SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For The Quarterly Period Ended May 5, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________
Commission File Number 1-79
THE MAY DEPARTMENT STORES COMPANY
(Exact name of registrant as specified in its charter)
Delaware 43-1104396
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
611 Olive Street, St. Louis, Missouri 63101
(Address of principal executive offices) (Zip Code)
(314) 342-6300
(Registrant's telephone number,
including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the
Securities Exchange Act of 1934 during the preceding 12 months and
(2) has been subject to such filing requirements for the past 90
days. YES X NO
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
299,199,490 shares of common stock, $.50 par value, as of May 5,
2001.
1
PART 1 - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
THE MAY DEPARTMENT STORES COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
(Millions)
May 5, April 29, Feb. 3,
ASSETS 2001 2000 2001
Current Assets:
Cash and cash equivalents $ 57 $ 40 $ 156
Accounts receivable, net 1,869 1,913 2,081
Merchandise inventories 3,351 3,191 2,938
Other current assets 118 83 95
Total Current Assets 5,395 5,227 5,270
Property and Equipment, at cost 8,485 7,945 8,167
Accumulated Depreciation (3,386) (3,136) (3,268)
Property and equipment, net 5,099 4,809 4,899
Goodwill and Other Assets 1,551 1,044 1,405
Total Assets $ 12,045 $ 11,080 $ 11,574
LIABILITIES AND SHAREOWNERS' EQUITY
Current Liabilities:
Notes payable $ 378 $ 49 $ -
Current maturities of
long-term debt 107 260 85
Accounts payable 1,232 1,323 965
Accrued expenses 872 824 871
Income taxes payable 111 100 293
Total Current Liabilities 2,700 2,556 2,214
Long-term Debt 4,427 3,709 4,534
Deferred Income Taxes 594 548 586
Other Liabilities 328 307 335
ESOP Preference Shares 296 311 299
Unearned Compensation (204) (248) (249)
Shareowners' Equity 3,904 3,897 3,855
Total Liabilities and
Shareowners' Equity $ 12,045 $ 11,080 $ 11,574
The accompanying notes to condensed consolidated financial
statements are an integral part of this balance sheet.
2
THE MAY DEPARTMENT STORES COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
(Unaudited)
(Millions, except per share) 13 Weeks Ended
May 5, April 29,
2001 2000
Net retail sales $ 3,131 $ 3,020
Revenues $ 3,153 $ 3,050
Cost of sales 2,202 2,141
Selling, general and
administrative expenses 688 638
Interest expense, net 86 71
Earnings before income taxes 177 200
Provision for income taxes 68 80
Net earnings $ 109 $ 120
Basic earnings per share $ .35 $ .36
Diluted earnings per share $ .34 $ .35
Dividends paid per common share $ .23-1/2 $ .23-1/4
Weighted average shares outstanding:
Basic 298.7 322.5
Diluted 321.2 344.2
The accompanying notes to condensed consolidated financial
statements are an integral part of this statement.
3
THE MAY DEPARTMENT STORES COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
(Millions) 13 Weeks Ended
May 5, April 29,
2001 2000
Operating Activities:
Net earnings $ 109 $ 120
Depreciation and amortization 130 119
Working capital changes:
Accounts receivable, net 244 260
Merchandise inventories (377) (374)
Other current assets (14) (3)
Accounts payable 267 294
Accrued expenses (47) (71)
Income taxes payable (182) (135)
Other, net 2 4
132 214
Investing Activities:
Net additions to property and equipment (203) (153)
Business combination (304) -
(507) (153)
Financing Activities:
Net issuances (repayments):
Notes payable 378 49
Long-term debt (39) 192
Net issuances (purchases) of common stock 12 (223)
Dividend payments, net of tax benefit (75) (80)
276 (62)
Decrease in Cash and Cash Equivalents (99) (1)
Cash and Cash Equivalents,
beginning of period 156 41
Cash and Cash Equivalents,
end of period $ 57 $ 40
Cash paid during the period:
Interest $ 78 $ 75
Income Taxes 237 202
The accompanying notes to condensed consolidated financial
statements are an integral part of this statement.
