-----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, OVp+EvKKycIt+ul+2glEUv7jEs7wGz5EMiYFoW/VSXHvICUiI7KE94L0RPcr//qx a1J0mewzI79cxEGHmd96Ow== 0000063416-01-500015.txt : 20010614 0000063416-01-500015.hdr.sgml : 20010614 ACCESSION NUMBER: 0000063416-01-500015 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20010505 FILED AS OF DATE: 20010613 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: 1659581 BUSINESS ADDRESS: STREET 1: 611 OLIVE ST CITY: ST LOUIS STATE: MO ZIP: 63101 BUSINESS PHONE: 3143426300 10-Q 1 tenq101r.txt 1ST QUARTER FORM 10-Q DATED MAY 5, 2001 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 May 5, 2001 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 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. 299,199,490 shares of common stock, $.50 par value, as of May 5, 2001. 1 PART 1 - FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS THE MAY DEPARTMENT STORES COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited) (Millions) May 5, April 29, Feb. 3, ASSETS 2001 2000 2001 Current Assets: Cash and cash equivalents $ 57 $ 40 $ 156 Accounts receivable, net 1,869 1,913 2,081 Merchandise inventories 3,351 3,191 2,938 Other current assets 118 83 95 Total Current Assets 5,395 5,227 5,270 Property and Equipment, at cost 8,485 7,945 8,167 Accumulated Depreciation (3,386) (3,136) (3,268) Property and equipment, net 5,099 4,809 4,899 Goodwill and Other Assets 1,551 1,044 1,405 Total Assets $ 12,045 $ 11,080 $ 11,574 LIABILITIES AND SHAREOWNERS' EQUITY Current Liabilities: Notes payable $ 378 $ 49 $ - Current maturities of long-term debt 107 260 85 Accounts payable 1,232 1,323 965 Accrued expenses 872 824 871 Income taxes payable 111 100 293 Total Current Liabilities 2,700 2,556 2,214 Long-term Debt 4,427 3,709 4,534 Deferred Income Taxes 594 548 586 Other Liabilities 328 307 335 ESOP Preference Shares 296 311 299 Unearned Compensation (204) (248) (249) Shareowners' Equity 3,904 3,897 3,855 Total Liabilities and Shareowners' Equity $ 12,045 $ 11,080 $ 11,574 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 May 5, April 29, 2001 2000 Net retail sales $ 3,131 $ 3,020 Revenues $ 3,153 $ 3,050 Cost of sales 2,202 2,141 Selling, general and administrative expenses 688 638 Interest expense, net 86 71 Earnings before income taxes 177 200 Provision for income taxes 68 80 Net earnings $ 109 $ 120 Basic earnings per share $ .35 $ .36 Diluted earnings per share $ .34 $ .35 Dividends paid per common share $ .23-1/2 $ .23-1/4 Weighted average shares outstanding: Basic 298.7 322.5 Diluted 321.2 344.2 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) 13 Weeks Ended May 5, April 29, 2001 2000 Operating Activities: Net earnings $ 109 $ 120 Depreciation and amortization 130 119 Working capital changes: Accounts receivable, net 244 260 Merchandise inventories (377) (374) Other current assets (14) (3) Accounts payable 267 294 Accrued expenses (47) (71) Income taxes payable (182) (135) Other, net 2 4 132 214 Investing Activities: Net additions to property and equipment (203) (153) Business combination (304) - (507) (153) Financing Activities: Net issuances (repayments): Notes payable 378 49 Long-term debt (39) 192 Net issuances (purchases) of common stock 12 (223) Dividend payments, net of tax benefit (75) (80) 276 (62) Decrease in Cash and Cash Equivalents (99) (1) Cash and Cash Equivalents, beginning of period 156 41 Cash and Cash Equivalents, end of period $ 57 $ 40 Cash paid during the period: Interest $ 78 $ 75 Income Taxes 237 202 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 26-31) in the 2000 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 fiscal year. The seasonality of David's Bridal varies from department stores, with sales and operating results peaking in the first half of the fiscal year. David's Bridal joined May in August 2000. Inventories. Merchandise inventories are stated on the LIFO (last- in, first-out) cost basis. The LIFO provision for the first quarter was $8 million in 2001 and 2000. Income Taxes. The effective income tax rate for the first quarter of 2001 was 38.8%, compared with 40.0% in the first quarter of 2000, as a result of implementing corporate structure changes which favorably impact the effective tax rate. Business Combination. In March 2001, the company completed the purchase of nine department store locations from Saks Incorporated, eight of which were reopened during the quarter. The cash purchase price includes approximately $237 million for the stores and approximately $67 million