-----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, GdGUFqV3H8S5xhdFUthOZxTOoSzvrLIFXBeH2FP3GfDYqZgbFZL4zQs34fUKrojB 4piTkaXOw1JllKCtQMR/vA== 0000063416-98-000044.txt : 19981209 0000063416-98-000044.hdr.sgml : 19981209 ACCESSION NUMBER: 0000063416-98-000044 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19981031 FILED AS OF DATE: 19981208 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MAY DEPARTMENT STORES CO CENTRAL INDEX KEY: 0000063416 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-DEPARTMENT STORES [5311] IRS NUMBER: 431104396 STATE OF INCORPORATION: DE FISCAL YEAR END: 0201 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-00079 FILM NUMBER: 98765548 BUSINESS ADDRESS: STREET 1: 611 OLIVE ST CITY: ST LOUIS STATE: MO ZIP: 63101 BUSINESS PHONE: 3143426300 10-Q 1 3RD QUARTER FORM 10-Q DATED DECEMBER 8, 1998 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 31, 1998 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) Delaware 43-1104396 (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 May (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. 223,615,619 shares of common stock, $0.50 par value, as of October 31, 1998. 1 PART 1 - FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS THE MAY DEPARTMENT STORES COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited) (Millions) Oct. 31, Nov. 1, Jan. 31, ASSETS 1998 1997 1998 Current Assets: Cash and cash equivalents $ 32 $ 23 $ 199 Accounts receivable, net 1,856 1,957 2,164 Merchandise inventories 3,300 3,102 2,433 Other current assets 99 135 82 Total Current Assets 5,287 5,217 4,878 Property and Equipment, at cost 7,125 6,720 6,787 Accumulated Depreciation (2,646) (2,495) (2,563) Net Property and Equipment 4,479 4,225 4,224 Goodwill and other assets 1,054 839 828 Total Assets $ 10,820 $ 10,281 $ 9,930 LIABILITIES AND SHAREOWNERS' EQUITY Current Liabilities: Notes payable and current maturities of long-term debt $ 451 $ 560 $ 233 Accounts payable 1,458 1,323 842 Accrued expenses 786 689 640 Income taxes 5 14 151 Total Current Liabilities 2,700 2,586 1,866 Long-term Debt 3,868 3,517 3,512 Deferred Income Taxes 471 425 449 Other Liabilities 290 273 277 ESOP Preference Shares 330 341 337 Unearned Compensation (302) (319) (320) Shareowners' Equity 3,463 3,458 3,809 Total Liabilities and Shareowners' Equity $ 10,820 $ 10,281 $ 9,930 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. 31, Nov. 1, Oct. 31, Nov. 1, 1998 1997 1998 1997 Net Retail Sales $ 3,020 $ 2,889 $ 8,570 $ 8,124 Revenues $ 3,089 $ 2,969 $ 8,795 $ 8,393 Cost of sales 2,180 2,097 6,182 5,899 Selling, general and administrative expenses 625 599 1,796 1,713 Interest expense, net 69 74 201 226 Earnings before income taxes 215 199 616 555 Provision for income taxes 85 79 245 221 Net earnings before extraordinary loss 130 120 371 334 Extraordinary loss related to early extinguishment of debt - - - (4) Net Earnings $ 130 $ 120 $ 371 $ 330 Basic earnings per share: Net earnings before extraordinary loss .55 .50 1.55 1.37 Extraordinary loss - - - (.01) Net Earnings $ .55 $ .50 $ 1.55 $ 1.36 Diluted earnings per share: Net earnings before extraordinary loss .52 .48 1.49 1.32 Extraordinary loss - - - (.01) Net Earnings $ .52 $ .48 $ 1.49 $ 1.31 Dividends Paid per Common Share $ .31-3/4 $ .30 $ .95-1/4 $ .90 Weighted average shares outstanding: Basic 227.8 231.3 230.1 232.7 Diluted 244.1 248.3 246.7 249.4 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. 31, Nov. 1, 1998 1997 Operating Activities: Net earnings and depreciation/amortization $ 691 $ 634 Decrease in working capital (excluding cash, cash equivalents and short-term debt) 40 142 Other assets and liabilities, net 31 30 762 806 Investing Activities: Net additions to property and equipment (557) (349) Net additions to goodwill and other assets (248) - (805) (349) Financing Activities: Net issuances of notes payable 381 327 Net issuances (repayments) of long-term debt 219 (334) Net acquisitions of treasury stock (491) (305) Dividend payments, net of tax benefit (233) (224) (124) (536) Increase (Decrease) in Cash and Cash Equivalents $ (167) $ (79) Cash paid during the period: Interest $ 220 $ 240 Income Taxes 351 356 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 Notes to Consolidated Financial Statements (pages 21-27) in the 1997 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. Merchandise inventories are stated on the LIFO (last- in, first-out) cost basis. The LIFO provision for the third quarter was $4 million in 1998 and 1997. The year-to-date LIFO provision was $20 million in 1998 and 1997. Long-term Debt. During the third quarter of 1998, May issued a total of $350 million in new debt: $200 million of 6.70% debentures due September 15, 2028, and $150 million of 5.95% notes due November 1, 2008. The net proceeds from the issuances were primarily used for repayment of a portion of May's short-term indebtedness, store acquisitions and stock repurchases. Acquisition. In September 1998, May completed the purchase of 11 former Mercantile stores from Dillard's. The transaction, which was accounted for as a purchase, did not have a material impact on May's financial statements. Common Stock Repurchase Program. In August 1998, May reduced its $650 million common stock repurchase program, announced in February 1998, to $500 million. The company completed the repurchase during the third quarter, totalling 8.4 million shares at an average price of $60 per share. Extraordinary Item. During the first quarter of 1997, May recorded an extraordinary aftertax loss of $4 million ($5 million pretax), or $.01 per share, as it retired $100 million of 9.875% debentures due to mature June 1, 2017. Summarized Financial Information - The May Department Stores Company, New York. Summarized financial information of The May Department Stores Company, New York, is set forth below (millions). October 31, January 31, 1998 1998 Financial Position Current assets $ 5,287 $ 4,878 Noncurrent assets 6,135 5,048 Current liabilities 2,723 1,894 Noncurrent liabilities 7,828 7,437 5 October 31, 1998 November 1, 1997 13 Weeks 39 Weeks 13 Weeks 39 Weeks Ended Ended Ended Ended Operating Results Revenues $ 3,089 $ 8,795 $ 2,969 $ 8,393 Cost of sales 2,180 6,182 2,097 5,899 Net earnings before extraordinary loss 83 230 74 193 Net earnings 83 230 74 189 Earnings per Share. The following tables reconcile net earnings and weighted average shares outstanding to amounts used to calculate basic and diluted earnings per share ("EPS") for the periods shown (millions, except per share).
