Consolidated Statements of Income - 4Q 2004 (Unaudited)
(All amounts in millions except percentages and per share figures)
| |
13 Weeks Ended |
52 Weeks Ended |
| |
January 29,
2005 |
January 31,
2004 |
January 29,
2005 |
January 31,
2004 |
| |
| Net Sales |
$5,074 |
$5,053 |
$15,630 |
$15,264 |
| |
| Cost of Sales (Note 1) |
3,001 |
2,981 |
9,297 |
9,099 |
| |
| Percent to sales |
59.1% |
59.0% |
59.5% |
59.6% |
| |
| Gross margin |
2,073 |
2,072 |
6,333 |
6,165 |
| |
| Percent to sales |
40.9% |
41.0% |
40.5% |
40.4% |
| |
Selling, general and administrative expenses
(Note 2) |
1,310 |
1,314 |
4,933 |
4,824 |
| |
| Percent to sales |
25.9% |
26.0% |
31.5% |
31.6% |
| |
| Operating income |
763 |
758 |
1,400 |
1,341 |
| |
| Percent to sales |
15.0% |
15.0% |
9.0% |
8.8% |
| |
| Interest expense – net (Note 3) |
(50) |
(61) |
(284) |
(257) |
| |
| Income before income taxes |
713 |
697 |
1,116 |
1,084 |
| |
| Federal, state and local income tax expense (Note 4) |
(273) |
(237) |
(427) |
(391) |
| |
| Net income |
$440 |
$460 |
$689 |
$693 |
| |
| Basic earnings per share |
$2.61 |
$2.55 |
$3.93 |
$3.76 |
| |
| Diluted earnings per share (Note 5) |
$2.55 |
$2.50 |
$3.86 |
$3.71 |
| |
| Average common shares: |
| Basic |
168.7 |
180.4 |
175.1 |
184.4 |
| Diluted |
172.4 |
183.9 |
178.2 |
186.6 |
| |
| Depreciation and amortization expense |
$204 |
$181 |
$737 |
$710 |
Notes:
(1) 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 and 52 weeks ended January 29, 2005 or January 31, 2004. For the 13 weeks ended January 29, 2005, cost of sales includes inventory valuation adjustments of $5 million related to the Macy's home store centralization. For the 52 weeks ended January 29, 2005, cost of sales includes inventory valuation adjustments of $36 million, including $31 million related to the Macy's home store centralization and $5 million related to the Burdines-Macy's consolidation.
(2) Selling, general and administrative ("SG&A") expenses include costs and expenses related to the Rich's-Macy's and Burdines-Macy's consolidations, centralizing the Macy's home store business and other store closings. For the 13 weeks ended January 29, 2005, SG&A expenses include store closing, centralization and consolidation costs of $8 million primarily related to the Macy's home store centralization. For the 52 weeks ended January 29, 2005, SG&A expenses include store closing, centralization and consolidation costs of $63 million, including Macy's home store centralization costs of $33 million and Burdines-Macy's consolidation costs of $10 million. For the 13 weeks ended January 31, 2004, SG&A expenses include store closing and consolidation costs of $12 million, including $4 million related to the Burdines-Macy's consolidation and $2 million related to the Rich's-Macy's consolidation. For the 52 weeks ended January 31, 2004, SG&A expenses include store closing and consolidation costs of $59 million, including $23 million related to the Rich's-Macy's consolidation and $13 million related to the Burdines-Macy's consolidation.
(3) Interest expense for the 52 weeks ended January 29, 2005 includes $59 million of costs, or $.20 per diluted share, associated with the repurchase of $274 million of Federated's 8.5% senior notes due 2010.
(4) Income tax expense was reduced $38 million, or $.21 per diluted share for the 13 weeks ended January 31, 2004 and $.20 per diluted share for the 52 weeks ended January 31, 2004, due to a change in estimate of the effective tax rate that existing deferred tax assets and liabilities will ultimately be settled.
(5) For the 13 and 52 weeks ended January 29, 2005, store closing and consolidation costs and Macy's home store centralization costs (See notes 1 and 2) amounted to $.04 and $.34 per diluted share, respectively. For the 13 and 52 weeks ended January 31, 2004, store closing and consolidation costs (See note 2) amounted to $.04 and $.19 per diluted share, respectively.
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