-----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, MjMx12WMuHZrThngNFgwh1esgA6yEVdNxVUsr3oqyS21UrWHVZPsziBjM/htBFCA J4reryI5ZHHQTaD1B0KplA== 0000063416-96-000039.txt : 19961211 0000063416-96-000039.hdr.sgml : 19961211 ACCESSION NUMBER: 0000063416-96-000039 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19961102 FILED AS OF DATE: 19961210 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MAY DEPARTMENT STORES CO CENTRAL INDEX KEY: 0000063416 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-DEPARTMENT STORES [5311] IRS NUMBER: 431104396 STATE OF INCORPORATION: DE FISCAL YEAR END: 0201 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-00079 FILM NUMBER: 96678658 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 11/2/96 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 November 2, 1996 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. 244,904,400 shares of common stock, $0.50 par value, as of November 2, 1996. 1 PART 1 - FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS THE MAY DEPARTMENT STORES COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited) (Millions)
Nov. 2, Oct. 28, Feb. 3, ASSETS 1996 1995 1996 Current Assets: Cash and cash equivalents $ 143 $ 23 $ 159 Accounts receivable, net 2,199 2,146 2,403 Merchandise inventories 2,951 2,555 2,134 Other current assets 173 237 169 Net current assets of discontinued operation - 280 232 Total Current Assets 5,466 5,241 5,097 Property and Equipment, at cost 6,275 5,575 5,617 Accumulated Depreciation (2,127) (1,891) (1,873) Net Property and Equipment 4,148 3,684 3,744 Goodwill 780 669 671 Other Assets 95 93 89 Net Noncurrent Assets of Discontinued Operation - 536 521 Total Assets $ 10,489 $ 10,223 $ 10,122 LIABILITIES AND SHAREOWNERS' EQUITY Current Liabilities: Notes payable and current maturities of long-term debt $ 269 $ 52 $ 132 Accounts payable 1,260 1,144 692 Accrued expenses 783 715 650 Income taxes 4 7 128 Total Current Liabilities 2,316 1,918 1,602 Long-term Debt 3,878 3,446 3,333 Deferred Income Taxes 375 335 378 Other Liabilities 216 196 204 ESOP Preference Shares 349 368 366 Unearned Compensation (331) (346) (346) Shareowners' Equity 3,686 4,306 4,585 Total Liabilities and Shareowners' Equity $ 10,489 $ 10,223 $ 10,122 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 Nov.2, Oct. 28, Nov. 2, Oct. 28, 1996 1995 1996 1995 Net Retail Sales $ 2,772 $ 2,483 $ 7,635 $ 6,850 Revenues $ 2,855 $ 2,569 $ 7,899 $ 7,112 Cost of sales 2,004 1,798 5,532 4,966 Selling, general and administrative expenses 581 526 1,620 1,459 Interest expense, net 73 61 201 176 Earnings from continuing operations before income taxes 197 184 546 511 Provision for income taxes 79 74 220 207 Net Earnings from: Continuing operations 118 110 326 304 Discontinued operation - 25 11 86 Net Earnings $ 118 $ 135 $ 337 $ 390 Primary earnings per share: Continuing operations .45 .42 1.25 1.16 Discontinued operation - .10 .05 .35 Primary Earnings per Share $ .45 $ .52 $ 1.30 $ 1.51 Fully diluted earnings per share: Continuing operations .44 .41 1.21 1.13 Discontinued operation - .09 .04 .32 Fully diluted Earnings per Share $ .44 $ .50 $ 1.25 $ 1.45 Dividends Paid per Common Share $ .29 $ .28-1/2 $ .86-1/2 $ .83 Primary Average Shares Outstanding and Equivalents 250.1 250.4 250.8 249.9 Fully Diluted Average Shares Outstanding and Equivalents 264.5 265.3 265.3 264.9 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 Nov. 2, Oct. 28, 1996 1995 Operating Activities: Net earnings from continuing operations and depreciation/amortization $ 585 $ 545 Decrease (increase) in working capital (excluding cash, cash equivalents and short-term debt) 88 (167) Other assets and liabilities, net (9) (2) Net cash provided by discontinued operation - 64 664 440 Investing Activities: Net additions to property and equipment (461) (718) Financing Activities: Net issuances of long-term debt 260 477 Net issuances (acquisitions) of treasury stock (237) 10 Dividend payments, net of tax benefit (242) (234) (219) 253 Decrease in Cash and Cash Equivalents $ (16) $ (25) Noncash financing activities for the 39 weeks ended November 2, 1996 include the distribution of $764 million of equity in the spin-off of Payless ShoeSource, Inc. and the acquisition of the former Strawbridge & Clothier stores for shares of May valued at $192 million and the assumption of $255 million of debt and certain other liabilities. Cash paid during the period: Interest $ 206 $ 182 Income Taxes 316 372 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 1995 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. There was no LIFO provision for the third quarter in 1996 and 1995. The year-to-date LIFO provision was $16 million in 1996 and 1995. Discontinued Operation. In January 1996, registrant announced its