13 Weeks Ended October 31, 1998 November 1, 1997 Earnings Shares EPS Earnings Shares EPS Net earnings $ 130 $ 120 ESOP preference shares' dividends (5) (5) Basic EPS 125 227.8 $ 0.55 115 231.3 $ 0.50 ESOP preference shares 4 14.7 4 15.2 Assumed exercise of options (treasury stock method) - 1.6 - 1.8 Diluted EPS $ 129 244.1 $ 0.52 $ 119 248.3 $ 0.48 39 Weeks Ended October 31, 1998 November 1, 1997 Earnings Shares EPS Earnings Shares EPS Net earnings $ 371 $ 334 ESOP preference shares' dividends (14) (14) Basic EPS 357 230.1 $ 1.55 320 232.7 $ 1.37 ESOP preference shares 11 14.8 11 15.3 Assumed exercise of options (treasury stock method) - 1.8 - 1.4 Diluted EPS $ 368 246.7 $ 1.49 $ 331 249.4 $ 1.32
Reclassifications. Certain prior period amounts have been reclassified to conform with current year presentation. 6 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations Financial Condition Key financial ratios for the periods indicated are as follows: Oct. 31, Nov. 1, Jan. 31, 1998 1997 1998 Current Ratio 2.0 2.0 2.6 Debt-Capitalization Ratio 50% 49 44% Fixed Charge Coverage* 4.4x 3.9x 4.1x * Fixed charge coverage, which is presented for the trailing 52 weeks ended October 31, 1998, January 31, 1998, and November 1, 1997, is defined as earnings before gross interest expense, the expense portion of interest on the ESOP debt, rent expense and income taxes divided by gross interest expense, interest expense on the ESOP debt, and total rent expense. May's October 31, 1998 current ratio, which was the same as November 1, 1997, decreased compared with year-end 1997 due mainly to seasonal working capital changes. The October 31, 1998 debt-capitalization ratio increased from January 31, 1998 due to seasonal borrowings to finance working capital needs; net increases in long-term debt used to finance capital expenditures, store acquisitions and common stock repurchases; and a decrease in shareowners' equity resulting from the $500 million common stock repurchase program. May's fixed charge coverage ratio for the 52 weeks ended October 31, 1998 increased as compared with the 52 week periods ended November 1, 1997 and January 31, 1998 due primarily to decreased net interest expense. The decrease in net interest expense for the 52 weeks ended October 31, 1998 was a result of lower average debt balances and higher cash equivalent balances. 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 increases are as follows: Third Quarter First Nine Months Store-for- Store-for- Total Store Total Store 4.5% 2.2% 5.5% 3.6% Store-for-store sales represent sales of those stores open during both periods. 7 The following table presents the components of costs and expenses, as a percent of revenues. Revenues include finance charge revenues and all sales from all stores operating during the period. Third Quarter First Nine Months 1998 1997 1998 1997 Cost of sales 70.6% 70.6% 70.3% 70.3% Selling, general and administrative expenses 20.2 20.2 20.4 20.4 Interest expense, net 2.3 2.5 2.3 2.7 Earnings before income taxes 6.9 6.7 7.0 6.6 Provision for income taxes 39.6* 39.6* 39.9* 39.9* Net Earnings 4.2% 4.0% 4.2% 4.0% * - Percent represents effective income tax rate. Cost of sales was $2,180 million in the 1998 third quarter, up 4.0% from $2,097 million in the 1997 third quarter. For the first nine months of 1998, cost of sales was $6,182 million, a 4.8% increase from $5,899 million in the 1997 period. The overall increases are primarily related to higher sales. As a percent of revenues, cost of sales remained constant in comparison to both the third quarter and first nine months of 1997. A small deterioration in gross margin, resulting from the impact of a decrease in the finance charge component of revenues, was offset by an improvement in buying and occupancy expenses. The finance charge component of revenues decreased 7.9% for the third quarter and 7.8% for the first nine months with no corresponding decrease in cost of sales. For the third quarter and first nine months of each year, the LIFO charge was $4 million and $20 million, respectively. Selling, general and administrative expenses were $625 million in the 1998 third quarter, compared with $599 million in the 1997 third quarter, a 4.4% increase. For the first nine months of 1998, selling, general and administrative expenses were $1,796 million compared with $1,713 million in the 1997 period, a 4.9% increase. The increases are primarily related to higher sales. Selling, general and administrative expenses, as a percent of revenues, remained constant for both the third quarter and first nine months of 1998 as compared with 1997. A decrease in bad debt expense related to lower delinquency and charge-off rates combined with decreased use of May's proprietary credit cards was offset by increases in advertising expense and retirement and profit sharing expense. Net interest expense for the third quarter and first nine months of 1998 and 1997 was as follows (millions): Third Quarter First Nine Months 1998 1997 1998 1997 Interest expense $ 79 $ 79 $ 228 $ 244 Interest income (5) (2) (16) (8) Capitalized interest (5) (3) (11) (10) Net Interest Expense $ 69 $ 74 $ 201 $ 226 8 Net interest expense decreased in the 1998 third quarter and first nine months due to decreased average debt balances and increased average cash equivalent balances. As a percent of revenues, net interest expense decreased 0.2% for the third quarter and 0.4% for the first nine months. Operating results for the trailing years were as follows (millions, except per share): 52 Weeks Ended Oct. 31, Nov. 1, 1998 1997 Net retail sales $ 12,776 $ 12,093 Revenues $ 13,087 $ 12,494 Net earnings $ 816 $ 757 Diluted earnings per share $ 3.28 $ 2.93 Year 2000 Readiness In 1996, May began preparing its