o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES |
Incorporated in Delaware | I.R.S. Employer Identification No. | |
13-3324058 |
Large accelerated filer ý | Accelerated filer o | Non-accelerated filer o | Smaller reporting company o | |||
(Do not check if a smaller reporting company) |
Class | Outstanding at November 23, 2012 | |
Common Stock, $0.01 par value per share | 395,275,822 shares |
13 Weeks Ended | 39 Weeks Ended | ||||||||||||||
October 27, 2012 | October 29, 2011 | October 27, 2012 | October 29, 2011 | ||||||||||||
Net sales | $ | 6,075 | $ | 5,853 | $ | 18,336 | $ | 17,681 | |||||||
Cost of sales | (3,672 | ) | (3,544 | ) | (10,984 | ) | (10,587 | ) | |||||||
Gross margin | 2,403 | 2,309 | 7,352 | 7,094 | |||||||||||
Selling, general and administrative expenses | (2,078 | ) | (2,018 | ) | (6,082 | ) | (5,967 | ) | |||||||
Operating income | 325 | 291 | 1,270 | 1,127 | |||||||||||
Interest expense | (104 | ) | (109 | ) | (322 | ) | (338 | ) | |||||||
Interest income | 1 | 1 | 2 | 3 | |||||||||||
Income before income taxes | 222 | 183 | 950 | 792 | |||||||||||
Federal, state and local income tax expense | (77 | ) | (44 | ) | (345 | ) | (281 | ) | |||||||
Net income | $ | 145 | $ | 139 | $ | 605 | $ | 511 | |||||||
Basic earnings per share | $ | .36 | $ | .33 | $ | 1.48 | $ | 1.20 | |||||||
Diluted earnings per share | $ | .36 | $ | .32 | $ | 1.45 | $ | 1.18 |
13 Weeks Ended | 39 Weeks Ended | ||||||||||||||
October 27, 2012 | October 29, 2011 | October 27, 2012 | October 29, 2011 | ||||||||||||
Net income | $ | 145 | $ | 139 | $ | 605 | $ | 511 | |||||||
Other comprehensive income (loss), before tax: | |||||||||||||||
Post employment and postretirement benefit plans | 37 | 22 | 115 | 66 | |||||||||||
Marketable securities | — | — | — | (15 | ) | ||||||||||
Total other comprehensive income, before tax | 37 | 22 | 115 | 51 | |||||||||||
Tax effect related to items of other comprehensive income | (13 | ) | (8 | ) | (44 | ) | (20 | ) | |||||||
Total other comprehensive income, net of tax effect | 24 | 14 | 71 | 31 | |||||||||||
Comprehensive income | $ | 169 | $ | 153 | $ | 676 | $ | 542 |
October 27, 2012 | January 28, 2012 | October 29, 2011 | |||||||||
ASSETS | |||||||||||
Current Assets: | |||||||||||
Cash and cash equivalents | $ | 1,264 | $ | 2,827 | $ | 1,097 | |||||
Receivables | 281 | 368 | 288 | ||||||||
Merchandise inventories | 7,208 | 5,117 | 7,158 | ||||||||
Prepaid expenses and other current assets | 410 | 465 | 408 | ||||||||
Total Current Assets | 9,163 | 8,777 | 8,951 | ||||||||
Property and Equipment - net of accumulated depreciation and amortization of $6,584, $5,986 and $6,720 | 8,212 | 8,420 | 8,423 | ||||||||
Goodwill | 3,743 | 3,743 | 3,743 | ||||||||
Other Intangible Assets – net | 570 | 598 | 608 | ||||||||
Other Assets | 582 | 557 | 538 | ||||||||
Total Assets | $ | 22,270 | $ | 22,095 | $ | 22,263 | |||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||
Current Liabilities: | |||||||||||
Short-term debt | $ | 123 | $ | 1,103 | $ | 805 | |||||
Merchandise accounts payable | 3,627 | 1,593 | 3,576 | ||||||||
Accounts payable and accrued liabilities | 2,419 | 2,788 | 2,375 | ||||||||
Income taxes | 89 | 371 | 66 | ||||||||
Deferred income taxes | 426 | 408 | 388 | ||||||||
Total Current Liabilities | 6,684 | 6,263 | 7,210 | ||||||||
Long-Term Debt | 6,817 | 6,655 | 6,151 | ||||||||
Deferred Income Taxes | 1,182 | 1,141 | 1,402 | ||||||||
Other Liabilities | 2,024 | 2,103 | 1,648 | ||||||||
Shareholders’ Equity | 5,563 | 5,933 | 5,852 | ||||||||
Total Liabilities and Shareholders’ Equity | $ | 22,270 | $ | 22,095 | $ | 22,263 |
39 Weeks Ended | |||||||
October 27, 2012 | October 29, 2011 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 605 | $ | 511 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 782 | 818 | |||||
Stock-based compensation expense | 47 | 54 | |||||
Amortization of financing costs and premium on acquired debt | (10 | ) | (12 | ) | |||
Changes in assets and liabilities: | |||||||
Decrease in receivables | 91 | 28 | |||||
Increase in merchandise inventories | (2,091 | ) | (2,400 | ) | |||
(Increase) decrease in prepaid expenses and other current assets | 58 | (32 | ) | ||||
Decrease in other assets not separately identified | 23 | 40 | |||||
Increase in merchandise accounts payable | 1,941 | 2,023 | |||||
Decrease in accounts payable and accrued liabilities not separately identified | (323 | ) | (220 | ) | |||
Decrease in current income taxes | (282 | ) | (117 | ) | |||
Increase in deferred income taxes | 14 | 162 | |||||
Increase (decrease) in other liabilities not separately identified | 34 | (228 | ) | ||||
Net cash provided by operating activities | 889 | 627 | |||||
