Federated Reports Significantly Higher Second Quarter Earnings; EPS of 84 Cents at Upper End of Guidance Range.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. -- 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 of 84 cents for the second quarter of 2005, ended July July: see month. 30. Earnings were within the company's prior guidance of 80-85 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. . This represents an increase of 95 percent over diluted earnings per share of 43 cents for the second quarter of 2004. Included in the year-ago quarter were one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. costs of $59 million, or 20 cents a 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. share, related to the company's 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. of $274 million of its long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. . Excluding these one-time costs, Federated's diluted earnings per share in the 2004 second quarter would have been 63 cents. For the first half of 2005, Federated reported diluted earnings per share of $1.56, an increase of 63 percent from 96 cents per share in the first half of 2004. Excluding costs related to the debt repurchase, diluted earnings per share for the first half of 2004 were $1.16. Terry J. Lundgren Terry J. Lundgren (b. 1952) is the CEO, Chairman of the Board, President, and Director at Macy's, Inc., the parent company of Macy*s and Bloomingdale's department stores. Lundgren is also the namesake of the Terry J. , Federated's chairman, president and chief executive officer, said the company is pleased with our performance to date in 2005. Sales growth is expected to accelerate in the second half of the year as the company continues implementation of its strategic priorities to improve assortments, pricing, the shopping experience and marketing. "We look forward to completing two important transactions in the third quarter - our merger with The May Department Stores The May Department Stores Company was a department store chain founded in 1877 by David May in Leadville, Colorado. Its headquarters moved to St. Louis, Missouri in 1905, and the company went public in 1911. Company, and the sale of Federated's owned proprietary and Visa credit receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed to Citigroup Citigroup U.S. holding company formed in 1998 from the merger of Citicorp (itself a holding company incorporated in 1967) and Travelers Group, Inc. The $70 billion merger included one of the largest U.S. investment banks, Salomon Smith Barney Inc. ," Lundgren Lundgren is a Swedish surname and may refer to:
Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. change that we believe will benefit our customers, employees and shareholders. "In the short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. , however, we are firmly focused on serving customers and delivering results through the holiday selling season. We have been careful not to disrupt or distract the Federated or May organizations so they can remain committed to achieving plans for the third and fourth quarters," he said. Sales Sales of $3.623 billion for the second quarter of 2005 were up 1.2 percent over sales of $3.581 billion in the same period last year. On a same-store basis, Federated's second quarter sales were up 1.1 percent. For the year to date, Federated's sales totaled $7.264 billion, an increase of 1.9 percent over sales of $7.131 billion in the same period last year. On a same-store basis, Federated's first-half sales were up 1.8 percent. In the second quarter of 2005, the company opened a new 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. East store in Wheaton Wheaton. 1 City (1990 pop. 51,464), seat of Du Page co., NE Ill., a residential suburb of Chicago; inc. 1859. It is a religious center and the headquarters of the Theosophical Society of America. Many evangelical organizations are also based there. , MD. 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. Federated's operating income totaled $291 million or 8.0 percent of sales for the quarter ended July 30, 2005, compared to operating income of $245 million or 6.8 percent of sales for the comparable period last year. The company's operating income for the first half of 2005 was $543 million or 7.5 percent of sales, compared to $462 million or 6.5 percent of sales in the same period of 2004. Federated's operating income included store closing, centralization cen·tral·ize v. cen·tral·ized, cen·tral·iz·ing, cen·tral·iz·es v.tr. 1. To draw into or toward a center; consolidate. 