information systems, communications networks, equipment and facilities for the year 2000. As of the end of the third quarter of 1998, May completed its assessment of all critical information systems, communication networks, equipment and facilities and substantially completed the coding, testing and installation of necessary modifications. May will test certain interfaces with some merchandise and service vendors for year 2000 compliance through the spring of 1999. Since May is substantially complete with its modifications, May does not expect any material disruption of business. Through participation in a National Retail Federation sponsored survey and other means, May is receiving assurances from its primary merchandise vendors and service providers regarding their year 2000 readiness. May developed, and maintains, most of its application systems internally. Over the past twelve months May utilized approximately 15% of it's information systems resources to address companywide year 2000 issues. May's use of outside consultants and contractors to address year 2000 compliance has not been significant. Through the third quarter of 1998, the cumulative cost of May's year 2000 effort approximates $6 million, which May expensed as incurred. Under the most reasonably likely worst case scenario, May does not anticipate more than isolated, temporary disruptions of its operations caused by year 2000 failures affecting either the company or its primary merchandise and service vendors. May expects that its technically trained personnel, working in cooperation with key vendors and service providers, should be able to address year 2000 system issues that may arise. To the extent May's vendors are unable to deliver products and provide services due to their own year 2000 issues, May believes it will generally have alternative sources for comparable products and services and does not expect to experience any material business disruptions. Many risks, however, such as the failure to perform by public utilities, telecommunications providers, and financial institutions 9 and the impact of the year 2000 issue on the economy as a whole, are outside May's control and could adversely affect the company and the conduct of its business. While May has made a significant effort to address all anticipated risks within its control, this is an event without precedent, consequently, there can be no assurance that the year 2000 issue will not have a material adverse impact on May's financial condition, operating results or business. Forward-Looking Statements The discussion of the year 2000 issue included in Management's Discussion and Analysis of Financial Condition and Results of Operations contains "forward-looking" statements as defined in the Private Securities Litigation Reform Act of 1995. While such statements reflect all available information and management's judgement and estimates of current and anticipated conditions and circumstances, prepared with the assistance of specialists, within and outside the company, many factors outside of May's control exist that impact its operations. Such factors include, but are not limited to, possible widespread inability to perform by merchandise vendors, public utilities, telecommunications providers, and financial institutions and the general economic impact of the year 2000 issue. Because of these outside influences that cannot be controlled by the company's management, actual performance could differ materially from that described in the forward-looking statements. THE MAY DEPARTMENT STORES COMPANY AND SUBSIDIARIES PART II - OTHER INFORMATION Item 1 - Legal Proceedings There are no material pending legal proceedings, other than ordinary routine litigation incidental to the business, to which May or any of its subsidiaries is a 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 (3) - By-laws of May, as amended (12) - Computation of Ratio of Earnings to Fixed Charges (27) - Financial Data Schedule (b) Reports on Form 8-K A report dated September 22, 1998 (Date of earliest event reported - September 3, 1998) which contained a press release announcing May's August 1998 and year-to-date sales results. 10 A report dated September 29, 1998 (Date of earliest event reported - September 28, 1998) which contained a copy of the Underwriting Agreement, dated September 22, 1998, among May, The May Department Stores Company - New York, Morgan Stanley & Co. Incorporated, NationsBanc Montgomery Securities LLC and Salomon Smith Barney Inc.; and a specimen of a global certificate for the 6.70% debentures due September 15, 2028. A report dated October 28, 1998 (Date of earliest event reported - October 8, 1998) which contained a press release announcing May's September 1998 and year-to-date sales results. A report dated October 30, 1998 which contained a copy of the Underwriting Agreement, dated October 27, 1998 among May, The May Department Stores Company - New York, Morgan Stanley & Co. Incorporated, Chase Securities Inc., and Salomon Smith Barney Inc.; and a specimen of a global certificate for the 5.95% notes due November 1, 2008. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, May 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 8, 1998 \s\ John L. Dunham John L. Dunham Executive Vice President and Chief Financial Officer 11 EX-3 2 BY-LAWS OF MAY, AS AMENDED BY-LAWS OF THE MAY DEPARTMENT STORES COMPANY (a Delaware Corporation) (as amended through November 20, 1998) ------------------ ARTICLE I. MEETINGS OF SHAREOWNERS Section 1. The annual meeting of shareowners shall be held on such date (not more than thirteen months after the most recent annual meeting) and at such place and time as may be fixed by the board and stated in the notice thereof, for the purpose of the election of directors and for the transaction of only such other business as is properly brought before the meeting in accordance with these By-laws. The annual meeting may be adjourned from day to day until its business is completed. Section 2. Written notice of the date, time and place of each annual meeting of the shareowners shall be mailed not less than ten nor more than sixty days previous