Cash flows from investing activities: | |||||||
Purchase of property and equipment | (464 | ) | (359 | ) | |||
Capitalized software | (169 | ) | (141 | ) | |||
Disposition of property and equipment | 36 | 22 | |||||
Proceeds from insurance claims | — | 6 | |||||
Other, net | (18 | ) | — | ||||
Net cash used by investing activities | (615 | ) | (472 | ) | |||
Cash flows from financing activities: | |||||||
Debt repaid | (803 | ) | (451 | ) | |||
Financing costs | — | (8 | ) | ||||
Dividends paid | (246 | ) | (106 | ) | |||
Increase in outstanding checks | 38 | 140 | |||||
Acquisition of treasury stock | (1,018 | ) | (210 | ) | |||
Issuance of common stock | 192 | 113 | |||||
Net cash used by financing activities | (1,837 | ) | (522 | ) | |||
Net decrease in cash and cash equivalents | (1,563 | ) | (367 | ) | |||
Cash and cash equivalents beginning of period | 2,827 | 1,464 | |||||
Cash and cash equivalents end of period | $ | 1,264 | $ | 1,097 | |||
Supplemental cash flow information: | |||||||
Interest paid | $ | 304 | $ | 333 | |||
Interest received | 2 | 4 | |||||
Income taxes paid (net of refunds received) | 591 | 272 |
13 Weeks Ended | |||||||||||||||||||||
October 27, 2012 | October 29, 2011 | ||||||||||||||||||||
Net Income | Shares | Net Income | Shares | ||||||||||||||||||
(millions, except per share data) | |||||||||||||||||||||
Net income and average number of shares outstanding | $ | 145 | 400.3 | $ | 139 | 424.3 | |||||||||||||||
Shares to be issued under deferred compensation plans | 1.0 | 1.0 | |||||||||||||||||||
$ | 145 | 401.3 | $ | 139 | 425.3 | ||||||||||||||||
Basic earnings per share | $ | .36 | $ | .33 | |||||||||||||||||
Effect of dilutive securities: | |||||||||||||||||||||
Stock options, restricted stock and restricted stock units | 6.6 | 6.5 | |||||||||||||||||||
$ | 145 | 407.9 | $ | 139 | 431.8 | ||||||||||||||||
Diluted earnings per share | $ | .36 | $ | .32 |
39 Weeks Ended | |||||||||||||||||||||
October 27, 2012 | October 29, 2011 | ||||||||||||||||||||
Net Income | Shares | Net Income | Shares | ||||||||||||||||||
(millions, except per share data) | |||||||||||||||||||||
Net income and average number of shares outstanding | $ | 605 | 408.7 | $ | 511 | 425.0 | |||||||||||||||
Shares to be issued under deferred compensation plans | 1.2 | 1.0 | |||||||||||||||||||
$ | 605 | 409.9 | $ | 511 | 426.0 | ||||||||||||||||
Basic earnings per share | $ | 1.48 | $ | 1.20 | |||||||||||||||||
Effect of dilutive securities: | |||||||||||||||||||||
Stock options, restricted stock and restricted stock units | 6.6 | 6.2 | |||||||||||||||||||
$ | 605 | 416.5 | $ | 511 | 432.2 | ||||||||||||||||
Diluted earnings per share | $ | 1.45 | $ | 1.18 |
39 Weeks Ended | |||||||
October 27, 2012 | October 29, 2011 | ||||||
(millions) | |||||||
5.35% Senior notes due 2012 | $ | 616 | $ | — | |||
8.0% Senior debentures due 2012 | 173 | — | |||||
6.625% Senior notes due 2011 | — | 330 | |||||
7.45% Senior debentures due 2011 | — | 109 | |||||
9.5% amortizing debentures due 2021 | 4 | 4 | |||||
9.75% amortizing debentures due 2021 | 2 | 2 | |||||
Capital leases and other obligations | 8 | 6 | |||||
$ | 803 | $ | 451 |
13 Weeks Ended | 39 Weeks Ended | ||||||||||||||
October 27, 2012 | October 29, 2011 | October 27, 2012 | October 29, 2011 | ||||||||||||
(millions) | |||||||||||||||
Pension Plan | |||||||||||||||
Service cost | $ | 30 | $ | 25 | $ | 88 | $ | 76 | |||||||
Interest cost | 40 | 40 | 118 | 120 | |||||||||||
Expected return on assets | (64 | ) | (61 | ) | (190 | ) | (185 | ) | |||||||
Recognition of net actuarial loss | 35 | 22 | 106 | 66 | |||||||||||
Amortization of prior service credit | (1 | ) | (1 | ) | (1 | ) | (1 | ) | |||||||
$ | 40 | $ | 25 | $ | 121 | $ | 76 | ||||||||
Supplementary Retirement Plan | |||||||||||||||
Service cost | $ | 1 | $ | 1 | $ | 4 | $ | 4 | |||||||
Interest cost | 9 | 9 | 26 | 27 | |||||||||||
Recognition of net actuarial loss | 4 | 2 | 13 | 6 | |||||||||||
Amortization of prior service credit | — | — | — | (1 | ) | ||||||||||
$ | 14 | $ | 12 | $ | 43 | $ | 36 | ||||||||
Postretirement Obligations | |||||||||||||||
Service cost | $ | — | $ | — | $ | — | $ | — | |||||||
Interest cost | 3 | 3 | 9 | 10 | |||||||||||
Recognition of net actuarial gain | (1 | ) | (1 | ) | (3 | ) | (4 | ) | |||||||
Amortization of prior service cost | — | — | — | — | |||||||||||
$ | 2 | $ | 2 | $ | 6 | $ | 6 |
October 27, 2012 | October 29, 2011 | ||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements | ||||||||||||||||||||||||||||||
Total | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||||||||||||||
(millions) | |||||||||||||||||||||||||||||||
