ZIONS COOPERATIVE 
MERCANTILE INSTITUTION
Financial Statements as of February 1, 1997 and February 3, 1996 and for Each of
the Three Years in the Period Ended February 1, 1997 and Independent Auditors'
Report;

INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
  Zions Cooperative Mercantile Institution:

We have audited the accompanying balance sheets of Zions Cooperative Mercantile
Institution (ZCMI) as of February 1, 1997 and February 3, 1996, and the related
statements of income, stockholders' equity, and cash flows for each of the three
years in the period ended February 1, 1997.  These financial statements are the
responsibility of ZCMI's management.  Our responsibility is to express an 
opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing 
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. 
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such financial statements present fairly, in all material
respects, the financial position of ZCMI at February 1, 1997 and February 3,
1996, and the results of its operations and its cash flows for each of the three
years in the period ended February 1, 1997 in conformity with generally accepted
accounting principles.


April 11, 1997

ZIONS COOPERATIVE MERCANTILE INSTITUTION                                        
BALANCE SHEETS AS OF FEBRUARY 1, 1997 AND FEBRUARY 3, 1996                 
<TABLE>
ASSETS                                          1997                1996

<S>                                          <C>                 <C>
CURRENT ASSETS:                                        
  Cash and short-term investments            $ 1,467,308         $  2,698,087
  Accounts receivable (less allowance for doubtful                              
  accounts of $1,334,154 and $1,307,360,
  respectively)                               50,573,755           50,721,239
  Inventories                                 49,061,807           45,877,368
  Prepaid expenses                             1,107,448            1,320,685
  Deferred income taxes (Notes 3 and 6)        1,483,391            2,015,807

          Total current assets               103,693,709          102,633,186

PROPERTY, PLANT, AND EQUIPMENT (Notes 2, 4 and 7):                              
                                   
  Land                                           177,058              177,058 
  Buildings and improvements                   4,253,922            4,241,162
  Leasehold improvements                      15,468,375           14,634,910
  Furniture, fixtures, and equipment          12,992,530            9,520,103
  Leased property under capital leases        31,364,742           31,364,742
  Construction in progress                       682,160            1,110,448
     
          Total                               64,938,787            61,048,423
Less accumulated depreciation and
                             amortization     31,835,765            27,774,562
     
        Property, plant, and equipment - net  33,103,022            33,273,861 
DEFERRED INCOME TAXES                            196,135
                                        
OTHER ASSETS                                     625,538               597,899 

TOTAL                                      $ 137,618,404         $ 136,504,946 
</TABLE>


See notes to financial statements.        (Continued)
                         


ZIONS COOPERATIVE MERCANTILE INSTITUTION               
BALANCE SHEETS AS OF FEBRUARY 1, 1997 AND FEBRUARY 3, 1996
<TABLE>

LIABILITIES AND STOCKHOLDERS' EQUITY              1997            1996

<S>                                          <C>              <C>
CURRENT LIABILITIES:               
  Accounts payable - trade                   $  9,269,359     $  7,370,076
  Short-term borrowings - banks (Note 4)       10,000,000        2,500,000
  Current portion of long-term debt (Note 4)      340,041          310,654 
  Current portion of obligations under
     capital leases (Notes 2 and 7)             1,864,206        2,291,330
  Accrued liabilities:                                           
    Salaries and commissions                    2,071,931        1,705,579 
    Sales, payroll, and other taxes             3,575,688        1,391,011
    Income taxes payable (Note 3)               1,284,563          400,000
    Outstanding gift certificates               1,934,568        1,611,472
    Pension liability (Note 6)                  1,528,987        1,625,000  
   Other                                        4,004,320        4,042,815
  Deferred gain on sale and leaseback (Note 2)  1,923,988        1,608,136     
          Total current liabilities            37,797,651       24,856,073
               
LONG-TERM DEBT (Note 4)                        26,246,034       37,886,428
                                             
DEFERRED INCOME TAXES (Note 3)                                     682,863
                                             
LONG-TERM DEFERRED GAIN ON SALE AND
  LEASEBACK (Note 2)                            5,089,551        3,497,593 
                                             
OBLIGATIONS UNDER CAPITAL LEASES 
  (Notes 2 and 7)                              16,709,248       18,519,845 
               
TOTAL LIABILITIES                              85,842,484       85,442,802 
               
COMMITMENTS AND CONTINGENCIES (Note 2)            
               