for merchandise inventories and accounts receivable. This transaction was accounted for as a purchase and did not have a material impact on the company's financial statements. Store Purchases. In April 2001, the company completed the purchase of 15 former Wards and Bradlees stores. Nine of the 15 stores are planned as new stores and the remainder will provide expansion in existing malls, with most locations opening in 2002. Store purchases are included in net additions to property and equipment in the accompanying condensed consolidated statement of cash flows. Common Stock Repurchase Program. During the first half of 2000, the company purchased $789 million or 28.4 million shares of May common stock. These repurchases completed the remaining $139 million of stock repurchases related to the 1999 stock repurchase program and the $650 million common stock repurchase program authorized by May's board of directors in 2000. Repurchases by quarter were: $ Shares First quarter 2000 $ 217 7.8 Second quarter 2000 572 20.6 Total $ 789 28.4 Reclassifications. Certain prior period amounts have been reclassified to conform with current year presentation. 5 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 May 5, 2001 April 29, 2000 Earnings Shares EPS Earnings Shares EPS Net earnings $ 109 $ 120 ESOP preference shares' dividends (5) (5) Basic EPS 104 298.7 $ 0.35 115 322.5 $ 0.36 ESOP preference shares 4 19.8 4 20.9 Assumed exercise of options (treasury stock method) - 2.7 - 0.8 Diluted EPS $ 108 321.2 $ 0.34 $ 119 344.2 $ 0.35 Condensed Consolidating Financial Information. The May Department Stores Company, Delaware ("Parent") has fully and unconditionally guaranteed certain long-term debt obligations of its wholly-owned subsidiary, The May Department Stores Company, New York ("Subsidiary Issuer"). Other subsidiaries of the Parent include May Department Stores International, Inc. (MDSI), Leadville Insurance Company, Snowdin Insurance Company, and David's Bridal, Inc. and subsidiaries. Subsidiary Issuer financial statements have been restated for all periods presented to reflect a February 3, 2001, reorganization of MDSI as a direct wholly-owned subsidiary of Parent rather than of the Subsidiary Issuer. Prior to fiscal year-end 2000, Parent was required to provide only summarized financial information for Subsidiary Issuer, which owned 100% of MDSI's common stock before the reorganization. Below is a restatement of Subsidiary Issuer's summarized financial position as of April 29, 2000, and summarized operating results for the thirteen week period ending April 29, 2000, as if the reorganization had occurred on February 1, 1998. The "As Reported" information was previously reported in Parent's Form 10-Q filed June 6, 2000. April 29, 2000 As Reported Adjustments As Restated Financial Position Current assets $ 5,213 $ (23) $ 5,190 Noncurrent assets 6,093 (136) 5,957 Current liabilities 2,543 (48) 2,495 Noncurrent liabilities 8,198 - 8,198 Thirteen weeks ended April 29, 2000 As Reported Adjustments As Restated Operating Results Revenues $ 3,050 $ - $ 3,050 Net earnings 68 (9) 59 Condensed consolidating balance sheets as of May 5, 2001, April 29, 2000 and February 3, 2001 and the related condensed consolidating statements of earnings and cash flows for the thirteen week periods ended May 5, 2001 and April 29, 2000, are presented on pages 7 through 11. 6 CONDENSED CONSOLIDATING FINANCIAL INFORMATION (continued) - Condensed Consolidating Balance Sheet As of May 5, 2001(Millions) Subsidiary Other Parent Issuer Subsidiaries Eliminations Consolidated ASSETS Current assets: Cash and cash equivalents $ - $ 40 $ 17 $ - $ 57 Accounts receivable, net - 1,864 42 (37) 1,869 Merchandise inventories - 3,280 71 - 3,351 Other current assets - 106 12 - 118 Total current assets - 5,290 142 (37) 5,395 Property and equipment, at cost - 8,405 80 - 8,485 Accumulated depreciation - (3,370) (16) - (3,386) Property and equipment, net - 5,035 64 - 5,099 Goodwill and other assets - 1,210 341 - 1,551 Intercompany receivable (payable) (680) 458 222 - - Investment in subsidiaries 4,881 - - (4,881) - Total assets $ 4,201 $ 11,993 $ 769 $(4,918) $12,045 LIABILITIES AND SHAREOWNERS' EQUITY Current liabilities: Notes payable $ - $ 378 $ - $ - $ 378 Current maturities of long- term debt - 107 - - 107 Accounts payable - 1,186 46 - 1,232 Accrued expenses 1 856 52 (37) 872 Income taxes payable - 111 - - 111 Total current liabilities 1 2,638 98 (37) 2,700 Long-term debt - 4,426 1 - 4,427 Intercompany note payable (receivable) - 3,200 (3,200) - - Deferred income taxes - 591 3 - 594 Other liabilities - 775 - (447) 328 ESOP preference shares 296 - - - 296 Unearned compensation - (204) - - (204) Shareowners' equity 3,904 567 3,867 (4,434) 3,904 Total liabilities and shareowners' equity $ 4,201 $ 11,993 $ 769 $(4,918) $12,045
