-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, S3TB5RYIwbq4eyl17JWFkN8/x9avjMyvCmAjxurpw9L49eeUuJiLyqRTL9dpRKiV d4qOBD3ANU+gx9Pd3rHCQA== 0000063416-95-000024.txt : 19951206 0000063416-95-000024.hdr.sgml : 19951206 ACCESSION NUMBER: 0000063416-95-000024 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19951028 FILED AS OF DATE: 19951205 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MAY DEPARTMENT STORES CO CENTRAL INDEX KEY: 0000063416 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-DEPARTMENT STORES [5311] IRS NUMBER: 430398035 STATE OF INCORPORATION: NY FISCAL YEAR END: 0201 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-00079 FILM NUMBER: 95599413 BUSINESS ADDRESS: STREET 1: 611 OLIVE ST CITY: ST LOUIS STATE: MO ZIP: 63101 BUSINESS PHONE: 3143426300 10-Q 1 1995 3RD QUARTER FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark one) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For The Quarterly Period Ended October 28, 1995 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________ to _______________ Commission File Number 1-79 THE MAY DEPARTMENT STORES COMPANY (Exact name of registrant as specified in its charter) New York 43-0398035 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 611 Olive Street, St. Louis, Missouri 63101 (Address of principal executive offices) (Zip Code) (314) 342-6300 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. YES X NO Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. 248,970,011 shares of common stock, $0.50 par value, as of October 28, 1995. 1 PART 1 - FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS THE MAY DEPARTMENT STORES COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited) (Millions)
Oct. 28, Oct. 29, Jan. 28, ASSETS 1995 1994 1995 Current Assets: Cash and cash equivalents $ 28 $ 26 $ 55 Accounts receivable, net 2,151 2,102 2,436 Merchandise inventories 2,974 2,565 2,207 Other current assets 267 227 212 Total Current Assets 5,420 4,920 4,910 Property and Equipment, at cost 6,475 5,660 5,794 Accumulated Depreciation (2,216) (1,866) (1,928) Net Property and Equipment 4,259 3,794 3,866 Goodwill 672 607 602 Other Assets 93 81 94 Total Assets $ 10,444 $ 9,402 $ 9,472 LIABILITIES AND SHAREOWNERS' EQUITY Current Liabilities: Notes payable and current maturities of long-term debt $ 53 $ 305 $ 169 Accounts payable 1,231 1,090 837 Accrued expenses 818 794 761 Income taxes 7 3 128 Total Current Liabilities 2,109 2,192 1,895 Long-term Debt 3,456 2,881 2,875 Deferred Income Taxes 354 326 359 Other Liabilities 196 184 191 ESOP Preference Shares 368 375 374 Unearned Compensation (346) (359) (357) Shareowners' Equity 4,307 3,803 4,135 Total Liabilities and Shareowners' Equity $ 10,444 $ 9,402 $ 9,472 The accompanying notes to condensed consolidated financial statements are an integral part of this balance sheet.
2 THE MAY DEPARTMENT STORES COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF EARNINGS (Unaudited)
(Millions, except per share) 13 Weeks Ended 39 Weeks Ended Oct. 28, Oct. 29, Oct. 28, Oct. 29, 1995 1994 1995 1994 Net Retail Sales: Department stores $ 2,489 $ 2,325 $ 6,860 $ 6,409 Payless ShoeSource 587 540 1,779 1,601 Total Net Retail Sales $ 3,076 $ 2,865 $ 8,639 $ 8,010 Revenues $ 3,155 $ 2,945 $ 8,890 $ 8,273 Cost of sales 2,221 2,055 6,238 5,766 Selling, general and administrative expenses 647 602 1,822 1,697 Interest expense, net 62 56 177 172 Earnings before income taxes 225 232 653 638 Provision for income taxes 90 93 263 257 Net Earnings $ 135 $ 139 $ 390 $ 381 Primary Earnings per Share $ .53 $ .54 $ 1.51 $ 1.47 Fully Diluted Earnings per Share $ .50 $ .51 $ 1.45 $ 1.41 Dividends Paid per Common Share $ .28-1/2 $ .26 $ .83 $ .75 Primary Average Shares Outstanding and Equivalents 250.4 249.6 249.9 249.8 Fully Diluted Average Shares Outstanding and Equivalents 265.3 264.7 264.9 265.0 The accompanying notes to condensed consolidated financial statements are an integral part of this statement.