to the date of such meeting, postage prepaid, to each shareowner of record in the Company entitled to vote thereat, at such address as shall appear on the books of the Company. Section 3. The business transacted at any special meeting of shareowners shall be confined to the object or objects specified in the notice therefor, and matters germane thereto. Section 4. Written notice of every special meeting of shareowners stating the date, time, place and object thereof, shall be mailed, postage prepaid, not less than ten nor more than sixty days before the date specified for such meeting to each shareowner of record in the Company entitled to vote thereat, at such address as shall appear on the books of the Company. Section 5. Except as otherwise provided in the Certificate of Incorporation, and subject to the provisions and limitations therein contained, at all meetings of shareowners each shareowner of record shall be entitled to cast one vote for each share appearing on the stock book of the Company as standing in his name, which vote may be cast either in person or by proxy, or power of attorney, but no proxy shall be voted on after three years from its date. Section 6. Each shareowner entitled to vote at a meeting of shareowners or to express consent or dissent to corporate action in writing without a meeting may authorize another person or persons to act for such shareowner by proxy by any means authorized by the board and lawful under the Delaware General Corporation Law. Section 7. No shareowner who is in default in the payment of any part of his subscription for any stock of the Company or who is disqualified by law, shall be entitled to vote at any meeting of shareowners. Section 8. Every pledgor of stock standing in his name on the books of the Company shall be deemed the owner thereof. Section 9. Except as otherwise provided by law, the Certificate of Incorporation or these By-laws, the owners of not less than a majority of the shares issued and outstanding, entitled to vote thereat, present in person or by proxy or power of attorney, are requisite for and shall constitute a quorum at all meetings of shareowners for the transaction of business, including the election of directors. The owners of a majority of the shares present in person or by proxy or power of attorney at any meeting, whether or not constituting a quorum, shall have power to adjourn the meeting from time to time (provided that each adjournment shall be for a period not exceeding twenty days), without notice other than announcement at the meeting, and at any adjourned meeting, any business may be transacted which might have been transacted at the meeting as originally notified. Section 10. The board of directors, in advance of the meeting of shareowners, shall appoint not less than two persons who are not directors to serve as inspectors of election. It shall be their duty to receive and canvass the votes for election of directors and on any proposal voted on by ballot and to certify the results to the chairman. In all cases where the right to vote upon any share of the Company shall be questioned, it shall be the duty of the inspectors to examine the stock ledger of the Company as evidence of the shares held, and all shares that appear standing thereon in the name of any person or persons may be voted upon by such person or persons. Each inspector of election before entering upon the duties of such office shall take and subscribe the following oath before an officer authorized by law to administer oaths: "I do solemnly swear that I will execute the duties of an inspector of the election now to be held with strict impartiality and according to the best of my ability." Section 11. To be properly brought before the annual or any special shareowners' meeting, business must be either (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the board, (b) otherwise properly brought before the meeting by or at the direction of the board or (c) otherwise 2 properly brought before the meeting by a shareowner. In addition to any other applicable requirements, for business to be properly brought before the annual or any special shareowners' meeting by a shareowner, the shareowner must have given timely notice thereof in writing to the secretary of the Company. To be timely, a shareowner's notice must be delivered to or mailed and received at the principal executive offices of the Company not less than 90 days nor more than 105 days prior to the anniversary date of the immediately preceding annual meeting of shareowners; provided, however, that in the event that the annual or special meeting is called for a date that is not within thirty days before or after such anniversary date, notice by the shareowner to be timely must be so received not later than the close of business on the 15th day following the first day on which notice or public disclosure of the date of the meeting is given or made to shareowners. Public disclosure shall include, but not be limited to, disclosure in a filing with the Securities and Exchange Commission or similar governmental agency. Such shareowner's notice to the secretary shall set forth as to each matter the shareowner proposes to bring before the meeting (i) a brief description of the business desired to be brought before the meeting and the reasons for conducting such business at the meeting, (ii) the name and record address of the shareowner proposing such business, (iii) the class and number of shares of common stock of the Company which are beneficially owned by the shareowner and (iv) any material interest of the shareowner in such business. Notwithstanding anything in the By-laws to the contrary, no business shall be conducted at the annual or any special meeting except in accordance with the procedures set forth in this Section 11, provided, however, that nothing in this Section 11 shall be deemed to preclude discussion by any shareowner of any business properly brought before the meeting. The chairman of the meeting shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting in accordance with the provisions of this Section 11, and if he should so determine and declare, any