Marketable equity and debt securities | $ | 83 | $ | — | $ | 83 | $ | — | $ | 91 | $ | — | $ | 91 | $ | — |
October 27, 2012 | October 29, 2011 | ||||||||||||||||||||||
Notional Amount | Carrying Amount | Fair Value | Notional Amount | Carrying Amount | Fair Value | ||||||||||||||||||
(millions) | |||||||||||||||||||||||
Long-term debt | $ | 6,583 | $ | 6,784 | $ | 7,736 | $ | 5,903 | $ | 6,124 | $ | 6,500 |
Parent | Subsidiary Issuer | Other Subsidiaries | Consolidating Adjustments | Consolidated | |||||||||||||||
ASSETS: | |||||||||||||||||||
Current Assets: | |||||||||||||||||||
Cash and cash equivalents | $ | 938 | $ | 36 | $ | 290 | $ | — | $ | 1,264 | |||||||||
Receivables | — | 31 | 250 | — | 281 | ||||||||||||||
Merchandise inventories | — | 3,712 | 3,496 | — | 7,208 | ||||||||||||||
Prepaid expenses and other current assets | — | 103 | 307 | — | 410 | ||||||||||||||
Income taxes | 127 | — | — | (127 | ) | — | |||||||||||||
Total Current Assets | 1,065 | 3,882 | 4,343 | (127 | ) | 9,163 | |||||||||||||
Property and Equipment – net | — | 4,696 | 3,516 | — | 8,212 | ||||||||||||||
Goodwill | — | 3,315 | 428 | — | 3,743 | ||||||||||||||
Other Intangible Assets – net | — | 131 | 439 | — | 570 | ||||||||||||||
Other Assets | 4 | 65 | 513 | — | 582 | ||||||||||||||
Deferred Income Tax Assets | 11 | — | — | (11 | ) | — | |||||||||||||
Intercompany Receivable | 1,260 | — | 3,114 | (4,374 | ) | — | |||||||||||||
Investment in Subsidiaries | 3,467 | 2,675 | — | (6,142 | ) | — | |||||||||||||
Total Assets | $ | 5,807 | $ | 14,764 | $ | 12,353 | $ | (10,654 | ) | $ | 22,270 | ||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY: | |||||||||||||||||||
Current Liabilities: | |||||||||||||||||||
Short-term debt | $ | — | $ | 121 | $ | 2 | $ | — | $ | 123 | |||||||||
Merchandise accounts payable | — | 1,730 | 1,897 | — | 3,627 | ||||||||||||||
Accounts payable and accrued liabilities | 212 | 919 | 1,288 | — | 2,419 | ||||||||||||||
Income taxes | — | 54 | 162 | (127 | ) | 89 | |||||||||||||
Deferred income taxes | — | 322 | 104 | — | 426 | ||||||||||||||
Total Current Liabilities | 212 | 3,146 | 3,453 | (127 | ) | 6,684 | |||||||||||||
Long-Term Debt | — | 6,793 | 24 | — | 6,817 | ||||||||||||||
Intercompany Payable | — | 4,374 | — | (4,374 | ) | — | |||||||||||||
Deferred Income Taxes | — | 389 | 804 | (11 | ) | 1,182 | |||||||||||||
Other Liabilities | 32 | 746 | 1,246 | — | 2,024 | ||||||||||||||
Shareholders' Equity (Deficit) | 5,563 | (684 | ) | 6,826 | (6,142 | ) | 5,563 | ||||||||||||
Total Liabilities and Shareholders' Equity | $ | 5,807 | $ | 14,764 | $ | 12,353 | $ | (10,654 | ) | $ | 22,270 |
Parent | Subsidiary Issuer | Other Subsidiaries | Consolidating Adjustments | Consolidated | |||||||||||||||
Net sales | $ | — | $ | 2,979 | $ | 5,820 | $ | (2,724 | ) | $ | 6,075 | ||||||||
Cost of sales | — | (1,901 | ) | (4,480 | ) | 2,709 | (3,672 | ) | |||||||||||
Gross margin | — | 1,078 | 1,340 | (15 | ) | 2,403 | |||||||||||||
Selling, general and administrative expenses | (2 | ) | (1,132 | ) | (959 | ) | 15 | (2,078 | ) | ||||||||||
Operating income (loss) | (2 | ) | (54 | ) | 381 | — | 325 | ||||||||||||
Interest (expense) income, net: | |||||||||||||||||||
External | — | (103 | ) | — | — | (103 | ) | ||||||||||||
Intercompany | — | (35 | ) | 35 | — | — | |||||||||||||
Equity in earnings of subsidiaries | 147 | 29 | — | (176 | ) | — | |||||||||||||
Income (loss) before income taxes | 145 | (163 | ) | 416 | (176 | ) | 222 | ||||||||||||
Federal, state and local income tax benefit (expense) | — | 50 | (127 | ) | — | (77 | ) | ||||||||||||
Net income (loss) | $ | 145 | $ | (113 | ) | $ | 289 | $ | (176 | ) | $ | 145 | |||||||
Comprehensive income (loss) | $ | 169 | $ | (89 | ) | $ | 299 | $ | (210 | ) | $ | 169 |
Parent | Subsidiary Issuer | Other Subsidiaries | Consolidating Adjustments | Consolidated | |||||||||||||||
Net sales | $ | — | $ | 9,024 | $ | 15,672 | $ | (6,360 | ) | $ | 18,336 | ||||||||
Cost of sales | — | (5,640 | ) | (11,661 | ) | 6,317 | (10,984 | ) | |||||||||||
Gross margin | — | 3,384 | 4,011 | (43 | ) | 7,352 | |||||||||||||
Selling, general and administrative expenses | (6 | ) | (3,282 | ) | (2,837 | ) | 43 | (6,082 | ) | ||||||||||
Operating income (loss) | (6 | ) | 102 | 1,174 | — | 1,270 | |||||||||||||
Interest (expense) income, net: | |||||||||||||||||||
External | 1 | (320 | ) | (1 | ) | — | (320 | ) | |||||||||||
Intercompany | (1 | ) | (106 | ) | 107 | — | — | ||||||||||||
Equity in earnings of subsidiaries | 609 | 222 | — | (831 | ) | — | |||||||||||||
Income (loss) before income taxes | 603 | (102 | ) | 1,280 | (831 | ) | 950 | ||||||||||||
Federal, state and local income tax benefit (expense) | 2 | 87 | (434 | ) | — | (345 | ) | ||||||||||||
