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Consolidated Statements of Income - 4Q 2005 (Unaudited) (Note 1)
(All amounts in millions except percentages and per share figures)
| |
13 Weeks Ended |
| |
January 28,
2006 |
January 29,
2005 |
| |
$ |
% to
Net Sales |
$ |
% to
Net Sales |
| |
| Net sales |
$9,571 |
|
$5,120 |
|
| |
| Cost of sales – recurring (Note 2) |
5,658 |
59.1% |
3,027 |
59.1% |
| |
| Gross margin - recurring |
3,913 |
40.9% |
2,093 |
40.9% |
| |
Inventory valuation adjustments –
May integration (Note 3) |
(25) |
(.3%) |
– |
–% |
| |
| Gross margin |
3,888 |
40.6% |
2,093 |
40.9% |
| |
| Selling, general and administrative expenses (Note 4) |
(2,588) |
(27.0%) |
(1,330) |
(26.0%) |
| |
| May integration costs (Note 5) |
(106) |
(1.1%) |
– |
–% |
| |
| Operating income |
1,194 |
12.5% |
763 |
14.9% |
| |
| Interest expense - net (Note 6) |
(127) |
|
(50) |
|
| |
| Income from continuing operations before income taxes |
1,067 |
|
713 |
|
| |
| Federal, state and local income tax expense (Note 7) |
(389) |
|
(273) |
|
| |
| Income from continuing operations |
678 |
|
440 |
|
| |
| Discontinued operations, net of income taxes (Note 8) |
21 |
|
– |
|
| |
| Net Income |
$699 |
|
$440 |
|
| |
| Basic earnings per share: |
| Income from continuing operations |
$2.48 |
|
$2.61 |
|
| Income from discontinued operations |
.08 |
|
– |
|
| Net income |
$2.56 |
|
$2.61 |
|
| |
| Diluted earnings per share (Note 9): |
| Income from continuing operations |
$2.45 |
|
$2.55 |
|
| Income from discontinued operations |
.07 |
|
– |
|
| Net income |
$2.52 |
|
$2.55 |
|
| |
| Average common shares: |
| Basic |
272.9 |
|
168.7 |
|
| Diluted |
277.1 |
|
172.4 |
|
| |
| Depreciation and amortization expense |
$328 |
|
$204 |
|
Notes:
(1) The May Department Stores Company ("May") was acquired August 30, 2005. The results of operations of May have been included in Federated's results of operations from the date of acquisition. Certain reclassifications were made to prior period amounts to conform with the classifications of such amounts for the most recent period.
(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 and 52 weeks ended January 28, 2006 or January 29, 2005. 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.
(3) Represents inventory valuation adjustments associated with the combination and integration of Federated and May merchandise assortments.
(4) For the 13 weeks ended January 29, 2005, SG&A expenses include $8 million of costs incurred in connection with the Macy's home store centralization, the Burdines-Macy's consolidation and other store closings.
(5) Represents costs and expenses associated with the integration and consolidation of May's operations into Federated's operations, primarily impairment charges for certain Federated stores planned to be closed.
(6) Interest expense for the 13 weeks ended January 28, 2006, includes $17 million of interest income related to the settlement of various tax examinations.
(7) Federal, state and local income tax expense for the 13 weeks ended January 28, 2006, includes a $10 million reduction in tax expense related to the settlement of various tax examinations.
(8) Represents the acquired operations of Lord & Taylor and the Bridal Group, including David's Bridal, After Hours Formalwear and Priscilla of Boston, which are being divested.
(9) For the 13 weeks ended January 28, 2006, May integration costs and related inventory valuation adjustments (See Notes 3 and 5) amounted to $.29 per diluted share. For the 13 weeks ended January 29, 2005, store closing and consolidation costs and Macy's home store centralization costs (See notes 2 and 4) amounted to $.04 per diluted share.