4
THE MAY DEPARTMENT STORES COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Interim Results. These unaudited condensed consolidated financial
statements have been prepared in accordance with the instructions
to Form 10-Q of the Securities and Exchange Commission and should
be read in conjunction with the Notes to Consolidated Financial
Statements (pages 26-31) in the 2000 Annual Report. In the opinion
of management, this information is fairly presented and all
adjustments (consisting only of normal recurring adjustments)
necessary for a fair statement of the results for the interim
periods have been included; however, certain items are included in
these statements based on estimates for the entire year. Also,
operating results of periods which exclude the Christmas season may
not be indicative of the operating results that may be expected for
the fiscal year. The seasonality of David's Bridal varies from
department stores, with sales and operating results peaking in the
first half of the fiscal year. David's Bridal joined May in August
2000.
Inventories. Merchandise inventories are stated on the LIFO (last-
in, first-out) cost basis. The LIFO provision for the first
quarter was $8 million in 2001 and 2000.
Income Taxes. The effective income tax rate for the first quarter
of 2001 was 38.8%, compared with 40.0% in the first quarter of
2000, as a result of implementing corporate structure changes which
favorably impact the effective tax rate.
Business Combination. In March 2001, the company completed the
purchase of nine department store locations from Saks Incorporated,
eight of which were reopened during the quarter. The cash purchase
price includes approximately $237 million for the stores and
approximately $67 million for merchandise inventories and accounts
receivable. This transaction was accounted for as a purchase and
did not have a material impact on the company's financial
statements.
Store Purchases. In April 2001, the company completed the purchase
of 15 former Wards and Bradlees stores. Nine of the 15 stores are
planned as new stores and the remainder will provide expansion in
existing malls, with most locations opening in 2002. Store
purchases are included in net additions to property and equipment
in the accompanying condensed consolidated statement of cash flows.
Common Stock Repurchase Program. During the first half of 2000,
the company purchased $789 million or 28.4 million shares of May
common stock. These repurchases completed the remaining $139
million of stock repurchases related to the 1999 stock repurchase
program and the $650 million common stock repurchase program
authorized by May's board of directors in 2000. Repurchases by
quarter were:
$ Shares
First quarter 2000 $ 217 7.8
Second quarter 2000 572 20.6
Total $ 789 28.4
Reclassifications. Certain prior period amounts have been
reclassified to conform with current year presentation.
5
Earnings per share. The following tables reconcile net earnings
and weighted average shares outstanding to amounts used to
calculate basic and diluted earnings per share ("EPS") for the
periods shown (millions, except per share).
13 Weeks Ended
May 5, 2001 April 29, 2000
Earnings Shares EPS Earnings Shares EPS
Net earnings $ 109 $ 120
ESOP preference
shares' dividends (5) (5)
Basic EPS 104 298.7 $ 0.35 115 322.5 $ 0.36
ESOP preference
shares 4 19.8 4 20.9
Assumed exercise of
options (treasury
stock method) - 2.7 - 0.8
Diluted EPS $ 108 321.2 $ 0.34 $ 119 344.2 $ 0.35
Condensed Consolidating Financial Information. The May Department
Stores Company, Delaware ("Parent") has fully and unconditionally
guaranteed certain long-term debt obligations of its wholly-owned
subsidiary, The May Department Stores Company, New York
("Subsidiary Issuer"). Other subsidiaries of the Parent include
May Department Stores International, Inc. (MDSI), Leadville
Insurance Company, Snowdin Insurance Company, and David's Bridal,
Inc. and subsidiaries.
Subsidiary Issuer financial statements have been restated for all
periods presented to reflect a February 3, 2001, reorganization of
MDSI as a direct wholly-owned subsidiary of Parent rather than of
the Subsidiary Issuer. Prior to fiscal year-end 2000, Parent was
required to provide only summarized financial information for
Subsidiary Issuer, which owned 100% of MDSI's common stock before
the reorganization. Below is a restatement of Subsidiary Issuer's
summarized financial position as of April 29, 2000, and summarized
operating results for the thirteen week period ending April 29,
2000, as if the reorganization had occurred on February 1, 1998.
The "As Reported" information was previously reported in Parent's
Form 10-Q filed June 6, 2000.