Net income (loss) | $ | 605 | $ | (15 | ) | $ | 846 | $ | (831 | ) | $ | 605 | |||||||
Comprehensive income | $ | 676 | $ | 56 | $ | 876 | $ | (932 | ) | $ | 676 |
Parent | Subsidiary Issuer | Other Subsidiaries | Consolidating Adjustments | Consolidated | |||||||||||||||
Cash flows from operating activities: | |||||||||||||||||||
Net income (loss) | $ | 605 | $ | (15 | ) | $ | 846 | $ | (831 | ) | $ | 605 | |||||||
Equity in earnings of subsidiaries | (609 | ) | (222 | ) | — | 831 | — | ||||||||||||
Dividends received from subsidiaries | 455 | — | (455 | ) | — | ||||||||||||||
Depreciation and amortization | — | 356 | 426 | — | 782 | ||||||||||||||
Increase in working capital | (173 | ) | (66 | ) | (367 | ) | — | (606 | ) | ||||||||||
Other, net | (17 | ) | 64 | 61 | — | 108 | |||||||||||||
Net cash provided by operating activities | 261 | 117 | 966 | (455 | ) | 889 | |||||||||||||
Cash flows from investing activities: | |||||||||||||||||||
Purchase of property and equipment and capitalized software, net | — | (210 | ) | (387 | ) | — | (597 | ) | |||||||||||
Other, net | — | — | (18 | ) | — | (18 | ) | ||||||||||||
Net cash used by investing activities | — | (210 | ) | (405 | ) | — | (615 | ) | |||||||||||
Cash flows from financing activities: | |||||||||||||||||||
Debt repaid | — | (800 | ) | (3 | ) | — | (803 | ) | |||||||||||
Dividends paid | (246 | ) | — | (455 | ) | 455 | (246 | ) | |||||||||||
Common stock acquired, net of issuance of common stock | (826 | ) | — | — | — | (826 | ) | ||||||||||||
Intercompany activity, net | (733 | ) | 892 | (159 | ) | — | — | ||||||||||||
Other, net | (51 | ) | (1 | ) | 90 | — | 38 | ||||||||||||
Net cash provided (used) by financing activities | (1,856 | ) | 91 | (527 | ) | 455 | (1,837 | ) | |||||||||||
Net increase (decrease) in cash and cash equivalents | (1,595 | ) | (2 | ) | 34 | — | (1,563 | ) | |||||||||||
Cash and cash equivalents at beginning of period | 2,533 | 38 | 256 | — | 2,827 | ||||||||||||||
Cash and cash equivalents at end of period | $ | 938 | $ | 36 | $ | 290 | $ | — | $ | 1,264 |
Parent | Subsidiary Issuer | Other Subsidiaries | Consolidating Adjustments | Consolidated | |||||||||||||||
ASSETS: | |||||||||||||||||||
Current Assets: | |||||||||||||||||||
Cash and cash equivalents | $ | 779 | $ | 34 | $ | 284 | $ | — | $ | 1,097 | |||||||||
Receivables | — | 49 | 239 | — | 288 | ||||||||||||||
Merchandise inventories | — | 3,781 | 3,377 | — | 7,158 | ||||||||||||||
Prepaid expenses and other current assets | — | 102 | 306 | — | 408 | ||||||||||||||
Income taxes | 44 | — | — | (44 | ) | — | |||||||||||||
Total Current Assets | 823 | 3,966 | 4,206 | (44 | ) | 8,951 | |||||||||||||
Property and Equipment – net | — | 4,812 | 3,611 | — | 8,423 | ||||||||||||||
Goodwill | — | 3,315 | 428 | — | 3,743 | ||||||||||||||
Other Intangible Assets – net | — | 161 | 447 | — | 608 | ||||||||||||||
Other Assets | 4 | 92 | 442 | — | 538 | ||||||||||||||
Deferred Income Tax Assets | — | — | — | — | — | ||||||||||||||
Intercompany Receivable | 2,176 | — | 2,954 | (5,130 | ) | — | |||||||||||||
Investment in Subsidiaries | 3,094 | 2,790 | — | (5,884 | ) | — | |||||||||||||
Total Assets | $ | 6,097 | $ | 15,136 | $ | 12,088 | $ | (11,058 | ) | $ | 22,263 | ||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY: | |||||||||||||||||||
Current Liabilities: | |||||||||||||||||||
Short-term debt | $ | — | $ | 802 | $ | 3 | $ | — | $ | 805 | |||||||||
Merchandise accounts payable | — | 1,748 | 1,828 | — | 3,576 | ||||||||||||||
Accounts payable and accrued liabilities | 211 | 928 | 1,236 | — | 2,375 | ||||||||||||||
Income taxes | — | 30 | 80 | (44 | ) | 66 | |||||||||||||
Deferred income taxes | — | 293 | 95 | — | 388 | ||||||||||||||
Total Current Liabilities | 211 | 3,801 | 3,242 | (44 | ) | 7,210 | |||||||||||||
Long-Term Debt | — | 6,125 | 26 | — | 6,151 | ||||||||||||||
Intercompany Payable | — | 5,130 | — | (5,130 | ) | — | |||||||||||||
Deferred Income Taxes | 1 | 446 | 955 | — | 1,402 | ||||||||||||||
Other Liabilities | 33 | 648 | 967 | — | 1,648 | ||||||||||||||
Shareholders' Equity (Deficit) | 5,852 | (1,014 | ) | 6,898 | (5,884 | ) | 5,852 | ||||||||||||
Total Liabilities and Shareholders' Equity | $ | 6,097 | $ | 15,136 | $ | 12,088 | $ | (11,058 | ) | $ | 22,263 |
Parent | Subsidiary Issuer | Other Subsidiaries | Consolidating Adjustments | Consolidated | |||||||||||||||
Net sales | $ | — | $ | 2,941 | $ | 5,733 | $ | (2,821 | ) | $ | 5,853 | ||||||||
Cost of sales | — | (1,899 | ) | (4,452 | ) | 2,807 | (3,544 | ) | |||||||||||
Gross margin | — | 1,042 | 1,281 | (14 | ) | 2,309 | |||||||||||||