7 CONDENSED CONSOLIDATING FINANCIAL INFORMATION (continued) - Condensed Consolidating Statement of Earnings For the Thirteen Weeks Ended May 5, 2001 (Millions) Subsidiary Other Parent Issuer Subsidiaries Eliminations Consolidated Revenues $ - $ 3,061 $ 334 $ (242) $ 3,153 Cost of sales - 2,164 262 (224) 2,202 Selling, general and administrative expenses - 674 37 (23) 688 Interest expense(income), net: External - 86 - - 86 Intercompany - 71 (71) - - Equity in earnings of subsidiaries (109) - - 109 - Earnings before income taxes 109 66 106 (104) 177 Provision for income taxes - 30 38 - 68 Net earnings $ 109 $ 36 $ 68 $ (104) $ 109
Condensed Consolidating Statement of Cash Flows For the Thirteen Weeks Ended May 5, 2001 (Millions) Subsidiary Other Parent Issuer Subsidiaries Eliminations Consolidated Operating activities: Net earnings $ 109 $ 36 $ 68 $ (104) $ 109 Equity in earnings of subsidiaries (109) - - 109 - Depreciation and amortization - 125 5 - 130 (Increase) Decrease in working capital (5) (107) 3 - (109) Other, net 32 - (25) (5) 2 27 54 51 - 132 Investing activities: Net additions to property and equipment - (197) (6) - (203) Business combination - (304) - - (304) - (501) (6) - (507) Financing activities: Net issuances of notes payable - 378 - - 378 Net repayments of long-term debt - (38) (1) - (39) Net issuances of common stock 3 9 - - 12 Dividend payments (76) 1 - - (75) Intercompany, net 46 - (46) - - (27) 350 (47) - 276 Decrease in cash and Cash equivalents - (97) (2) - (99) Cash and cash equivalents, beginning of year - 137 19 - 156 Cash and cash equivalents, end of year $ - $ 40 $ 17 $ - $ 57 8
CONDENSED CONSOLIDATING FINANCIAL INFORMATION (continued) - Condensed Consolidating Balance Sheet As of April 29, 2000 (Millions) Subsidiary Other Parent Issuer Subsidiaries Eliminations Consolidated ASSETS Current assets: Cash and cash equivalents $ - $ 27 $ 13 $ - $ 40 Accounts receivable, net - 1,913 36 (36) 1,913 Merchandise inventories - 3,169 22 - 3,191 Other current assets - 81 2 - 83 Total assets - 5,190 73 (36) 5,227 Property and equipment, at cost - 7,927 18 - 7,945 Accumulated depreciation - (3,126) (10) - (3,136) Property and equipment, net - 4,801 8 - 4,809 Goodwill and other assets - 1,043 1 - 1,044 Intercompany receivable (payable) (242) 113 129 - - Investment in subsidiaries 4,886 - - (4,886) - Total assets $ 4,244 $11,147 $ 211 $(4,522) $11,080 LIABILITIES AND SHAREOWNERS' EQUITY Current liabilities: Notes payable $ - $ 49 $ - $ - $ 49 Current maturities of long- term debt - 260 - - 260 Accounts payable - 1,283 40 - 1,323 Accrued expenses 11 829 20 (36) 824 Income taxes payable 25 74 1 - 100 Total current liabilities 36 2,495 61 (36) 2,556 Long-term debt - 3,709 - - 3,709 Intercompany note payable (receivable) - 3,200 (3,200) - - Deferred income taxes - 548 - - 548 Other liabilities - 741 - (434) 307 ESOP preference shares 311 - - - 311 Unearned compensation - (248) - - (248) Shareowners' equity 3,897 702 3,350 (4,052) 3,897 Total liabilities and shareowners' equity $ 4,244 $11,147 $ 211 $ (4,522) $11,080
9 CONDENSED CONSOLIDATING FINANCIAL INFORMATION (continued) - Condensed Consolidating Statement of Earnings For the Thirteen Weeks Ended April 29, 2000 (Millions) Subsidiary Other Parent Issuer Subsidiaries Eliminations Consolidated Revenues $ - $ 3,050 $ 208 $ (208) $ 3,050 Cost of sales - 2,143 190 (192) 2,141 Selling, general and administrative expenses - 656 3 (21) 638 Interest expense (income), net: External - 71 - - 71 Intercompany - 71 (71) - - Equity in earnings of subsidiaries (120) - - 120 - Earnings before income taxes 120 109 86 (115) 200 Provision for income taxes - 50 30 - 80 Net earnings $ 120 $ 59 $ 56 $ (115) $ 120
Condensed Consolidating Statement of Cash Flows For the Thirteen Weeks Ended April 29, 2000 (Millions) Subsidiary Other Parent Issuer Subsidiaries Eliminations Consolidated Operating activities: Net earnings $ 120 $ 59 $ 56 $ (115) $ 120 Equity in earnings of subsidiaries (120) - - 120 - Depreciation and amortization - 119 - - 119 (Increase) Decrease in working capital 21 (27) (23) - (29) Other, net 242 (260) 27 (5) 4 263 (109) 60 - 214 Investing activities: Net additions to property and equipment - (153) - - (15) - (153) - - (153) Financing activities: Net issuances of notes payable - 49 - - 49 Net issuances of long-term debt - 192 - - 192 Net (purchases) issuances of common stock (229) 6 - - (223) Dividend payments (81) 1 - - (80) Intercompany activity, net 47 10 (57) - - (263) 258 (57) - (62) (Decrease)increase in cash and cash equivalents - (4) 3 - (1) Cash and cash equivalents, beginning of year - 31 10 - 41 Cash and cash equivalents, end of year $ - $ 27 $ 13 $ - $ 40