such business not properly brought before the meeting shall not be transacted. Section 12. Except as provided in Section 1 of Article II, only persons who are nominated in accordance with the following procedures shall be eligible for election as directors. Nominations of persons for election to the board of directors of the Company at the annual meeting may be made at that meeting by or at the direction of the board of directors, by any nominating committee or person appointed by the board of directors or by any shareowner of the Company entitled to vote for the election of directors at the meeting who complies with the notice procedures set forth in this Section 12. Such nominations, other than those 3 made by or at the direction of the board of directors, shall be made pursuant to timely notice in writing to the secretary of the Company. To be timely, a shareowner's notice must be delivered to or mailed and received at the principal executive offices of the Company not less than 90 days nor more than 105 days prior to the anniversary date of the immediately preceding annual meeting of shareowners; provided, however, that in the event that the annual meeting is called for a date that is not within thirty days before or after such anniversary date, notice by the shareowner to be timely must be so received not later than the close of business on the 15th day following the first day on which notice or public disclosure of the date of the meeting is given or made to shareowners. Public disclosure shall include, but not be limited to, disclosure in a filing with the Securities and Exchange Commission or similar governmental agency. Such shareowner's notice to the secretary shall set forth (a) as to each person whom the shareowner proposes to nominate for election or re-election as a director, (i) the name, age, business address and residence address of the person, (ii) the principal occupation or employment of the person, (iii) the class and number of shares of common stock of the Company which are beneficially owned by the person, and (iv) any other information relating to the person that is required to be disclosed in solicitations for proxies for election of directors pursuant to Section 14 of the Securities Exchange Act of 1934, as amended; and (b) as to the shareowner giving the notice (i) the name and record address of the shareowner and (ii) the class and number of shares of common stock of the Company which are beneficially owned by the shareowner. Such notice shall be accompanied by the executed consent of each nominee to serve as a director if so elected. The Company may require any proposed nominee to furnish such other information as may reasonably be required by the Company to determine the eligibility of such proposed nominee to serve as a director of the Company. The chairman of the meeting shall, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the foregoing procedure, and if he should so determine and declare, the defective nomination shall be disregarded. ARTICLE II. THE BOARD OF DIRECTORS Section 1. The business and affairs of the Company shall be managed and conducted by or under the direction of a board of sixteen directors. Newly created directorships resulting from an increase in the number of directors and vacancies occurring in the board of directors for any reason may be filled by vote of a majority of the 4 directors then in office, although less than a quorum or by the sole remaining director. A director elected to fill a newly created directorship, and a director elected to fill a vacancy, shall hold office for the remainder of the term of the Class to which such director was elected and until his successor shall be chosen and qualified in his stead. Section 2. The directors shall prescribe rules and regulations for voting at all elections and shall cause the result of each such election to be filed with the minutes of the proceedings of the board of directors, or of any committee of the board of directors appointed in accordance with Section 12 of this Article II. Section 3. The board of directors at its first meeting after each annual meeting of shareowners, or at any subsequent meeting at which such action may be appropriate, shall elect a chairman of the executive committee, a chairman of the board, a president, a vice chairman of the board, one or more vice presidents, a secretary, a controller, and a treasurer, and such other officers as it may determine. The board of directors shall by resolution provide for the authority and duties of any and all such officers in the management of the Company to the extent not so provided in these By-laws. The dates of the commencement and expiration of the term of office of any such officer may be fixed by the board of directors at the time of his election; but unless so fixed, such officer shall hold office from the date of his election until the first meeting of the board of directors following the next ensuing annual meeting of shareowners, or until his successor is elected. The chairman of the executive committee, the chairman of the board, the president and the vice chairman of the board shall be members of the board of directors. No other officers need be members of the board of directors. Any two offices, except the offices of president and secretary, may be held by the same person. Section 4. If for any reason the election of officers shall not be held on or as of the date fixed therefor, the board of directors shall designate another day for such election. Section 5. The board of directors may also appoint such additional officers and agents, including additional vice presidents, one or more assistant treasurers, one or more assistant secretaries and one or more assistant controllers, as it may from time to time deem advisable, and may remove any of the persons so appointed at its pleasure, and may, in its discretion, contract for a definite period of employment for any officer or agent upon such 5 terms as it may deem advisable. The board of directors may by resolution provide for the powers and duties of any and all such additional officers and agents so appointed. Section 6. Except as