intention to spin off Payless ShoeSource, Inc. ("Payless"), its chain of self-service family shoe stores. The spin-off was completed effective May 4, 1996, as a tax-free distribution to shareowners. The registrant's financial statements presented herein reflect Payless as a discontinued operation through the end of the first quarter. As discussed in the 1995 Annual Report to Shareowners, and in accordance with generally accepted accounting principles, Payless 1996 pre-tax earnings were recorded in 1995 to the extent of spin- off costs and the Payless operating loss from January 17, 1996 through fiscal 1995 year-end. As a result, $21 million of 1996 Payless pre-tax earnings is not reported in the year-to-date net earnings from discontinued operation. Acquisition. On July 18, 1996, registrant purchased 13 former Strawbridge & Clothier department stores in the greater Philadelphia area. The registrant delivered 4.5 million shares of May common stock and assumed $255 million of debt and certain other liabilities in exchange for the Strawbridge & Clothier department store assets. Registrant has also agreed to issue additional May common stock, at the then current market price, in exchange for any cash proceeds from Strawbridge & Clothier's divestiture of its other assets, including its Clover discount division, remaining after satisfaction of all Strawbridge & Clothier liabilities and obligations. The acquisition was accounted for as a purchase. Reclassifications. Certain prior period amounts have been reclassified to conform with current year presentation. 5 Summarized Financial Information - 3rd Quarter; The May Department Stores Company, New York. At the shareowners' annual meeting on May 24, 1996, the shareowners approved the change of the state of incorporation of The May Department Stores Company from New York to Delaware. This transaction did not result in any change in the business or the consolidated assets, liabilities or net worth of the reincorporated entity. Reincorporation in Delaware allows the registrant to take advantage of certain provisions of the corporate laws of Delaware and also allows registrant to manage its state franchise tax and other affairs in ways that will result in significant savings each year beginning in 1996. The reincorporation in Delaware was accomplished by means of a statutory share exchange (Share Exchange), where each share of common stock of The May Department Stores Company (and associated preferred stock purchase right), outstanding prior to the filing of a "Certificate of Exchange" by the Department of State of the State of New York, was exchanged for one share of common stock of the reincorporated entity. As a result of the Share Exchange, The May Department Stores Company, New York, became a wholly owned subsidiary of registrant. Summarized financial information for The May Department Stores Company, New York, is set forth below for 1996. Corresponding information for fiscal year 1995 is not included below as amounts reflected in the respective consolidated financial statements reflect information for The May Department Stores Company, New York. November 2, 1996 Balance Sheet Current assets $ 5,467 Noncurrent assets 5,023 Current liabilities 2,354 Noncurrent liabilities 7,338 ESOP preference shares 349 November 2, 1996 13 Weeks 39 Weeks Ended Ended Statement of Earnings Revenues 2,855 7,899 Cost of sales 2,004 5,532 Net earnings 78 285 6 Common Stock Repurchase Program. At a meeting of its board of directors on August 16, 1996, a resolution was passed authorizing registrant's management to implement a common stock repurchase program of up to $600 million. Such purchases have been and will continue to be made in the open market from time to time as market conditions allow, subject to Securities and Exchange Commission rules and regulations. Through the end of the 1996 third quarter, registrant repurchased approximately $265 million of common stock. Subsequent Event. During the 1996 fourth quarter, registrant gave notice that it had called $150 million, 9.125% debentures due to mature December 1, 2016. The debentures will be retired early, effective December 20, 1996, resulting in a 1996 fourth quarter extraordinary aftertax loss of $5 million. Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations Financial Condition A summary of key financial information reflecting the completion of the spin-off of Payless in all periods indicated is as follows: Nov. 2, Oct 28, Feb. 3, 1996 1995 1996 Current Ratio* 2.4 2.6 3.0 Debt-Capitalization Ratio** 48% 45% 42% Fixed Charge Coverage*** 4.0x 4.2x 4.2x * The current ratios including net current assets of the discontinued operation were 2.7 at Oct. 28, 1995 and 3.2 at Feb. 3, 1996, respectively. ** The debt-to-capitalization ratios including the discontinued operation were 47% at Oct. 28, 1995 and 44% at February 3, 1996. *** Fixed charge coverage including the discontinued operation was 3.3x at Oct. 28, 1995 and 3.1x at February 3, 1996. Fixed charge coverage, which is presented for the trailing 52 weeks ended November 2, 1996, February 3, 1996, and October 28, 1995, 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, total rent expense and the pretax equivalent of dividends on redeemable stock. Registrant's third quarter 1996 current ratio decreased compared with third quarter 1995 primarily due to an increase in the current maturities of long-term debt. The impact of the increase in merchandise inventory, principally related to new store growth including the acquisition of the Strawbridge & Clothier department 7 stores, was substantially offset by the related increase in accounts payable. The third quarter 1996 current ratio decreased as compared with year-end 1995 primarily due to an increase in accounts payable partially offset by an increase in inventory, an increase in current maturities of long-term debt, an increase in accrued expenses and the seasonal decrease in accounts receivable. The increase in registrant's third quarter 1996 debt-capitalization ratio compared with third quarter 1995 and year-end 1995 is due to the $600 million common stock repurchase program discussed previously, including the additional borrowing for this program. The registrants' fixed charge coverage ratio for the 52 weeks ended November 2, 1996 decreased slightly as compared with the 52 week periods ended October 28, 1995 and February 3, 1996 due primarily to an increase in interest expense resulting from increased borrowing levels as discussed on page 9 and an increase in rent expense resulting from new store growth, partially offset by an increased level of earnings. 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 11.6% 3.9% 11.5% 4.2% Store-for-store sales represent sales of those stores open during both periods. 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 1996 1995 1996 1995 Cost of sales 70.2% 70.0% 70.0% 69.8% Selling, general and administrative expenses 20.4 20.5 20.5 20.5 Interest expense, net 2.5 2.4 2.6 2.5 Earnings before income taxes 6.9% 7.1% 6.9% 7.2% Effective income tax rate 40.0% 40.1% 40.4% 40.5% Net Earnings 4.1% 4.3% 4.1% 4.3% Cost of sales was $2,004 million in the 1996 third quarter, up 11.4% from $1,798 million in the 1995 third quarter. For the first nine months of 1996, cost of sales was $5,532 million, an 11.4% increase from $4,966 million in the 1995 period. The overall increase is primarily related to higher sales volume. As a percent of revenues, cost of sales increased 0.2% from the third quarter of 1995 and for the first nine months due principally to a small 8 deterioration in gross margin and an increase in occupancy expenses both of which were partially offset by a decrease in buying expense. For the third quarter and first nine months of each year, the LIFO charge was $0 and $16 million, respectively. There were no significant changes in the other components of cost of sales. Selling, general and administrative expenses were $581 million in the 1996 third quarter, compared with $526 million in the 1995 third quarter, a 10.5% increase. For the first nine months of 1996, selling, general and administrative expenses were $1,620 million compared with $1,459 million in the 1995 period, an 11.0% increase. The increase is primarily related to higher sales volume. Selling, general and administrative expenses, as a percent of revenues, decreased 0.1% for the third quarter of 1996 as compared with 1995 as most selling, general and administrative expense components decreased except for bad debt expense. Net interest expense for the third quarter and first nine months of 1996 and 1995 was as follows (millions): Third Quarter First Nine Months 1996 1995 1996 1995 Interest expense $ 82 $ 72 $ 223 $ 203 Interest income (5) (4) (12) (11) Capitalized interest (4) (7) (10) (16) Net Interest Expense $ 73 $ 61 $ 201 $ 176 Interest expense increased in the 1996 third quarter and first nine months due to the 1995 borrowings for the acquisition of certain assets of John Wanamaker and Woodward & Lothrop and due to 1996 borrowings related to the Strawbridge & Clothier acquisition and the common stock repurchase program. As a percent of revenues, net interest expense increased 0.1% for the third quarter and first nine months. During the 1996 third quarter, registrant issued a total of $475 million in debt securities which was comprised of $200 million, 7.875% debentures due in 2036; $150 million, 7.45% debentures due in 2011; and $125 million, 7.45% debentures due in 2016. In addition, during the second quarter of 1996 registrant