STOCKHOLDERS' EQUITY (Note 5):               
  Capital stock - par value $.001; 5,000,000 shares authorized;
    2,164,483 and 2,159,745 shares issued at February 1,
    1997 and February 1, 1996, respectively         2,164           2,160
  Paid-in capital                              14,816,213      14,729,203
  Pension liability adjustment (Note 6)        (1,806,875)     (1,908,750)
  Retained earnings                            38,764,418      38,239,531  

          Stockholders' equity - net           51,775,920      51,062,144  
               
TOTAL                                        $137,618,404    $136,504,946 
</TABLE>
               
               
See notes to financial statements.      (Concluded)    


ZIONS COOPERATIVE MERCANTILE INSTITUTION                    
                    
STATEMENTS OF INCOME                    
FOR THE YEARS ENDED FEBRUARY 1, 1997, FEBRUARY 3, 1996, AND JANUARY 28, 1995
<TABLE>
                    
                                       1997           1996          1995

<S>                                <C>             <C>           <C>
NET SALES AND OTHER INCOME                   
  (Notes 2 and 7)                  $259,599,460    $254,371,323  $244,923,590

COSTS AND EXPENSES (Note 7):                 
  Cost of merchandise sold          172,950,259     171,161,111   161,672,320 
  Selling, general, and administrative expenses
    (Notes 2 and 6)                  79,713,352      77,417,255    74,782,477 
  Interest expense:                                         
    Borrowings (Note 4)               2,495,892       2,938,466     2,088,029
    Capital leases (Note 2)           1,918,675       2,072,060     2,087,194
          Total costs and expenses  257,078,178     253,588,892   240,630,020

INCOME FROM OPERATIONS                2,521,282         782,431     4,293,570

GAIN ON SALE OF STORE                                               1,373,658 
               
INCOME BEFORE INCOME TAX
  EXPENSE                             2,521,282         782,431     5,667,228 
               
INCOME TAX EXPENSE (Note 3)             683,656         200,791     2,042,977

NET INCOME                         $  1,837,626      $  581,640  $  3,624,251
                    
NET INCOME PER COMMON AND                    
  COMMON EQUIVALENT SHARE          $       0.84      $     0.27  $       1.69 
</TABLE>
     
                    
                    
See notes to financial statements.


ZIONS COOPERATIVE MERCANTILE INSTITUTION
STATEMENTS OF STOCKHOLDERS' EQUITY 
FOR THE YEARS ENDED FEBRUARY 1, 1997, FEBRUARY 3, 1996, AND JANUARY 28, 1995
<TABLE>
                                        
                                                    Pension        
       Capital Stock      Paid-in  Treasury Stock  Liability  Retained
     Shares     Amount  Capital    Shares  Amount  Adjustment Earnings
<S>  <C>        <C>    <C>           <C>    <C>      <C>     <C>
BALANCE,  JANUARY 30, 1994
     2,135,776  $2,136 $14,477,678   NONE   NONE     NONE    $36,612,953

  Purchases of treasury stock       1,500   14,202
                                        
  Issuance of capital stock (net of
    1,500 shares of  treasury stock)
        14,546      14     140,801 (1,500) (14,202)
                                        
  Net income                                                   3,624,251

  Cash dividends ($.60 a share)                               (1,287,153)
                                        
BALANCE,  JANUARY 28, 1995
     2,150,322   2,150 14,618,479  NONE     NONE    NONE      38,950,051

  Purchases of treasury stock      5,350    54,035

  Issuance of capital stock(net of
    5,350 shares of treasury stock)
         9,423      10    110,724 (5,350)  (54,035)

  Pension liability adjustment (Note 6)          $(1,908,750)

  Net income                                                     581,640
                                        
  Cash dividends ($.60 a share)                               (1,292,160)
                                        
BALANCE, FEBRUARY 3, 1996
     2,159,745   2,160 14,729,203  NONE     NONE  (1,908,750) 38,239,531
                                        
  Purchases of treasury stock      6,726    79,816

  Issuance of capital stock(net of
    6,726 shares of treasury stock)
         4,738       4     87,010 (6,726)  (79,816)
                                        
  Pension liability adjustment (Note 6)             101,875
                                        
  Net income                                                   1,837,626
                                        
  Cash dividends ($.60 a share)                               (1,312,739)

BALANCE, FEBRUARY 1, 1997
     2,164,483  $2,164 $14,816,213 NONE    NONE $(1,806,875) $38,764,418
</TABLE>
                                   
                                   
See notes to financial statements.