may be otherwise specifically provided by law, the Certificate of Incorporation or these By-laws, at all meetings of the board of directors, a majority of the entire board of directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the board of directors. If a quorum shall not be present at any meeting of the board of directors, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. All matters coming before the board of directors shall, except as otherwise provided by the General Corporation Law of the State of Delaware ("GCL") or by these By-laws, be determined by a majority vote of the members present, provided that a quorum shall be present. Any one or more members of the board of directors or of any committee thereof may participate in any meeting of such board or of such committee thereof by means of a conference telephone or similar communications equipment allowing all persons participating in the meeting to hear each other at the same time. Participation by such means shall constitute presence in person at any such meeting. Section 7. The directors may hold their meetings and cause the books of the Company (except the Stock and Transfer Books) to be kept within or without the State of Delaware, at such place or places as they may from time to time determine. Section 8. Subject to Section 15 of this Article II, there shall be an annual meeting of the board of directors on the day of the annual meeting of shareowners in each year or as soon thereafter as convenient, such annual meeting to be at such place and time (and, if applicable, on such date) as the chairman of the board shall designate by written notice to the directors, and regular meetings shall be held on such dates and at such times and places either as the directors shall by resolution provide or as the chairman of the board shall designate by written notice to the directors. Except as above provided, no notice of said annual meeting or such regular meetings of the board of directors need be given. Section 9. Special meetings of the board of directors may be called by the chairman of the executive committee, the chairman of the board, the president, the vice chairman of the board, or the secretary or the treasurer. Notice thereof stating the place, date 6 and hour of the meeting shall be given to each director either by mail not less than forty-eight (48) hours before the date of the meeting, by telephone or facsimile transmission not later than the day preceding the date of such meeting, or on such shorter notice as the person or persons calling such meeting may deem necessary or appropriate in the circumstance. Special meetings shall be called by one of the foregoing officers in like manner on the written request of five directors, specifying the object or objects of such special meeting. In the event that one of the foregoing officers shall fail to call a meeting within two days after receipt of such request, such meeting may be called in like manner by the directors making such request. Section 10. If any vacancy shall occur in the board of directors by reason of death, removal, resignation or otherwise, such vacancy may be filled by the vote of a majority of the remaining directors then in office, although less than a quorum, or by a sole remaining director. Section 11. Any director may resign his office at any time, such resignation to be made in writing and delivered to the chairman of the executive committee, the chairman of the board, the president, the vice chairman of the board, or the secretary. Section 12. The board of directors shall appoint an executive committee, which shall consist of one or more directors and may from time to time designate the number of such executive committee members that shall constitute a quorum and may provide for the holding of regular meetings thereof. In the absence of any such designation, a majority of the members of the executive committee shall constitute a quorum. To the extent permitted by law (including, without limitation, Section 141(c)(2) of the GCL) and by the Certificate of Incorporation, the executive committee shall have and may exercise all the powers vested in the board of directors during the intervals between the meetings of the board of directors. The affirmative vote of a majority of those present at a meeting of the executive committee, at which a quorum is present, shall be necessary for the adoption of any resolution. The executive committee shall, whenever called upon, report to the board of directors and be subject to its direction, and the board of directors may remove members and appoint new members thereof to fill vacancies therein, and may increase or decrease the membership thereof. Meetings of the executive committee shall be called by the chairman of the executive committee or, upon the request of not less than two members, by the secretary by notice deposited in the mail, sent by telegram or delivered by hand not less than two days prior to the date of such meeting. Waiver of notice by any member of the executive committee, whether before or after the meeting to which such waiver relates, shall be equivalent to notice. The board of directors may appoint such other committees, each consisting of one or more directors, as the board of directors may 7 at any time and from time to time deem appropriate; subject to the limitations contained in Section 141(c)(2) of the GCL, the board of directors from time to time may by resolution prescribe for each such committee such duties, powers and authority as the board of directors shall deem appropriate. Section 13. In addition to the powers by these By-laws expressly conferred upon them, the board of directors may exercise such powers and do such lawful acts and things as are not prohibited by law or required by the Certificate of Incorporation or by these By-laws to be exercised and done by the shareowners. Section 14. Directors as such may be paid such compensation as the board of directors may from time to time determine. Nothing herein contained shall be construed to preclude any director from serving the Company in any other capacity and receiving compensation therefor. Section 15. Anything