2. and consolidation costs of $31 million for the second quarter of 2004 and $50 million for the first half of 2004. Cash Flow Cash flow from operating activities was $665 million in the first half of 2005, compared to $586 million in the same period last year. After first-half investing activities of $237 million this year and $281 million last year, cash flow before financing activities was $428 million compared to $305 million in the same period last year. The company repurchased no shares of Federated common stock in the first half. There were an average of 175.7 million diluted shares outstanding for the second quarter of 2005, compared to 182.0 million in the same period last year. Looking Ahead 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. increases of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 3 percent in each of the third and fourth quarters. The company does not plan to issue guidance on its third or fourth quarter earnings until after the May merger closes. Federated, with corporate offices in Cincinnati 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 operates more than 450 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 and 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. . The company also operates macys.com and Bloomingdale's By Mail. This press release contains 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. within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Such statements include, but are not limited to, statements about the benefits of the business combination transaction involving Federated and May, including future financial and operating results, the new company's plans, objectives, expectations and intentions and other statements that are not historical facts. Such statements are based upon the current beliefs and expectations of Federated's and May's management and are subject to significant risks and uncertainties. Actual results may differ materially from those set forth in the forward-looking statements because of a variety of factors, including: the ability to obtain governmental approvals of the transaction on the proposed terms and schedule; the risk that the businesses will not be integrated successfully; the risk that the cost savings and any other synergies from the transaction may not be fully realized or may take longer to realize than expected; disruption disruption /dis·rup·tion/ (dis-rup´shun) a morphologic defect resulting from the extrinsic breakdown of, or interference with, a developmental process. from the transaction making it more difficult to maintain relationships with customers, employees or suppliers; 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 stores; 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 MERCHANDISE. By this term is understood all those things which merchants sell either wholesale or retail, as dry goods, hardware, groceries, drugs, &c. It is usually applied to personal chattels only, and to those which are not required for food or immediate support, but such as remain stores, manufacturers' outlets, off-price off-price adj. 1. Of, relating to, or being a retail store that sells merchandise at prices lower than usual. 2. For sale at prices lower than usual: off-price assortments of women's clothing. 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. Additional factors that could cause Federated's and May's results to differ materially from those described in the forward-looking statements can be found in the 2004 Forms 10-K of Federated and May filed with the SEC and available at the SEC's 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 site (http://www.sec.gov See .gov and GovNet. (networking) gov - The top-level domain for US government bodies. ). (NOTE: Additional information on Federated is available on the Internet at www.fds.com/pressroom. A webcast of Federated's second quarter earnings call with analysts will be held beginning at 10:30 a.m. ET on Wednesday Wednesday: see week. , August 10. Pre-registration is requested. Those unable to access the webcast at www.fds.com may call 1-866-215-1938 to listen to the audio in real time. 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 26 Weeks Ended
----------------- -----------------
July 30, July 31, July 30, July 31,
2005 2004 2005 2004
-------- -------- -------- --------
Net sales $3,623 $3,581 $7,264 $7,131
Cost of sales (Note 2) 2,126 2,111 4,302 4,234
Percent to sales 58.7% 59.0% 59.2% 59.4%
-------- -------- -------- --------
Gross margin 1,497 1,470 2,962 2,897
Percent to sales 41.3% 41.0% 40.8% 40.6%
Selling, general and administrative
expenses (Note 3) 1,206 1,225 2,419 2,435
Percent to sales 33.3% 34.2% 33.3% 34.1%
-------- -------- -------- --------
Operating income 291 245 543 462
Percent to sales 8.0% 6.8% 7.5% 6.5%
Interest expense - net (Note 4) (54) (119) (108) (179)
-------- -------- -------- --------
Income before income taxes 237 126 435 283
Federal, state and local income tax
expense (89) (48) (164) (108)
-------- -------- -------- --------
Net Income $148 $78 $271 $175
======== ======== ======== ========
Basic Earnings per Share $.87 $.44 $1.60 $.97
======== ======== ======== ========
Diluted Earnings per Share (Note 5) $.84 $.43 $1.56 $.96
======== ======== ======== ========
Average common shares:
Basic 171.2 179.1 170.0 179.8
Diluted 175.7 182.0 174.2 183.1
Depreciation and amortization
expense $178 $178 $356 $355
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 26 weeks ended July 30, 2005 and
July 31, 2004 (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 26 weeks ended July 30, 2005 or July 31, 2004. For
the 13 weeks ended July 31, 2004, cost of sales includes inventory
valuation adjustments of $13 million primarily related to the
Macy's home store centralization. For the 26 weeks ended July 31,
2004, cost of sales includes inventory valuation adjustments of
$17 million related to the Macy's home store centralization and
the Burdines-Macy's consolidation.