ZIONS COOPERATIVE MERCANTILE INSTITUTION               
               
STATEMENTS OF CASH FLOWS           
FOR THE YEARS ENDED FEBRUARY 1, 1997, FEBRUARY 3, 1996, AND JANUARY 28, 1995
<TABLE>
                                       1997         1996        1995
<S>                               <C>          <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:             
  Net income                      $ 1,837,626  $  581,640    $3,624,251
  Adjustments to reconcile net income to net cash
    provided by (used in) operating activities:                                 
    Depreciation and amortization   4,198,197   4,457,778     3,969,509
    Deferred income taxes            (346,582)   (199,209)      606,194
    Amortization of deferred gain 
     on sale and leaseback         (1,697,217) (1,302,992)   (1,186,055)
    Gain on sale of store                                    (1,373,658)
    Change in operating assets and liabilities:                            
        Accounts receivable           147,484   3,957,543    (2,057,515)
        Inventories                (3,184,439)    534,626    (7,400,264)
        Prepaid expenses              213,237    (560,145)       76,598
        Other assets                  (27,639)                   45,426
        Accounts payable - trade    1,899,283     722,576     1,084,972
        Accrued liabilities         3,726,055  (6,620,863)   (1,264,068)
                    
          Net cash provided by (used in) operating activities
                                    6,766,005   1,570,954    (3,874,610)
                    
CASH FLOWS FROM INVESTING ACTIVITIES:                  
  Purchase of property, plant, and equipment
                                   (5,242,358) (2,528,970)   (6,527,906)
  Proceeds from sale of property, plant, and equipment
                                    4,820,027   5,040,000     3,900,000
                    
          Net cash provided by (used in) investing activities
                                     (422,331)  2,511,030    (2,627,906)
                    
CASH FLOWS FROM FINANCING ACTIVITIES:                  
  Net decrease in short-term 
     borrowings                    (2,500,000) (9,000,000)   (4,500,000)
  Proceeds from long-term debt                  8,093,095    12,807,776
  Principal payments on long-term 
     debt                          (1,611,007)   (263,919)   (1,705,379)
  Principal payments on obligations
      under capital leases         (2,237,721) (1,730,540)   (1,570,136)
  Proceeds from sale of capital 
      stock                           166,830     164,769       155,017
  Purchase of treasury stock          (79,816)    (54,035)      (14,202)
  Cash dividends                   (1,312,739) (1,292,160)   (1,287,153)       
          Net cash provided by (used in) financing activities
                                   (7,574,453) (4,082,790)    3,885,923
               
NET DECREASE IN CASH AND CASH           
  EQUIVALENTS                      (1,230,779)       (806)   (2,616,593)

CASH AND CASH EQUIVALENTS AT            
  BEGINNING OF YEAR                 2,698,087   2,698,893     5,315,486
               
CASH AND CASH EQUIVALENTS AT 
  END OF YEAR                     $ 1,467,308 $ 2,698,087    $2,698,893
</TABLE>
                                   (continued)
ZIONS COOPERATIVE MERCANTILE INSTITUTION                              
                              
STATEMENTS OF CASH FLOWS                          
FOR THE YEARS ENDED FEBRUARY 1, 1997, FEBRUARY 3, 1996, AND JANUARY 28, 1995    
<TABLE>
                                        1997      1996        1995 
                              
<S>                                 <C>         <C>          <C>
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS                           
  INFORMATION:                          
  Cash paid during the year for:                            
    Interest                        $4,434,585  $5,077,498   $3,949,228
    Income taxes                       145,676   1,468,899    1,347,116       
                                                  
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING                            
  AND FINANCING ACTIVITIES:                                           
  Capital lease obligations incurred for the acquisition                       
    of property under capital lease                          $1,162,097
  Deferred gain on sale and leaseback of property, plant,             
    and equipment                    3,605,000   2,050,948    1,665,298    
  Transfer from long-term debt to short-term                          
    borrowings - banks              10,000,000                        
  Increase (decrease) in accrued liabilities and                       
    corresponding decrease (increase) in stockholders'                         
    equity due to pension liability adjustment (Note 6)
                                       163,000  3,054,000
  Decrease (increase) in deferred tax assets and                       
    corresponding increase (decrease) in stockholders'                         
    equity due to pension liability adjustment (Note 6)
                                       (61,125)(1,145,250)
</TABLE>
                              