in this Article II to the contrary notwithstanding, any action required or permitted to be taken by the board of directors at any regular, annual or special meeting thereof, or by any committee thereof, may be taken without a meeting if all members of the board of directors or such committee consent in writing to the adoption of a resolution authorizing the action. The resolution and the written consents thereto by the members of the board of directors or such committee shall be filed with the minutes of the proceedings of the board of directors or such committee. Section 16. No contract or transaction between the Company and one or more of its directors or officers, or between the Company and any other corporation, partnership, association, or other organization in which one or more of its directors or officers are directors or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the board of directors or committee thereof which authorizes the contract or transaction, or solely because his or their votes are counted for such purpose if (i) the material facts as to his or their relationship or interest and as to the contract or transaction are disclosed or are known to the board of directors or the committee, and the board of directors or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; or (ii) the material facts as to his or their relationship or interest and as to the contract or transaction are disclosed or are known to the shareowners entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the shareowners; or (iii) the contract or transaction is fair as to the Company as of the time it is authorized, approved or ratified, by 8 the board of directors, a committee thereof or the shareowners. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the board of directors or of a committee which authorizes the contract or transaction. ARTICLE III. ELECTED OFFICERS The elected officers of the Company shall be the chairman of the executive committee, the chairman of the board, the president, the vice chairman of the board, the secretary, the treasurer, the controller, and such other officers of the Company as shall be elected by the board of directors. ARTICLE IV. AUTHORITY AND DUTIES OF OFFICERS Each officer of the Company shall be subject to the control of the board of directors and shall have such duties in the management of the Company as may be provided by appropriate resolution of the board of directors and/or provided in these By-laws. ARTICLE V. DUTIES OF OFFICERS MAY BE DELEGATED In the case of the absence of any officer of the Company, or for any other reason that the board of directors may deem sufficient, the board of directors may delegate the powers or duties of such officer to any other officer or to any other director, or to any other person for the time being. ARTICLE VI. INDEMNIFICATION Section 1. The Company shall indemnify to the fullest extent authorized or permitted by law (as now or hereafter in effect) any person made, or threatened to be made a party to or otherwise involved in any action or proceeding (whether civil or criminal or otherwise) by reason of the fact that he, his testator or intestate, is or was a director or officer of the Company or by reason of the fact that such director or officer, at the request of the Company, is or was serving any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, in any capacity. Nothing contained herein shall affect any rights to indemnification to which employees other than directors and officers may be entitled by law. No amendment or repeal of this 9 Section 1 shall apply to or have any effect on any right to indemnification provided hereunder with respect to any acts or omissions occurring prior to such amendment or repeal. Section 2. The Company may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Company or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the Company would have the power to indemnify him against such liability under the provisions of the law. The Company may create a trust fund, grant a security interest and/or use other means (including, without limitation, letters of credit, surety bonds and/or other similar arrangements), as well as enter into contracts providing for indemnification to the fullest extent authorized or permitted by law and including as part thereof any or all of the foregoing, to ensure the payment of such sums as may become necessary to effect full indemnification. Section 3. The rights to indemnification conferred in this Article VI shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, the Certificate of Incorporation of the Company, these By-laws or any agreement, vote of stockholders or directors or otherwise. ARTICLE VII. POWER OF OFFICERS TO CONTRACT, ETC. Section 1. All contracts and agreements, purporting to be the act of this Company shall be signed by such officer(s) of the Company or other person(s) as may be designated by resolution of the board of directors, in order that the same shall be binding upon the Company. Section 2. The board of directors may, from time to time, authorize any officer or officers of the Company, or any other person or persons, to sign, countersign and endorse bills of exchange, checks, notes, leases, deeds and other instruments, agreements and documents in behalf of the Company. ARTICLE VIII. ORDER OF BUSINESS Section 1. The order of business at all meetings of the shareowners shall be as follows: 1. The election of directors. 10 2. Other matters to be acted upon. 3. The reports of officers. 