Consolidated Statements of Income (Unaudited)(Note 1)
(All amounts in millions except percentages and per share figures)
| |
39 Weeks Ended
October 29, 2011 |
|
39 Weeks Ended
October 30, 2010 |
| |
|
$ |
|
% to
Net Sales |
|
$ |
|
% to
Net Sales |
| |
| Net sales |
|
$17,681 |
|
|
|
$16,734 |
|
|
| |
| Cost of sales (Note 2) |
|
10,587 |
|
59.9% |
|
9,969 |
|
59.6% |
| |
| Gross margin |
|
7,094 |
|
40.1% |
|
6,765 |
|
40.4% |
| |
| Selling, general and administrative expenses |
|
(5,967) |
|
(33.7%) |
|
(6,015) |
|
(35.9%) |
| |
| Operating income |
|
1,127 |
|
6.4% |
|
750 |
|
4.5% |
| |
| Interest expense - net (Note 3) |
|
(335) |
|
|
|
(456) |
|
|
| |
| Income before income taxes |
|
792 |
|
|
|
294 |
|
|
| |
| Federal, state and local income tax expense (Note 4) |
|
(281) |
|
|
|
(114) |
|
|
| |
| Net income |
|
$511 |
|
|
|
$180 |
|
|
| |
| Basic earnings per share |
|
$1.20 |
|
|
|
$.43 |
|
|
| |
| Diluted earnings per share |
|
$1.18 |
|
|
|
$.42 |
|
|
| |
| Average common shares: |
| Basic |
|
426.0 |
|
|
|
423.0 |
|
|
| Diluted |
|
432.2 |
|
|
|
426.7 |
|
|
| |
| End of period common shares outstanding |
|
420.6 |
|
|
|
423.0 |
|
|
| |
| Depreciation and amortization expense |
|
$818 |
|
|
|
$865 |
|
|
Notes:
(1) Because of the seasonal nature of the retail business, the results of operations for the 39 weeks ended October 29, 2011 and October 30, 2010 (which do not include the Christmas season) are not necessarily indicative of such results for the fiscal year.
(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 39 weeks ended October 29, 2011 or October 30, 2010.
(3) Interest expense for the 39 weeks ended October 30, 2010, included approximately $66 million on a pre-tax basis, or $41 million after tax or $.10 per diluted share, of expenses associated with the early retirement of approximately $1,000 million of outstanding debt.
(4) Federal, state and local income taxes differ from the federal income tax statutory rate of 35%, principally because of the effect of state and local taxes, including the settlement of various tax issues and tax examinations. Additionally, income tax expense for the 39 weeks ended October 30, 2010 reflected a $4 million reduction of deferred tax assets due to the enactment of healthcare reform legislation. The reduction was required as a result of the elimination of the deductibility of retiree health care payments to the extent of tax-free Medicare Part D subsidies that are received. The change in deductibility is effective February 3, 2013.
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