See notes to financial statements.             (Concluded)                 

<PAGE>
ZIONS COOPERATIVE MERCANTILE INSTITUTION
NOTES TO FINANCIAL STATEMENTS
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED FEBRUARY 1, 1997

1.   SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES

Nature of Operations - Zions Cooperative Mercantile Institution (ZCMI) was
organized as a Utah corporation in 1868 and was the first full-line department
store in the United States.  ZCMI is in the retail line of business, operating
both full-line conventional department stores and men's and women's ready to 
wear specialty stores and outlet stores.  The full-line conventional department 
stores are located in Salt Lake City and Ogden, Utah and in regional shopping 
centers in the suburban Salt Lake City, Orem, Logan, Sandy, Layton, and St. 
George, Utah areas and in Pocatello and Idaho Falls, Idaho.  The specialty and 
outlet stores are located in Provo and St. George, Utah.

Use of Estimates in Preparing Financial Statements - The preparation of 
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and 
liabilities at the date of the financial statements and the reported amounts of 
revenues and expenses during the reporting period.  Actual results could differ
from those estimates.

Inventories - Substantially all inventories are valued at the lower of cost or
market, using the retail method, on the last-in, first-out (LIFO) basis.  If the
inventories had been valued on the first-in, first-out basis, total inventory
values would have been approximately $6,600,000 and $6,500,000 higher at Feb.
1, 1997 and February 3, 1996, respectively.

Property, Plant, and Equipment - Property, plant, and equipment are stated at
cost. For financial statement purposes, the straight-line method of depreciation
is used for buildings, and the sum-of-the-years digits and straight-line methods
are used for leasehold improvements and furniture, fixtures, and equipment, over
estimated useful lives ranging from 3 to 50 years.  See Note 2 for information
concerning leased property under capital leases.

Net Sales and Other Income - Net sales includes proceeds, net of returns, from
merchandise, services, and licensed departments.  The sales of licensed
departments amounted to approximately $22,914,000, $21,690,000, and $20,423,000
for the years ended February 1, 1997, February 3, 1996, and January 28, 1995,
respectively.  Included in net sales are finance charges on retail credit
accounts receivable totaling approx. $5,653,000, $5,716,000, and $5,830,000
for the years ended February 1, 1997, February 3, 1996, and January 28, 1995,
respectively.  Net sales and other income also include the amortization of
deferred gain on sale and leaseback totaling approximately $1,697,000,
$1,303,000, and $1,186,000 for the years ended February 1, 1997, February 3,
1996, and January 28, 1995, respectively (see Note 2).

Income Taxes - ZCMI accounts for its taxes based on Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes".  The Statement
requires an asset and liability approach for financial accounting and reporting
for income taxes.

Net Income Per Common and Common Equivalent Share - Net income per common and
common equivalent share is based on weighted average shares outstanding for the
years ended February 3, 1996 and January 28, 1995.  For the year ended February
1, 1997, the computation includes common stock equivalents which assumes the
exercise of options or grants of unvested shares of common stock granted under
employee benefit plans (see Note 5).  This computation resulted in assumed
weighted average shares outstanding of 2,189,232 for the year ended February 1,
1997, 2,153,600 for the year ended February 3, 1996, and 2,148,202 for the year
ended January 28, 1995.  Stock options were excluded from the computation of per
share amounts for the years ended February 3, 1996 and January 28, 1995 because
they were antidilutive or because the dilutive effect was not material.

Statements of Cash Flows - For purposes of the statements of cash flows, ZCMI
considers short-term investments with original maturities of three months or
less, to be cash equivalents.

Fiscal Year - ZCMI's fiscal year ends on the Saturday nearest the end of 
January.


2.   COMMITMENTS AND CONTINGENCIES

ZCMI has noncancelable leases covering store premises, fixtures, and equipment
which expire on various dates to 2017.  Leases covering store premises contain
provisions for additional annual lease payments based on a percentage of sales
and have renewal options for various additional periods ranging up to 68 years.

Minimum rentals of capital leases have been capitalized at the present value of
the rentals at the inception of the lease and the obligation for such amount is
recorded as a liability.  Amortization of capital lease property, which is
included with depreciation expense, is computed on the straight-line basis over
the lease terms and interest expense is accrued on the basis of the outstanding
lease obligation.