Selling, general and administrative expenses | 11 | (1,174 | ) | (869 | ) | 14 | (2,018 | ) | |||||||||||
Operating income (loss) | 11 | (132 | ) | 412 | — | 291 | |||||||||||||
Interest (expense) income, net: | |||||||||||||||||||
External | — | (108 | ) | — | — | (108 | ) | ||||||||||||
Intercompany | (1 | ) | (47 | ) | 48 | — | — | ||||||||||||
Equity in earnings of subsidiaries | 132 | 21 | — | (153 | ) | — | |||||||||||||
Income (loss) before income taxes | 142 | (266 | ) | 460 | (153 | ) | 183 | ||||||||||||
Federal, state and local income tax benefit (expense) | (3 | ) | 101 | (142 | ) | — | (44 | ) | |||||||||||
Net income (loss) | $ | 139 | $ | (165 | ) | $ | 318 | $ | (153 | ) | $ | 139 | |||||||
Comprehensive income (loss) | $ | 153 | $ | (151 | ) | $ | 324 | $ | (173 | ) | $ | 153 |
Parent | Subsidiary Issuer | Other Subsidiaries | Consolidating Adjustments | Consolidated | |||||||||||||||
Net sales | $ | — | $ | 8,967 | $ | 15,188 | $ | (6,474 | ) | $ | 17,681 | ||||||||
Cost of sales | — | (5,614 | ) | (11,406 | ) | 6,433 | (10,587 | ) | |||||||||||
Gross margin | — | 3,353 | 3,782 | (41 | ) | 7,094 | |||||||||||||
Selling, general and administrative expenses | 7 | (3,303 | ) | (2,712 | ) | 41 | (5,967 | ) | |||||||||||
Operating income | 7 | 50 | 1,070 | — | 1,127 | ||||||||||||||
Interest (expense) income, net: | |||||||||||||||||||
External | 1 | (336 | ) | — | — | (335 | ) | ||||||||||||
Intercompany | (1 | ) | (144 | ) | 145 | — | — | ||||||||||||
Equity in earnings of subsidiaries | 506 | 175 | — | (681 | ) | — | |||||||||||||
Income (loss) before income taxes | 513 | (255 | ) | 1,215 | (681 | ) | 792 | ||||||||||||
Federal, state and local income tax benefit (expense) | (2 | ) | 132 | (411 | ) | — | (281 | ) | |||||||||||
Net income (loss) | $ | 511 | $ | (123 | ) | $ | 804 | $ | (681 | ) | $ | 511 | |||||||
Comprehensive income (loss) | $ | 542 | $ | (92 | ) | $ | 822 | $ | (730 | ) | $ | 542 |
Parent | Subsidiary Issuer | Other Subsidiaries | Consolidating Adjustments | Consolidated | |||||||||||||||
Cash flows from operating activities: | |||||||||||||||||||
Net income (loss) | $ | 511 | $ | (123 | ) | $ | 804 | $ | (681 | ) | $ | 511 | |||||||
Equity in earnings of subsidiaries | (506 | ) | (175 | ) | — | 681 | — | ||||||||||||
Dividends received from subsidiaries | 352 | — | — | (352 | ) | — | |||||||||||||
Depreciation and amortization | — | 390 | 428 | — | 818 | ||||||||||||||
Increase in working capital | (73 | ) | (213 | ) | (432 | ) | — | (718 | ) | ||||||||||
Other, net | 1 | 23 | (8 | ) | — | 16 | |||||||||||||
Net cash provided (used) by operating activities | 285 | (98 | ) | 792 | (352 | ) | 627 | ||||||||||||
Cash flows from investing activities: | |||||||||||||||||||
Purchase of property and equipment and capitalized software, net | — | (194 | ) | (278 | ) | — | (472 | ) | |||||||||||
Other, net | — | 38 | (38 | ) | — | — | |||||||||||||
Net cash used by investing activities | — | (156 | ) | (316 | ) | — | (472 | ) | |||||||||||
Cash flows from financing activities: | |||||||||||||||||||
Debt repaid | — | (449 | ) | (2 | ) | — | (451 | ) | |||||||||||
Dividends paid | (106 | ) | — | (352 | ) | 352 | (106 | ) | |||||||||||
Acquisition of common stock, net of common stock issued | (97 | ) | — | — | — | (97 | ) | ||||||||||||
Intercompany activity, net | (488 | ) | 705 | (217 | ) | — | — | ||||||||||||
Other, net | 11 | (9 | ) | 130 | — | 132 | |||||||||||||
Net cash provided (used) by financing activities | (680 | ) | 247 | (441 | ) | 352 | (522 | ) | |||||||||||
Net increase (decrease) in cash and cash equivalents | (395 | ) | (7 | ) | 35 | — | (367 | ) | |||||||||||
Cash and cash equivalents at beginning of period | 1,174 | 41 | 249 | — | 1,464 | ||||||||||||||
Cash and cash equivalents at end of period | $ | 779 | $ | 34 | $ | 284 | $ | — | $ | 1,097 |
Parent | Subsidiary Issuer | Other Subsidiaries | Consolidating Adjustments | Consolidated | |||||||||||||||
ASSETS: | |||||||||||||||||||
Current Assets: | |||||||||||||||||||
Cash and cash equivalents | $ | 2,533 | $ | 38 | $ | 256 | $ | — | $ | 2,827 | |||||||||
Receivables | — | 58 | 310 | — | 368 | ||||||||||||||
Merchandise inventories | — | 2,722 | 2,395 | — | 5,117 | ||||||||||||||
Prepaid expenses and other current assets | — | 152 | 313 | — | 465 | ||||||||||||||
Total Current Assets | 2,533 | 2,970 | 3,274 | — | 8,777 | ||||||||||||||
Property and Equipment – net | — | 4,827 | 3,593 | — | 8,420 | ||||||||||||||
Goodwill | — | 3,315 | 428 | — | 3,743 | ||||||||||||||
Other Intangible Assets – net | — | 153 | 445 | — | 598 | ||||||||||||||
Other Assets | 4 | 73 | 480 | — | 557 | ||||||||||||||
Intercompany Receivable | 520 | — | 2,963 | (3,483 | ) | — | |||||||||||||
