Incentive Plan (incorporated by reference...

  • Page 54
    ...and Michael Rodgers, Executive Vice President, IT Operations *Amendment to Employment Agreement between Saks Incorporated and Michael Rodgers, dated as of December 17, 2008 Form of Performance Unit Award Agreement pursuant to Saks Incorporated 2004 Long-Term Incentive Plan (incorporated by reference...

  • Page 55
    ... Consolidated Financial Statements Report of Independent Registered Public Accounting Firm ...Consolidated Statements of Income for the fiscal years ended January 31, 2009, February 2, 2008, and February 3, 2007 ...Consolidated Balance Sheets at January 31, 2009 and February 2, 2008 ...Consolidated...

  • Page 56
    ..., effective January 31, 2009, the Company changed the measurement date for defined benefit plan assets and liabilities to coincide with its fiscal year end to conform to Statement of Financial Accounting Standards No. 158, Employers' Accounting for Defined Benefit Pension and Other Postretirement...

  • Page 57
    ... OF INCOME January 31, 2009 Year Ended February 2, 2008 February 3, 2007 (In Thousands, except per share amounts) NET SALES ...Cost of sales (excluding depreciation and amortization) ...Gross margin ...Selling, general and administrative expenses ...Other operating expenses Property and equipment...

  • Page 58
    SAKS INCORPORATED & SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In Thousands, except per share amounts) January 31, 2009 February 2, 2008 ASSETS CURRENT ASSETS Cash and cash equivalents ...Merchandise inventories ...Other current assets ...Deferred income taxes, net ...TOTAL CURRENT ASSETS ......

  • Page 59
    ...Balance at February 2, 2008 ...141,784 $14,180 $ 1,119,192 Net loss ...Change in minimum pension liability, net of tax ...Comprehensive loss ...SFAS No. 158 measurement date change ...Issuance of common stock ...Income tax provision adjustment related to employee stock plans ...Activity under stock...

  • Page 60
    ...4,279 Excess tax benefit from stock-based compensation ...- - Gain on lease termination ...- (1,669) Gain on sale of property ...(3,400) (1,069) Changes in operating assets and liabilities: Merchandise inventories ...118,539 (71,032) Other current assets ...20,990 12,495 Accounts payable and accrued...

  • Page 61
    ... CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except per share amounts) NOTE 1 - GENERAL ORGANIZATION The Company's operations consist of Saks Fifth Avenue ("SFA"), Saks Fifth Avenue OFF 5th ("OFF 5th"), and SFA's e-commerce operations. Previously, the Company also operated Saks Department Store...

  • Page 62
    ... flows for fiscal year 2006. As of January 31, 2009, the Company discontinued the operations of its CLL business, which consisted of 98 leased, mall-based specialty stores, targeting girls aged 4-12 years old. Charges incurred during 2008 associated with the closing of the stores included inventory...

  • Page 63
    ... operations. NET SALES Net sales include sales of merchandise (net of returns and exclusive of sales taxes), commissions from leased departments, shipping and handling revenues related to merchandise sold and breakage income from unredeemed gift cards. Net sales are recognized at the time customers...

  • Page 64
    ... support areas, exclusive of payroll taxes; advertising; store and headquarters occupancy, operating and maintenance costs exclusive of rent, depreciation, and property taxes; proprietary credit card promotion, issuance and servicing costs; insurance programs; telecommunications; and other operating...

  • Page 65
    ... the year ended January 31, 2009, February 2, 2008 and February 3, 2007, the Company incurred charges of $11,139, $4,279 and $5,676, respectively, related to asset impairments and other costs in the normal course of business. OPERATING LEASES The Company leases stores, distribution centers, and...

  • Page 66
    .... DERIVATIVES The Company uses financial derivatives to manage its costs and risks in conjunction with specific business transactions. All derivative instruments are recognized on the balance sheet at fair value. The Company cancelled all of its interest rate swap agreements during 2004 resulting in...

  • Page 67
    ... flows. In December 2007, the U.S. Securities and Exchange Commission ("SEC") issued Staff Accounting Bulletin ("SAB") No. 110, "Year-End Help For Expensing Employee Stock Options" ("SAB 110"), which was effective for the Company beginning in the first quarter of 2008. SAB 110 amends the SEC's views...

  • Page 68
    ...market price Stock Options (1) ...1,811 688 1,722 Securities excluded from the diluted earnings (loss) per share calculation because the performance criteria were not met: Performance Shares ...845 - - (1) These options represent the number outstanding at the end of the respective year. At the point...

  • Page 69
    ... contributions from time to time, generally not to exceed the maximum tax-deductible limitation. Beginning in fiscal 2008, the Company's pension plans are valued annually as of the fiscal year-end balance sheet date in accordance with SFAS No. 158 "Employers' Accounting for Defined Benefit Pension...

  • Page 70
    ..., financial performance, and cash flows. The provisions of SFAS No. 161 are effective as of the beginning of the 2009 fiscal year. The adoption of this standard will not have a material impact on the consolidated financial statements. In May 2008, the FASB issued FSP Accounting Principles Board...

  • Page 71
    ...defined benefit pension plans in notes to the Company's consolidated financial statements. NOTE 3 - PROPRIETARY CREDIT CARDS On April 15, 2003, the Company sold its proprietary credit card portfolio, consisting of the proprietary credit card accounts owned by the National Bank of the Great Lakes and...

  • Page 72
    ... a traditional proprietary credit card when used at any SFA or OFF 5th store and at Saks Direct or as a MasterCard card when used at any unaffiliated location that accepts MasterCard cards. HSBC establishes and owns the co-brand accounts, retains the benefits and sales associated with the ownership...

  • Page 73
    SAKS INCORPORATED & SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (In thousands, except per share amounts) NOTE 5 - INCOME TAXES The components of income tax expense (benefit) from continuing operations were as follows: 2008 2007 2006 Current: Federal ...State ...Deferred: ...

  • Page 74
    SAKS INCORPORATED & SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (In thousands, except per share amounts) At January 31, 2009, the Company had deferred tax assets of $78,905 related to U.S. Federal Net Operating Loss (NOL) carryforwards of $225,444. The total Federal NOL ...

  • Page 75
    SAKS INCORPORATED & SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (In thousands, except per share amounts) tax returns related to prior periods. During 2006, the Company favorably concluded certain tax examinations which resulted in an income tax benefit of $10,150. The Company...

  • Page 76
    SAKS INCORPORATED & SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (In thousands, except per share amounts) NOTE 6 - DEBT A summary of long-term debt and capital lease obligations is as follows: January 31, 2009 February 2, 2008 Notes 8.25%, maturing fiscal year 2008 ...Notes ...

  • Page 77
    SAKS INCORPORATED & SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (In thousands, except per share amounts) letters of credit outstanding under the agreement during 2008 was $34,326. At January 31, 2009, the Company had $156,675 of direct outstanding borrowings and had letters ...

  • Page 78
    ...debt" on the Company's balance sheet as of January 31, 2009. At February 2, 2008, the holders of the convertible notes had the ability to exercise their conversion rights as a result of the Company's share price exceeding 120% of the applicable conversion price for the trading period. Therefore, the...

  • Page 79
    SAKS INCORPORATED & SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (In thousands, except per share amounts) MATURITIES At January 31, 2009, maturities of long-term debt and capital lease obligations for the next five years and thereafter are as follows: Year Maturities 2009 ......

  • Page 80
    ... to purchase various services are generally less than one to two year commitments and are cancelable within several weeks notice. From time to time the Company has issued guarantees to landlords under leases of stores operated by its subsidiaries. Certain of these stores were sold in connection with...

  • Page 81
    ... the years ended January 31, 2009 and February 2, 2008, respectively, and is included in Other Assets in the accompanying consolidated balance sheets. EMPLOYEE SAVINGS PLANS The Company sponsors various qualified savings plans that cover substantially all full-time employees. Company contributions...

  • Page 82
    ... NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (In thousands, except per share amounts) Additionally, the Company amended the SFA Pension Plan during 2006, freezing benefit accruals for all participants except those who have attained age 55 and completed 10 years of credited service as of...

  • Page 83
    ...FINANCIAL STATEMENTS-(Continued) (In thousands, except per share amounts) 2008 2007 Change in benefit obligation: Benefit obligation at beginning of period ...Service cost ...Interest cost ...Actuarial loss ...Benefits paid ...Benefit obligation at end of period ...Change in plan assets: Fair value...

