Federated Reports Improved 3Q Earnings.Business Editors CINCINNATI--(BUSINESS WIRE)--Nov. 13, 2002 Federated Connected and treated as one. See federated database and federated directories. Department Stores This is a list of department stores. In the case of department store groups the location of the flagship store is given. This list does not include large specialist stores, which sometimes resemble department stores. , Inc. (NYSE NYSE See: New York Stock Exchange :FD)(PCX (1) A bitmapped graphics file format that handles monochrome, 2-bit, 4-bit, 8-bit and 24-bit color and uses RLE to achieve compression ratios of approximately 1.1:1 to 1.5:1. Images with large blocks of solid colors compress best under the RLE method. See PC Paintbrush. :FD) today reported diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the of 38 cents for the third quarter of 2002. This compared to diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. earnings of 20 cents a share from continuing operations in the same 13-week period last year, excluding restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. related to the closing of Stern's Stern's was a regional department store chain serving the U.S. states of New York, Pennsylvania, and New Jersey. The chain was in business for more than 130 years, prior to its 2001 integration into Macy's and Bloomingdale's. and the conversion of Liberty House stores into Macy's Macy's formerly R.H. Macy & Co., Inc. Major U.S. department-store chain. Its former flagship, an 11-story store that occupies a city block in New York City's Herald Square, was for many years the largest single store in the country. Rowland H. , which affected the 2001 third quarter. Federated's income from continuing operations totaled $75 million for the quarter ended November November: see month. 2, 2002, an increase of approximately 190 percent over income of $26 million from continuing operations for the same period last year. For the year to date, Federated reported diluted earnings per share from continuing operations of $1.48, compared to $1.13 a share in the same period of 2001, excluding restructuring charges. The company's income from continuing operations for the first nine months of fiscal 2002 was $297 million, an increase of 43 percent over income of $208 million in the same period of 2001. James James, person in the Bible James, in the Gospel of St. Luke, kinsman of St. Jude. The original does not specify the relationship. James, rivers, United States James. M. Zimmerman Zimmerman may refer to: People
Sales Sales of $3.479 billion for the third quarter of 2002 were flat with sales of $3.475 billion in the same period last year. On a same-store basis, Federated's third quarter sales were down 2.0 percent. Sales in the first 39 weeks of 2002 totaled $10.418 billion, a decrease of 1.0 percent from sales of $10.519 billion in the same period last year. On a same-store basis, Federated's year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. sales were down 2.6 percent. The company opened eight new stores in the third quarter: a Macy's East in the Mall at Millenia Millenia can refer to:
Orlando (ôrlăn`dō), city (1990 pop. 164,693), seat of Orange co., central Fla., in a lake region; inc. 1875. In a citrus fruit and farm area, it is one of the world's most visited vacation spots. , FL; three Macy's West Macy's West is a division of Macy's, Inc. (formerly Federated Department Stores) and headquartered in San Francisco, California. It currently operates approximately 200 stores throughout Arizona, California, Colorado, Guam, Hawaii, Nevada, New Mexico and Texas. stores in Fashion Square, Scottsdale Scottsdale, city (1990 pop. 130,069), Maricopa co., central Ariz.; settled in 1895 by Winfield Scott, inc. 1951. It is a resort and retirement center in the Phoenix metropolitan area. , AZ, Promenade promenade Public place where people walk (or, in the past, rode) at leisure for pleasure, exercise, or display. Promenades are pedestrian avenues pleasingly landscaped or commanding a view, often located along waterfronts and in parks. Vehicular traffic may or may not be restricted. Mall, Temecula, CA, and Westminster Westminster. 