Investment in Subsidiaries | 3,210 | 2,435 | — | (5,645 | ) | — | |||||||||||||
Total Assets | $ | 6,267 | $ | 13,773 | $ | 11,183 | $ | (9,128 | ) | $ | 22,095 | ||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY: | |||||||||||||||||||
Current Liabilities: | |||||||||||||||||||
Short-term debt | $ | — | $ | 1,099 | $ | 4 | $ | — | $ | 1,103 | |||||||||
Merchandise accounts payable | — | 731 | 862 | — | 1,593 | ||||||||||||||
Accounts payable and accrued liabilities | 248 | 1,103 | 1,437 | — | 2,788 | ||||||||||||||
Income taxes | 46 | 29 | 296 | — | 371 | ||||||||||||||
Deferred income taxes | — | 314 | 94 | — | 408 | ||||||||||||||
Total Current Liabilities | 294 | 3,276 | 2,693 | — | 6,263 | ||||||||||||||
Long-Term Debt | — | 6,630 | 25 | — | 6,655 | ||||||||||||||
Intercompany Payable | — | 3,483 | — | (3,483 | ) | — | |||||||||||||
Deferred Income Taxes | 4 | 351 | 786 | — | 1,141 | ||||||||||||||
Other Liabilities | 36 | 771 | 1,296 | — | 2,103 | ||||||||||||||
Shareholders' Equity (Deficit) | 5,933 | (738 | ) | 6,383 | (5,645 | ) | 5,933 | ||||||||||||
Total Liabilities and Shareholders' Equity | $ | 6,267 | $ | 13,773 | $ | 11,183 | $ | (9,128 | ) | $ | 22,095 |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
Item 4. | Controls and Procedures. |
Item 1. | Legal Proceedings. |
Item 1A. | Risk Factors. |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds. |
Total Number of Shares Purchased | Average Price per Share ($) | Number of Shares Purchased under Program (1) | Open Authorization Remaining (1)($) | ||||||||
(thousands) | (thousands) | (millions) | |||||||||
July 29, 2012 – August 25, 2012 | 2,067 | 38.76 | 2,067 | 684 | |||||||
August 26, 2012 – September 29, 2012 | 4,697 | 39.24 | 4,697 | 500 | |||||||
September 30, 2012 – October 27, 2012 | 3,515 | 39.49 | 3,515 | 361 | |||||||
10,279 | 39.23 | 10,279 |
(1) | Commencing in January 2000, the Company's board of directors has from time to time approved authorizations to purchase, in the aggregate, up to $10,500 million of Common Stock. All authorizations are cumulative and do not have an expiration date. As of October 27, 2012, $361 million of authorization remained unused. The Company may continue, discontinue or resume purchases of Common Stock under these or possible future authorizations in the open market, in privately negotiated transactions or otherwise at any time and from time to time without prior notice. |
Item 4. | Mine Safety Disclosures. |
Item 5. | Other Information. |
• | the possible invalidity of the underlying beliefs and assumptions; |
• | competitive pressures from department and specialty stores, general merchandise stores, manufacturers' outlets, off-price and discount stores, and all other retail channels, including the Internet, mail-order catalogs and television; |
• | general consumer-spending levels, including the impact of general economic conditions, consumer disposable income levels, consumer confidence levels, the availability, cost and level of consumer debt, the costs of basic necessities and other goods and the effects of the weather or natural disasters; |
• | conditions to, or changes in the timing of, proposed transactions and changes in expected synergies, cost savings and non-recurring charges; |
• | possible changes or developments in social, economic, business, industry, market, legal and regulatory circumstances and conditions; |
• | possible actions taken or omitted to be taken by third parties, including customers, suppliers, business partners, competitors and legislative, regulatory, judicial and other governmental authorities and officials; |
• | changes in relationships with vendors and other product and service providers; |
• | currency, interest and exchange rates and other capital market, economic and geo-political conditions; |
• | severe weather, natural disasters and changes in weather patterns; |
• | possible outbreaks of epidemic or pandemic diseases; |
• | the potential impact of national and international security concerns on the retail environment, including any possible military action, terrorist attacks or other hostilities; |
• | the possible inability of the Company's manufacturers to deliver products in a timely manner or meet the Company's quality standards; |
• | the Company's reliance on foreign sources of production, including risks related to the disruption of imports by labor disputes, regional health pandemics, and regional political and economic conditions; |
• | duties, taxes, other charges and quotas on imports; and |