Leased property under capital leases by major classes as of February 1, 1997 and
February 3, 1996 is as follows (see Note 7):
<TABLE>
                                                1997                1996
<S>                                          <C>                 <C>
Buildings and improvements                   $15,747,559         $15,747,559
Furniture, fixtures, and equipment            15,617,183          15,617,183
               
Total                                         31,364,742          31,364,742
Less accumulated amortization                 20,148,406          18,114,174
               
Net assets under capital leases              $11,216,336         $13,250,568
</TABLE>
Approximate future minimum lease payments on both capital and noncancelable
operating leases at February 1, 1997 were as follows:
<TABLE>
 
                                               Capital           Operating
                                               Leases              Leases
<S>                                          <C>                 <C>
Year ending:             
  1998                                       $ 3,589,001         $ 9,872,589
  1999                                         3,090,501           9,720,054
  2000                                         2,843,177           9,246,832
  2001                                         2,104,778           9,233,927
  2002                                         1,711,840           6,715,461
  Later years                                 23,336,084          26,636,755
               
Total minimum lease payments                  36,675,381         $71,425,618
Less amount representing interest             18,101,927
               
Present value of net minimum lease payments   18,573,454
Less current portion                           1,864,206
               
Long-term portion                            $16,709,248
</TABLE>
          

Approximate total operating lease expense was as follows:
<TABLE>
                                                Year Ended
                                       1997         1996           1995
<S>                                <C>            <C>            <C>
Minimum rentals on noncancelable                       
  operating leases                 $9,520,162     $8,773,000     $8,025,000
Contingent rentals on noncancelable                                   
  operating leases                     91,000         99,000         55,000
Other operating lease expenses        139,000        696,000        700,000
                         
Total                              $9,750,162     $9,568,000     $8,780,000
</TABLE>
                         

Contingent rentals on capital leases, which were included in expense, totaled
approximately $274,000, $251,000, and $251,000 for the years ended February 1,
1997, February 3, 1996, and January 28, 1995, respectively.

During the years ended February 1, 1997, February 3, 1996, and January 28, 1995,
ZCMI sold certain furniture, fixtures, and equipment with a net book value of
approximately $1,215,000, $2,989,000, and $35,000 for approximately $4,820,000,
$5,040,000, and $1,700,000, respectively.  ZCMI agreed to lease back such
furniture, fixtures, and equipment under operating lease agreements.  The
resulting gains on sale for the years ended February 1, 1997, February 3, 1996,
and January 28, 1995 of approximately $3,605,000, $2,051,000, and $1,665,000,
respectively, are being amortized over the lease terms ranging from 5 to 10
years. Amortization of gains on all sale leasebacks for the years ended February
1, 1997, February 3, 1996, and January 28, 1995 totaled approx. $1,697,000, 
$1,303,000, and $1,186,000, respectively.

3.   INCOME TAXES

ZCMI has recorded current deferred tax assets and net long-term deferred tax
liabilities as of February 1, 1997 and February 3, 1996 as follows:
<TABLE>
                                 1997                       1996    
                         Current      Long-Term     Current      Long-Term
<S>                    <C>          <C>            <C>           <C>
Deferred tax assets    $1,483,391   $ 2,630,077    $2,015,807    $2,902,983
Deferred tax liabilities             (2,433,942)                 (3,585,846)

Total                  $1,483,391   $   196,135    $2,015,807    $ (682,863)
</TABLE>
                         
Deferred tax assets and liabilities as of February 1, 1997 and February 3, 1996
consisted of the following temporary differences and carryforward items:
<TABLE>
                                      1997                   1996   
Assets                          Current  Long-Term     Current    Long-Term
                         
<S>                          <C>         <C>        <C>          <C>
Allowance for doubtful                       
  accounts receivable        $  500,307             $  489,214
Deferred gross profit on sale                     
  leaseback  transactions                $2,630,077              $ 1,914,648
Accrued vacation expense                          
  not currently  recognized                  
  for income tax purposes       342,052                286,527
Pension liability adjustment    573,359              1,145,250
Net property, plant, and                
  equipment for tax in excess                     
  of financial reporting                                             988,335
Other                            67,673                 94,816