1 Residential city (1990 pop. 78,118), Orange co., S Calif.; founded 1870 as a temperance colony for Presbyterians, inc. 1957. It has several industrial parks. A U.S. naval weapons station and Los Alamitos Naval Air Base are nearby. Mall, Westminster, CA; two Bloomingdale's This article or section needs sources or references that appear in reliable, third-party publications. Alone, primary sources and sources affiliated with the subject of this article are not sufficient for an accurate encyclopedia article. , a department store in Millenia Mall, Orlando, and a home store in Las Vegas Las Vegas (läs vā`gəs), city (1990 pop. 258,295), seat of Clark co., S Nev.; inc. 1911. It is the largest city in Nevada and the center of one of the fastest-growing urban areas in the United States. , NV; and two Bon Marche Marche, region, Italy Marche (mär`kā) or the Marches, region (1991 pop. 1,429,205), 3,742 sq mi (9,692 sq km), E central Italy, extending from the eastern slopes of the Apennines to the Adriatic Sea. stores, in Silver Lake Mall, Coeur d'Alene Coeur d'Alene, city, United States Coeur d'Alene (kûrdəlān`), city (1990 pop. 24,563), seat of Kootenai co., N Idaho, near the Wash. line; inc. 1907. , ID, and Columbia Center
The Columbia Center (formerly the Bank of America Tower, Columbia Center and the Columbia Seafirst Center , Kennewick Kennewick (kĕn`əwĭk), city (1990 pop. 42,155), Benton co., SE Wash., on the Columbia River near the influx of the Snake River, in an irrigated farm and vineyard region; inc. 1904. , WA, which were former Gottschalk's locations. Operating and Net Income Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. in the third quarter was $188 million or 5.4 percent of sales. This compares to operating income of $126 million or 3.6 percent of sales for the third quarter of 2001, including restructuring charges, or $149 million or 4.3 percent of sales excluding those charges. Net income for the third quarter was $106 million compared to $3 million in the same period last year. For the first 39 weeks of 2002, Federated's operating income totaled $709 million or 6.8 percent of sales. This compares to operating income of $517 million or 4.9 percent of sales for the same period last year, including restructuring charges, or $619 million or 5.9 percent of sales excluding those charges. Net income for the 2002 year to date was $477 million, compared to $171 million in the same period last year. Discontinued Operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. In the third quarter, Federated completed the sale of the Arizona Arizona (âr'əzō`nə), state in the southwestern United States. It is bordered by Utah (N), New Mexico (E), Mexico (S), and, across the Colorado R., Nevada and California (W). Mail Order and Figi's catalog catalog, descriptive list, on cards or in a book, of the contents of a library. Assurbanipal's library at Nineveh was cataloged on shelves of slate. The first known subject catalog was compiled by Callimachus at the Alexandrian Library in the 3d cent. B.C. businesses, along with other Fingerhut assets, which resulted in an after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. gain of $31 million. Discontinued operations for the year-to-date showed an after-tax gain of $180 million from the disposition of Fingerhut assets, producing cash of $731 million. Cash Flow During the first 39 weeks of 2002, cash flow from continued and discontinued operations, before financing activities, was $530 million, compared to a use of cash totaling $513 million in the same year-to-date period last year. During the third quarter, the company retired approximately $1 billion of debt and spent $253 million to repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. approximately 7.6 million shares of Federated stock. Earnings/Sales Expectations Consistent with prior guidance, Federated's earnings expectations from continuing operations are $1.95 - 2.05 a share for the fourth quarter, and $3.35 - 3.45 a share for the full year of fiscal 2002, which ends February February: see month. 1, 2003. Federated expects same-store sales Same-store sales is a business term which refers to the revenue generated by one of a retail chain's specific outlets during a certain period of time (often a fiscal quarter or a particular shopping season), compared to an identical period in the past, usually in the previous year. in the fourth quarter to be flat to down 2 percent. For the combined November-December period, same-store sales are expected to be flat to down 2.5 percent, reflecting continued economic uncertainty and low consumer confidence indices. Federated's CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. and CFO See Chief Financial Officer. intend to certify cer·ti·fy v. cer·ti·fied, cer·ti·fy·ing, cer·ti·fies v.tr. 1. a. To confirm formally as true, accurate, or genuine. b. the company's financial statements, as required by the Securities and Exchange Commission and the Sarbanes-Oxley Act See SOX. of 2002, in connection with the filing of the company's 10-Q when due on or before December December: see month. 