3 THE MAY DEPARTMENT STORES COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
(Millions) 39 Weeks Ended Oct. 28, Oct. 29, 1995 1994 Operating Activities: Net earnings and depreciation/amortization $ 701 $ 647 Increase in working capital (excluding cash, cash equivalents and short-term debt) (206) (32) Other assets and liabilities, net (9) (45) 486 570 Investing Activities: Net additions to property and equipment (773) (637) Other 8 10 (765) (627) Financing Activities: Increase in notes payable 31 137 Net issuances of long-term debt 445 121 Net issuances (purchases) of treasury stock 10 (7) Dividend payments, net of tax benefit (234) (214) 252 37 Decrease in Cash and Cash Equivalents $ (27) $ (20) Cash paid during the period: Interest $ 183 $ 167 Income Taxes 372 333 The accompanying notes to condensed consolidated financial statements are an integral part of this statement.
4 THE MAY DEPARTMENT STORES COMPANY AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Interim Results. These unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q of the Securities and Exchange Commission and should be read in conjunction with the Summary of Significant Accounting Policies (page 18) and the Notes to Consolidated Financial Statements (pages 23-29) in the 1994 Annual Report. In the opinion of management, this information is fairly presented and all adjustments (consisting only of normal recurring adjustments) necessary for a fair statement of the results for the interim periods have been included; however, certain items are included in these statements based on estimates for the entire year. Also, operating results of periods which exclude the Christmas season may not be indicative of the operating results that may be expected for the full fiscal year. Inventories. Department store merchandise inventories are stated on the LIFO (last-in, first-out) cost basis. There was no LIFO provision for the third quarter in 1995 or 1994. The year-to-date LIFO provision was $16 million in 1995 and 1994. Acquisition. Effective August 28, 1995, registrant purchased 14 John Wanamaker stores in the Philadelphia area and three Woodward & Lothrop stores in the Washington, D.C. area, for approximately $415 million, including $175 million for inventory, receivables and other current assets, subject to certain conditions and adjustments. The asset acquisition has been accounted for as a purchase and, accordingly, the operating results of the acquired stores have been included in the registrant's consolidated results since the effective acquisition date. The acquisition was funded principally with long-term debt. The acquisition did not have a material effect on the results of operations or financial position of the registrant in 1995. Litigation Costs. During the 1994 third quarter, the registrant recorded a pretax charge of $10 million, or $0.02 per share, which represented the settlement of a 1992 lawsuit filed by certain bondholders. 5 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations Financial Condition A summary of key financial information for the periods indicated is as follows: Oct. 28, Oct. 29, Jan. 28, 1995 1994 1995 Current Ratio 2.6 2.2 2.6 Debt-Capitalization Ratio 47% 46% 44% Fixed Charge Coverage* 3.3x 3.4x 3.4x * Fixed charge coverage, which is presented for the trailing 52 weeks in each period ended above, is defined as earnings before gross interest expense, the expense portion of interest on the ESOP debt, total rent expense and income taxes divided by gross interest expense, interest expense on the ESOP debt, total rent expense and the pretax equivalent of dividends on redeemable preferred stock. Registrant's third quarter 1995 current ratio increased as compared with third quarter 1994 primarily due to a decrease in notes payable and current maturities of long-term debt. The impact of the increase in inventories was offset by an increase in accounts payable. The increase in registrant's third quarter 1995 debt-capitalization ratio as compared with third quarter 1994 and year-end 1994 is primarily due to third quarter 1995 long-term debt activity as described below. These long-term debt increases were partially offset by the growth in retained earnings. During the 1995 third quarter, registrant issued $125 million, 7.15% notes due 2004, $125 million, 7.625% debentures due in 2013 and $150 million, 8.125% debentures due in 2035. The proceeds from the issuance were added to registrant's general funds and were available for the acquisition of certain assets of John Wanamaker and Woodward & Lothrop (page 5). The registrant's fixed charge coverage ratio for the 52 weeks ended October 28, 1995 decreased slightly as compared with the 52 week periods ended October 29, 1994 and January 28, 1995 due to increases in fixed charges, primarily rent and interest expenses, partially offset by an increased level of earnings. 6 Results of Operations Net retail sales represent the sales of stores operating at the end of the latest period. They exclude finance charge revenue and the sales of stores which have been closed and not replaced. Sales percent changes by business segment are as follows:
Third Quarter First Nine Months Store-for- Store-for- Total Store Total Store Department stores 7.1% 1.5% 7.0% 2.9% Payless ShoeSource 8.6 (4.7) 11.1 (3.6) Total Net Retail Sales 7.4% 0.3% 7.9% 1.6% Store-for-store sales represent sales of those stores open during both periods.