• | possible systems failures and/or security breaches, including, any security breach that results in the theft, transfer or unauthorized disclosure of customer, employee or company information, or the failure to comply with various laws applicable to the Company in the event of such a breach. |
Item 6. | Exhibits. |
10.1+ | Eighth Amendment to Credit Card Program Agreement, effective as of April 16, 2012, by and among Macy's, Inc., f/k/a Federated Department Stores, Inc., a Delaware corporation, ("Macy's, Inc."), FDS Bank, a federally-chartered stock savings bank ("FDS Bank"), Macy's Credit and Customer Services, Inc., f/k/a FACS Group, Inc., an Ohio corporation ("MCCS"), Macy's West Stores, Inc., f/k/a Macy's Department Stores, Inc., an Ohio corporation ("Macy's"), Bloomingdale's, Inc., an Ohio corporation ("Bloomingdale's") (collectively the "Macy's Companies"), and Department Stores National Bank, a national banking association, as assignee of Citibank, N.A. ("Bank"). | |
31.1 | Certification of Chief Executive Officer pursuant to Rule 13a-14(a) | |
31.2 | Certification of Chief Financial Officer pursuant to Rule 13a-14(a) | |
32.1 | Certification by Chief Executive Officer under Section 906 of the Sarbanes-Oxley Act | |
32.2 | Certification by Chief Financial Officer under Section 906 of the Sarbanes-Oxley Act | |
101** | The following financial statements from Macy's, Inc.'s Quarterly Report on Form 10-Q for the quarter ended October 27, 2012, filed on December 3, 2012, formatted in XBRL: (i) Consolidated Statements of Income, (ii) Consolidated Statements of Comprehensive Income, (iii) Consolidated Balance Sheets, (iv) Consolidated Statements of Cash Flows, and (v) the Notes to Consolidated Financial Statements, tagged as blocks of text and in detail. |
+ | Portions of the exhibit have been omitted pursuant to a request for confidential treatment. The confidential portions have been provided to the SEC. |
** | As provided in Rule 406T of Regulation S-T, this information is furnished and not filed for purposes of Sections 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934. |
MACY’S, INC. | ||
By: | /s/ DENNIS J. BRODERICK | |
Dennis J. Broderick Executive Vice President, General Counsel and Secretary | ||
By: | /s/ JOEL A. BELSKY | |
Joel A. Belsky Executive Vice President and Controller (Principal Accounting Officer) |
By: | /s/ Douglas C. Morrison |
By: | /s/ Dennis J. Broderick |
By: | /s/ Teresa Huxel Name: Teresa Huxel |
By: | /s/ Dennis J. Broderick Name: Dennis J. Broderick Title: Vice President |
By: | /s/ Dennis J. Broderick Name: Dennis J. Broderick Title: President |
By: | /s/Dennis J. Broderick Name: Dennis J. Broderick Title: Vice President |
CERTIFICATION | |||||
I, Terry J. Lundgren, certify that: | |||||
1 | I have reviewed this quarterly report on Form 10-Q of Macy's, Inc.; | ||||
2 | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | ||||
3 | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | ||||
4 | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: | ||||
a. | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||||
b. | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||||
c. | evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||||
d. | disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and | ||||
5 | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): | ||||
a. | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and | ||||
b. | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. | ||||
December 3, 2012 | /s/ Terry J. Lundgren____ | ||||
Terry J. Lundgren | |||||
Chief Executive Officer |
CERTIFICATION | |||||
I, Karen M. Hoguet, certify that: | |||||
1 | I have reviewed this quarterly report on Form 10-Q of Macy's, Inc.; | ||||
2 | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | ||||
3 | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | ||||
4 | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: | ||||
a. | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||||
b. | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||||
c. | evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||||
d. | disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and | ||||
5 | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): | ||||
a. | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and | ||||
b. | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. | ||||
December 3, 2012 | /s/ Karen M. Hoguet______ | ||||
Karen M. Hoguet | |||||
Chief Financial Officer |
CERTIFICATION UNDER SECTION 906 OF THE SARBANES-OXLEY ACT | |||
Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, in connection with the filing of the Form 10-Q of Macy's, Inc. (the "Company") for the fiscal quarter ended October 27, 2012, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned officer of the Company certifies that, to his knowledge: | |||
