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Consolidated Statements of Income - 1Q 2006 (Unaudited) (Note 1)
(All amounts in millions except percentages and per share figures)
| |
13 Weeks Ended |
| |
April 29,
2006 |
April 30,
2005 |
| |
$ |
% to
Net Sales |
$ |
% to
Net Sales |
| |
| Net sales |
$5,930 |
|
$3,641 |
|
| |
| Cost of sales – recurring (Note 2) |
3,627 |
61.2% |
2,176 |
59.8% |
| |
| Gross margin - recurring |
2,303 |
38.8% |
1,465 |
40.2% |
| |
Inventory valuation adjustments –
May integration (Note 3) |
(6) |
(0.1%) |
– |
–% |
| |
| Gross margin |
2,297 |
38.7% |
1,465 |
40.2% |
| |
| Selling, general and administrative expenses |
(2,154) |
(36.3%) |
(1,213) |
(33.3%) |
| |
| May integration costs (Note 4) |
(123) |
(2.1%) |
– |
–% |
| |
| Operating income |
20 |
0.3% |
252 |
6.9% |
| |
| Interest expense - net |
(138) |
|
(54) |
|
| |
| Income (loss) from continuing operations before income taxes |
(118) |
|
198 |
|
| |
| Federal, state and local income tax benefit (expense) |
44 |
|
(75) |
|
| |
| Income (loss) from continuing operations |
(74) |
|
123 |
|
| |
| Discontinued operations, net of income taxes (Note 5) |
22 |
|
– |
|
| |
| Net Income (loss) |
$52 |
|
$123 |
|
| |
| Basic earnings (loss) per share: |
| Income (loss) from continuing operations |
$(.27) |
|
$.73 |
|
| Income from discontinued operations |
.08 |
|
- |
|
| Net income (loss) |
$(.19) |
|
$.73 |
|
| |
| Diluted earnings (loss) per share (Note 6): |
| Income (loss) from continuing operations |
$(.27) |
|
$.71 |
|
| Income from discontinued operations |
.08 |
|
- |
|
| Net income (loss) |
$(.19) |
|
$.71 |
|
| |
| Average common shares: |
| Basic |
275.1 |
|
168.8 |
|
| Diluted |
279.0 |
|
172.8 |
|
| |
| Depreciation and amortization expense |
$316 |
|
$177 |
|
Notes:
(1) Because of the seasonal nature of the retail business, the results of operations for the 13 weeks ended April 29, 2006 and April 30, 2005 (which do not include the Christmas season) are not necessarily indicative of such results for the fiscal year. 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.
(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 April 29, 2006 or April 30, 2005.
(3) Represents inventory valuation adjustments associated with the combination and integration of Federated and May merchandise assortments.
(4) Represents costs and expenses associated with the integration and consolidation of May's operations into Federated's operations, primarily related to the closing of duplicate store locations.
(5) 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.
(6) For the 13 weeks ended April 29, 2006, May integration costs and related inventory valuation adjustments (See Notes 3 and 4) amounted to $.29 per diluted share.
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