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R.H. MACY & CO. REPORTS RESULTS

                    R.H. MACY & CO. REPORTS RESULTS
    NEW YORK, Dec. 17 /PRNewswire/ -- R.H. Macy & Co., Inc. today


released the following letter to shareholders and report on its financial results:
    To our investors:
    Following is a copy of the 10-Q for our first quarter ended Nov. 2, 1991.
    The results are in keeping with the expectations we shared with you in November and reflect the continuing effects of the sluggish economy. Meaningful comparisons with earlier periods are difficult due to the significant effects on certain expense items entailed in the sale of our credit card operations to GE Capital earlier this year.  This lack of comparability will continue for two more quarters.
    With one week to go until Christmas, our earlier expectations that this would not be a particularly robust holiday season is proving out. Nonetheless, we believe we continue to gain market share, and the recent amendments to our bank agreement provide us with the necessary flexibility to keep growing our business.
    We will give you a complete report on the fall season following the close of the second quarter.
    Best wishes to you and yours for a healthy, happy and prosperous New Year.
    (Edward S. Finkelstein, chairman and chief executive officer, Mark S. Handler, president and chief operating officer, and Myron E. Ullman, vice chairman.)
          R.H. MACY & CO., INC. AND CONSOLIDATED SUBSIDIARIES
             Condensed Consolidated Statement of Operations
          (Unaudited, dollars in thousands, except per share)
        Quarter (13 weeks) ended          Nov. 2, 1991    Oct. 27, 1990
    Net retail sales (including
     licensed departments)                  $1,601,271      $1,546,100
        Less:
    Cost of goods sold, including occupancy
     and buying costs                        1,076,072       1,034,606
    Selling, general & administrative exps.    522,492         430,189
     Operating profit                            2,707          81,305
        Other expenses:
    Interest expense - net                     128,063         180,534
    Unusual item                                30,000            ---
    Loss before income tax benefit and
     extraordinary gain                       (155,356)        (99,229)
    Income tax benefit                            ---           32,526
    Net loss before extraordinary gain        (155,356)        (66,703)
    Extraordinary gain (net of income tax
     expense of $7,360 in 1990)                   ---           10,165
    Net loss                                  (155,356)        (56,538)
        Net loss per share of common stock:
    Net loss before extraordinary gain        $(101.29)        $(44.75)
    Extraordinary gain, net                        ---            6.22
    Net loss per share of common stock         (101.29)         (38.53)
      Management's Discussion and Analysis of Financial Condition
                       And Results of Operations
    Results of Operations
    The sale of accounts and receivables to GE Capital or its subsidiary, Monogram (receivable transaction) and the related arrangements have significant effects on certain expense items and limit the comparability of the results of operations and expense classifications for all periods prior to the sale date.
    As a result of the receivable transaction, operations and expense classifications are affected as follows:  (i) selling, general and administrative expenses increase as finance charge income (which was previously recorded as a reduction of this expense classification) and bad debt expense are eliminated, and the discount charged by GE/Monogram on new credit card sales is included and (ii) interest expense decreases as the expense of financing new credit card receivables is borne by GE/Monogram.
    Sales in the first quarter of fiscal 1992 (13 weeks) ended Nov. 2, 1991, increased 3.6 percent to $1,601,271,000 from $1,546,100,000 in the first quarter of fiscal 1991 (13 weeks) ended Oct. 27, 1990.  Comparable store sales increased 3.7 percent from the corresponding period in the prior year.  Comparable store sales increases are primarily due to increases in market share and the television marketing program.
    Cost of goods sold, including occupancy and buying costs, was 67.2 percent of sales for the quarter ended Nov. 2, 1991, compared with 66.9 percent of sales for the quarter ended Oct. 27, 1990.  The percentage increase is primarily due to higher merchandise costs due to markdowns offset by a decrease in occupancy costs.
    Selling, general and administrative expenses were 32.6 percent of sales for the quarter ended Nov. 2, 1991, compared with 27.8 percent of sales for the quarter ended Oct. 27, 1990.  Selling, general and administrative expenses as a percentage of sales would have been 29.5 percent of sales for the quarter ended Nov. 2, 1991, without the effects of the receivable transaction (3.1 percent of sales).  The percentage increase other than the receivable transaction was primarily the result of higher sales promotion expenses including the television marketing program (1.6 percent of sales).
    Operating profit defined as net retail sales less cost of goods sold, including occupancy and buying costs, and selling, general and administrative expenses was $2,707,000 for the quarter ended Nov. 2, 1991, and $81,305,000 for the quarter ended Oct. 27, 1990.  Operating profit includes a charge for depreciation and amortization expense (non- cash expenses) of $69,639,000 for the quarter ended Nov. 2, 1991, and $71,347,000 for the quarter ended Oct. 27, 1990.
    Interest expense-net decreased by $52,471,000 from $180,534,000 to $128,063,000 in the quarter ended Nov. 2, 1991, compared with the quarter ended Oct. 27, 1990.  The decrease is primarily related to the elimination of receivables related borrowings as a result of the receivable transaction (approximately $38,601,000), the repurchase of subordinated debt during fiscal 1991, and prepayments on the six-year term loan under the Macy Bank Agreement from the application of proceeds from asset dispositions during fiscal 1991.