  • Page 84
    ... of assets within the target asset allocation of the plan asset portfolio. This rate is utilized principally in calculating the expected return on plan assets component of the Company's annual pension expense. The Company's expected long-term rate of return on assets was 8.0% in 2008 and 2007. The...

  • Page 85
    ... payment, the Human Resources and Compensation Committee of the Company's Board of Directors exercised its discretion under anti-dilution provisions of the Company's long-term incentive plan to adjust the exercise price and number of stock options to reflect the change in the share price on the...

  • Page 86
    ... payment, the Human Resources and Compensation Committee of the Company's Board of Directors exercised its discretion under anti-dilution provisions of the Company's long-term incentive plan to adjust the exercise price and number of stock options to reflect the change in the share price on the May...

  • Page 87
    ... the plan permits accelerated vesting in certain circumstances at the discretion of the Human Resources and Compensation Committee of the Board of Directors. In December 2004, the FASB issued SFAS No.123R, which requires companies to expense the value of employee stock options and similar awards...

  • Page 88
    ... the options. RESTRICTED STOCK AND PERFORMANCE SHARES The Company granted restricted stock awards of 2,184, 406, and 372 shares to certain employees in 2008, 2007, and 2006, respectively. The fair value of the restricted stock is based on the market value of the Company's common stock on the date of...

  • Page 89
    ... operating (non-market condition) goals for the one-year performance period beginning February 3, 2008 and range from 0% to 150% of the target number of performance shares granted. In addition, once earned, performance shares are not payable unless the grantee remains employed by the Company...

  • Page 90
    ..., the plan had 148 shares available for future offerings. On December 3, 2008, the Human Resources and the Compensation Committee of the Board of Directors suspended the employee stock purchase plan for the 2009 calendar year. NOTE 11 - FAIR VALUE MEASUREMENTS Effective February 3, 2008, the Company...

  • Page 91
    ... on a recurring basis that required adjustments or write-downs. NOTE 12 - FAIR VALUES OF FINANCIAL INSTRUMENTS The fair values of the Company's cash and cash equivalents and accounts payable approximate their carrying amounts reported in the consolidated balance sheets, due to the immediate or...

  • Page 92
    ... to these charges as of January 31, 2009. During the fourth quarter of 2008, the Company discontinued the operations of its CLL specialty store business which consisted of 98 leased, mall-based stores. Along with the previous disposition of the SDSG businesses, CLL was no longer determined to be...

  • Page 93
    ...) (In thousands, except per share amounts) NOTE 14 - QUARTERLY FINANCIAL INFORMATION (UNAUDITED) Summarized quarterly financial information for 2008 and 2007 is as follows: First Quarter Second Quarter Third Quarter Fourth Quarter Fiscal year ended January 31, 2009: Total sales ...$850,041 $656,968...

  • Page 94
    ... OF INCOME FOR THE YEAR ENDED JANUARY 31, 2009 (In Thousands) SAKS GUARANTOR INCORPORATED SUBSIDIARIES ELIMINATIONS CONSOLIDATED NET SALES ...Cost of sales ...GROSS MARGIN ...Selling, general and administrative expenses . . Other operating expenses ...Store pre-opening costs ...Impairments and...

  • Page 95
    ... INCORPORATED & SUBSIDIARIES CONDENSED CONSOLIDATING BALANCE SHEETS AS OF JANUARY 31, 2009 (In Thousands) SAKS GUARANTOR INCORPORATED SUBSIDIARIES ELIMINATIONS CONSOLIDATED ASSETS CURRENT ASSETS Cash and cash equivalents ...Merchandise inventories ...Other current assets ...Deferred income taxes...

  • Page 96
    ... STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED JANUARY 31, 2009 (In Thousands) SAKS GUARANTOR INCORPORATED SUBSIDIARIES ELIMINATIONS CONSOLIDATED OPERATING ACTIVITIES Net loss ...Loss from discontinued operations ...Loss from continuing operations ...Adjustments to reconcile net income to...

  • Page 97
    ... OF INCOME FOR THE YEAR ENDED FEBRUARY 2, 2008 (In Thousands) SAKS INCORPORATED GUARANTOR SUBSIDIARIES ELIMINATIONS CONSOLIDATED NET SALES ...Cost of sales ...GROSS MARGIN ...Selling, general and administrative expenses ...Other operating expenses ...Store pre-opening costs ...Impairments and...

  • Page 98
    ... INCORPORATED & SUBSIDIARIES CONDENSED CONSOLIDATING BALANCE SHEETS AS OF FEBRUARY 2, 2008 (In Thousands) SAKS GUARANTOR INCORPORATED SUBSIDIARIES ELIMINATIONS CONSOLIDATED ASSETS CURRENT ASSETS Cash and cash equivalents ...Merchandise inventories ...Other current assets ...Deferred income taxes...

  • Page 99
    SAKS INCORPORATED & SUBSIDIARIES CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED FEBRUARY 2, 2008 (In Thousands) OPERATING ACTIVITIES Net income ...Loss from discontinued operations ...Income from continuing operations ...Adjustments to reconcile net income to net cash (used in) ...

  • Page 100
    ... OF INCOME FOR THE YEAR ENDED FEBRUARY 3, 2007 (In Thousands) SAKS INCORPORATED GUARANTOR SUBSIDIARIES ELIMINATIONS CONSOLIDATED NET SALES ...Cost of sales ...GROSS MARGIN ...Selling, general and administrative expenses ...Other operating expenses ...Store pre-opening costs ...Impairments and...

  • Page 101
    ... compensation ...52,072 52,072 Excess tax benefit from stock-based compensation ...(16,027) (16,027) Deferred income taxes ...4,241 89,384 93,625 Gain on extinguishment of debt ...(7) (7) Impairments and dispositions ...11,775 11,775 Changes in operating assets and liabilities, net ...10,795 (120...

  • Page 102
    ... AND QUALIFYING ACCOUNTS January 31, 2009 Year Ended February 2, 2008 February 3, 2007 (Dollars In Thousands) Allowance for sales returns, net: Balance at Beginning of Year ...$ 7,255 $ 6,848 $ 8,645 Charged to Costs and Expenses ...946,230 961,593 1,003,822 Reserve related to sold Proffitt's and...

  • Page 103
    ... ("Sales Shipping") and MCRAE'S STORES SERVICES, INC., an Illinois corporation ("McRae's Services; Herberger's Stores, Saks Stores, Carson Holdings, Saks Distribution, Sales Shipping and McRae's Services are collectively referred to herein as the "New Guarantors") and THE FIRST NATIONAL BANK OF...

  • Page 104
    ... of Holding and CPS & Stores in the Indenture and in the applicable Note Guarantee. SECTION 4. Governing Law. This Supplemental Indenture shall be governed by the laws of the State of New York. SECTION 5. Counterparts. This Supplemental Indenture may be signed in any number of counterparts, each of...

  • Page 105
    ... FIFTH AVENUE DISTRIBUTION COMPANY SFA REAL ESTATE COMPANY HERBERGER DEPARTMENT STORES LLC By: Saks Incorporated, as member SAKS STORES PARTNERSHIP, L.P. By: MCRAE'S INC. as Managing Partner CARSON PIRIE HOLDINGS, INC. SAKS DISTRIBUTION CENTERS, INC. SAKS SHIPPING CO, INC. MCRAE'S STORES SERVICES...

  • Page 106
    ... corporation (the "Company "), the Subsidiary Guarantors named herein, as Guarantors, New York City Saks, LLC, a New York limited liability company ("LLC ") Saks Fifth Avenue Texas, L.P., a Delaware limited partnership (together with LLC, the "New Guarantors"), and Bank One Trust Company, National...

  • Page 107
    ... and Assistant Secretary Attest: Vice President and Assistant Secretary Bank One Trust Company, National Association, successor in interest to The First National Bank of Chicago, as Trustee By: /s/ Benita A. Pointer Title: Benita A. Pointer Account Executive Attest: /s/ Janice Ott Rotunno Title...

  • Page 108
    (Signatures continued on next page)

  • Page 109
    ... York City Sales, LLC Sales Holdings, Inc. Saks & Company Saks Fifth Avenue, Inc. Saks Fifth Avenue Of Texas, Inc. Saks Fifth Avenue Texas, L.P. SFA Folio Collections, Inc. Saks Fifth Avenue Distribution Company Herberger's Department Stores LLC Carson Pirie Holdings, Inc. Saks Distribution Centers...