issued $200 million, 8.30% debentures due in 2026. The proceeds from the issuances were added to registrant's general funds to be used for capital expenditures, working capital needs, stock repurchases and other general corporate purposes, including investments and acquisitions. Operating results for the trailing years were as follows (millions, except per share): 52 Weeks Ended Nov. 2, Oct. 28, 1996 1995 Net retail sales $ 11,269 $ 10,196 Revenues $ 11,629 $ 10,548 Net earnings from continuing operations $ 722 $ 679 Fully diluted earnings per share from continuing operations $ 2.69 $ 2.55 9 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 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)(ii) - By-laws (11) - Computation of Net Earnings Per Share (12) - Computation of Ratio of Earnings to Fixed Charges (27) - Financial Data Schedule (b) Reports on Form 8-K A report dated August 20, 1996, which contained three August, 1996 press releases concerning the registrant's July, 1996 and year-to-date sales release; second quarter and first six months of fiscal 1996 earnings release; and the announcement of the common stock repurchase program and new trading symbol. A report dated August 22, 1996 which contained a copy of the Underwriting Agreement, dated August 19, 1996, among registrant, The May Department Stores Company, New York, Morgan Stanley & Co. Incorporated and Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated; and a specimen of 7.875% debentures due August 15, 2036. A report dated September 18, 1996 which contained a copy of the Underwriting Agreement, dated September 13, 1996, among registrant, The May Department Stores Company, New York, Morgan Stanley & Co. Incorporated, Citicorp Securities, Inc. and Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated; and a specimen of 7.45% debentures due September 15, 2011. A report dated October 24, 1996 which contained a copy of the Underwriting Agreement dated October 21, 1996, among registrant, The May Department Stores Company, New York, Morgan Stanley & Co. Incorporated, Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated and Citicorp Securities, Inc; and a specimen of 7.45% debentures due October 15, 2016. 10 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. THE MAY DEPARTMENT STORES COMPANY (Registrant) Date: December 10, 1996 \s\ John L. Dunham John L. Dunham Executive Vice President and Chief Financial Officer 11 EX-3 2 EXHIBIT 3II BY-LAWS Exhibit 3(ii) BY-LAWS OF THE MAY DEPARTMENT STORES COMPANY (a Delaware Corporation) (as amended through November 15, 1996) ------------------ 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. Whenever a shareowner shall vote by proxy, the authority or proxy shall be in writing, subscribed by the 1 shareowner in whose name the said stock shall stand on the books of the Company, and shall, if requested by any shareowner, or proxy, be exhibited at the time of such meeting to the presiding officer and filed by him with the secretary of the Company. 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 properly brought before the meeting by a 2 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 75 days nor more than 90 days prior to the meeting; provided, however, that in the event that less than 90 days' notice or prior public disclosure of the date of the meeting is given or made to shareowners, notice by the shareowner to be timely must be so received not later than the close of business on the 15th day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made, whichever first occurs. 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 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 3 the Company not less than 75 days nor more than 90 days prior to the meeting; provided, however, that in the event that less than 90 days' notice or prior public disclosure of the date of the meeting is given or made to shareowners, notice by the shareowner to be timely must be so received not later than the close of business on the 15th day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made, whichever first occurs. 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 fourteen 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. 4 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 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 5 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 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 6 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 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. 7 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 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. 8 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 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. 9 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. 2. Other matters to be acted upon. 3. The reports of officers. 10 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 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 11 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. 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 12 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-11 3 3RD QUARTER EXHIBIT 11
