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Consolidated Statements of Income - 4Q 2007 (Unaudited) (Note 1)
(All amounts in millions except percentages and per share figures)
| |
13 Weeks Ended |
14 Weeks Ended |
| |
February 2,
2008 |
February 3,
2007 |
| |
$ |
% to
Net Sales |
$ |
% to
Net Sales |
| |
| Net sales |
$8,594 |
|
$9,159 |
|
| |
| Cost of sales – recurring (Note 2) |
5,021 |
58.4% |
5,409 |
59.1% |
| |
| Gross margin – recurring |
3,573 |
41.6% |
3,750 |
40.9% |
| |
Inventory valuation adjustments –
May integration (Note 3) |
- |
-% |
(10) |
(0.1%) |
| |
| Gross margin |
3,573 |
41.6% |
3,740 |
40.8% |
| |
| Selling, general and administrative expenses |
(2,282) |
(26.6%) |
(2,313) |
(25.2%) |
| |
| May integration costs (Note 4) |
(69) |
(0.8%) |
(167) |
(1.8%) |
| |
| Operating income |
1,222 |
14.2% |
1,260 |
13.8% |
| |
| Interest expense – net (Note 5) |
(136) |
|
(49) |
|
| |
| Income from continuing operations before income taxes |
1,086 |
|
1,211 |
|
| |
| Federal, state and local income tax expense (Note 6) |
(336) |
|
(451) |
|
| |
| Income from continuing operations |
750 |
|
760 |
|
| |
| Discontinued operations, net of income taxes (Note 7) |
- |
|
(27) |
|
| |
| Net income |
$750 |
|
$733 |
|
| |
| Basic earnings (loss) per share: |
| Income from continuing operations |
$1.74 |
|
$1.47 |
|
| Loss from discontinued operations |
- |
|
(.05) |
|
| Net income |
$1.74 |
|
$1.42 |
|
| |
| Diluted earnings (loss) per share: |
| Income from continuing operations |
$1.73 |
|
$1.45 |
|
| Loss from discontinued operations |
- |
|
(.05) |
|
| Net income |
$1.73 |
|
$1.40 |
|
| |
| Average common shares: |
| Basic |
432.1 |
|
516.0 |
|
| Diluted |
434.7 |
|
523.7 |
|
| |
| End of period common shares outstanding |
419.7 |
|
496.9 |
|
| |
| Depreciation and amortization expense |
$327 |
|
$320 |
|
Notes:
(1) The May Department Stores Company ("May") was acquired August 30, 2005. The Lord & Taylor division and the Bridal Group, consisting of David's Bridal, After Hours Formalwear and Priscilla of Boston, were subsequently sold to third parties. The sale of the Lord & Taylor division was completed in October 2006, the sale of David's Bridal and Priscilla of Boston was completed in January 2007 and the sale of After Hours Formalwear was completed in April 2007.
(2) Merchandise inventories are primarily valued at the lower of cost or market using the last-in, first-out (LIFO) retail inventory method. Application of this method did not impact cost of sales for the 13 weeks ended February 2, 2008 or the 14 weeks ended February 3, 2007.
(3) Represents inventory valuation adjustments associated with the combination and integration of Macy's and May's merchandise assortments.
(4) Represents costs and expenses associated with the integration and consolidation of May's operations into Macy's operations, including costs related to closed locations, system conversion costs and costs related to other operational consolidations. For the 13 weeks ended February 2, 2008, May integration costs also includes approximately $74 million of impairment charges with respect to the recently announced closure of 9 underperforming May stores and approximately $41 million in gains from the sale of 3 previously closed distribution center facilities. For the 13 weeks ended February 2, 2008 and the 14 weeks ended February 3, 2007, May integration costs and related inventory valuation adjustments (see Note 3) amounted to $.10 and $.21 per diluted share, respectively.
(5) Interest expense - net for the 14 weeks ended February 3, 2007 included a gain of approximately $54 million, or $.06 per diluted share, related to the completion of a debt tender offer.
(6) Income tax expense for the 13 weeks ended February 2, 2008 reflects approximately $78 million, or $.18 per diluted share, of tax benefits related to the settlement of a federal income tax examination, primarily attributable to losses related to the disposition of a former subsidiary.
(7) Represents the results of operations of Lord & Taylor and the Bridal Group. For the 14 weeks ended February 3, 2007, discontinued operations also included the loss on disposal of David's Bridal and Priscilla of Boston of $22 million on a pre-tax basis, or $18 million after income taxes, or $.03 per diluted share.