10 CONDENSED CONSOLIDATING FINANCIAL INFORMATION (continued) - Condensed Consolidating Balance Sheet As of February 3, 2001 (Millions) Subsidiary Other Parent Issuer Subsidiaries Eliminations Consolidated ASSETS Current assets: Cash and cash equivalents $ - $ 137 $ 19 $ - $ 156 Accounts receivable, net - 2,076 43 (38) 2,081 Merchandise inventories - 2,877 61 - 2,938 Other current assets - 86 10 (1) 95 Total current assets - 5,176 133 (39) 5,270 Property and equipment, at cost - 8,093 74 - 8,167 Accumulated depreciation - (3,254) (14) - (3,268) Property and equipment, net - 4,839 60 - 4,899 Goodwill and other assets - 1,062 343 - 1,405 Intercompany receivable (payable) (648) 449 199 - - Investment in subsidiaries 4,808 - - (4,808) - Total assets $ 4,160 $11,526 $ 735 $(4,847) $11,574 LIABILITIES AND SHAREOWNERS' EQUITY Current liabilities: Current maturities of long- term debt $ - $ 85 $ - $ - $ 85 Accounts payable - 922 43 - 965 Accrued expenses 6 857 47 (39) 871 Income taxes payable (receivable) - 299 (6) - 293 Total current liabilities 6 2,163 84 (39) 2,214 Long-term debt - 4,531 3 - 4,534 Intercompany note payable (receivable) - 3,200 (3,200) - - Deferred income taxes - 583 3 - 586 Other liabilities - 777 - (442) 335 ESOP preference shares 299 - - - 299 Unearned compensation - (249) - - (249) Shareowners' equity 3,855 521 3,845 (4,366) 3,855 Total liabilities and shareowners' equity $ 4,160 $11,526 $ 735 $(4,847) $11,574
Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations Net retail sales (sales) represent sales of stores operating at the end of the latest period including lease department sales and excluding finance charge revenues and the sales of stores that have been closed and not replaced. Store-for-store sales represent sales of those stores open during both periods. David's Bridal sales are included in total sales for fiscal 2001 but are not included in store-for-store sales. Sales percent increases (decreases) are: Store-for- Total Store 13 Weeks Ended May 5, 2001 3.7% (1.1)% The following table presents the components of costs and expenses, as a percent of revenues, for the first quarter of 2001 and 2000. Revenues include sales from all stores operating during the period, finance charge revenues and lease department income. 2001 2000 Revenues 100.0% 100.0% Cost of sales 69.8 70.2 Selling, general and administrative expenses 21.8 20.9 Interest expense, net 2.8 2.4 Earnings before income taxes 5.6 6.5 Provision for income taxes 38.8* 40.0* Net Earnings 3.5% 3.9% *-Percent represents effective income tax rate. Cost of sales was $2,202 million in the 2001 first quarter, up 2.9% from $2,141 million in the 2000 first quarter. As a percent of revenues, cost of sales decreased 0.4% compared with the first quarter of 2000 principally due to the addition of David's Bridal, partially offset by buying and occupancy costs, which grew at a faster rate than revenues. Selling, general and administrative expenses were $688 million in the 2001 first quarter, compared with $638 million in the 2000 first quarter, a 7.7% increase. Selling, general and administrative expenses as a percent of revenues increased 0.9% compared with the first quarter of 2000 due to the addition of David's Bridal and payroll, advertising, credit, and employee benefit expenses, which grew at a faster rate than revenues. 12 Net interest expense for the first quarter 2001 and 2000 was (millions): 2001 2000 Interest expense $ 94 $ 79 Interest income (4) (4) Capitalized interest (4) (4) Net Interest Expense $ 86 $ 71 Interest expense principally relates to long-term debt. In 2000, we issued $1.1 billion in new debt of which $875 million was issued subsequent to the first quarter of 2000. In the first quarter of 2001, we financed the previously described business combination and store purchases principally through short-term borrowings and cash and cash equivalents. Short-term borrowings for the first quarter were (dollars in millions): 2001 2000 Average balance outstanding $112 $17 Average interest rate on average balance 4.8% 6.0% The