  • Page 110
    ...Indenture (this "Supplemental Indenture") among Saks Incorporated, a Tennessee corporation (the "Company"), the Subsidiary Guarantors that are signatories hereto, as Guarantors, Bank One Trust Company, National Association, successor in interest to The First National Bank of Chicago, as Trustee (the...

  • Page 111
    ...This Supplemental Indenture may be signed in any number of counterparts, each of...President and Assistant Secretary Bank One Trust Company, National Association, successor in interest to The First National Bank of Chicago, as Trustee By: /s/ Benita A. Pointer Title: Benita A. Pointer Account Executive...

  • Page 112
    ...Of Alabama, Inc. New York City Saks, LLC Saks Holdings, Inc. Saks & Company Saks Fifth Avenue, Inc. Saks Fifth Avenue Of Texas, Inc. Saks Fifth Avenue Texas, L.P. Saks Direct, Inc. (formerly SFA Folio Collections, Inc.) Saks Fifth Avenue Distribution Company Herberger's Department Stores, LLC Carson...

  • Page 113
    ...Association, successor in interest to The First National Bank of Chicago, as Trustee (the "Trustee"), and each of the following (together the "New Guarantors"): saksfifthavenue.com, inc, a Delaware corporation; Saks Wholesalers, Inc., an Alabama corporation, and Tex SFA, Inc., a New York corporation...

  • Page 114
    ...validity, legality and ...President and Assistant Secretary Attest: Vice President and Assistant Secretary Bank One Trust Company, National Association, successor in interest to The First National Bank of Chicago, as Trustee By: /s/ Benita A. Pointer Title: Benita A. Pointer Account Executive...

  • Page 115
    ...Of Alabama, Inc. New York City Saks, LLC Saks Holdings, Inc. Saks & Company Saks Fifth Avenue, Inc. Saks Fifth Avenue Of Texas, Inc. Saks Fifth Avenue Texas, L.P. Saks Direct, Inc. (formerly SFA Folio Collections, Inc.) Saks Fifth Avenue Distribution Company Herberger's Department Stores, LLC Carson...

  • Page 116
    ... First National Bank of Chicago, as Trustee (the "Trustee"), and SCIL Store Holdings, Inc., a Delaware corporation (the "New Guarantor"). Preliminary Statements A. In accordance with Section 9.01 of the Indenture dated as of December 2, 1998 among the Company, the Subsidiary Guarantors named therein...

  • Page 117
    ... of the parties hereto. Saks Incorporated By: Senior Vice President and Assistant Secretary Attest: Vice President and Assistant Secretary Bank One Trust Company, National Association, successor in interest to The First National Bank of Chicago, as Trustee By: Account Executive Attest: Title: Vice...

  • Page 118
    ...Of Alabama, Inc. New York City Saks, LLC Saks Holdings, Inc. Saks & Company Saks Fifth Avenue, Inc. Saks Fifth Avenue Of Texas, Inc. Saks Fifth Avenue Texas, L.P. Saks Direct, Inc. (formerly SFA Folio Collections, Inc.) Saks Fifth Avenue Distribution Company Herberger's Department Stores, LLC Carson...

  • Page 119
    ... Saks Incorporated, a Tennessee corporation (the "Company"); the Subsidiary Guarantors that are signatories hereto, as Guarantors; J.P. Morgan Trust Company, National Association, ultimate successor in interest to The First National Bank of Chicago, as Trustee (the "Trustee"); and Merchandise Credit...

  • Page 120
    ... legality...Saks Incorporated By: /s/ George W. Carlis George W. Carlis, Senior Vice President Attest: /s/ Charles J. Hansen Charles J. Hansen, Executive Vice President and Assistant and Secretary J.P. Morgan Trust Company, National Association, ultimate successor in interest to The First National Bank...

  • Page 121
    ... Pirie Holdings, Inc. Herberger's Department Stores, LLC Jackson Leasing, LLC McRae's, Inc. McRae's of Alabama, Inc. McRae's Stores Partnership By: McRae's, Inc., Managing General Partner McRae's Stores Services, Inc. McRIL, LLC Merchandise Credit, LLC New York City Saks, LLC NorthPark Fixtures, Inc...

  • Page 122
    [Signature Page to Supplemental Indenture dated as of June 23, 2004 regarding Saks Incorporated] SCCA, LLC By: /s/ Charles J. Hansen Charles J. Hansen, Executive Vice President and Secretary Attest: /s/ George W. Carlis George W. Carlis, Senior Vice President and Assistant Secretary

  • Page 123
    ... Saks Incorporated, a corporation incorporated under the laws of the State of Tennessee (the "Company"), as issuer, the Subsidiary Guarantors listed on the signature pages hereto (the "Guarantors"), as guarantors, and J.P. Morgan Trust Company, National Association, a national banking association...

  • Page 124
    ..." means, 5:30 p.m., New York City time, on the earlier of (i) the Business Day following the Company's failure to pay the Purchase Price, if due, for the... involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order. rule or regulation of any...

  • Page 125
    ... minimum principal amount of $50 million, for money borrowed by the Company or a Subsidiary under the terms of the instrument under which such Indebtedness is issued or secured, if such acceleration is not discharged within 10 days after written notice of such acceleration; or (e) any Note Guarantee...

  • Page 126
    ..., whether or not the Company or any Guarantor has a class of securities registered under the Exchange Act; (b) file with the Trustee within 15 days after it files or would be required to file the information specified in subsection (a) of this Section 7.04 reports and documents with the Commission...

  • Page 127
    ... 120 days after the end of each of their fiscal years ending after the date hereof, a written statement (such written statement, a "Compliance Certificate") signed by the chairman or a chief executive officer, the principal financial officer, principal accounting officer or Treasurer of the Company...

  • Page 128
    ...five Business Days after the Company becomes aware of such occurrence and what action the Company is ...Operation. (a) This Supplemental Indenture shall be effective upon execution hereof by the Company... effect if the Company shall fail to pay to Holders of the Notes the Purchase Price described in the ...

  • Page 129
    ... BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW. Section 5.04. Counterparts. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together...

  • Page 130
    ... or sufficiency of this Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the Company and the Guarantors.

  • Page 131
    ...DEPARTMENT STORES, LLC JACKSON LEASING LLC MCRAE'S OF ALABAMA, INC. MCRAE'S STORES SERVICES, INC. MCRAE'S, INC. MCRIL, LLC MERCHANDISE CREDIT, LLC NEW YORK CITY SAKS, LLC PARISIAN, INC. SAKS & COMPANY SAKS DIRECT, INC. SAKS DISTRIBUTION CENTERS, INC. SAKS FIFTH AVENUE DISTRIBUTION COMPANY SAKS FIFTH...

  • Page 132
    ...'s, Inc., its Managing General Partner By: /s/ Charles J. Hansen Charles J. Hansen Executive Vice President PMIN GENERAL PARTNERSHIP By: /s/ Charles J. Hansen Charles J. Hansen Executive Vice President J.P. MORGAN TRUST COMPANY, NATIONAL ASSOCIATION, as Trustee By: /s/ Benita A. Pointer Name: Benita...

  • Page 133
    ... corporation (the "Company"), the Subsidiary Guarantors named herein, as Guarantors, New York City Saks, LLC, a New York limited liability company ("LLC"), Saks Fifth Avenue Texas, L.P., a Delaware limited partnership (together with LLC, the "New Guarantors"), and Bank One Trust Company, National...

  • Page 134
    ... and Assistant Secretary Attest: Vice President and Assistant Secretary Bank One Trust Company, National Association, successor in interest to The First National Bank of Chicago, as Trustee By: /s/ Benita A. Pointer Title: Benita A. Pointer, Account Executive Attest: /s/ Diane Swanson Title: Diane...

  • Page 135
    .... Saks Fifth Avenue Texas, L.P. SFA Folio Collections, Inc. Saks Fifth Avenue Distribution Company Herberger's Department Stores, LLC Carson Pirie Holdings, Inc. Saks Distribution Centers, Inc. Saks Shipping Company, Inc. McRae's Stores Services, Inc By: /s/ Charles Hansen Senior Vice President and...

  • Page 136
    ...Indenture (this "Supplemental Indenture") among Saks Incorporated, a Tennessee corporation (the "Company"), the Subsidiary Guarantors that are signatories hereto, as Guarantors, Bank One Trust Company, National Association, successor in interest to The First National Bank of Chicago, as Trustee (the...