Total                        $1,483,391  $2,630,077 $2,015,807   $ 2,902,983

Liabilities                        
                         
Net property, plant, and
  equipment for financial
  reporting in excess of tax
  basis                                 $  (920,168)
Capital and operating leases                      
  treated differently for                         
  income tax purposes                    (1,513,774)             $(3,585,846)
                         
Total                           None    $(2,433,942)   None      $(3,585,846)
</TABLE>
Computed "expected" income taxes on income for financial reporting purposes are
reconciled to income tax expense as follows:
<TABLE>
                                                 Year Ended          
                                       1997          1996       1995
<S>                                <C>            <C>        <C>
Federal income taxes at the statutory 
rate                               $  882,449     $ 274,327  $1,983,530
Increase (decrease) resulting from:                                        
  State income taxes                  102,533        27,377     198,185
  Other                              (301,326)     (100,913)   (138,738)
               
Income tax expense                 $  683,656     $ 200,791  $2,042,977
               
Consisting of:           
               
Current:            
  Federal                          $  893,047     $ 357,280  $1,274,744
  State                               137,191        42,720     162,039
               
  Total                             1,030,238       400,000   1,436,783
               
Deferred:           
  Federal                            (311,924)     (177,933)    541,453
  State                               (34,658)      (21,276)     64,741
               
  Total                              (346,582)     (199,209)    606,194
               
Total expense                      $  683,656     $ 200,791  $2,042,977
</TABLE>

4.   SHORT-TERM BORROWINGS AND LONG-TERM DEBT

Short-term borrowings and long-term debt consisted of the following at year end:
<TABLE>
                                                 1997               1996
<S>                                          <C>                 <C>
Unsecured notes payable to banks under lines of credit,
  due at various dates through June 1998     $34,000,000         $37,800,873
Mortgage note, 8%, due in monthly installments through                    
  February 2003                                1,245,044           1,402,819
Note payable, 10.255%, due in quarterly installments   
  through December 2002                        1,341,031           1,493,390
          
Total                                         36,586,075          40,697,082
Less current portion                          10,340,041           2,810,654
          
Long-term portion                            $26,246,034         $37,886,428
</TABLE>
          
Interest rates on the borrowings under lines of credit are negotiable.  At
February 1, 1997 and February 3, 1996, interest rates on these borrowings
averaged 6.4% and 6.7%, respectively.

Land and buildings with net book values of approximately $2,062,000 and
$2,140,000 at February 1, 1997 and February 3, 1996, respectively, were pledged
as collateral to the mortgage notes.  Furniture, fixtures, and equipment with a
net book value of approximately $1,353,060 at February 1, 1997 was pledged as
collateral on the note payable having a balance of $1,341,031 as of February 1,
1997.

Short-term borrowings and long-term debt at February 1, 1997 matures as follows:
<TABLE>
                                                    Amount   
<S>                                               <C>
Year ending:        
  1998                                            $10,340,041    
  1999                                             24,353,238    
  2000                                                404,474    
  2001                                                442,888
  2002                                                484,999    
  Thereafter                                          560,435    
          
  Total                                           $36,586,075
</TABLE>
          
          ZCMI had unused lines of credit available with various banks totaling
approximately $26,000,000 at February 1, 1997.  This amount is generally
available at the prime interest rate or lower.  In addition to the lines of
credit, ZCMI had available letters of credit totaling $2,000,000.  Open letters
of credit at February 1, 1997 amounted to approximately $1,331,975.

5.   EMPLOYEE STOCK OPTIONS

ZCMI had an incentive stock option plan for its key employees which expired in
1992, under which options to purchase capital stock were granted at a price not
less than fair market value on the date of grant.  Changes in options granted
under this incentive stock option plan and other related information are as
follows:
<TABLE>
                                                    Year Ended  
                                             1997       1996      1995
<S>                                          <C>       <C>       <C>
Options outstanding - beginning of year      5,000     18,900    19,900
Granted                                      None       None      None  
Exercised                                    None       None      None  
Forfeited                                    None     (13,900)   (1,000)
                              
Options outstanding - end of year            5,000      5,000    18,900
                              
Options exercisable                          5,000      5,000    18,900
                              
Price of outstanding options                $16.50     $16.50    $14.00 
                                                                   to
                                                                 $16.50 
</TABLE>
During the year ended February 1, 1997, ZCMI instituted the Equity-Based
Incentive Plan under which options to purchase capital stock were granted at a
price not less than the fair market value on the date of the grant.  Changes in
options granted under the plan and the fair market value of such options is as
follows:
<TABLE>
                                             Number    Exercise
                                             of Shares Price     
<S>                                          <C>       <C>
Outstanding - beginning of year               None
Granted                                      124,000   $11.25
Canceled                                      None
Exercised                                     None
               
