Consolidated Statements of Operations - 1Q 2007 (Unaudited) (Note 1)
(All amounts in millions except percentages and per share figures)
| |
13 Weeks Ended |
| |
May 5, 2007 |
April 29, 2006 |
| |
$ |
% to
Net sales |
$ |
% to
Net sales |
| |
| Net sales |
$5,921 |
|
$5,930 |
|
| |
| Cost of sales – recurring (Note 2) |
3,564 |
60.2% |
3,627 |
61.2% |
| |
| Gross margin - recurring |
2,357 |
39.8% |
2,303 |
38.8% |
| |
Inventory valuation adjustments –
May integration (Note 3) |
– |
–% |
(6) |
(0.1%) |
| |
| Gross margin |
2,357 |
39.8% |
2,297 |
38.7% |
| |
| Selling, general and administrative expenses |
(2,113) |
(35.7%) |
(2,154) |
(36.3%) |
| |
| May integration costs (Note 4) |
(36) |
(0.6%) |
(123) |
(2.1%) |
| |
| Operating income |
208 |
3.5% |
20 |
0.3% |
| |
| Interest expense - net |
(125) |
|
(138) |
|
| |
| Income (loss) from continuing operations before income taxes |
83 |
|
(118) |
|
| |
| Federal, state and local income tax benefit (expense) |
(31) |
|
44 |
|
| |
| Income (loss) from continuing operations |
52 |
|
(74) |
|
| |
| Discontinued operations, net of income taxes (Note 5) |
(16) |
|
22 |
|
| |
| Net income (loss) |
$36 |
|
$(52) |
|
| |
| Basic earnings (loss) per share: |
| Income (loss) from continuing operations |
$.11 |
|
$(.13) |
|
| Income (loss) from discontinued operations |
(.03) |
|
.04 |
|
| Net income (loss) |
$.08 |
|
$(.09) |
|
| |
| Diluted earnings (loss) per share (Note 6): |
| Income (loss) from continuing operations |
$.11 |
|
$(.13) |
|
| Income (loss) from discontinued operations |
(.03) |
|
.04 |
|
| Net income (loss) |
$.08 |
|
$(.09) |
|
| |
| Average common shares: |
| Basic |
468.2 |
|
550.2 |
|
| Diluted |
476.4 |
|
558.0 |
|
| |
| Common shares outstanding |
459.2 |
|
552.7 |
|
| |
| Depreciation and amortization expense |
$329 |
|
$316 |
|
Notes:
(1) Because of the seasonal nature of the retail business, the results of operations for the 13 weeks ended May 5, 2007 and April 29, 2006 (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, including the Lord & Taylor division and the Bridal Group, including David's Bridal, After Hours Formalwear and Priscilla of Boston. 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. Share and per share amounts have been adjusted for the two-for-one stock split effected in the form of a stock dividend distributed on June 9, 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 May 5, 2007 or April 29, 2006.
(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, including additional costs related to closed locations, final system conversion costs and costs related to other operational consolidations.
(5) Represents the results of operations of Lord & Taylor and the Bridal Group, including David's Bridal, After Hours Formalwear and Priscilla of Boston. For the 13 weeks ended May 5, 2007, discontinued operations 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.
(6) For the 13 weeks ended May 5, 2007 and April 29, 2006, May integration costs and related inventory valuation adjustments (see Notes 3 and 4) amounted to $.05 and $.14 per diluted share, respectively.
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