  • Page 137
    ...This Supplemental Indenture may be signed in any number of counterparts, each of...President and Assistant Secretary Bank One Trust Company, National Association, successor in interest to The First National Bank of Chicago, as Trustee By: /s/ Benita A. Pointer Title: Benita A. Pointer Account Executive...

  • Page 138
    ...Of Alabama, Inc. New York City Saks, LLC Saks Holdings, Inc. Saks & Company Saks Fifth Avenue, Inc. Saks Fifth Avenue Of Texas, Inc. Saks Fifth Avenue Texas, L.P. Saks Direct, Inc. (formerly SFA Folio Collections, Inc.) Saks Fifth Avenue Distribution Company Herberger's Department Stores, LLC Carson...

  • Page 139
    ...Association, successor in interest to The First National Bank of Chicago, as Trustee (the "Trustee"), and each of the following (together the "New Guarantors"): saksfifthavenue.com, inc, a Delaware corporation; Saks Wholesalers, Inc., an Alabama corporation, and Tex SFA, Inc., a New York corporation...

  • Page 140
    ... or unenforceable, the validity, legality and enforceability of the remaining ...President and Assistant Secretary Bank One Trust Company, National Association, successor in interest to The First National Bank of Chicago, as Trustee By: /s/ Benita A. Pointer Title: Benita A. Pointer, Account Executive...

  • Page 141
    ...Of Alabama, Inc. New York City Saks, LLC Saks Holdings, Inc. Saks & Company Saks Fifth Avenue, Inc. Saks Fifth Avenue Of Texas, Inc. Saks Fifth Avenue Texas, L.P. Saks Direct, Inc. (formerly SFA Folio Collections, Inc.) Saks Fifth Avenue Distribution Company Herberger's Department Stores, LLC Carson...

  • Page 142
    ...First National Bank of Chicago, as Trustee (the "Trustee"), and SCIL Store Holdings, Inc., a Delaware corporation (the "New Guarantor"). Preliminary Statements A. In accordance with Section 9.01 of the Indenture dated as of February 17, 1999 among the Company, the Subsidiary Guarantors named therein...

  • Page 143
    ... by each of the parties hereto. Saks Incorporated Saks Incorporated By: Senior Vice President and Assistant Secretary Attest: Vice President and Assistant Secretary Bank One Trust Company, National Association, successor in interest to The First National Bank of Chicago, as Trustee By: Title...

  • Page 144
    ...Of Alabama, Inc. New York City Saks, LLC Saks Holdings, Inc. Saks & Company Saks Fifth Avenue, Inc. Saks Fifth Avenue Of Texas, Inc. Saks Fifth Avenue Texas, L.P. Saks Direct, Inc. (formerly SFA Folio Collections, Inc.) Saks Fifth Avenue Distribution Company Herberger's Department Stores, LLC Carson...

  • Page 145
    ... Saks Incorporated, a Tennessee corporation (the "Company"); the Subsidiary Guarantors that are signatories hereto, as Guarantors; J.P. Morgan Trust Company, National Association, ultimate successor in interest to The First National Bank of Chicago, as Trustee (the "Trustee"); and Merchandise Credit...

  • Page 146
    ...validity, legality and...Saks Incorporated By: /s/ George W. Carlis George W. Carlis, Senior Vice President Attest: /s/ Charles J. Hansen Charles J. Hansen, Executive Vice President and Secretary J.P. Morgan Trust Company, National Association, ultimate successor in interest to The First National Bank...

  • Page 147
    ... Pirie Holdings, Inc. Herberger's Department Stores, LLC Jackson Leasing, LLC McRae's, Inc. McRae's of Alabama, Inc. McRae's Stores Partnership By: McRae's, Inc., Managing General Partner McRae's Stores Services, Inc. McRIL, LLC Merchandise Credit, LLC New York City Saks, LLC NorthPark Fixtures, Inc...

  • Page 148
    [Signature Page to Supplemental Indenture dated as of June 23, 2004 regarding Saks Incorporated] SCCA, LLC By: /s/ Charles J. Hansen Charles J. Hansen, Executive Vice President and Secretary Attest: /s/ George W. Carlis George W. Carlis, Senior Vice President and Assistant Secretary

  • Page 149
    ...as Guarantors, Bank One Trust Company, National Association, as Trustee (the "Trustee"), and each of the following (together the "New Guarantors"): saksfifthavenue.com, inc, a Delaware corporation; Saks Wholesalers, Inc., an Alabama corporation, and Tex SFA, Inc., a New York corporation. Preliminary...

  • Page 150
    ... validity, legality and enforceability...Saks Incorporated By: /s / Charles Hansen Senior Vice President and Assistant Secretary Attest: Vice President and Assistant Secretary Bank One Trust Company, National Association, as Trustee By: /s/ Benita A. Pointer Title: Benita A. Pointer Account Executive...

  • Page 151
    ...Of Alabama, Inc. New York City Saks, LLC Saks Holdings, Inc. Saks & Company Saks Fifth Avenue, Inc. Saks Fifth Avenue Of Texas, Inc. Saks Fifth Avenue Texas, L.P. Saks Direct, Inc. (formerly SFA Folio Collections, Inc.) Saks Fifth Avenue Distribution Company Herberger's Department Stores, LLC Carson...

  • Page 152
    ... Indenture") among Saks Incorporated, a Tennessee corporation (the "Company"), the Subsidiary Guarantors that are signatories hereto, as Guarantors, Bank One Trust Company, National Association, as Trustee (the "Trustee"), and SCIL Store Holdings, Inc., a Delaware corporation (the "New Guarantor...

  • Page 153
    ...laws of the State of New York. SECTION 5. Counterparts. This Supplemental Indenture may be signed in any number of counterparts, each of ...Saks Incorporated By: Senior Vice President and Assistant Secretary Attest: Vice President and Assistant Secretary Bank One Trust Company, National Association...

  • Page 154
    ...Of Alabama, Inc. New York City Saks, LLC Saks Holdings, Inc. Saks & Company Saks Fifth Avenue, Inc. Saks Fifth Avenue Of Texas, Inc. Saks Fifth Avenue Texas, L.P. Saks Direct, Inc. (formerly SFA Folio Collections, Inc.) Saks Fifth Avenue Distribution Company Herberger's Department Stores, LLC Carson...

  • Page 155
    ... Trust Company, National Association, successor in interest to Bank One Trust Company, National Association, as Trustee (the "Trustee"); Merchandise Credit, LLC, a Virginia limited liability company, and NorthPark Fixtures, Inc., a Delaware corporation (together, the "New Guarantors"). Preliminary...

  • Page 156
    ... legality ...Saks Incorporated By: /s/ George W. Carlis George W. Carlis, Senior Vice President Attest: /s/ Charles J. Hansen Charles J. Hansen, Executive Vice President and Secretary J.P. Morgan Trust Company, National Association, successor in interest to Bank One Trust Company, National Association...

  • Page 157
    ... Pirie Holdings, Inc. Herberger's Department Stores, LLC Jackson Leasing, LLC McRae's, Inc. McRae's of Alabama, Inc. McRae's Stores Partnership By: McRae's, Inc., Managing General Partner McRae's Stores Services, Inc. McRlL,LLC Merchandise Credit, LLC New York City Saks, LLC NorthPark Fixtures, Inc...

  • Page 158
    [Signature Page to Supplemental Indenture dated as of June 23, 2004 regarding Saks Incorporated] SCCA, LLC By: /s/ Charles J. Hansen Charles J. Hansen, President and Assistant Secretary Attest: /s/ George W. Carlis Georg W. Carlis, Senior Vice President and Assistant Secretary

  • Page 159
    ... due 2013 Dated as of May 20 2004 This is a First Supplemental Indenture (this "Supplemental Indenture") among Saks Incorporated, a Tennessee corporation (the "Company"); the Subsidiary Guarantors that are signatories hereto, as Guarantors; The Bank of New York, as Trustee (the "Trustee"); NorthPark...

  • Page 160
    ...unenforceable, the validity, legality and enforceability of ...Saks Incorporated By: /s/ Charles J. Hansen Charles J. Hansen, Executive Vice President Attest: /s/ George W. Carlis George W. Carlis, Senior Vice President and Assistant Secretary The Bank Of New York, as Trustee By: Title: Vice President...

  • Page 161
    ...'s Stores Services, Inc. McRIL, LLC New York City Saks, LLC NorthPark Fixtures, Inc. Parisian, Inc. PMIN General Partnership, a Virginia general partnership By: Parisian, Inc., Managing Partner Saks Direct, Inc. (formerly SFA Folio Collections, Inc.) Saks Distribution Centers, Inc. Saks Fifth Avenue...