effective income tax rate for the first quarter of 2001 was 38.8%, compared with 40.0% in the first quarter of 2000, as a result of implementing corporate structure changes which favorably impact our effective tax rate. Operating results for the trailing years were (millions, except per share): 52 Weeks Ended May 5, April 29, 2001 2000 Net retail sales $ 14,516 $ 13,927 Revenues 14,614 13,927 Net earnings 847 925 Diluted earnings per share 2.61 2.61 Financial Condition Cash Flows. Cash flows from operations (net earnings plus depreciation and amortization) was $239 million in the first quarter of 2001 and 2000. A portion of the cash flows from operations was used to fund seasonal working capital changes during the quarter as detailed on the accompanying condensed consolidated statement of cash flows. Available Credit and Debt Ratings. We can borrow up to $878 million under our credit agreements. In addition, we have filed with the Securities and Exchange Commission shelf registration statements that enable us to issue up to $775 million of debt securities. 13 Financial Ratios. Key financial ratios for the periods indicated are: May 5, April 29, Feb. 3, 2001 2000 2001 Current Ratio 2.0 2.0 2.4 Debt-to-Capitalization Ratio 52% 46% 50% Fixed Charge Coverage* 3.8x 4.8x 4.0x The debt-to-capitalization ratio increased as of May 5, 2001 and February 3, 2001 compared with April 29, 2000 due to the issuance of debt and the repurchase of May common stock subsequent to April 29, 2000. The fixed charge coverage ratio for the 52 weeks ended May 5, 2001 declined from the 52 weeks ended April 29, 2000 due to higher interest expense and lower operating earnings. * Fixed charge coverage, which is presented for the 52 weeks ended May 5, 2001, April 29, 2000 and February 3, 2001, 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. Recent Sales Results Sales for the four-week period ended June 2, 2001 were $1.10 billion, a 5.8% increase from $1.04 billion in the similar period last year. Store-for-store sales increased 1.1%. Sales for the first seventeen weeks of fiscal 2001 were $4.23 billion, a 4.2% increase over $4.06 billion during the first seventeen weeks of fiscal 2000. Store-for-store sales decreased 0.5%. Sales comparisons in May 2001 benefited from the movement of a major sales promotion event from the first week of fiscal June to the last week of fiscal May 2001. The company anticipates its June performance will be adversely impacted by the shift in the promotional calendar. Forward-looking Statements Management's Discussion and Analysis contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. While such statements reflect all available information and management's judgment and estimates of current and anticipated conditions and circumstances and are prepared with the assistance of specialists within and outside the company, there are many factors outside of our control that have an impact on our operations. Such factors include, but are not limited to: competitive changes, general and regional economic conditions, consumer preferences and spending patterns, availability of adequate locations for building or acquiring new stores, and our ability to hire and retain qualified associates. Because of these factors, actual performance could differ materially from that described in the forward-looking statements. 14 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 registrant 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) - Bylaws of May, as amended (12) - Computation of Ratio of Earnings to Fixed Charges (15) - Letter Re: Unaudited Interim Financial Information (b) Reports on Form 8-K A report dated April 25, 2001, which contained information concerning debt ratings and incorporated by reference registrant's Annual Report on Form 10-K for the fiscal year ended February 3, 2001. 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: June 12, 2001 /s/ Thomas D. Fingleton Thomas D. Fingleton Executive Vice President and Chief Financial Officer 15 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Board of Directors and Shareowners of The May Department Stores Company: We have reviewed the accompanying condensed consolidated balance sheet of The May Department Stores Company (a Delaware corporation) and subsidiaries as of May 5, 2001, and April 29, 2000, and the related condensed consolidated statements of earnings and cash flows for the thirteen week periods ended May 5, 2001 and April 29, 2000. These financial statements are the responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the financial statements referred to above for them to be in conformity with accounting principles generally accepted in the United States. We have previously audited, in accordance with auditing standards generally accepted in the United States, the consolidated balance sheet of The May Department Stores Company as of February 3, 2001, (not presented separately herein), and in our report dated February 14, 2001, we expressed an unqualified opinion on that statement. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of February 3, 2001, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived. /s/ Arthur Andersen LLP St. Louis, Missouri June 12, 2001 Exhibit 15 To the Board of Directors and Shareowners of The May Department Stores Company: We are aware that The May Department Stores Company, Inc. has incorporated by reference in its Registration Statements on Form S-3 (No. 333-42940, 333-42940-01, 333-71413 and 333-71413-01) and Form S-8 (No. 33-21415, 33-58985, 333-59792 and 333-76227) its Form 10-Q for the quarter ended May 5, 2001, which includes our report dated June 12, 2001 covering the unaudited interim financial information contained therein. Pursuant to Regulation C of the Securities Act of 1933, that report is not considered a part of the registration statement prepared or certified by our firm or a report prepared or certified by our firm within the meaning of Sections 7 and 11 of the Act. It should be noted that we have not performed any procedures subsequent to June 12, 2001. /s/ Arthur Andersen LLP St. Louis, Missouri June 12, 2001 16 Exhibit 12 THE MAY DEPARTMENT STORES COMPANY AND SUBSIDIARIES COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES FOR THE FIVE FISCAL YEARS ENDED FEBRUARY 3, 2001 AND FOR THE THIRTEEN WEEKS ENDED MAY 5, 2001, AND APRIL 29, 2000 13 Weeks Ended Fiscal Year Ended May 5, April 29, Feb. 3, Jan. 29, Jan. 30, Jan. 31, Feb. 1, 2001 2000 2001 2000 1999 1998 1997 Earnings Available for Fixed Charges: Pretax earnings from continuing operations $ 177 $ 200 $ 1,402 $ 1,523 $ 1,395 $ 1,279 $ 1,232 Fixed charges (excluding interest capitalized and pretax preferred stock dividend requirements) 103 87 406 346 344 363 346 Dividends on ESOP Preference Shares (5) (6) (23) (24) (25) (26) (26) Capitalized interest amortization 2 2 8 7 7 6 6 277 283 1,793 1,852 1,721 1,622 1,558 Fixed Charges: Gross interest expense (a) $ 99 $ 85 $ 395 $ 340 $ 339 $ 353 $ 341 Interest factor attributable to rent expense 8 6 28 22 21 23 22 107 91 423 362 360 376 363 Ratio of Earnings to Fixed Charges 2.6 3.1 4.2 5.1 4.8 4.3 4.3 (a) Represents interest expense on long-term and short-term debt, ESOP debt and amortization of debt discount and debt issue expense.
EX-3 2 bylaw1q.txt BYLAWS AS AMENDED THROUGH MAY 25, 2001 Exhibit 3 BY-LAWS OF THE MAY DEPARTMENT STORES COMPANY (a Delaware Corporation) (as amended through May 25, 2001) ------------------ 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 1 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 2 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 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. 3 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 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 4 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 eleven 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 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 5 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 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. 6 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 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 7 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 at any time and from time to time deem appropriate; subject to the limitations contained in Section 141(c)(2) of the 8 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 9 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 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. 10 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 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. 11 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. 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 12 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 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. 13 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. 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 14 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. 15 -----END PRIVACY-ENHANCED MESSAGE-----