The following table presents the components of net earnings as a percent of revenues. Third Quarter First Nine Months 1995 1994 1995 1994 Cost of sales 70.3% 69.8% 70.2% 69.7% Selling, general and administrative expenses 20.5 20.4 20.5 20.5 Interest expense, net 2.0 1.9 2.0 2.1 Earnings before income taxes 7.2% 7.9% 7.3% 7.7% Effective income tax rate 40.0 40.0 40.3% 40.3% Net Earnings 4.3% 4.7% 4.4% 4.6% Cost of sales was $2,221 million in the 1995 third quarter, up 8.0% from $2,055 million in the 1994 period. For the first nine months of 1995, cost of sales was $6,238 million, an 8.2% increase from $5,766 million in the 1994 period. The overall increases are principally related to higher sales volume. For the third quarter and first nine months, cost of sales, as a percent of revenues, increased 0.5% due to an increase in buying and occupancy expenses and a small deterioration in gross margin. For the third quarter and first nine months of each year, the LIFO charge was $0 and $16 million, respectively. There were no significant changes in the other components of cost of sales. 7 Selling, general and administrative expenses were $647 million in the 1995 third quarter, up 7.7% from $602 million a year ago. For the first nine months of 1995, selling, general and administrative expenses were $1,822 million compared with $1,697 million in the 1994 period, a 7.4% increase. The 1994 amounts include a $10 million litigation cost charge discussed in the Notes to Condensed Consolidated Financial Statements (page 5) of this report. The overall increases are primarily related to higher sales volume. Selling, general and administrative expenses as a percent of revenues, excluding 1994 litigation costs, increased 0.4% to 20.5% for the third quarter and 0.1% to 20.5% for the first nine months. These increases were principally related to increased payroll costs. Net interest expense for the third quarter and first nine months of 1995 and 1994 is as follows (millions):
Third Quarter First Nine Months 1995 1994 1995 1994 Interest expense $ 72 $ 66 $ 204 $ 190 Interest income (4) (3) (11) (6) Capitalized interest (6) (7) (16) (12) Net Interest Expense $ 62 $ 56 $ 177 $ 172 The increase in 1995 net interest for the third quarter and first nine months is due to increased average borrowings. Interest income for the same periods increased due to an increase in average short term investments and higher short term interest rates. As a percent of revenues, interest expense increased 0.1% for the third quarter and decreased 0.1% for the first nine months.
Operating results for the trailing years were as follows (millions, except per share): 52 Weeks Ended Oct. 28, Oct. 29, 1995 1994 Net retail sales $ 12,504 $ 11,578 Revenues $ 12,840 $ 11,980 Net earnings $ 791 $ 746 Fully diluted earnings per share $ 2.96 $ 2.78 8 THE MAY DEPARTMENT STORES COMPANY AND SUBSIDIARIES PART II - OTHER INFORMATION Item 1 - Legal Proceedings There are no material pending legal proceedings, other than routine litigation incidental to the business, to which registrant or any of its subsidiaries is party or of which any of their property is the subject. Item 2 - Changes in Securities - None. Item 3 - Defaults Upon Senior Securities - None. Item 4 - Submission of Matters to a Vote of Security Holders - None. Item 5 - Other Information - None. Item 6 - Exhibits and Reports on Form 8-K (a) Exhibits (11) - Computation of Net Earnings Per Share (12) - Computation of Ratio of Earnings to Fixed Charges (27) - Financial Data Schedule (b) Reports on Form 8-K A report dated August 3, 1995 which contained a July, 1995 Sales Release dated August 3, 1995; a second quarter, 1995 Earnings Release dated August 7, 1995; a release announcing the purchase of John Wanamaker and Woodward & Lothrop stores in the Philadelphia, Washington, D.C. and Baltimore areas by the registrant and J.C. Penney Company, Inc. dated August 8, 1995. A report dated August 18, 1995 which contained a copy of the Underwriting Agreement, dated August 15, 1995, among registrant, Morgan Stanley & Co., Incorporated and Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated; a specimen of 7.15% notes due 2004; a specimen of 7.625% debentures due August 15, 2013; a specimen of 8.125% debentures due August 15, 2035. 9 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. THE MAY DEPARTMENT STORES COMPANY (Registrant) Date: December 5, 1995 \s\ Jerome T. Loeb Jerome T. Loeb President and Chief Financial Officer 10 EX-11 2 1995 3RD QTR EXHIBIT 11