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Consolidated Statements of Income - 4Q 2005 (Unaudited) (Note 1)
(All amounts in millions except percentages and per share figures)
| |
52 Weeks Ended |
| |
January 28,
2006 |
January 29,
2005 |
| |
$ |
% to
Net Sales |
$ |
% to
Net Sales |
| |
| Net sales |
$22,390 |
|
$15,776 |
|
| |
| Cost of sales – recurring (Note 2) |
13,272 |
59.3% |
9,382 |
59.5% |
| |
| Gross margin - recurring |
9,118 |
40.7% |
6,394 |
40.5% |
| |
Inventory valuation adjustments –
May integration (Note 3) |
(25) |
(.1%) |
– |
–% |
| |
| Gross margin |
9,093 |
40.6% |
6,394 |
40.5% |
| |
| Selling, general and administrative expenses (Note 4) |
(6,980) |
(31.2%) |
(4,994) |
(31.6%) |
| |
| May integration costs (Note 5) |
(169) |
(.7%) |
– |
– |
| |
| Gain on the sale of accounts receivable (Note 6) |
480 |
2.1% |
– |
– |
| |
| Operating income |
2,424 |
10.8% |
1,400 |
8.9% |
| |
| Interest expense - net (Note 7) |
(380) |
|
(284) |
|
| |
| Income from continuing operations before income taxes |
2,044 |
|
1,116 |
|
| |
| Federal, state and local income tax expense (Note 8) |
(671) |
|
(427) |
|
| |
| Income from continuing operations |
1,373 |
|
689 |
|
| |
| Discontinued operations, net of income taxes (Note 9) |
33 |
|
– |
|
| |
| Net Income |
$1,406 |
|
$689 |
|
| |
| Basic earnings per share: |
| Income from continuing operations |
$6.44 |
|
$3.93 |
|
| Income from discontinued operations |
.16 |
|
– |
|
| Net income |
$6.60 |
|
$3.93 |
|
| |
| Diluted earnings per share (Note 10): |
| Income from continuing operations |
$6.32 |
|
$3.86 |
|
| Income from discontinued operations |
.15 |
|
– |
|
| Net income |
$6.47 |
|
$3.86 |
|
| |
| Average common shares: |
| Basic |
213.0 |
|
175.1 |
|
| Diluted |
217.3 |
|
178.2 |
|
| |
| Depreciation and amortization expense |
$978 |
|
$737 |
|
Notes:
(1) The May Department Stores Company ("May") was acquired August 30, 2005. The results of operations of May have been included in Federated's results of operations from the date of acquisition. Certain reclassifications were made to prior period amounts to conform with the classifications of such amounts for the most recent period.
(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 January 28, 2006 or January 29, 2005. For the 52 weeks ended January 29, 2005, cost of sales includes inventory valuation adjustments of $36 million related to the Macy's home store centralization and the Burdines-Macy's consolidation.
(3) Represents inventory valuation adjustments associated with the combination and integration of Federated and May merchandise assortments.
(4) For the 52 weeks ended January 29, 2005, SG&A expenses include $63 million of costs incurred in connection with the Macy's home store centralization, the Burdines-Macy's consolidation and other store closings.
(5) Represents costs and expenses associated with the integration and consolidation of May's operations into Federated's operations, primarily impairment charges for certain Federated stores planned to be closed.
(6) Represents the gain recognized on the sale of the Company's proprietary and non-proprietary credit card accounts receivable. For the 52 weeks ended January 28 2006, the after-tax net gain amounted to $1.77 per diluted share.
(7) Interest expense for the 52 weeks ended January 28, 2006, includes $17 million of interest income related to the settlement of various tax examinations. Interest expense for the 52 weeks ended January 29, 2005 includes $59 million of one-time costs, or 20 cents a diluted share, associated with the repurchase of $274 million of Federated's 8.5% senior notes due 2010.
(8) Federal, state and local income tax expense for the 52 weeks ended January 28, 2006 was reduced by approximately $85 million to recognize capital loss carryforwards realized as a result of the sale of certain credit card accounts receivable and $10 million related to the settlement of various tax examinations.
(9) Represents the acquired operations of Lord & Taylor and the Bridal Group, including David's Bridal, After Hours Formalwear and Priscilla of Boston, which are being divested.
(10) For the 52 weeks ended January 28, 2006, May integration costs and related inventory valuation adjustments (See Notes 3 and 5) amounted to $.56 per diluted share. For the 52 weeks ended January 29, 2005, store closing and consolidation costs and Macy's home store centralization costs (See notes 2 and 4) amounted to $.34 per diluted share.
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Consolidated Financial Statements:
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