17, 2002. Federated, with corporate offices in Cincinnati Cincinnati (sĭnsənăt`ē, –năt`ə), city (1990 pop. 364,040), seat of Hamilton co., extreme SW Ohio, on the Ohio River opposite Newport and Covington, Ky.; inc. as a city 1819. and New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of , is one of the nation's leading department store retailers, with annual sales of more than $15.6 billion. Federated currently operates more than 460 stores in 34 states, Guam Guam (gwäm), Chamorro Guåhan, the largest, most populous, and southernmost of the Mariana Islands (see also Northern Mariana Islands, an unincorporated territory of the United States (2005 est. pop. and Puerto Rico Puerto Rico (pwār`tō rē`kō), island (2005 est. pop. 3,917,000), 3,508 sq mi (9,086 sq km), West Indies, c.1,000 mi (1,610 km) SE of Miami, Fla. , under the names of Macy's, Bloomingdale's, The Bon Marche, Burdines, Goldsmith's, Lazarus and Rich's. The company also operates macys.com and Bloomingdale's By Mail. This release contains certain forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that reflect current views of the financial performance and future events of Federated. The words "expect," "plan," "think," "believe" and other similar expressions identify forward-looking statements. Any such forward-looking statements are subject to risks and uncertainties. Future results of the operations of Federated could differ materially from historical results or current expectations because of a variety of factors that affect the company, including transaction costs Transaction Costs Costs incurred when buying or selling securities. These include brokers' commissions and spreads (the difference between the price the dealer paid for a security and the price they can sell it). associated with the renovation, conversion and transitioning of company retail stores in regional markets; the outcome and timing of sales and leasing in conjunction with the disposition of company retail store properties; the retention, reintegration reintegration /re·in·te·gra·tion/ (-in-te-gra´shun) 1. biological integration after a state of disruption. 2. restoration of harmonious mental function after disintegration of the personality in mental illness. and transitioning of displaced displaced see displacement. company employees; competitive pressures from department and specialty stores Noun 1. specialty store - a store that sells only one kind of merchandise shop, store - a mercantile establishment for the retail sale of goods or services; "he bought it at a shop on Cape Cod" , general merchandise stores, manufacturers' outlets, off-price and discount stores, and all other retail channels; and general consumer-spending levels, including the impact of the availability and level of consumer debt, and the effects of weather. (NOTE: Weekly sales updates are available at 513/579-7987 and on the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the at www.fds.com. A live webcast of the first quarter earnings call with analysts can be accessed through the Federated website, beginning at 10:30 a.m. ET. Pre-registration is requested. The webcast will be archived for replay beginning approximately two hours after the conclusion of the live call.)
FEDERATED DEPARTMENT STORES, INC.
Consolidated Statements of Income (Unaudited) (Note 1)
------------------------------------------------------
(All amounts in millions except percentages and per share figures)
13 Weeks Ended 39 Weeks Ended
----------------------- -----------------------
November 2, November 3, November 2, November 3,
2002 2001 2002 2001
----------- ----------- ----------- -----------
Net Sales $ 3,479 $ 3,475 $10,418 $10,519
Cost of Sales:
Recurring (Note 2) 2,112 2,134 6,241 6,420
Inventory
valuation
adjustments
(Note 3) - 9 - 35
----------- ----------- ----------- -----------
Total cost of sales 2,112 2,143 6,241 6,455
Percent to sales 60.7% 61.7% 59.9% 61.4%
Selling, general
and administrative
expenses (Note 4) 1,179 1,192 3,468 3,480
Percent to sales 33.9% 34.3% 33.3% 33.1%
Asset impairment
and restructuring
charges (Note 5) - 14 - 67
Percent to sales -% 0.4% -% 0.6%
----------- ----------- ----------- -----------
Operating Income 188 126 709 517
Percent to sales 5.4% 3.6% 6.8% 4.9%
Interest
expense - net (73) (80) (225) (236)
----------- ----------- ----------- -----------
Income from
Continuing
Operations Before
Income Taxes and
Extraordinary Item 115 46 484 281
Federal, state and
local income tax
expense (Note 6) (40) (20) (187) (73)
----------- ----------- ----------- -----------
Income from
Continuing
Operations Before
Extraordinary Item 75 26 297 208
FEDERATED DEPARTMENT STORES, INC.
