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Consolidated Statements of Operations - 1Q 2008 (Unaudited) (Note 1)
(All amounts in millions except percentages and per share figures)
| |
13 Weeks Ended |
13 Weeks Ended |
| |
May 3,
2008 |
May 5,
2007 |
| |
$ |
% to
Net Sales |
$ |
% to
Net Sales |
| |
| Net sales |
$5,747 |
|
$5,921 |
|
| |
| Cost of sales (Note 2) |
3,527 |
61.4% |
3,564 |
60.2% |
| |
| Gross margin |
2,220 |
38.6% |
2,357 |
39.8% |
| |
| Selling, general and administrative expenses (Note 3) |
(2,103) |
(36.6%) |
(2,113) |
(35.7%) |
| |
| Division consolidation costs (Note 4) |
(87) |
(1.5%) |
– |
–% |
| |
| May integration costs (Note 5) |
– |
–% |
(36) |
(0.6%) |
| |
| Operating income |
30 |
0.5% |
208 |
3.5% |
| |
| Interest expense - net |
(136) |
|
(125) |
|
| |
Income (loss) from continuing operations
before income taxes |
(106) |
|
83 |
|
| |
Federal, state and local income tax
benefit (expense) (Note 6) |
47 |
|
(31) |
|
| |
| Income (loss) from continuing operations |
(59) |
|
52 |
|
| |
| Discontinued operations, net of income taxes (Note 7) |
– |
|
(16) |
|
| |
| Net Income (loss) |
$(59) |
|
$36 |
|
| |
| Basic earnings (loss) per share: |
| Income (loss) from continuing operations |
$(.14) |
|
$.11 |
|
| Loss from discontinued operations |
– |
|
(.03) |
|
| Net income (loss) |
$(.14) |
|
$.08 |
|
| |
| Diluted earnings (loss) per share: |
| Income (loss) from continuing operations |
$(.14) |
|
$.11 |
|
| Loss from discontinued operations |
– |
|
(.03) |
|
| Net income (loss) |
$(.14) |
|
$.08 |
|
| |
| Average common shares: |
| Basic |
420.9 |
|
468.2 |
|
| Diluted |
420.9 |
|
476.4 |
|
| |
| End of period common shares outstanding |
420.5 |
|
459.2 |
|
| |
| Depreciation and amortization expense |
$315 |
|
$329 |
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Notes:
(1) Because of the seasonal nature of the retail business, the results of operations for the 13 weeks ended May 3, 2008 and May 5, 2007 (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 Lord & Taylor division and the Bridal Group, consisting of David's Bridal, After Hours Formalwear and Priscilla of Boston, were subsequently sold to third parties. 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.
(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 3, 2008 or May 5, 2007.
(3) For the 13 weeks ended May 3, 2008, selling, general and administrative expenses include an accrual related to a legal dispute of approximately $23 million or $.03 per diluted share.
(4) Represents costs and expenses associated with the division consolidation and localization initiatives, primarily severance and other human resource related costs. For the 13 weeks ended May 3, 2008, division consolidation costs amounted to $.13 per diluted share.
(5) Represents costs and expenses associated with the integration and consolidation of May's operations into Macy's operations, including additional costs related to closed locations, final system conversion costs and costs related to other operational consolidations. For the 13 weeks ended May 5, 2007, May integration costs amounted to $.05 per diluted share.
(6) The income tax benefit for the 13 weeks ended May 3, 2008 reflects the settlement of various state tax issues.
(7) Represents the results of operations of After Hours Formalwear. For the 13 weeks ended May 5, 2007, discontinued operations included the loss on disposal of After Hours Formalwear of $7 million on a pre-tax and after-tax basis, or $.01 per diluted share.
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