(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Emerging growth company | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. | ☐ |
Item 2.02. | Results of Operations and Financial Condition. | ||||||
On July 1, 2020, Macy’s, Inc. ("Macy’s") issued a press release announcing Macy’s financial condition, results of operations and cash flows as of and for the 13 weeks ended May 2, 2020. The full text of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference. Macy’s reports its financial results in accordance with U.S. generally accepted accounting principles (“GAAP”). The press release referred to above contains non-GAAP financial measures of earnings (loss) before interest, taxes, depreciation and amortization (“EBITDA”), adjusted EBITDA, adjusted net income (loss) and adjusted diluted earnings (loss) per share. Adjusted EBITDA, adjusted net income (loss) and adjusted diluted earnings (loss) per share exclude impairment, restructuring and other costs. A section has been included at the end of the press release that contains important additional information regarding these non-GAAP financial measures including reconciliation to the most directly comparable GAAP financial measure. | |||||||
Item 8.01. | Other Events | ||||||
As previously announced, in response to the COVID-19 pandemic, beginning April 1, 2020 the base salaries of each of our named executive officers (NEOs) were temporarily reduced by 20% and our Chief Executive Officer (CEO) and the Board of Directors received no cash compensation. The Compensation and Management Development (CMD) Committee and our Board of Directors have approved restoring base salaries for our NEOs, including our CEO, and reinstating our Board of Directors’ cash compensation. All actions are effective July 1, 2020. The CMD Committee generally approves equity grants to management at its March meeting and our Board of Directors receive annual equity grants following the annual meeting of shareholders in May. Due to the impact of the COVID-19 pandemic, the CMD Committee delayed approving equity grants to management. Equity grants to the Board of Directors were also delayed. The Company expects to make these equity grants in the next few weeks. | |||||||
Item 9.01. | Financial Statements and Exhibits. | ||||||
(d) | Exhibits | ||||||
99.1 | |||||||
104 | Cover Page Interactive Data File (embedded within the Inline XBRL Document) |
MACY'S, INC. | |
SIGNATURE | |
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. | |
MACY'S, INC. | |
Dated: July 1, 2020 | By: /s/ Paul Griscom |
Name: Paul Griscom | |
Title: Vice President, Financial Reporting and Interim Chief Accounting Officer |
First Quarter | ||||||
(All amounts in millions except per share figures) | 2020 | 2019 | ||||
Net sales | $ | 3,017 | $ | 5,504 | ||
Net income (loss) (a) (b) | $ | (3,581 | ) | $ | 136 | |
Earnings (loss) before interest, taxes, depreciation and amortization (a) (b) | $ | (3,873 | ) | $ | 446 | |
Diluted earnings (loss) per share (a) (b) | $ | (11.53 | ) | $ | 0.44 | |
Adjusted Net income (loss) (b) | $ | (630 | ) | $ | 137 | |
Adjusted Earnings (loss) before interest, taxes, depreciation and amortization (b) | $ | (689 | ) | $ | 447 | |
Adjusted Diluted earnings (loss) per share (b) | $ | (2.03 | ) | $ | 0.44 |
13 Weeks Ended | 13 Weeks Ended | |||||||||||||
May 2, 2020 | May 4, 2019 | |||||||||||||
$ | % to Net sales | $ | % to Net sales | |||||||||||
Net sales | $ | 3,017 | $ | 5,504 | ||||||||||
Credit card revenues, net | 131 | 4.3 | % | 172 | 3.1 | % | ||||||||