Consolidated Statements of Income (Unaudited) (Note 1)
------------------------------------------------------
(All amounts in millions except percentages and per share figures)
13 Weeks Ended 39 Weeks Ended
----------------------- -----------------------
November 2, November 3, November 2, November 3,
2002 2001 2002 2001
----------- ----------- ----------- -----------
Discontinued
Operations:
Loss from
discontinued
operations, net
of tax effect - (13) - (27)
Income on
disposal of
discontinued
operations,
net of tax
effect (Note 7) 31 - 180 -
Extraordinary Item
- loss on early
extinguishment of
debt, net of
tax effect - (10) - (10)
----------- ----------- ----------- -----------
Net Income $ 106 $ 3 $ 477 $ 171
=========== =========== =========== ===========
Basic
Earnings (Loss)
per Share:
Income from
continuing
operations $ .38 $ .13 $ 1.49 $ 1.06
Income (loss)
from discontinued
operations .16 (.06) .90 (.13)
Extraordinary item - (.05) - (.05)
----------- ----------- ----------- -----------
Net income $ .54 $ .02 $ 2.39 $ .88
=========== =========== =========== ===========
Diluted
Earnings (Loss)
per Share:
Income from
continuing
operations $ .38 $ .13 $ 1.48 $ 1.04
Income (loss)
from discontinued
operations .16 (.06) .89 (.13)
Extraordinary item - (.05) - (.05)
----------- ----------- ----------- -----------
Net income $ .54 $ .02 $ 2.37 $ .86
=========== =========== =========== ===========
Diluted earnings
per share from
continuing
operations,
excluding asset
impairment and
restructuring
charges (Note 8) $ .38 $ .20 $ 1.48 $ 1.13
=========== =========== =========== ===========
Average common
shares:
Basic 195.0 192.9 199.4 195.1
Diluted 195.9 194.6 201.1 199.4
Depreciation and
amortization
expense (Note 4) $ 167 $ 174 $ 500 $ 511
FEDERATED DEPARTMENT STORES, INC.
Consolidated Statements of Income (Unaudited) (Note 1)
------------------------------------------------------
Notes:
(1) Because of the seasonal nature of the retail business, the results
of operations for the 13 and 39 weeks ended November 2, 2002 and
November 3, 2001 (which do not include the Christmas season) are not
necessarily indicative of such results for the fiscal year. Certain
reclassifications were made to prior period amounts to conform with
the classifications of such amounts for the most recent period.
(2) Merchandise inventories are primarily valued at the lower of cost
or market using the last-in, first-out (LIFO) retail inventory method.
Application of this method did not impact cost of sales for the 13 and
39 weeks ended November 2, 2002 or November 3, 2001.
(3) Inventory valuation adjustments for the 13 and 39 weeks ended
November 3, 2001 relate to the closure of the Stern's department store
division and the Macy's West integration of Liberty House, Inc.
(4) Includes amortization expense of $7 million, or $.03 per diluted
share, for the 13 weeks ended November 3, 2001 and $21 million, or
$.09 per diluted share, for the 39 weeks ended November 3, 2001
related to goodwill and indefinite lived intangible assets. Effective
February 3, 2002, Federated adopted Statement of Financial Accounting
Standards No. 142, "Goodwill and Other Intangible Assets," and upon
implementation of this standard, Federated ceased amortizing goodwill
and indefinite lived intangible assets.
(5) Asset impairment and restructuring charges for the 13 and 39 weeks
ended November 3, 2001 represent costs and expenses associated with
the closure of the Stern's department store division and subsequent
conversion of the Stern's stores to Macy's stores, including
severance, advertising and duplicate central office costs, and
expenses associated with the Macy's West integration of Liberty House,
Inc., primarily duplicate central office costs. The impact of the
asset impairment and restructuring charges and related inventory
valuation adjustments on the 13 and 39 weeks ended November 3, 2001
was $.07 and $.31 per diluted share, respectively.
(6) Income tax expense for the 39 weeks ended November 3, 2001
reflects a $44 million benefit, $.22 per diluted share, related to the
recognition of the effect of the difference between the financial
reporting and tax bases of the Company's investment in Stern's
Department Stores, Inc. upon disposition.
(7) Income from discontinued operations represents adjustments to the
estimated loss on disposal of Fingerhut's assets and businesses.
During October 2002, Federated completed the sale of the Arizona Mail
Order and Figi's businesses conducted by Fingerhut's subsidiaries. For
the 13 weeks ended November 2, 2002, the actual proceeds from the sale
of these subsidiaries and other Fingerhut assets exceeded the
estimated amounts by $50 million before income taxes, or $31 million
after income taxes. During July 2002, Federated completed the sale of
Fingerhut's core catalog accounts receivable portfolio, with the buyer
assuming $450 million of receivables-backed debt, and in a separate
transaction completed the sale of various other Fingerhut assets,
including two distribution centers, the corporate headquarters, a data
center, existing inventory, the Fingerhut name, customer lists and
other miscellaneous property and equipment. For the 39 weeks ended
November 2, 2002, proceeds from all of the above sale transactions and
collections on customer accounts receivable prior to the sale, net of
operating expenses, exceeded the amount estimated to be received
through wind-down of the portfolio, and liquidation of the assets by
$286 million before income taxes, or $180 million after income taxes.