  • Page 162
    [Signature Page to First Supplemental Indenture] Merchandise Credit, LLC Saks & Company By: /s/ Charles J. Hansen Charles J. Hansen, Senior Vice President and Secretary Attest: /s/ Scott A. Honnold Scott A. Honnold, Senior Vice President and Assistant Secretary SCCA, LLC By: /s/ Charles J. Hansen ...

  • Page 163
    Exhibit 10.16 SAKS INCORPORATED DEFERRED COMPENSATION PLAN (as amended and restated effective January 1, 2009) 12/14/2008

  • Page 164
    ... Credits 2.24 Lost Match Amounts 2.25 Open Enrollment Period 2.26 Other Employer Amounts 2.27 Participant 2.28 Participating Company 2.29 Plan 2.30 Plan Year 2.31 Retirement 2.32 Retirement Class Share 2.33 Separation from Service 2.34 Specified Employee 2.35 Stock Grant 2.36 Stock Grant Account...

  • Page 165
    ... Stock Grant Account 5.11 Distributions in Event of Change in Control 5.12 Delay in Distributions 5.13 Tax Withholding 5.14 Committee Rules and Procedures FINANCING AND UNFUNDED STATUS 6.01 Costs Borne by the Participating Companies 6.02 Source of Benefit Payments and Medium of Financing the Plan...

  • Page 166
    ...1, 2002, pursuant to which the name of the Plan was changed to "Saks Incorporated Deferred Compensation Plan." The Plan has further been amended from time to time. This document is an amendment and restatement of the Plan and shall be effective as of January 1, 2009, except as specifically otherwise...

  • Page 167
    ... own stock of the Corporation at the same time, or as a result of the same public offering. However, persons will be considered to be acting as a group if they are owners of another entity and the Corporation enters into a merger, consolidation, purchase or acquisition of stock, or similar business...

  • Page 168
    ... except for the Participant's election to defer such amount under this Plan or a plan under Code section 401(k) or Code section 125. For members of the Board, the term Compensation means retainers and attendance fees paid by the Corporation to the Director for service as a Director. 12/14...

  • Page 169
    ... to which shall be credited (added) the Participant's Elective Deferral Amounts, Lost Match Amounts, Other Employer Amounts, and Investment Credits thereon and from which any distributions and in-service withdrawals shall be subtracted. 2.14 "Director" means a member of the Board. 2.15 "Disability...

  • Page 170
    ...). The term Employee shall also include Directors. 2.19 "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time. 2.20 "Frozen Account" means the Participant's account balance in this Plan as of December 31, 2004, plus subsequent Investment Credits thereon and...

  • Page 171
    (b) attainment of age 55 while actively employed by one or more of the Participating Companies and completion of at least 5 years of service with the Participating Companies. 2.32 "Retirement Class Share" means a Class Share used to account for amounts to be distributed pursuant to the Participant...

  • Page 172
    ... whether or not the Participant has suffered an Unforeseeable Emergency. 2.39 "Valuation Date" means each business day that the applicable trading markets and the Plan's record keeper are open for business, or such other dates as the Committee, in its discretion, may designate. 12/14/2008 2-6

  • Page 173
    ... 3.01 Eligibility. Eligibility to participate in the Plan shall be limited to Directors and full-time salaried Employees of the Participating Companies who are in a select group of management or highly compensated Employees and who are designated, from time to time, by the Committee as eligible to...

  • Page 174
    ... to maintain up to two In-Service Class Shares in the Stock Grant Account. (c) Frozen Account. A Frozen Account shall be maintained for each Participant or former Participant with an Account under the Plan as of December 31, 2004, with a beginning balance on December 31, 2004 equal to the total...

  • Page 175
    ... made during the last six (6) months of a calendar year shall apply to the annual fiscal performance period beginning in the next calendar year, which in turn corresponds to Bonus Compensation to be paid during the second calendar year following the calendar year of the election. 12/14/2008 4-2

  • Page 176
    ... Amounts shall be credited, this Section shall apply to a Participant whose employer matching contribution under the Saks Incorporated 401(k) Retirement Plan (the "401(k) Plan") for such Plan Year was limited due to the operation of the deferral limit under Code section 402(g) and the 12/14/2008 4-3

  • Page 177
    ... credited to his Deferred Compensation Account for such Plan Year in the amount described herein, provided he is employed by a Participating Company on the last day of the Plan Year and further provided that his total compensation exceeds the limit under Code section 401(a)(17) for the Plan Year...

  • Page 178
    ... to block or reverse investment changes involving shares of common stock of the Corporation, in accordance with any "insider trading" rules or procedures maintained by the Corporation. 4.07 Default Provisions (a) Default Class Share. In the event that the Participant fails to designate a Class Share...

  • Page 179
    ...In-Service Class Share the Participant shall designate the number of annual installments, from one to ten, and the year in which installments are to commence, with scheduled distributions to be made as of January 31 of the scheduled year, based on the Class Share value as of the last business day in...

  • Page 180
    ... a Class Share shall result in at least a five (5) year delay in the payments from that Class Share. Any such change election related to an In-Service Class Share must be made at least twelve (12) months prior to the initial payment from that In-Service Class Share. For purposes of the timing rules...

  • Page 181
    ... from his Stock Grant Account be made in the form of shares of Corporation Stock, provided that an amount equal to any partial shares shall be distributed in cash. 5.11 Distributions in Event of Change in Control. In the event of a Change in Control, vested benefits of Participants shall...

  • Page 182
    ... the payment would not have such effect, as applicable. 5.13 Tax Withholding. If, at the time of distribution, the Participant does not tender to the Corporation an amount equal to the amount required to be withheld for income taxes due as a result of the distribution, then the Participant shall be...

  • Page 183
    ... 6.02 hereof. 6.02 Source of Benefit Payments and Medium of Financing the Plan. Benefits payable under the Plan to any Participant shall be paid directly by the Participating Company which employs the Participant. The Participating Company shall not be required to fund or otherwise segregate assets...

  • Page 184
    ... way so as to be unable to manage his financial affairs, the Committee may direct payments to such person or to his legal representative or to a relative or friend of such person for his benefit, or the Committee may direct the payment for the benefit of such person in such manner as the Committee...

  • Page 185
    ..., damages and expense (including all expenses reasonably incurred in his defense in the event that the Participating Companies fail to provide such defense upon his written request) which the Committee member may incur while acting in good faith in the administration of the Plan. 12/14/2008 7-2

  • Page 186
    ...adopts this Plan for any former employees who become employees of a Successor Company under a plan of reorganization. The Plan may be terminated, and Participant's Accounts distributed, at the Boards discretion, under any of the following conditions: (a) The Corporation may terminate the Plan at its...

  • Page 187
    ... be in writing and authorized by the Board. 8.03 No Liability for Plan Amendment or Termination. Neither the Corporation, nor any officer, nor any Board member thereof shall have any liability as a result of the amendment or termination of the Plan. Without limiting the generality of the foregoing...

  • Page 188
    ... of this Plan shall be binding upon and inure to the benefit of the Corporation, its successors, and assigns, and each Participant and his heirs, executors, administrators and legal representatives. The term successors as used herein shall include any corporate or other business entity which...

  • Page 189
    IN WITNESS WHEREOF, the Corporation has caused this Plan to be duly executed for and on behalf of the Corporation by its duly authorized officer on this the day of , 2008. SAKS INCORPORATED By: Title: 12/14/2008 9-2

  • Page 190
    ...of the Company and the Executive to adopt this Amendment; and WHEREAS, Section 9(c) of the Agreement requires that any modification of the Agreement be in writing signed by the party to be charged in order to be effective. NOW THEREFORE, the parties agree to amend the Employment Agreement, effective...

  • Page 191
    ... under Section 280G(s) of the Code. The reduction of the amounts payable to the Executive, if applicable, shall be made in the following order: (1) by first eliminating the acceleration of vesting of any stock options for which the exercise price exceeds the then fair market value (and if there is...

  • Page 192
    The Executive hereby waives any notice requirement provided for under the Agreement and agrees that the Company's failure to comply with any such requirements with respect to this Amendment will not affect the validity thereof. Except as expressly modified herein, all other terms of the Agreement ...