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Consolidated Statements of Income - 4Q 2007 (Unaudited) (Note 1)
(All amounts in millions except percentages and per share figures)
| |
52 Weeks
Ended |
53 Weeks
Ended |
| |
February
2,
2008 |
February
3,
2007 |
| |
$ |
% to
Net Sales |
$ |
% to
Net Sales |
| |
| Net sales |
$26,313 |
|
$26,970 |
|
| |
| Cost of sales – recurring (Note 2) |
15,677 |
59.6% |
16,019 |
59.4% |
| |
| Gross margin – recurring |
10,636 |
40.4% |
10,951 |
40.6% |
| |
Inventory valuation adjustments –
May integration (Note 3) |
- |
-% |
(178) |
(0.7%) |
| |
| Gross margin |
10,636 |
40.4% |
10,773 |
39.9% |
| |
| Selling, general and administrative expenses |
(8,554) |
(32.5%) |
(8,678) |
(32.2%) |
| |
| May integration costs (Note 4) |
(219) |
(0.8%) |
(450) |
(1.6%) |
| |
| Gain on the sale of accounts receivable (Note 5) |
- |
-% |
191 |
0.7% |
| |
| Operating income |
1,863 |
7.1% |
1,836 |
6.8% |
| |
| Interest expense – net (Note 6) |
(543) |
|
(390) |
|
| |
| Income from continuing operations before income taxes |
1,320 |
|
1,446 |
|
| |
| Federal, state and local income tax expense (Note 7) |
(411) |
|
(458) |
|
| |
| Income from continuing operations |
909 |
|
988 |
|
| |
| Discontinued operations, net of income taxes (Note 8) |
(16) |
|
7 |
|
| |
| Net Income |
$893 |
|
$995 |
|
| |
| Basic earnings (loss) per share: |
| Income from continuing operations |
$2.04 |
|
$1.83 |
|
| Income (loss) from discontinued
operations |
(.04) |
|
.01 |
|
| Net income |
$2.00 |
|
$1.84 |
|
| |
| Diluted earnings (loss) per share: |
| Income from continuing operations |
$2.01 |
|
$1.80 |
|
| Income (loss) from discontinued operations |
(.04) |
|
.01 |
|
| Net income |
$1.97 |
|
$1.81 |
|
| |
| Average common shares: |
| Basic |
446.6 |
|
540.0 |
|
| Diluted |
451.8 |
|
547.7 |
|
| |
| End of period common shares outstanding |
419.7 |
|
496.9 |
|
| |
| Depreciation and amortization expense |
$1,304 |
|
$1,265 |
|
Notes:
(1) The May Department Stores Company ("May") was acquired August 30, 2005. The Lord & Taylor division and the Bridal Group, consisting of David's Bridal, After Hours Formalwear and Priscilla of Boston, were subsequently sold to third parties. The sale of the Lord & Taylor division was completed in October 2006, the sale of David's Bridal and Priscilla of Boston was completed in January 2007 and the sale of After Hours Formalwear was completed in April 2007.
(2) Merchandise inventories are primarily valued at the lower of cost or market using the last-in, first-out (LIFO) retail inventory method. Application of this method did not impact cost of sales for the 52 weeks ended February 2, 2008 or the 53 weeks ended February 3, 2007.
(3) Represents inventory valuation adjustments associated with the combination and integration of Macy's and May's merchandise assortments.
(4) Represents costs and expenses associated with the integration and consolidation of May's operations into Macy's operations, including costs related to closed locations, system conversion costs and costs related to other operational consolidations. For the 52 weeks ended February 2, 2008, May integration costs also includes approximately $121 million of impairment charges with respect to the announced closure of certain distribution center facilities and 9 underperforming May stores and approximately $41 million in gains from the sale of 3 previously closed distribution center facilities. May integration costs for the 53 weeks ended February 3, 2007 were partially offset by gains from the sale of Macy's locations. For the 52 weeks ended February 2, 2008 and the 53 weeks ended February 3, 2007, May integration costs and related inventory valuation adjustments (see Note 3) amounted to $.31 and $.72 per diluted share, respectively.
(5) Represents the gains recognized on the sale of Macy's remaining proprietary and non-proprietary credit card accounts and related receivables. For the 53 weeks ended February 3, 2007, the after-tax net gain amounted to $.22 per diluted share.
(6) Interest expense - net for the 53 weeks ended February 3, 2007 included a gain of approximately $54 million, or $.06 per diluted share, related to the completion of a debt tender offer and approximately $17 million of interest income related to the settlement of a federal income tax examination.
(7) Income tax expense for the 52 weeks ended February 2, 2008 reflects approximately $78 million, or $.17 per diluted share, of tax benefits related to the settlement of a federal income tax examination, primarily attributable to losses related to the disposition of a former subsidiary. Income tax expense for the 53 weeks ended February 3, 2007 reflected approximately $80 million of tax benefits related to the settlement of a federal income tax examination, also primarily attributable to losses related to the disposition of a former subsidiary. The total impact of the tax settlement in the 53 weeks ended February 3, 2007, including interest income (see Note 6), amounted to $.16 per diluted share.
(8) Represents the results of operations of Lord & Taylor and the Bridal Group. For the 52 weeks ended February 2, 2008, discontinued operations also includes the loss on disposal of After Hours Formalwear of $7 million on a pre-tax and after-tax basis, or $.01 per diluted share. For the 53 weeks ended February 3, 2007, discontinued operations also included the loss on disposal of the Lord & Taylor division of $63 million on a pre-tax basis, or $38 million after income taxes, or $.07 per diluted share and the loss on disposal of David's Bridal and Priscilla of Boston of $22 million on a pre-tax basis, or $18 million after income taxes, or $.03 per diluted share.
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Consolidated Financial Statements:
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