(3) For the 13 weeks ended July 31, 2004, selling, general and
administrative ("SG&A") expenses include $18 million of costs
incurred in connection with the Macy's home store centralization,
the Burdines-Macy's consolidation and other store closings. For
the 26 weeks ended July 31, 2004, SG&A expenses include
$33 million of costs incurred in connection with the Macy's home
store centralization, the Burdines-Macy's consolidation and other
store closings.
(4) Interest expense for the 13 and 26 weeks ended July 31, 2004
includes $59 million of one-time costs, or 20 cents a diluted
share, associated with the repurchase of $274 million of
Federated's 8.5% senior notes due 2010.
(5) For the 13 and 26 weeks ended July 31, 2004, store closing and
consolidation costs and Macy's home store centralization costs
(See notes 2 and 3) amounted to $.11 and $.17 per diluted share,
respectively.
FEDERATED DEPARTMENT STORES, INC.
Consolidated Balance Sheets (Unaudited)
(millions)
July 30, January 29, July 31,
2005 2005 2004
-------- ----------- --------
ASSETS:
Current Assets:
Cash $1,399 $868 $605
Accounts receivable 3,271 3,418 3,062
Merchandise inventories 3,259 3,120 3,355
Supplies and prepaid expenses 121 104 112
-------- ----------- --------
Total Current Assets 8,050 7,510 7,134
Property and Equipment - net 5,824 6,018 6,019
Goodwill 260 260 262
Other Intangible Assets - net 378 378 378
Other Assets 707 719 272
-------- ----------- --------
Total Assets $15,219 $14,885 $14,065
======== =========== ========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current Liabilities:
Short-term debt $1,229 $1,242 $691
Accounts payable and accrued
liabilities 2,715 2,707 2,672
Income taxes 178 324 192
Deferred income tax assets 29 28 -
-------- ----------- --------
Total current liabilities 4,151 4,301 3,555
Long-Term Debt 2,634 2,637 3,040
Deferred Income Taxes 1,224 1,199 1,029
Other Liabilities 597 581 595
Shareholders' Equity 6,613 6,167 5,846
-------- ----------- --------
Total Liabilities and Shareholders'
Equity $15,219 $14,885 $14,065
======== =========== ========
FEDERATED DEPARTMENT STORES, INC.
Consolidated Statements of Cash Flows (Unaudited)
(millions)
26 Weeks Ended 26 Weeks Ended
July 30, 2005 July 31, 2004
-------------- --------------
Cash flows from operating activities:
Net income $271 $175
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization 355 354
Amortization of financing costs 2 4
Amortization of unearned restricted
stock 1 1
Changes in assets and liabilities:
Decrease in proprietary and
other accounts receivable not
separately identified 223 241
Increase in merchandise
inventories (139) (140)
Increase in supplies and prepaid
expenses (17) (13)
Decrease in other assets not
separately identified 10 1
Increase in accounts payable and
accrued liabilities not
separately identified 64 82
Decrease in current income taxes (147) (168)
Increase in deferred income taxes 26 32
Increase in other liabilities
not separately identified 16 17
-------------- --------------
Net cash provided by
operating activities 665 586
-------------- --------------
Cash flows from investing activities:
Purchase of property and equipment (143) (175)
Capitalized software (32) (37)
Increase in non-proprietary accounts
receivable (76) (96)
Collection of note receivable - 20
Disposition of property and equipment 14 7
-------------- --------------
Net cash used by investing
activities (237) (281)
-------------- --------------
Cash flows from financing activities:
Debt issued - 34
Debt repaid (16) (361)
Dividends paid (46) (47)
Decrease in outstanding checks (55) (27)
Acquisition of treasury stock (7) (353)
Issuance of common stock 227 129
-------------- --------------
Net cash provided (used) by
financing activities 103 (625)
-------------- --------------
Net increase (decrease) in cash 531 (320)
Cash at beginning of period 868 925
-------------- --------------
Cash at end of period $1,399 $605
============== ==============
Note - Certain reclassifications were made to prior year's amounts to
reflect increases in non-proprietary accounts receivable as cash used
by investing activities instead of operating activities to conform
with the classifications of such amounts for the most recent year.
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