  • Page 193
    In witness whereof, each of the Company and the Executive has executed this Amendment to be effective as of the date indicated above. SAKS INCORPORATED By: /s/ Christine A. Morena Name: Christine A. Morena Title: EVP, Human Resources /s/ Kevin G. Wills Kevin G. Wills 4

  • Page 194
    ... Agreement This Amendment to the Employment Agreement (the "Agreement"), dated as of July 31, 2007, between Stephen I. Sadove (the "Executive") and Saks Incorporated (the "Company") is entered into as of December 16, 2008 by the Company and the Executive. Capitalized terms used in this Amendment...

  • Page 195
    ... under Section 280G(a) of the Code. The reduction of the amounts payable to the Executive, if applicable, shall be made in the following order: (1) by first eliminating the acceleration of vesting of any stock options for which the exercise price exceeds the then fair market value (and if there is...

  • Page 196
    Except as expressly modified herein, all other terms of the Agreement shall remain in full force and effect. 3

  • Page 197
    In witness whereof, each of the Company and the Executive has executed this Amendment to be effective as of the date indicated above. SAKS INCORPORATED By: /s/ Christine A. Morena Name: Christine A. Morena Title: EVP, Human Resources /s/ Stephen I. Sadove Stephen I. Sadove 4

  • Page 198
    ... Agreement This Amendment to the Employment Agreement (the "Agreement"), dated as of July 31, 2007, between Ronald L. Frasch (the "Executive") and Saks Incorporated (the "Company") is entered into as of December 18, 2008 by the Company and the Executive. Capitalized terms used in this Amendment...

  • Page 199
    ... under Section 280G(a) of the Code. The reduction of the amounts payable to the Executive, if applicable, shall be made in the following order: (1) by first eliminating the acceleration of vesting of any stock options for which the exercise price exceeds the then fair market value (and if there is...

  • Page 200
    Except as expressly modified herein, all other terms of the Agreement shall remain in full force and effect. 3

  • Page 201
    In witness whereof, each of the Company and the Executive has executed this Amendment to be effective as of the date indicated above. SAKS INCORPORATED By: /s/ Christine A. Morena Name: Christine A. Morena Title: EVP, Human Resources /s/ Ronald L. Frasch Ronald L. Frasch 4

  • Page 202
    ... the policies and directions of the Company's Chief Executive Officer and of the Board. The Executive may engage in charitable, civic or community activities, manage his personal investments and, with prior approval of the Board of Directors of the Company (the "Board"), may serve as a director of...

  • Page 203
    ... be granted annually, with specified values for achievement at the threshold, target and maximum levels. (d) Benefits. During the Executive's employment the Company shall (i) reimburse the Executive for his costs incurred for annual financial and tax planning services and for annual personal income...

  • Page 204
    ... amount of such bonus being determined in accordance with the applicable formula or the achievement of the corporate objectives applicable to the Executive and his direct reports, which bonus shall be paid to the Executive by the Company at the time that bonuses for such fiscal year are paid to...

  • Page 205
    ... or the achievement of the corporate objectives applicable to the Executive and his direct reports, which bonus amount shall be (1) multiplied by a fraction the numerator of which is the number of days that have elapsed during the fiscal year in which the Employment Termination Date occurs to and...

  • Page 206
    ...and delivery of the Release, or at such other time provided pursuant to Section 10 hereof, a lump sum amount equal to the sum of two times the Executive's Base Salary and one times the Executive's target bonus potential amount described in Section 3(b) for the fiscal year during which the Employment...

  • Page 207
    ...of the corporate objectives applicable to the Executive and his direct reports, and the portion of the bonus that is based on personal objectives being paid at the target level of the achievement; (C) not less than eight, and not more than 10, days following the Executive's execution and delivery of...

  • Page 208
    ... or following a Change in Control, any reduction in the Executive's Base Salary, annual bonus opportunity or severance payment upon a termination of employment, in any such case below the level specified by this Agreement without the substitution of an equivalent benefit, shall constitute a material...

  • Page 209
    ...such stock options; (c) the Executive's unvested shares of restricted stock and unvested performance shares shall be forfeited in accordance with and subject to the applicable plan and the agreements applicable to such awards; and (d) the Executive shall be entitled to receive all of the benefits in...

  • Page 210
    ... of this Agreement, if on the Employment Termination Date (a) the Company is a publicly traded corporation and (b) the Company determines that the Executive is a "specified employee," as defined in Section 409A of the Internal Revenue Code of 1986, as amended (the "Code"), then to the extent any...

  • Page 211
    ... payable by the Executive, the Accounting Firm will furnish the Executive with a written opinion that failure to report the Excise Tax on the Executive's applicable federal income tax return should not result in the imposition of a negligence or similar penalty or comparable opinion supporting such...

  • Page 212
    ...in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment. The Executive will give the notice as soon as practicable but no later than 10 business days after the Executive is informed in writing of the claim and will...

  • Page 213
    ... one or more of the following: sales; costs; pricing; strategies; forecasts and long-range plans; financial and tax information; personnel information; business, marketing, and operational projections, plans, and opportunities; and customer, vendor, and supplier information. Confidential Information...

  • Page 214
    ... Executive will need the benefits and use of the goodwill of the Company and its affiliates and Confidential Information in order for the Executive to properly perform the Executive's responsibilities in accordance with this Agreement. The Company will provide the Executive immediate access to new...

  • Page 215
    ...iv)(D)) listed on a national securities exchange or actively traded in the over-the-counter market if the Executive and the members of the Executive's immediate family together do not, directly or indirectly, hold more than one percent of all such shares of capital stock or other securities issued...

  • Page 216
    ...) If within six months following the Executive's termination of employment the Executive, without the written consent of the Company, engages directly or indirectly in an association that constitutes an Association, the Executive will be required to pay to the Company an amount in cash equal to the...

  • Page 217
    ... 13(a). Notices shall be deemed communicated as of the actual receipt or refusal of receipt. If to the Executive: [Executive Name and Address] If to the Company: Saks Incorporated 12 East 49th Street New York, New York 10017 Attention: Executive Vice President and General Counsel (b) Enforceability...

  • Page 218
    ... as an officer and director of the Company (and all of its subsidiaries) and as a member of each committee and working or operating group established by the Company, as the case may be, effective as of the date of such termination. Upon termination of employment, the Executive will return to the...

  • Page 219
    ... with this subsection, and pay to the Executive a stipend of $4,000 per day or partial day the Executive is required to provide services in accordance with this subsection. The Company will not be required to pay the stipend to the Executive for time incurred by the Executive to prepare for and...

  • Page 220
    (j) Governing Law. This Agreement will be governed by and construed in accordance with the laws of the New York without regard to principles of conflicts of laws. SAKS INCORPORATED By: Name: Title: [Name of Executive] 19

  • Page 221
    ... Saks Incorporated (the "Company") and [Name of Executive] (the "Executive") enter into this Release (this "Release") on . Preliminary Statement The Company and Executive are parties to an Employment Agreement dated as of [ ] (the "Agreement"). As a condition to the receipt of specified benefits...

  • Page 222
    ... HER EMPLOYMENT WITH THE COMPANY WHO DID NOT SIGN A RELEASE SIMILAR TO THIS RELEASE, THAT SUCH BENEFITS WOULD NOT HAVE BEEN PROVIDED IN THEIR ENTIRETY HAD THE EXECUTIVE NOT SIGNED THIS RELEASE, AND THAT SUCH BENEFITS ARE IN EXCHANGE IN PART FOR THE SIGNING OF THIS RELEASE; (D) THAT THE EXECUTIVE HAS...

  • Page 223
    5. This Release will be governed by, and construed and enforced in accordance with, the internal laws of the State of New York without regard to the principle of conflicts of laws. [Name of Executive] SAKS INCORPORATED By: Name: Title: 3

  • Page 224
    ... the policies and directions of the Company's Chief Executive Officer and of the Board. The Executive may engage in charitable, civic or community activities, manage his personal investments and, with prior approval of the Board of Directors of the Company (the "Board"), may serve as a director of...

  • Page 225
    ... be granted annually, with specified values for achievement at the threshold, target and maximum levels. (d) Benefits. During the Executive's employment the Company shall (i) reimburse the Executive for his costs incurred for annual financial and tax planning services and for annual personal income...

  • Page 226
    ... amount of such bonus being determined in accordance with the applicable formula or the achievement of the corporate objectives applicable to the Executive and his direct reports, which bonus shall be paid to the Executive by the Company at the time that bonuses for such fiscal year are paid to...