    The unusual item in the quarter ended Nov. 2, 1991, primarily relates to the costs incurred in the one-time liquidation of certain aged inventory in temporary inventory liquidation facilities.  This event is a result of Macy's modification in inventory management policy for the department stores which led to the establishment of its new inventory closeout operation, Macy's Closeout.
    The effective income tax rate for the quarter ended Oct. 27, 1990, was 42 percent of loss before income tax benefit prior to certain expenses arising from purchase accounting adjustments which are non- deductible for tax purposes.  Under current accounting rules, an income tax benefit cannot be recognized for the loss incurred in the quarter ended Nov. 2, 1991, because the benefit is not expected to be recovered as an income tax cash refund or savings currently or in the near future.
    The net loss in the quarter ended Nov. 2, 1991, was $155,356,000. The net loss before an extraordinary gain for the quarter ended Oct. 27, 1990, was $66,703,000.  The extraordinary gain of $10,165,000 for the prior year's quarter primarily relates to the repurchase of subordinated indebtedness at a discount, net of related income tax expense.  The net loss for the quarter ended Oct. 27, 1990, was $56,538,000.  The increase in net loss in the quarter ended Nov. 2, 1991, compared to the quarter ended Oct. 27, 1990, is primarily related to the unusual item ($30,000,000) in 1991, the nonrecognition of income tax benefit ($32,526,000) and the extraordinary gain-net ($10,165,000) in 1990.
    Financial Condition
    As of Nov. 2, 1991, and Oct. 27, 1990, the registrant had short- and long-term debt outstanding (before unamortized deferred debt expense) of $4,037,989,000 and $5,704,722,000.  Outstanding convertible preferred stock (redeemable) was $619,412,000 and $395,892,000, and the deficiency in net assets was $915,173,000 and $628,546,000 as of Nov. 2, 1991, and Oct. 27, 1990, respectively.
    The reduction of $1,666,733,000 in total short- and long-term outstanding indebtedness from the comparable period last year resulted primarily from the following steps taken by Macy to improve its financial condition:  (i) the sale of receivables and related transactions with GE/Monogram which enabled Macy to reduce indebtedness by approximately $1,410,000,000, (ii) the sale of additional convertible preferred stock which funded repurchases of subordinated indebtedness of Macy and (iii) the sale in fiscal 1991 of Macy's 50 percent equity interest in the Valley Fair Shopping Center which resulted in a $40,000,000 payment on the six-year term loan under the Macy Bank Agreement.  The foregoing transactions reduced interest expense and current maturities of debt instruments.
    Macy's indebtedness results in substantial interest expense and principal payment obligations.  The sources available to meet the cash portion of interest expense, principal payment obligations, working capital requirements and planned capital expenditures, consist of a combination of (i) internally generated funds; (ii) existing revolving credit facility; (iii) proceeds from asset dispositions; (iv) refinancings of existing borrowing arrangements; and (v) other external sources of funding.  The adequacy of the foregoing sources of funding is subject to a variety of factors, including general economic conditions as well as those specifically affecting the retail industry, credit market conditions and successful achievement of Macy's business plans. Macy continues to explore alternatives to reduce interest and operating expenses, total debt outstanding and short-term funding obligations.
    Macy's requirement to reduce its outstanding borrowings under the Macy Revolving Credit Facility under its bank credit agreement to between $1,000,000 and $2,000,000 (excluding letters of credit) for a period of 30 consecutive days at any time during the 60-day period beginning on Dec. 16 of each year and ending on Feb. 13 of the immediately succeeding year, was amended for the 60-day period beginning Dec. 16, 1991.  During such 60-day period, the outstanding revolving credit facility borrowings shall not be greater than $150,000,000 nor less than $1,000,000 for one period of 30 consecutive days and, further, for one period of 7 consecutive days within this 30-day period, shall not be greater than $75,000,000 nor less than $1,000,000.
    There has been no significant change in the registrant's financial condition at Nov. 2, 1991, compared to Aug. 3, 1991.
    Fluctuations in certain balance sheet accounts between Nov. 2, 1991, and Aug. 3, 1991, reflect normal seasonal variations within the retail industry.
                         R.H. Macy & Co., Inc.
                     October 1991 Quarterly Results
                          Net Loss Comparison
        The purpose of the table below is to highlight the differences
    between the two quarters and to identify the issues that management
    believes should be taken into account in making comparisons between
    the periods.
        October quarter                         1991        1990
    Net loss (per 10Q)                        $(155,356)   $(56,538)
        Differences:
    Unusual item                                 30,000           0
    Corporate TV marketing                        8,200           0
    Proforma effect of GECC                           0     (45,946)
    Income tax benefit                                0     (32,526)
    Extraordinary gain                                0     (10,165)
    Interest reduction                                0      52,471
    Adjusted totals                            (117,156)    (92,704)
    Note -- All of the above numbers, except for corporate TV marketing, appear individually within the 10-Q.
    -0-                        12/17/91
    /CONTACT:  Jim Fingeroth of Kekst and Company, 212-593-2655, for Macy/ CO:  R.H. Macy & Co., Inc. ST:  New York IN:  REA SU:  ERN FC-KD -- NY057 -- 3054 12/17/91 15:14 EST
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