Cost of sales | (2,501 | ) | (82.9 | %) | (3,403 | ) | (61.8 | %) | ||||||
Selling, general and administrative expenses | (1,598 | ) | (52.9 | %) | (2,112 | ) | (38.4 | %) | ||||||
Gains on sale of real estate | 16 | 0.5 | % | 43 | 0.8 | % | ||||||||
Impairment, restructuring and other costs (Note 2) | (3,184 | ) | (105.5 | %) | (1 | ) | — | % | ||||||
Operating income (loss) | (4,119 | ) | (136.5 | %) | 203 | 3.7 | % | |||||||
Benefit plan income, net | 9 | 7 | ||||||||||||
Interest expense, net | (47 | ) | (47 | ) | ||||||||||
Income (loss) before income taxes | (4,157 | ) | 163 | |||||||||||
Federal, state and local income tax benefit (expense) (Note 3) | 576 | (27 | ) | |||||||||||
Net income (loss) | $ | (3,581 | ) | $ | 136 | |||||||||
Basic earnings (loss) per share | $ | (11.53 | ) | $ | 0.44 | |||||||||
Diluted earnings (loss) per share | $ | (11.53 | ) | $ | 0.44 | |||||||||
Average common shares: | ||||||||||||||
Basic | 310.6 | 309.1 | ||||||||||||
Diluted | 310.6 | 311.4 | ||||||||||||
End of period common shares outstanding | 310.2 | 308.9 | ||||||||||||
Supplemental Financial Measures: | ||||||||||||||
Gross Margin (Note 4) | $ | 516 | 17.1 | % | $ | 2,101 | 38.2 | % | ||||||
Depreciation and amortization expense | $ | 237 | $ | 236 |
May 2, 2020 | February 1, 2020 | May 4, 2019 | ||||||||||
ASSETS: | ||||||||||||
Current Assets: | ||||||||||||
Cash and cash equivalents | $ | 1,523 | $ | 685 | $ | 737 | ||||||
Receivables | 170 | 409 | 237 | |||||||||
Merchandise inventories | 4,923 | 5,188 | 5,498 | |||||||||
Prepaid expenses and other current assets | 519 | 528 | 633 | |||||||||
Total Current Assets | 7,135 | 6,810 | 7,105 | |||||||||
Property and Equipment – net | 6,425 | 6,633 | 6,499 | |||||||||
Right of Use Assets | 2,672 | 2,668 | 2,631 | |||||||||
Goodwill | 838 | 3,908 | 3,908 | |||||||||
Other Intangible Assets – net | 439 | 439 | 441 | |||||||||
Other Assets | 1,072 | 714 | 712 | |||||||||
Total Assets | $ | 18,581 | $ | 21,172 | $ | 21,296 | ||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY: | ||||||||||||
Current Liabilities: | ||||||||||||
Short-term debt | $ | 739 | $ | 539 | $ | 41 | ||||||
Merchandise accounts payable | 2,196 | 1,682 | 1,950 | |||||||||
Accounts payable and accrued liabilities | 2,757 | 3,448 | 2,846 | |||||||||
Income taxes | 80 | 81 | 182 | |||||||||
Total Current Liabilities | 5,772 | 5,750 | 5,019 | |||||||||
Long-Term Debt | 4,918 | 3,621 | 4,680 | |||||||||
Long-Term Lease Liabilities | 2,923 | 2,918 | 2,823 | |||||||||
Deferred Income Taxes | 944 | 1,169 | 1,193 | |||||||||
Other Liabilities | 1,327 | 1,337 | 1,258 | |||||||||
Shareholders' Equity | 2,697 | 6,377 | 6,323 | |||||||||
Total Liabilities and Shareholders’ Equity | $ | 18,581 | $ | 21,172 | $ | 21,296 |
13 Weeks Ended | 13 Weeks Ended | |||||||
May 2, 2020 | May 4, 2019 | |||||||
Cash flows from operating activities: | ||||||||
Net income (loss) | $ | (3,581 | ) | $ | 136 | |||
Adjustments to reconcile net income (loss) to net cash used by operating activities: | ||||||||
Impairment, restructuring and other costs | 3,184 | 1 | ||||||
Depreciation and amortization | 237 | 236 | ||||||
Benefit plans | 12 | 8 | ||||||
Stock-based compensation expense | 6 | 14 | ||||||
Gains on sale of real estate | (16 | ) | (43 | ) | ||||
Deferred income taxes | (225 | ) | 7 | |||||
Changes in assets and liabilities: | ||||||||
Decrease in receivables | 236 | 163 | ||||||
(Increase) decrease in merchandise inventories | 265 | (235 | ) | |||||
(Increase) decrease in prepaid expenses and other current assets | 12 | (6 | ) | |||||