1 | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | ||
2 | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report. | ||
Dated: December 3, 2012 | |||
/s/ Terry J. Lundgren__ | |||
Name: Terry J. Lundgren | |||
Title: Chief Executive Officer |
CERTIFICATION UNDER SECTION 906 OF THE SARBANES-OXLEY ACT | |||
Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, in connection with the filing of the Form 10-Q of Macy's, Inc. (the "Company") for the fiscal quarter ended October 27, 2012 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned officer of the Company certifies that, to her knowledge: | |||
1 | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | ||
2 | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report. | ||
Dated: December 3, 2012 | |||
/s/ Karen M. Hoguet__________ | |||
Name: Karen M. Hoguet | |||
Title: Chief Financial Officer |
]FN$/DTT(MJA$YJH($I$'K#++1#H
Fair Value Measurements (Financial Assets Measured At Fair Value On A Recurring Basis) (Details) (USD $)
In Millions, unless otherwise specified |
Oct. 27, 2012
|
Oct. 29, 2011
|
---|---|---|
Marketable equity and debt securities | $ 83 | $ 91 |
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
|
||
Marketable equity and debt securities | 0 | 0 |
Significant Observable Inputs (Level 2) [Member]
|
||
Marketable equity and debt securities | 83 | 91 |
Significant Unobservable Inputs (Level 3) [Member]
|
||
Marketable equity and debt securities | $ 0 | $ 0 |
Financing Activities
|
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Oct. 27, 2012
|
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Financing Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financing Activities | Financing Activities On January 10, 2012, the Company issued $550 million aggregate principal amount of 3.875% senior notes due 2022 and $250 million aggregate principal amount of 5.125% senior notes due 2042, the proceeds of which were used to retire indebtedness maturing during the 39 weeks ended October 27, 2012. On March 29, 2012, the Company redeemed the $173 million of 8.0% senior debentures due July 15, 2012, as allowed under the terms of the indenture. The price for the redemption was calculated pursuant to the indenture and resulted in the recognition of additional interest expense of approximately $4 million. By redeeming this debt early, the Company saved approximately $4 million of interest expense during the 39 weeks ended October 27, 2012. In addition, the Company repaid $616 million of 5.35% senior notes due March 15, 2012 at maturity. During the 39 weeks ended October 29, 2011, the Company repaid $439 million of indebtedness at maturity. The following table shows the detail of debt repayments:
During the 39 weeks ended October 27, 2012, the Company repurchased 26,256,576 shares of its common stock pursuant to existing stock purchase authorizations at an approximate cost of $991 million. As of October 27, 2012, the Company had approximately $361 million of authorization remaining under its share repurchase program. The Company may continue or, from time to time, suspend repurchases of shares under its share repurchase program, depending on prevailing market conditions, alternate uses of capital and other factors. On November 28, 2012, the Company repurchased $700 million aggregate principal amount of its outstanding senior unsecured notes, which had a net book value of approximately $706 million. The repurchased senior unsecured notes had stated interest rates ranging from 5.9% to 7.875% and maturities in 2015 and 2016. The Company expects to record the redemption premium and other costs related to these repurchases as additional interest expense of approximately $133 million ($83 million after income taxes) prior to February 2, 2013. On November 20, 2012, the Company issued $750 million aggregate principal amount of 2.875% senior unsecured notes due 2023 and $250 million aggregate principal amount of 4.3% senior unsecured notes due 2043. This debt was used to pay for the repurchased notes described above. Remaining proceeds of this debt will be used to retire $298 million of 5.875% senior unsecured notes maturing during January 2013, and as a result this short-term debt was reclassified to long-term debt as of October 27, 2012. Through these transactions, the Company has improved its debt maturity profile, decreased its ongoing interest expense by taking advantage of the current low interest rate environment and reduced its refinancing and interest rate risk over the next few years. The Company's annual interest expense is anticipated to be reduced on a full year basis by approximately $30 million. |