4. Election of inspectors of election. The order of business at any meeting may be changed by a vote of the owners of a majority of the shares represented at such meeting. Section 2. The order of business at meetings of the board of directors shall be as the directors may determine. ARTICLE IX. SHARES OF STOCK Section 1. The interest of each shareowner shall be evidenced by a certificate or certificates for shares of stock of the Company in such form as the board of directors may from time to time prescribe. The certificates of stock shall be signed by the chairman of the executive committee, the chairman of the board, the president, the vice chairman of the board, or a vice president and the treasurer or an assistant treasurer or the secretary or an assistant secretary and sealed with the seal of the Company, and shall be countersigned and registered in such manner, if any, as the board of directors may by resolution prescribe; provided that, in case such certificates are required by such resolution to be signed by a transfer agent or transfer clerk and by a registrar, the signatures of the above designated officers and the seal of the Company upon such certificates may be facsimiles, engraved or printed. In case any such officer who has signed or whose facsimile signature has been placed upon such certificate shall have ceased to be such before such certificate is issued, it may be issued with the same effect as if such officer had not ceased to be such at the date of its issue. Section 2. Shares of stock of the Company shall be transferred only on the books of the Company, by the holder thereof in person or by his attorney, upon surrender for cancellation of certificates for the same number of shares, with an assignment and power of transfer endorsed thereon or attached thereto, duly executed, with such proof of the authenticity of the signature as the Company or its agents may reasonably require. Section 3. The board of directors may direct a new certificate or certificates of stock to be issued in the place of any certificate or certificates theretofore issued and alleged to have been lost, stolen or destroyed; but the board of directors, when authorizing the issue of such new certificate or certificates, may in its discretion require the owner of the stock represented by 11 the certificate so lost, stolen or destroyed, or his legal representatives, to execute and deliver to the Company a bond with one or more sureties, in such sum as it may direct, indemnifying the Company and its agents against any claim that may be made against it by reason of the issue of such new certificate. The board of directors, however, may refuse to authorize any such new certificate except upon the order of a court having jurisdiction in such matter. Section 4. The board of directors may from time to time appoint such transfer agents and registrars of shares as it may deem advisable and may define their powers and duties. ARTICLE X. DIVIDENDS Subject to the limitations and provisions set forth in the Certificate of Incorporation of the Company, dividends on the stock of the Company shall be paid at such times and in such amounts as the board of directors shall, from time to time, determine. ARTICLE XI. CORPORATE SEAL The corporate seal shall consist of the words "THE MAY DEPARTMENT STORES COMPANY" arranged in a circular around the words and figures "Corporate Seal -- Delaware" and shall be kept by the secretary in the office of the Company. The impression of the seal may be made and attested upon contracts, certificates of stock and other papers requiring the seal of the Company, when authorized by resolution of the board of directors, by the secretary, or by an assistant secretary or by any other officer of the Company, and the board of directors may authorize the use of a duplicate corporate seal by any assistant secretary or other officer of the Company. ARTICLE XII. FISCAL YEAR The fiscal year of the Company shall end on the Saturday closest to the 31st day of January in each year. 12 ARTICLE XIII. AMENDMENTS In furtherance and not in limitation of the powers conferred by statute, the board of directors, by vote of two-thirds of the entire board of directors of the Company, is expressly authorized to adopt, repeal, alter, amend or rescind the foregoing By-laws at any meeting of the board of directors, provided that the substance of the proposed amendment or addition or the subject matter thereof shall have been submitted in writing at a preceding meeting of the board of directors or notice thereof shall have been given to the directors; waiver of notice by any director being deemed equivalent to such notice to him. The By-laws may also be amended at any general or special meeting ofshareowners, provided notice of the proposed amendment shall have been given in the call for such meeting. ARTICLE XIV. WAIVER OF NOTICE Any notice required to be given by law or by the Certificate of Incorporation or by these By-laws may be waived in writing, and such waiver may be made either before or after the act or event to which the same relates. 13 EX-12 3 EXHIBIT 12 - QUARTER ENDED OCTOBER 31, 1998
Exhibit 12 THE MAY DEPARTMENT STORES COMPANY AND SUBSIDIARIES COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES FOR THE FIVE FISCAL YEARS ENDED JANUARY 31, 1998, AND FOR THE THIRTY-NINE WEEKS ENDED OCTOBER 31, 1998, AND NOVEMBER 1, 1997 39 Weeks Ended Fiscal Year Ended Oct. 31, Nov. 1, Jan. 31, Feb. 1, Feb. 3, Jan. 28, Jan. 29, 1998 1997 1998 1997 1996 1995 1994 Earnings Available for Fixed Charges: Pretax earnings from continuing operations $ 616 $ 554 $ 1,279 $ 1,232 $ 1,160 $ 1,079 $ 957 Fixed charges (excluding interest capitalized and pretax preferred stock dividend requirements) 256 274 363 346 317 293 305 Dividends on ESOP Preference Shares (19) (19) (26) (26) (28) (28) (28) Capitalized interest amortization 5 5 6 6 5 4 4 858 814 1,622 1,558 1,454 1,348 1,238 Fixed Charges: Gross interest expense (a) $ 249 $ 267 353 $ 341 $ 316 $ 289 $ 295 Interest factor attributable to rent expense 18 17 23 22 20 19 20 267 284 376 363 336 308 315 Ratio of Earnings to Fixed Charges 3.2 2.9 4.3 4.3 4.3 4.4 3.9 (a) Represents interest expense on long-term and short-term debt, ESOP debt and amortization of debt discount and debt issue expense.
EX-27 4 EXHIBIT 27 - QUARTER ENDED OCTOBER 31, 1998
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE MAY DEPARTMENT STORES COMPANY FORM 10-Q FOR THE QUARTER ENDED OCTOBER 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY TO SUCH FINANCIAL STATEMENTS. 1,000,000 9-MOS JAN-30-1999 OCT-31-1998 14 18 1,931 75 3,300 5,287 7,125 2,646 10,820 2,700 3,868 0 0 0 3,463 10,820 8,570 8,795 6,182 6,182 0 0 201 616 245 371 0 0 0 371 1.55 1.49
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