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Virtually every company in the retailing industry suffered in 2007 as
the American economy weakened and consumer confidence eroded. Macy's,
Inc. was no exception. Even with the significant amount of energy and
newness infused in the business, the company's financial results were
softer than originally anticipated going into the year. There were,
however, some important positive outcomes. These included the growth of Bloomingdale's,
continued development of our online business, initial planning for the My Macy's localization strategy,
and significant cash flow that was generated once again by the company in 2007.
For the 52 weeks of fiscal 2007, Macy's, Inc. reported diluted earnings per
share from continuing operations of $2.01 per share, compared with $1.80
per share for the full 53 weeks of fiscal 2006. Excluding May Company
merger integration costs of $219 million ($138 million after tax or 31
cents per diluted share) and the tax settlement of $78 million (17 cents
per diluted share), diluted earnings per share from continuing operations
were $2.15 for fiscal 2007. Fiscal 2006 included merger integration costs
and related merchandise inventory adjustments of $628 million ($393 million
after tax or 72 cents per diluted share), as well as gains on the sale of
credit receivables of $191 million ($119 million after tax or 22 cents per
diluted share). Excluding these items, as well as the gain of 6 cents per
diluted share related to completion of the company's debt tender offer and
a 16 cents per diluted share tax settlement, diluted earnings per share
from continuing operations were $2.08 for fiscal 2006.
Macy's, Inc. generated $2.231 billion in cash from continuing
operating activities in fiscal 2007, compared to $3.692 billion, or $1.832
billion excluding the $1.860 billion in proceeds from the sale of
proprietary accounts receivable, in fiscal 2006. Cash used in continuing
investing activities was $789 million in 2007, compared with $1.273 billion
generated last year. In 2007, continuing investing activities included $66
million of proceeds from the sale of After Hours Formalwear and $227
million of proceeds from the disposal of property and equipment, primarily
from the sale of duplicate facilities associated with the May Company
integration. In 2006, continuing investing activities included $1.787
billion of proceeds from the sale of Lord & Taylor, David's Bridal and
Priscilla of Boston, $679 million of proceeds from the disposal of property
and equipment, primarily from the sale of approximately 60 duplicate store
locations, and $182 million of net proceeds from the sale of repurchased
accounts receivable. Excluding these items in both years, as well as the
proceeds from the sale of proprietary accounts receivable in 2006, cash
from continuing operating activities net of cash used in continuing
investing activities would be $1.149 billion in 2007, compared to $457
million in 2006.
Net cash used by continuing financing activities was $2.069 million
in 2007, compared with $4.013 billion in cash used by continuing financing
activities in 2006. In 2007, the company issued $1.950 billion in debt and
repaid $649 million of debt.
The company repurchased approximately 13.0 million shares of its
common stock for a total of approximately $318 million in the fourth
quarter of 2007. In fiscal 2007, the company repurchased approximately 85.3
million shares of its common stock for approximately $3.3 billion. At Feb.
2, 2008, the company had remaining authorization to repurchase up to
approximately $850 million of its common stock.
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