(8) Excludes the after income tax impact of the inventory valuation
adjustments and the asset impairment and restructuring charges related
to the closure of the Stern's department store division and the
integration of Liberty House, Inc., as well as the tax benefit
associated with the related disposition of Stern's Department Stores,
Inc. (See Notes 5 and 6).
FEDERATED DEPARTMENT STORES, INC.
Consolidated Balance Sheets (Unaudited)
---------------------------------------
(millions)
November 2, February 2, November 3,
2002 2002 2001
ASSETS: ----------- ----------- -----------
Current Assets:
Cash $ 216 $ 636 $ 224
Accounts receivable 2,702 2,379 2,146
Merchandise inventories 4,633 3,376 4,698
Supplies and prepaid expenses 140 124 137
Deferred income tax assets 26 21 25
Assets of discontinued operations 364 1,812 2,471
----------- ----------- -----------
Total Current Assets 8,081 8,348 9,701
Property and Equipment - net 6,424 6,506 6,528
Goodwill 273 305 310
Other Intangible Assets - net 378 378 381
Other Assets 542 575 614
----------- ----------- -----------
Total Assets $15,698 $16,112 $17,534
=========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current Liabilities:
Short-term debt $ 1,306 $ 1,012 $ 1,809
Accounts payable and
accrued liabilities 3,372 2,645 3,300
Income taxes 33 57 111
Liabilities of
discontinued operations 170 1,068 890
----------- ----------- -----------
Total current liabilities 4,881 4,782 6,110
Long-Term Debt 3,410 3,859 3,861
Deferred Income Taxes 1,178 1,345 1,271
Other Liabilities 549 562 546
Shareholders' Equity 5,680 5,564 5,746
----------- ----------- -----------
Total Liabilities and
Shareholders' Equity $15,698 $16,112 $17,534
=========== =========== ===========
FEDERATED DEPARTMENT STORES, INC.
Consolidated Statements of Cash Flows (Unaudited)
-------------------------------------------------
(millions)
39 Weeks Ended 39 Weeks Ended
November 2, 2002 November 3, 2001
---------------- ----------------
Cash flows from
continuing operating activities:
Net income $ 477 $ 171
Adjustments to reconcile
net income to net cash
provided by continuing
operating activities:
(Income) loss from
discontinued operations (180) 27
Depreciation and amortization 497 487
Amortization of
intangible assets - 21
Amortization of
financing costs 5 6
Amortization of
unearned restricted stock 3 3
Restructuring charges - 102
Loss or early extinguishments
of debt - 10
Changes in assets and
liabilities:
Decrease in
accounts receivable 282 316
Increase in
merchandise inventories (1,257) (1,017)
Increase in supplies
and prepaid expenses (16) (14)
Increase in other assets
not separately identified (31) (60)
Increase in accounts
payable and accrued
liabilities not
separately identified 668 394
Decrease in current
income taxes (24) (127)
Decrease in deferred
income taxes (139) (68)
Increase (decrease) in
other liabilities not
separately identified (13) 5
---------------- ----------------
Net cash provided
by continuing
operating activities 272 256
---------------- ----------------
Cash flows from continuing
investing activities:
Purchase of property
and equipment (406) (427)
Capitalized software (40) (50)
Increase in note receivable (39) -
Acquisition of
Liberty House, Inc.,
net of cash acquired - (175)
Disposition of property
and equipment 12 54
---------------- ----------------
Net cash used
by continuing
investing activities (473) (598)
---------------- ----------------
Cash flows from continuing
financing activities:
Debt issued 366 1,386
Financing costs (1) (21)
Debt repaid (1,014) (729)
Increase in outstanding checks 63 129
Acquisition of treasury stock (392) (299)
Issuance of common stock 28 49
---------------- ----------------
Net cash provided (used)
by continuing financing
activities (950) 515
---------------- ----------------
Net cash provided (used) by
continuing operations (1,151) 173
Net cash provided (used) by
discontinued operations 731 (171)
---------------- ----------------
Net increase (decrease) in cash (420) 2
Cash at beginning of period 636 222
---------------- ----------------
Cash at end of period $ 216 $ 224
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