  • Page 227
    ... or the achievement of the corporate objectives applicable to the Executive and his direct reports, which bonus amount shall be (1) multiplied by a fraction the numerator of which is the number of days that have elapsed during the fiscal year in which the Employment Termination Date occurs to and...

  • Page 228
    ... and delivery of the Release, or at such other time provided pursuant to Section 10 hereof, a lump sum amount equal to the sum of two times the Executive's Base Salary and one times the Executive's target bonus potential amount of 50% of Base Salary for the fiscal year during which the Employment...

  • Page 229
    ...of the corporate objectives applicable to the Executive and his direct reports, and the portion of the bonus that is based on personal objectives being paid at the target level of the achievement; (C) not less than eight, and not more than 10, days following the Executive's execution and delivery of...

  • Page 230
    ... or following a Change in Control, any reduction in the Executive's Base Salary, annual bonus opportunity or severance payment upon a termination of employment, in any such case below the level specified by this Agreement without the substitution of an equivalent benefit, shall constitute a material...

  • Page 231
    ...such stock options; (c) the Executive's unvested shares of restricted stock and unvested performance shares shall be forfeited in accordance with and subject to the applicable plan and the agreements applicable to such awards; and (d) the Executive shall be entitled to receive all of the benefits in...

  • Page 232
    ... of this Agreement, if on the Employment Termination Date (a) the Company is a publicly traded corporation and (b) the Company determines that the Executive is a "specified employee," as defined in Section 409A of the Internal Revenue Code of 1986, as amended (the "Code"), then to the extent any...

  • Page 233
    ... payable by the Executive, the Accounting Firm will furnish the Executive with a written opinion that failure to report the Excise Tax on the Executive's applicable federal income tax return should not result in the imposition of a negligence or similar penalty or comparable opinion supporting such...

  • Page 234
    ... mediums, concerning or evidencing one or more of the following: sales; costs; pricing; strategies; forecasts and long-range plans; financial and tax information; personnel information; business, marketing, and operational projections, plans, and opportunities; and customer, vendor, and supplier 11

  • Page 235
    ... Executive will need the benefits and use of the goodwill of the Company and its affiliates and Confidential Information in order for the Executive to properly perform the Executive's responsibilities in accordance with this Agreement. The Company will provide the Executive immediate access to new...

  • Page 236
    ... operations of the Company or any of its affiliates, or any current or future officer, director, or employee of the Company or any of its affiliates. (B) Whether on the Executive's own behalf or on behalf of any other individual, partner, firm, corporation, or business organization, either directly...

  • Page 237
    ...iv)(D)) listed on a national securities exchange or actively traded in the over-the-counter market if the Executive and the members of the Executive's immediate family together do not, directly or indirectly, hold more than one percent of all such shares of capital stock or other securities issued...

  • Page 238
    ..., or within six months prior to, the Executive's termination of employment; and (B) with respect to awards made under the Plans consisting of restricted stock, restricted stock units, performance shares, performance share units, and performance units, the value of the awards that vested on or after...

  • Page 239
    ... as an officer and director of the Company (and all of its subsidiaries) and as a member of each committee and working or operating group established by the Company, as the case may be, effective as of the date of such termination. Upon termination of employment, the Executive will return to the...

  • Page 240
    ..." as published under "Money Rates" in The Wall Street Journal from time to time in effect, but in no event higher than the maximum legal rate permissible under applicable law, such interest to accrue from the date the Company receives the Executive's statement for such fees and expenses through the...

  • Page 241
    ...Agreement will be governed by and construed in accordance with the laws of the New York without regard to principles of conflicts of laws. SAKS INCORPORATED By: /s/ Christine A. Morena Name: Christine A. Morena Title: Executive Vice President, Human Resources /s/ Carolyn R. Biggs Carolyn R. Biggs 18

  • Page 242
    ...respect to the Executive pursuant to any employee benefit or equity plan of the Company (other than the Saks Incorporated Amended and Restated 2000 Change of Control and Material Transaction Severance Plan and any other severance or retention program or practice). The Executive acknowledges that the...

  • Page 243
    ... HER EMPLOYMENT WITH THE COMPANY WHO DID NOT SIGN A RELEASE SIMILAR TO THIS RELEASE, THAT SUCH BENEFITS WOULD NOT HAVE BEEN PROVIDED IN THEIR ENTIRETY HAD THE EXECUTIVE NOT SIGNED THIS RELEASE, AND THAT SUCH BENEFITS ARE IN EXCHANGE IN PART FOR THE SIGNING OF THIS RELEASE; (D) THAT THE EXECUTIVE HAS...

  • Page 244
    5. This Release will be governed by, and construed and enforced in accordance with, the internal laws of the State of New York without regard to the principle of conflicts of laws. Carolyn R. Biggs SAKS INCORPORATED By: Name: Title: 3

  • Page 245
    ... projects and tasks as assigned or otherwise directed by the Company's Chief Executive Officer, Chief Merchandising Officer, and/or any of their designees from time-to-time, and the Executive's place of business shall be located in New York, New York. Effective October 15, 2007, all prior agreements...

  • Page 246
    ... or the achievement of the corporate objectives applicable to the Executive and her direct reports, which bonus amount shall be (1) multiplied by a fraction the numerator of which is the number of days that have elapsed during the fiscal year in which the Employment Termination Date occurs to and...

  • Page 247
    ... contained herein shall affect the Executive's right to receive any benefits to which such Executive would be entitled pursuant to Section 4(b) of the Agreement. The Executive hereby waives any notice requirement provided for under the Agreement and agrees that the Company's failure to comply with...

  • Page 248
    In witness whereof, each of the Company and the Executive has executed this Amendment to be effective as of the date indicated above. SAKS INCORPORATED By: /s/ Michael Brizel Name: Michael Brizel Title: EVP and General Counsel /s/ Carolyn R. Biggs Carolyn R. Biggs 4

  • Page 249
    ... Agreement This Amendment to the Employment Agreement (the "Agreement"), dated as of October 15, 2007, between Carolyn R. Biggs (the "Executive") and Saks Incorporated (the "Company") is entered into as of December 15th, 2008 by the Company and the Executive. Capitalized terms used in this Amendment...

  • Page 250
    ... under Section 280G(a) of the Code. The reduction of the amounts payable to the Executive, if applicable, shall be made in the following order: (1) by first eliminating the acceleration of vesting of any stock options for which the exercise price exceeds the then fair market value (and if there is...

  • Page 251
    The Executive hereby waives any notice requirement provided for under the Agreement and agrees that the Company's failure to comply with any such requirements with respect to this Amendment will not affect the validity thereof. Except as expressly modified herein, all other terms of the Agreement ...

  • Page 252
    In witness whereof, each of the Company and the Executive has executed this Amendment to be effective as of the date indicated above. SAKS INCORPORATED By: /s/ Christine A. Morena Name: Christine A. Morena Title: EVP, Human Resources /s/ Carolyn R. Biggs Carolyn R. Biggs 4

  • Page 253
    ... the policies and directions of the Company's Chief Executive Officer and of the Board. The Executive may engage in charitable, civic or community activities, manage his personal investments and, with prior approval of the Board of Directors of the Company (the "Board"), may serve as a director of...

  • Page 254
    ... be granted annually, with specified values for achievement at the threshold, target and maximum levels. (d) Benefits. During the Executive's employment the Company shall (i) reimburse the Executive for his costs incurred for annual financial and tax planning services and for annual personal income...

  • Page 255
    ... amount of such bonus being determined in accordance with the applicable formula or the achievement of the corporate objectives applicable to the Executive and his direct reports, which bonus shall be paid to the Executive by the Company at the time that bonuses for such fiscal year are paid to...

  • Page 256
    ... or the achievement of the corporate objectives applicable to the Executive and his direct reports, which bonus amount shall be (1) multiplied by a fraction the numerator of which is the number of days that have elapsed during the fiscal year in which the Employment Termination Date occurs to and...

  • Page 257
    ... and delivery of the Release, or at such other time provided pursuant to Section 10 hereof, a lump sum amount equal to the sum of two times the Executive's Base Salary and one times the Executive's target bonus potential amount of 50% of Base Salary for the fiscal year during which the Employment...

  • Page 258
    ...of the corporate objectives applicable to the Executive and his direct reports, and the portion of the bonus that is based on personal objectives being paid at the target level of the achievement; (C) not less than eight, and not more than 10, days following the Executive's execution and delivery of...