Exhibit 11 THE MAY DEPARTMENT STORES COMPANY COMPUTATION OF NET EARNINGS PER SHARE 13 Weeks Ended 39 Weeks Ended Oct. 28, Oct. 29, Oct. 28, Oct. 29, (millions, except per share) 1995 1994 1995 1994 Net earnings $ 135 $ 139 $ 390 $ 381 ESOP Preferred Dividends, net of tax benefit on unallocated shares (4) (5) (14) (14) Dividend requirements on redeemable preferred stock - - - - Net earnings available for common shareowners $ 131 $ 134 $ 376 $ 367 Average common shares outstanding 249.2 248.3 248.9 248.4 Net earnings per share $ 0.52 $ 0.54 $ 1.51 $ 1.48 Primary Computation Net earnings available for common shareowners $ 131 $ 134 $ 376 $ 367 Net earnings adjustment for dividend equivalents - - 1 1 Adjusted net earnings $ 131 $ 134 $ 377 $ 368 Average common shares outstanding 249.2 248.3 248.9 248.4 Common share equivalents under stock option and deferred compensation plans, based upon the treasury stock method 1.2 1.3 1.0 1.4 Average common and common equivalent shares 250.4 249.6 249.9 249.8 Primary earnings per share $ 0.52(A)$ 0.54 $ 1.51(A)$ 1.47 Fully Diluted Computation Adjusted net earnings $ 131 $ 134 $ 377 $ 368 Impact of assumed conversion of ESOP Preference Shares 3 3 8 7 Adjusted net earnings $ 134 $ 137 $ 385 $ 375 Average common and common equivalent shares 250.4 249.6 249.9 249.8 Additional common stock equivalents attributable to application of the treasury stock method - - - - Assumed conversion of ESOP Preference Shares 14.9 15.1 15.0 15.2 Average common and common equivalent shares, assuming full dilution 265.3 264.7 264.9 265.0 Fully diluted earnings per share $ 0.50 $ 0.52(B)$ 1.45 $ 1.41(B) (A) The primary earnings per share reported on the face of the Condensed Consolidated Statement of Earnings was $.53 in order for reported quarterly amounts to sum to the reported year-to-date primary earnings per share of $1.51. (B) The fully diluted earnings per share reported on the face of the Condensed Consolidated Statement of Earnings was $.51 in order for reported quarterly amounts to sum to the reported year-to-date fully diluted earnings per share of $1.41.
11 EX-12 3 1995 3RD QTR EXHIBIT 12
Exhibit 12 THE MAY DEPARTMENT STORES COMPANY AND SUBSIDIARIES COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES FOR THE FIVE FISCAL YEARS ENDED JANUARY 28, 1995, AND FOR THE THIRTY-NINE WEEKS ENDED OCTOBER 28, 1995, AND OCTOBER 29, 1994 39 Weeks Ended Fiscal Year Ended Oct. 28, Oct. 29, Jan. 28, Jan. 29, Jan. 30, Feb. 1, Feb. 2, 1995 1994 1995 1994 1993 1992 1991 Earnings Available for Fixed Charges: Pretax earnings from continuing operations $ 653 $ 638 $ 1,296 $ 1,178 $ 791 $ 796 $ 762 Fixed charges (excluding interest capitalized and pretax preferred stock dividend requirements) 295 276 377 381 432 474 421 Dividends on ESOP Preference Shares (21) (21) (28) (29) (29) (30) (30) Capitalized interest amortization 4 3 4 4 3 3 3 931 896 1,649 1,534 1,197 1,243 1,156 Fixed Charges: Gross interest expense (a) $ 228 $ 214 $ 290 $ 297 $ 341 $ 388 $ 347 Interest factor attributable to rent expense 83 73 102 94 94 92 83 Other (b) - - - - 4 8 5 311 287 392 391 439 488 435 Ratio of Earnings to Fixed Charges 3.0 3.1 4.2 3.9 2.7 2.6 2.7 (a) Represents interest expense on long-term and short-term debt, ESOP debt and amortization of debt discount and debt issue expense. (b) Represents the company's proportionate share of interest of unconsolidated 50% owned persons and pretax preferred stock dividend requirements.
12 EX-27 4 1995 3RD QTR EXHIBIT 27
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE MAY DEPARTMENT STORES COMPANY FORM 10-Q FOR THE QUARTER ENDED OCTOBER 28, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000,000 9-MOS FEB-03-1996 OCT-28-1995 28 0 2151 0 2974 5420 6475 2216 10444 2109 0 0 0 0 4307 10444 8639 8890 6238 6238 0 0 177 653 263 390 0 0 0 390 1.51 1.45
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