Exhibit 11 THE MAY DEPARTMENT STORES COMPANY COMPUTATION OF NET EARNINGS PER SHARE 13 Weeks Ended 39 Weeks Ended Nov. 2, Oct. 28, Nov. 2, Oct. 28, 1996 1995 1996 1995 (millions, except per share) Net earnings from continuing operations $ 117.9 $ 109.8 $ 325.5 $ 303.7 ESOP Preferred Dividends, net of tax benefit on unallocated shares (4.5) (4.7)) (13.6) (14.2) Preferred Dividend requirements - - - - Net earnings available for common shareowners: Continuing operations 113.4 105.1 311.9 289.5 Discontinued operation - 25.7 11.4 86.4 Total net earnings available for common shareowners $ 113.4 $ 130.8 $ 323.3 $ 375.9 Average common shares outstanding 248.6 249.2 249.2 248.9 Net earnings per share: Continuing operations $ 0.46 $ 0.42 $ 1.25 $ 1.16 Discontinued operation - 0.10 0.05 0.35 Total net earnings per share $ 0.46 $ 0.52 $ 1.30 $ 1.51 Primary Computation Net earnings available from continuing operations $ 113.4 $ 105.1 $ 311.9 $ 289.5 Deferred comp. dividend adjustment 0.3 0.3 1.0 1.0 Adjusted net earnings available: Continuing operations $ 113.7 $ 105.4 $ 312.9 $ 290.5 Discontinued operation - 25.7 11.4 86.4 Total adjusted net earnings available $ 113.7 $ 131.1 $ 324.3 $ 376.9 Average common shares outstanding 248.6 249.2 249.2 248.9 Common share equivalents (CSE's) 1.5 1.2 1.6 1.0 Average common stock and CSE's 250.1 250.4 250.8 249.9 Primary earnings per share: Continuing operations $ 0.45 $ 0.42 $ 1.25 $ 1.16 Discontinued operation - 0.10 0.05 0.35 Total Primary Earnings per share $ 0.45 $ 0.52 $ 1.30 $ 1.51
Exhibit 11 THE MAY DEPARTMENT STORES COMPANY COMPUTATION OF NET EARNINGS PER SHARE 13 Weeks Ended 39 Weeks Ended Nov. 2, Oct. 28, Nov. 2, Oct. 28, 1996 1995 1996 1995 (millions, except per share) Fully Diluted Computation: Adjusted net earnings available from continuing operations-PRIMARY $ 113.7 $ 105.4 $ 312.9 $ 290.5 Earnings impact of assumed conversion of ESOP Preference Shares, net of tax benefit on unallocated common shares 2.8 2.9 8.6 8.5 Adjusted net earnings available: Continuing operations 116.5 108.3 321.5 299.0 Discontinued operation - 25.7 11.4 86.4 Total adjusted net earnings available $ 116.5 $ 134.0 $ 332.9 $ 385.4 Average common shares and CSE's 250.1 250.4 250.8 249.9 Additional CSE's attributable to treasury stock method 0.2 - 0.1 - ESOP Preference Shares 14.2 14.9 14.4 15.0 Average Common Shares Outstanding on fully diluted basis 264.5 265.3 265.3 264.9 Fully Diluted earnings per share: Continuing operations $ 0.44 $ 0.41 $ 1.21 $ 1.13 Discontinued operation - 0.09 0.04 0.32 Total Fully Diluted Earnings per share $ 0.44 $ 0.50 $ 1.25 $ 1.45
EX-12 4 3RD QUARTER EXHIBIT 12
Exhibit 12 THE MAY DEPARTMENT STORES COMPANY AND SUBSIDIARIES COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES FOR THE FIVE FISCAL YEARS ENDED FEBRUARY 3, 1996, AND FOR THE THIRTY-NINE WEEKS ENDED NOVEMBER 2, 1996, AND OCTOBER 28, 1995 39 Weeks Ended Fiscal Year Ended Nov. 2, Oct. 28, Feb. 3, Jan. 28, Jan. 29, Jan. 30, Feb. 1, 1996 1995 1996 1995 1994 1993 1992 Earnings Available for Fixed Charges: Pretax earnings from continuing operations $ 546 $ 511 $ 1,160 $ 1,079 $ 957 $ 579 $ 617 Fixed charges (excluding interest capitalized and pretax preferred stock dividend requirements) 252 226 317 293 305 361 409 Dividends on ESOP Preference Shares (20) (21) (28) (28) (28) (29) (29) Capitalized interest amortization 5 4 5 4 4 3 3 783 720 1,454 1,348 1,238 914 1,000 Fixed Charges: Gross interest expense (a) $ 246 $ 227 $ 316 $ 289 $ 295 $ 338 $ 384 Interest factor attributable to rent expense 17 15 20 19 20 24 29 Other (b) - - - - - 5 8 263 242 336 308 315 367 421 Ratio of Earnings to Fixed Charges 3.0 3.0 4.3 4.4 3.9 2.5 2.4 (a) Represents interest expense on long-term and short-term debt, ESOP debt and amortization of debt discount and debt issue expense. (b) Represents the company's proportionate share of interest of unconsolidated 50% owned persons and pretax preferred stock dividend requirements.
EX-27 5 EXHIBIT 27 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE MAY DEPARTMENT STORES COMPANY FORM 10-Q FOR THE QUARTER ENDED NOVEMBER 2, 1996 AND IS QUALIFIED IN ITS ENTIRETY TO SUCH FINANCIAL STATEMENTS. 9-MOS FEB-01-1997 NOV-02-1996 12 131 2312 113 2951 5466 6275 2127 10489 2316 3878 0 0 0 3686 10489 7635 7899 5532 5532 0 0 201 546 220 326 11 0 0 337 1.30 1.25
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