Outstanding - end of year                    124,000   $11.25
               
Options exercisable                           None
               
Remaining contractual life                 9.6 years
               
Fair market value of options granted                   $ 1.67
</TABLE>
ZCMI accounts for stock options granted using Accounting Principles Board 
Opinion No. 25. Accordingly, no compensation cost has been recognized for its 
fixed stock option plan.  Had compensation cost for ZCMI's stock based 
compensation plan been determined based on the fair value at the grant dates 
for awards under those plans consistent with Statement of Financial Accounting
Standards (SFAS) No. 123, ZCMI's net income and net income per common and common
equivalent share would have changed to the pro forma amounts indicated below:
<TABLE>
                                                  Year Ended   
                                                  February 1,
                                                     1997
<S>                                               <C>
Net income:              
  As reported                                     $1,837,626
  Pro forma                                        1,824,564
               
Net income per common and common equivalent share:               
  As reported                                        $0.84
  Pro forma                                           0.83
</TABLE>
The fair value of each option grant is estimated on the date of the grant using
the Black-Scholes option-pricing model with the following weighted-average
assumptions used for grants:  dividend yield of 5.33%; expected volatility of
17.29%; risk-free interest rates ranging from 6.14% to 6.57%; and expected lives
ranging from 2.75 years to 10 years subsequent to vesting dates.

As part of the Equity Based Incentive Plan, restricted stock awards were granted
to certain officers of ZCMI.  Under this grant, 46,000 non-vested restricted
stock awards were granted during the year ended February 1, 1997.  The fair
market value of this grant was determined to be $517,500.  The shares vest from
1999 through 2007 with the total compensation cost related to this grant to be
recognized from the date of grant through the final vesting date.  During the
year ended February 1, 1997, ZCMI recorded $26,606 of compensation expense
related to this grant.

6.   EMPLOYEE BENEFIT PLANS

ZCMI has a trusteed, noncontributory retirement plan covering substantially all
of its employees.  Benefits are based on years of service and compensation
history.  ZCMI's funding policy is to contribute annually the minimum amount
required by law.

The components of the net pension cost for the years ended February 1, 1997,
February 3, 1996, and January 28, 1995 were as follows:
<TABLE>
                                                   Year Ended   
                                        1997           1996           1995
<S>                                <C>            <C>            <C>
Service cost - benefits earned during 
          year                     $   567,000    $   445,000    $   562,000
Interest cost on projected benefit
          obligation                 2,017,000      1,975,000      1,876,000
Actual return on plan assets        (1,834,000)    (3,522,000)      (596,000)
Net amortization and deferral         (276,000)     1,500,000     (1,205,000)
               
Net periodic pension cost          $   474,000    $   398,000    $   637,000
</TABLE>
Actuarial assumptions used at January 1, 1996, 1995, and 1994 to compute the
above information were:
<TABLE>
                                             1996      1995      1994
<S>                                          <C>       <C>       <C>
Weighted average discount rate               7.75%     9.0%      8.0%
Rate of increase in compensation levels      4.0%      4.0%      4.0%
Expected long-term rate of return on assets  9.5%      9.5%      9.5%
</TABLE>
The following table sets forth the funded status and amounts recognized in 
ZCMI's balance sheets at February 1, 1997 and February 3, 1996, respectively,
as of the actuarial valuation dates shown:
<TABLE>
                                                      January 1,
                                                  1997          1996
<S>                                          <C>            <C>
Actuarial present value of benefit obligations:             
  Vested benefit obligation                  $(24,714,000)  $(24,889,000)
                                        
  Accumulated benefit obligation             $(25,097,000)  $(25,200,000)
               
  Projected benefit obligation               $(26,090,000)  $(26,025,000)
  Plan assets at fair value                    23,568,000     23,575,000
               
  Plan assets less than projected benefit 
    obligation                                 (2,522,000)    (2,450,000)
  Unrecognized prior service costs               (197,000)      (286,000)
  Unrecognized net loss                         4,823,000      5,092,000
  Unrecognized net obligation at February 1, 1986                          
    being recognized over 15 years               (742,000)      (927,000)
  Additional liability for unfunded accumulated   
    benefit obligation                         (2,891,000)    (3,054,000)
          
