Consolidated Balance Sheets - 4Q 2008 (Unaudited)
(millions)
| |
January 31,
2009 |
February 2,
2008 |
| ASSETS: |
| Current Assets: |
| Cash and cash equivalents |
$1,306 |
$583 |
| Receivables |
439 |
463 |
| Merchandise inventories |
4,769 |
5,060 |
| Supplies and prepaid expenses |
226 |
218 |
| Total Current Assets |
6,740 |
6,324 |
| |
| Property and Equipment – net |
10,442 |
10,991 |
| Goodwill |
9,125 |
9,133 |
| Other Intangible Assets – net |
719 |
831 |
| Other Assets |
501 |
510 |
| |
| Total Assets |
$27,527 |
$27,789 |
| |
| LIABILITIES AND SHAREHOLDERS' EQUITY: |
| Current Liabilities: |
| Short-term debt |
$966 |
$666 |
| Merchandise accounts payable |
1,282 |
1,398 |
| Accounts payable and accrued liabilities |
2,628 |
2,729 |
| Income taxes |
28 |
344 |
| Deferred income taxes |
224 |
223 |
| Total Current Liabilities |
5,128 |
5,360 |
| |
| Long-Term Debt |
8,733 |
9,087 |
| Deferred Income Taxes |
1,416 |
1,446 |
| Other Liabilities |
2,521 |
1,989 |
| Shareholders' Equity |
9,729 |
9,907 |
| |
| Total Liabilities and Shareholders' Equity |
$27,527 |
$27,789 |
Notes:
Certain reclassifications were made to prior period amounts to conform with the classifications of such amounts for the most recent period.
As of January 31, 2009, the Company had $9,125 million of goodwill, which predominately relates to the acquisition of The May Department Stores Company ("May") on August 30, 2005. As a result of the deterioration in the general economic environment and the resultant decline in the Company's market capitalization, the Company is in the process of reviewing its goodwill for impairment.
For purposes of impairment testing, goodwill has been assigned to reporting units, which are the Company's retail operating divisions. The goodwill impairment test involves a two-step process. The first step is a comparison of each reporting unit's fair value to its carrying value. The Company estimates the fair value of its reporting units based on their discounted cash flows. If the carrying value of a reporting unit exceeds its estimated fair value in the first step, a second step is performed, in which the reporting unit's goodwill is written down to its implied fair value. The second step requires the Company to allocate the fair value of the reporting unit derived in the first step to the fair value of the reporting unit's net assets, with any fair value in excess of amounts allocated to such net assets representing the implied fair value of goodwill for that reporting unit. If the carrying value of the goodwill allocated to a reporting unit exceeds its fair value, such goodwill is written down by an amount equal to such excess.
In the first step, the Company initially calculated the fair value of its reporting units by discounting their projected future cash flows to present value using the Company's estimated weighted average cost of capital as the discount rate and the fair value of each of the Company's Macy's reporting units exceeded its carrying value. However, the reconciliation of the fair value of the Company's reporting units to the Company's market capitalization resulted in an implied fair value substantially in excess of its market capitalization. In order to reconcile the discounted cash flows of the Company's reporting units to the trading value of the Company's common stock, the Company applied discount rates higher than the Company's estimated weighted average cost of capital to the projected cash flows of its reporting units and determined that the carrying value of each of the Company's reporting units exceeded its fair value at January 31, 2009, which resulted in all of the Company's reporting units failing the first step of the goodwill impairment test.
The Company is in the beginning stages of the second step of the impairment testing process, which will require, among other things, obtaining third-party appraisals of substantially all of the Company's tangible and intangible assets. Due to the complexity of this process, and the need for appraisals and analyses that have not yet been obtained and performed, the Company presently cannot make an accurate estimate of the amount by which the Company's goodwill was impaired as of January 31, 2009. However, based solely on the results of the first step of the impairment testing process, the Company preliminarily estimates that the amount of such impairment will ultimately be determined to be between $4.5 billion and $5.5 billion. The financial statements of the Company included in its Form 10-K for the fiscal year ended January 31, 2009, to be filed with the Securities and Exchange Commission on or before April 1, 2009, will reflect the required reduction in the carrying value of the Company's goodwill and the related non-cash impairment charge. This reduction may vary significantly from the preliminarily estimated range set forth above due to a variety of factors that may affect the results of the second step impairment testing process, including inherent uncertainties and subjectivity associated with appraisals and valuations in general.
Download Excel spreadsheet
Go to top of page
Historical Data:
Consolidated Financial Statements: