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Consolidated Statements of Income - 2Q 2006 (Unaudited) (Note 1)
(All amounts in millions except percentages and per share figures)
| |
13 Weeks Ended |
| |
July 29,
2006 |
July 30,
2005 |
| |
$ |
% to
Net Sales |
$ |
% to
Net Sales |
| |
| Net sales |
$5,995 |
|
$3,623 |
|
| |
| Cost of sales – recurring (Note 2) |
3,470 |
57.9% |
2,126 |
58.7% |
| |
| Gross margin - recurring |
2,525 |
42.1% |
1,497 |
41.3% |
| |
Inventory valuation adjustments –
May integration (Note 3) |
(134) |
(2.2%) |
– |
–% |
| |
| Gross margin |
2,391 |
39.9% |
1,497 |
41.3% |
| |
| Selling, general and administrative expenses |
(2,117) |
(35.3%) |
(1,206) |
(33.3%) |
| |
| May integration costs (Note 4) |
(43) |
(0.8%) |
– |
–% |
| |
| Gains on sale of accounts receivable (Note 5) |
191 |
3.2% |
– |
–% |
| |
| Operating income |
422 |
7.0% |
291 |
8.0% |
| |
| Interest expense - net (Note 6) |
(99) |
|
(54) |
|
| |
| Income from continuing operations before income taxes |
323 |
|
237 |
|
| |
| Federal, state and local income tax expense (Note 7) |
(41) |
|
(89) |
|
| |
| Income from continuing operations |
282 |
|
148 |
|
| |
| Discontinued operations, net of income taxes (Note 8) |
35 |
|
– |
|
| |
| Net Income |
$317 |
|
$148 |
|
| |
| Basic earnings per share: |
| Income from continuing operations |
$.51 |
|
$.43 |
|
| Income from discontinued operations |
.06 |
|
- |
|
| Net income |
$.57 |
|
$.43 |
|
| |
| Diluted earnings per share (Note 9): |
| Income from continuing operations |
$.51 |
|
$.42 |
|
| Income from discontinued operations |
.06 |
|
- |
|
| Net income |
$.57 |
|
$.42 |
|
| |
| Average common shares: |
| Basic |
552.2 |
|
342.4 |
|
| Diluted |
559.2 |
|
351.4 |
|
| |
| Depreciation and amortization expense |
$314 |
|
$178 |
|
Notes:
(1) Because of the seasonal nature of the retail business, the results of operations for the 13 weeks ended July 29, 2006 and July 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. Share and per share amounts have been adjusted for the two-for-one stock split effected in the form of a stock dividend distributed after the close of trading on June 9, 2006 to shareholders of record on May 26, 2006.
(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 July 29, 2006 or July 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, partially offset by gains from the sale of Federated locations.
(5) Represents the gains recognized on the sale of the Company's remaining proprietary and non-proprietary credit card accounts and related receivables. For the 13 weeks ending July 29, 2006, the after-tax net gain amounted to $.21 per diluted share.
(6) Interest expense for the 13 weeks ended July 29, 2006 includes approximately $17 million of interest income related to the settlement of various tax examinations (See Note 7).
(7) Income tax expense for the 13 weeks ended July 29, 2006 reflects approximately $80 million of tax benefits related to the settlement of various tax examinations, primarily attributable to losses related to the disposition of a former subsidiary.
(8) Represents the results of operations of the acquired businesses 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 July 29, 2006, May integration costs and related inventory valuation adjustments (See Notes 3 and 4) amounted to $.19 per diluted share.
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Consolidated Statements of Income - 2Q 2006 (Unaudited) (Note 1)
(All amounts in millions except percentages and per share figures)
| |
26 Weeks Ended |
| |
July 29,
2006 |
July 30,
2005 |
| |
$ |
% to
Net Sales |
$ |
% to
Net Sales |
| |
| Net sales |
$11,925 |
|
$7,264 |
|
| |
| Cost of sales – recurring (Note 2) |
7,097 |
59.5% |
4,302 |
59.2% |
| |
| Gross margin - recurring |
4,828 |
40.5% |
2,962 |
40.8% |
| |
Inventory valuation adjustments –
May integration (Note 3) |
(140) |
(1.2%) |
– |
–% |
| |
| Gross margin |
4,688 |
39.3% |
2,962 |
40.8% |
| |
| Selling, general and administrative expenses |
(4,271) |
(35.8%) |
(2,419) |
(33.3%) |
| |
| May integration costs (Note 4) |
(166) |
(1.4%) |
– |
–% |
| |
| Gains on sale of accounts receivable (Note 5) |
191 |
1.6% |
– |
–% |
| |
| Operating income |
442 |
3.7% |
543 |
7.5% |
| |
| Interest expense - net (Note 6) |
(237) |
|
(108) |
|
| |
| Income from continuing operations before income taxes |
205 |
|
435 |
|
| |
| Federal, state and local income tax (expense) (Note 7) |
3 |
|
(164) |
|
| |
| Income from continuing operations |
208 |
|
271 |
|
| |
| Discontinued operations, net of income taxes (Note 8) |
57 |
|
– |
|
| |
| Net Income |
$265 |
|
$271 |
|
| |
| Basic earnings per share: |
| Income from continuing operations |
$.38 |
|
$.80 |
|
| Income from discontinued operations |
.10 |
|
- |
|
| Net income |
$.48 |
|
$.80 |
|
| |
| Diluted earnings per share (Note 9): |
| Income from continuing operations |
$.37 |
|
$.78 |
|
| Income from discontinued operations |
.10 |
|
– |
|
| Net income |
$.47 |
|
$.78 |
|
| |
| Average common shares: |
| Basic |
551.2 |
|
340.0 |
|
| Diluted |
558.6 |
|
348.5 |
|
| |
| Depreciation and amortization expense |
$630 |
|
$356 |
|
Notes:
(1) Because of the seasonal nature of the retail business, the results of operations for the 26 weeks ended July 29, 2006 and July 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. Share and per share amounts have been adjusted for the two-for-one stock split effected in the form of a stock dividend distributed after the close of trading on June 9, 2006 to shareholders of record on May 26, 2006.
(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 26 weeks ended July 29, 2006 or July 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, partially offset by gains from the sale of Federated locations.
(5) Represents the gains recognized on the sale of the Company's remaining proprietary and non-proprietary credit card accounts and related receivables. For the 26 weeks ended July 29, 2006, the after-tax net gain amounted to $.21 per diluted share.
(6) Interest expense for the 26 weeks ended July 29, 2006 includes approximately $17 million of interest income related to the settlement of various tax examinations (See Note 7).
(7) The income tax benefit for the 26 weeks ended July 29, 2006 reflects approximately $80 million of tax benefits related to the settlement of various tax examinations, primarily attributable to losses related to the disposition of a former subsidiary.
(8) Represents the results of operations of the acquired businesses 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 26 weeks ended July 29, 2006, May integration costs and related inventory valuation adjustments (See Notes 3 and 4) amounted to $.34 per diluted share.
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Consolidated Financial Statements:
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