Increase in merchandise accounts payable | 629 | 247 | ||||||
Decrease in accounts payable and accrued liabilities | (531 | ) | (516 | ) | ||||
Increase (decrease) in current income taxes | (353 | ) | 8 | |||||
Change in other assets and liabilities | (39 | ) | (58 | ) | ||||
Net cash used by operating activities | (164 | ) | (38 | ) | ||||
Cash flows from investing activities: | ||||||||
Purchase of property and equipment | (122 | ) | (204 | ) | ||||
Capitalized software | (38 | ) | (60 | ) | ||||
Disposition of property and equipment | 21 | 34 | ||||||
Other, net | 26 | (7 | ) | |||||
Net cash used by investing activities | (113 | ) | (237 | ) | ||||
Cash flows from financing activities: | ||||||||
Debt issued | 1,500 | — | ||||||
Debt repaid | (4 | ) | (3 | ) | ||||
Dividends paid | (117 | ) | (116 | ) | ||||
Decrease in outstanding checks | (231 | ) | (45 | ) | ||||
Issuance of common stock | — | 6 | ||||||
Net cash provided (used) by financing activities | 1,148 | (158 | ) | |||||
Net increase (decrease) in cash, cash equivalents and restricted cash | 871 | (433 | ) | |||||
Cash, cash equivalents and restricted cash beginning of period | 731 | 1,248 | ||||||
Cash, cash equivalents and restricted cash end of period | $ | 1,602 | $ | 815 |
(1) | As a result of the seasonal nature of the retail business, the results of operations for the 13 weeks ended May 2, 2020 and May 4, 2019 (which do not include the Christmas season) are not necessarily indicative of such results for the fiscal year. |
(2) | The 13 weeks ended May 2, 2020 includes non-cash impairment charges totaling $3.2 billion, which consists of $3.1 billion of a non-cash goodwill impairment charge and $80 million impairment charge on long-lived tangible and right of use assets. |
(3) | The income tax benefit of $576 million, or 13.9% of pretax loss, reflects a higher projected benefit rate for fiscal 2020 due to the carryback of net operating losses as permitted under the CARES Act and the impact of the goodwill impairment charge. |
(4) | Gross margin is defined as net sales less cost of sales. |
(5) | Restricted cash of $79 million and $78 million have been included with cash and cash equivalents for the 13 weeks ended May 2, 2020 and May 4, 2019, respectively. |
• | EBITDA and adjusted EBITDA are reconciled to GAAP net income (loss). |
• | Adjusted net income (loss) is reconciled to GAAP net income (loss). |
• | Adjusted diluted earnings (loss) per share is reconciled to GAAP diluted earnings (loss) per share. |
13 Weeks Ended | 13 Weeks Ended | |||||||
May 2, 2020 | May 4, 2019 | |||||||
Net income (loss) | $ | (3,581 | ) | $ | 136 | |||
Interest expense, net | 47 | 47 | ||||||
Federal, state and local income tax expense (benefit) | (576 | ) | 27 | |||||
Depreciation and amortization | 237 | 236 | ||||||
EBITDA | (3,873 | ) | 446 | |||||
Impairment, restructuring and other costs | 3,184 | 1 | ||||||
Adjusted EBITDA | $ | (689 | ) | $ | 447 |
13 Weeks Ended | 13 Weeks Ended | |||||||||||||||
May 2, 2020 | May 4, 2019 | |||||||||||||||
Net Income (Loss) | Diluted Earnings (Loss) Per Share | Net Income | Diluted Earnings Per Share | |||||||||||||
As reported | $ | (3,581 | ) | $ | (11.53 | ) | $ | 136 | $ | 0.44 | ||||||
Impairment, restructuring and other costs | 3,184 | 10.25 | 1 | — | ||||||||||||
Income tax impact of certain items identified above | (233 | ) | (0.75 | ) | — | — | ||||||||||
As adjusted | $ | (630 | ) | $ | (2.03 | ) | $ | 137 | $ | 0.44 |
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