Pension liability recognized in the balance 
    sheet                                     $(1,529,000)   $(1,625,000)
</TABLE>
Actuarial assumptions used at January 1, 1997 and 1996 to compute the above
information were:
<TABLE>
                                                  1997           1996
<S>                                               <C>            <C>
Weighted average discount rate                    8.00%          7.75%
Rate of increase in compensation levels           4.00%          4.00%
</TABLE>
During the year ended February 3, 1996, ZCMI recognized the additional minimum
liability aspects of Statement of Financial Accounting Standards No. 87,
"Employers' Accounting for Pensions" (SFAS No. 87).  SFAS No. 87 requires the
recognition of an additional pension liability in the amount of the unfunded
accumulated benefit obligation in excess of accrued pension liability with an
equal amount to be recognized as either an intangible asset or a reduction of
equity.  Based upon plan actuarial and asset information as of February 3, 1996,
ZCMI recorded an increase to the pension liability of $3,054,000 and a decrease
to stockholders' equity of $1,908,750 ($3,054,000 less applicable deferred tax
asset of $1,145,250 related to the additional pension expense recognized for
financial statement purposes).

ZCMI has an employees' savings plan, which is a qualified, contributory savings
plan based on Section 401(k) of the Internal Revenue Code.  Total ZCMI
contributions for the years ended February 1, 1997, February 3, 1996, and Jan.
28, 1995 were approximately $214,000, $204,000, and $199,000, respectively. 
Under the plan, employees are also given the option to purchase ZCMI stock.  The
amended plan also allows ZCMI to elect to contribute shares of its common stock,
at current market prices, into the plan for up to 100% of the employer matching
contributions made to the plan for any period. As of February 1, 1997, no shares
have been contributed to this plan.

7.   RELATED PARTY TRANSACTIONS

ZCMI's Downtown Store and Service Center, with net book values of approximately
$7,529,000 and $7,922,000 at February 1, 1997 and Feb. 3, 1996, respectively,
are leased from a major stockholder under capital leases. Included in oblig.
under capital leases are approximately $13,768,000 and $13,988,000 at February
1, 1997 and February 3, 1996, respectively, pertaining to these leases.  Lease
payments of approximately $1,906,000 were made on these leases for each of the
years ended February 1, 1997, February 3, 1996, and January 28, 1995.  Included
in costs and expenses are transactions with companies in which a major ZCMI
stockholder has a significant interest totaling approximately $3,971,000,
$2,984,000, and $3,156,000 for the years ended February 1, 1997, February 3,
1996, and January 28, 1995, respectively. Included in net sales are transactions
with major ZCMI stockholders totaling approximately $350,000, $289,000, and
$351,000 for the years ended February 1, 1997, February 3, 1996, and January 28,
1995, respectively.

8.   RECENTLY ISSUED FINANCIAL ACCOUNTING STANDARDS

In February 1997, the Financial Accounting Standards Board issued SFAS No. 128,
"Earnings per Share".  This standard establishes standards for computing and
presenting earnings per share (EPS).  SFAS No. 128 simplifies the approach for
computing earnings per share previously found in Accounting Principles Board
Opinion (APB) Opinion No. 15.  It replaces the presentation of primary EPS with
a presentation of basic EPS.  It also requires dual presentation of basic and
diluted EPS on the face of the income statement for all entities with complex
capital structures.

Under the new statement, basic EPS excludes dilution and is computed by dividing
income available to common stockholders by the weighted-average number of common
shares outstanding for the period.  Diluted EPS reflects the potential dilution
that could occur if securities or other contracts to issue common stock were
exercised or converted into common stock.  Diluted EPS is computed similarly to
fully diluted EPS pursuant to APB Opinion No. 15.
SFAS No. 128 is effective for financial statements issued for periods ending
after December 15, 1997, including interim periods with earlier application not
permitted.  The computation of basic EPS under SFAS No. 128 would have resulted
in net income per common share of $.85, $.27, and $1.69 for the years ended
February 1, 1997, February 3, 1996, and January 28, 1995, respectively.  Diluted
EPS computed under FASB No. 128 would have resulted in net income per common
share of $.84, $.27, and $1.69 for the years ended February 1, 1997, February 3,
1996, and January 28, 1995, respectively.
                              ******