  • Page 259
    ... or following a Change in Control, any reduction in the Executive's Base Salary, annual bonus opportunity or severance payment upon a termination of employment, in any such case below the level specified by this Agreement without the substitution of an equivalent benefit, shall constitute a material...

  • Page 260
    ...such stock options; (c) the Executive's unvested shares of restricted stock and unvested performance shares shall be forfeited in accordance with and subject to the applicable plan and the agreements applicable to such awards; and (d) the Executive shall be entitled to receive all of the benefits in...

  • Page 261
    ... of this Agreement, if on the Employment Termination Date (a) the Company is a publicly traded corporation and (b) the Company determines that the Executive is a "specified employee," as defined in Section 409A of the Internal Revenue Code of 1986, as amended (the "Code"), then to the extent any...

  • Page 262
    ... payable by the Executive, the Accounting Firm will furnish the Executive with a written opinion that failure to report the Excise Tax on the Executive's applicable federal income tax return should not result in the imposition of a negligence or similar penalty or comparable opinion supporting such...

  • Page 263
    ... mediums, concerning or evidencing one or more of the following: sales; costs; pricing; strategies; forecasts and long-range plans; financial and tax information; personnel information; business, marketing, and operational projections, plans, and opportunities; and customer, vendor, and supplier 11

  • Page 264
    ... Executive will need the benefits and use of the goodwill of the Company and its affiliates and Confidential Information in order for the Executive to properly perform the Executive's responsibilities in accordance with this Agreement. The Company will provide the Executive immediate access to new...

  • Page 265
    ... operations of the Company or any of its affiliates, or any current or future officer, director, or employee of the Company or any of its affiliates. (B) Whether on the Executive's own behalf or on behalf of any other individual, partner, firm, corporation, or business organization, either directly...

  • Page 266
    ...iv)(D)) listed on a national securities exchange or actively traded in the over-the-counter market if the Executive and the members of the Executive's immediate family together do not, directly or indirectly, hold more than one percent of all such shares of capital stock or other securities issued...

  • Page 267
    ..., or within six months prior to, the Executive's termination of employment; and (B) with respect to awards made under the Plans consisting of restricted stock, restricted stock units, performance shares, performance share units, and performance units, the value of the awards that vested on or after...

  • Page 268
    ... as an officer and director of the Company (and all of its subsidiaries) and as a member of each committee and working or operating group established by the Company, as the case may be, effective as of the date of such termination. Upon termination of employment, the Executive will return to the...

  • Page 269
    ..." as published under "Money Rates" in The Wall Street Journal from time to time in effect, but in no event higher than the maximum legal rate permissible under applicable law, such interest to accrue from the date the Company receives the Executive's statement for such fees and expenses through the...

  • Page 270
    ... Agreement will be governed by and construed in accordance with the laws of the New York without regard to principles of conflicts of laws. SAKS INCORPORATED By: /s/ Christine A. Morena Name: Christine A. Morena Title: Executive Vice President, Human Resources /s/ Michael Rodgers Michael Rodgers 18

  • Page 271
    ...respect to the Executive pursuant to any employee benefit or equity plan of the Company (other than the Saks Incorporated Amended and Restated 2000 Change of Control and Material Transaction Severance Plan and any other severance or retention program or practice). The Executive acknowledges that the...

  • Page 272
    ... HER EMPLOYMENT WITH THE COMPANY WHO DID NOT SIGN A RELEASE SIMILAR TO THIS RELEASE, THAT SUCH BENEFITS WOULD NOT HAVE BEEN PROVIDED IN THEIR ENTIRETY HAD THE EXECUTIVE NOT SIGNED THIS RELEASE, AND THAT SUCH BENEFITS ARE IN EXCHANGE IN PART FOR THE SIGNING OF THIS RELEASE; (D) THAT THE EXECUTIVE HAS...

  • Page 273
    5. This Release will be governed by, and construed and enforced in accordance with, the internal laws of the State of New York without regard to the principle of conflicts of laws. Michael Rodgers SAKS INCORPORATED By: Name: Title: 3

  • Page 274
    ... Agreement This Amendment to the Employment Agreement (the "Agreement"), dated as of October 9, 2007, between Michael Rodgers (the "Executive") and Saks Incorporated (the "Company") is entered into as of December 17, 2008 by the Company and the Executive. Capitalized terms used in this Amendment...

  • Page 275
    ... under Section 280G(a) of the Code. The reduction of the amounts payable to the Executive, if applicable, shall be made in the following order: (1) by first eliminating the acceleration of vesting of any stock options for which the exercise price exceeds the then fair market value (and if there is...

  • Page 276
    Except as expressly modified herein, all other terms of the Agreement shall remain in full force and effect. 3

  • Page 277
    In witness whereof, each of the Company and the Executive has executed this Amendment to be effective as of the date indicated above. SAKS INCORPORATED By: /s/ Christine A. Morena Name: Christine A. Morena Title: EVP, Human Resources /s/ Michael Rodgers Michael Rodgers 4

  • Page 278
    ....com Saks Saks Fifth Avenue Saks Saks Fifth Avenue Saks Saks Fifth Avenue Club Libby Lu Off 5th Saks Fifth Avenue Outlet Saks & Company New York Saks Direct, Inc. New York Saks Fifth Avenue Distribution Company Saks Fifth Avenue Food Corporation Saks Fifth Avenue, Inc. Delaware California...

  • Page 279
    ... Virginia Saks Saks Fifth Avenue Off 5th Saks Fifth Avenue Outlet SCIL Store Holdings, Inc. Second Floor Restaurant at SFA LLC SFA Holdings, Inc. SFA Realty, Inc. SFAILA, LLC Sixth Floor Restaurant at SFA LLC Tex SFA, Inc. The Restaurant at Saks Fifth Avenue Corporation Delaware New York Delaware...

  • Page 280
    Exhibit 23.1 Consent of Independent Registered Public Accounting Firm We hereby consent to the incorporation by ...Saks Incorporated of our report dated March 23, 2009 relating to the financial statements, financial statement schedule and the effectiveness of internal control over financial reporting...

  • Page 281
    ... PUBLIC ACCOUNTING FIRM We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (File No. 333-91416) of Saks incorporated and Subsidiaries of our report dated March 20, 2009 relating to the financial statements of Saks Incorporated Employee Stock Purchase Plan...

  • Page 282
    ... and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the...

  • Page 283
    ... and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the...

  • Page 284
    ...with the filing with the Securities and Exchange Commission of Saks Incorporated's (the "Company") Annual Report on Form 10-K for the fiscal year ended January 31, 2009 (the "Report"). The undersigned hereby certifies that: 1. 2. The Report fully complies with the requirements of Section 13(a) or 15...

  • Page 285
    ...with the filing with the Securities and Exchange Commission of Saks Incorporated's (the "Company") Annual Report on Form 10-K for the fiscal year ended January 31, 2009 (the "Report"). The undersigned hereby certifies that: 1. 2. The Report fully complies with the requirements of Section 13(a) or 15...

  • Page 286
    Exhibit 99.1 Saks Incorporated Employee Stock Purchase Plan Financial Statements December 31, 2008 and 2007

  • Page 287
    Saks Incorporated Employee Stock Purchase Plan Index December 31, 2008 and 2007 Page(s) Report of Independent Registered Public Accounting Firm Financial Statements Statements of Net Assets Available for Benefits Statements of Changes in Net Assets Available for Benefits Notes to Financial ...

  • Page 288
    ... management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform...

  • Page 289
    ... Employee Stock Purchase Plan Statements of Net Assets Available for Benefits December 31, 2008 and 2007 2008 2007 Assets Cash held by Saks Incorporated Liabilities Due to terminated employees Net assets available for benefits The accompanying notes are an integral part of these financial...

  • Page 290
    Saks Incorporated Employee Stock Purchase Plan Statements of Changes in Net Assets Available for Benefits For the Years Ended December 31, 2008, 2007 and 2006 2008 2007 2006 Additions Participant contributions Deductions Purchase of common stock Return of contributions to terminated employees Net ...

  • Page 291
    ... Committee") of the Company's Board of Directors. Option periods currently end on December 31 of each year. The price at which the stock may be purchased is 85% of the lesser of the closing price per share as listed on the New York Stock Exchange on the last business day preceding (i) the grant...

  • Page 292
    ... time shares and cash due to terminated employees would be distributed and no further contributions would be accepted. On December 3, 2008, the Compensation Committee suspended the Plan for the 2009 calendar year. 3. Income Tax Status The Plan is designed to meet the requirements of the applicable...