April 29, 2000
As Reported Adjustments As Restated
Financial Position
Current assets $ 5,213 $ (23) $ 5,190
Noncurrent assets 6,093 (136) 5,957
Current liabilities 2,543 (48) 2,495
Noncurrent liabilities 8,198 - 8,198
Thirteen weeks ended April 29, 2000
As Reported Adjustments As Restated
Operating Results
Revenues $ 3,050 $ - $ 3,050
Net earnings 68 (9) 59
Condensed consolidating balance sheets as of May 5, 2001, April 29,
2000 and February 3, 2001 and the related condensed consolidating
statements of earnings and cash flows for the thirteen week periods
ended May 5, 2001 and April 29, 2000, are presented on pages 7
through 11.
6
CONDENSED CONSOLIDATING FINANCIAL INFORMATION (continued) -
Condensed Consolidating Balance Sheet
As of May 5, 2001(Millions)
Subsidiary Other
Parent Issuer Subsidiaries Eliminations Consolidated
ASSETS
Current assets:
Cash and cash equivalents $ - $ 40 $ 17 $ - $ 57
Accounts receivable, net - 1,864 42 (37) 1,869
Merchandise inventories - 3,280 71 - 3,351
Other current assets - 106 12 - 118
Total current assets - 5,290 142 (37) 5,395
Property and equipment, at cost - 8,405 80 - 8,485
Accumulated depreciation - (3,370) (16) - (3,386)
Property and equipment, net - 5,035 64 - 5,099
Goodwill and other assets - 1,210 341 - 1,551
Intercompany receivable
(payable) (680) 458 222 - -
Investment in subsidiaries 4,881 - - (4,881) -
Total assets $ 4,201 $ 11,993 $ 769 $(4,918) $12,045
LIABILITIES AND SHAREOWNERS' EQUITY
Current liabilities:
Notes payable $ - $ 378 $ - $ - $ 378
Current maturities of long-
term debt - 107 - - 107
Accounts payable - 1,186 46 - 1,232
Accrued expenses 1 856 52 (37) 872
Income taxes payable - 111 - - 111
Total current liabilities 1 2,638 98 (37) 2,700
Long-term debt - 4,426 1 - 4,427
Intercompany note payable
(receivable) - 3,200 (3,200) - -
Deferred income taxes - 591 3 - 594
Other liabilities - 775 - (447) 328
ESOP preference shares 296 - - - 296
Unearned compensation - (204) - - (204)
Shareowners' equity 3,904 567 3,867 (4,434) 3,904
Total liabilities and
shareowners' equity $ 4,201 $ 11,993 $ 769 $(4,918) $12,045
7
CONDENSED CONSOLIDATING FINANCIAL INFORMATION (continued) -
Condensed Consolidating Statement of Earnings
For the Thirteen Weeks Ended May 5, 2001
(Millions)
Subsidiary Other
Parent Issuer Subsidiaries Eliminations Consolidated
Revenues $ - $ 3,061 $ 334 $ (242) $ 3,153
Cost of sales - 2,164 262 (224) 2,202
Selling, general and
administrative expenses - 674 37 (23) 688
Interest expense(income), net:
External - 86 - - 86
Intercompany - 71 (71) - -
Equity in earnings of
subsidiaries (109) - - 109 -
Earnings before income taxes 109 66 106 (104) 177
Provision for income taxes - 30 38 - 68
Net earnings $ 109 $ 36 $ 68 $ (104) $ 109
Condensed Consolidating Statement of Cash Flows
For the Thirteen Weeks Ended May 5, 2001
(Millions)
Subsidiary Other
Parent Issuer Subsidiaries Eliminations Consolidated
Operating activities:
Net earnings $ 109 $ 36 $ 68 $ (104) $ 109
Equity in earnings
of subsidiaries (109) - - 109 -
Depreciation and amortization - 125 5 - 130
(Increase) Decrease in working
capital (5) (107) 3 - (109)
Other, net 32 - (25) (5) 2
27 54 51 - 132
Investing activities:
Net additions to property and
equipment - (197) (6) - (203)
Business combination - (304) - - (304)
- (501) (6) - (507)
Financing activities:
Net issuances of notes payable - 378 - - 378
Net repayments of long-term debt - (38) (1) - (39)
Net issuances of common stock 3 9 - - 12
Dividend payments (76) 1 - - (75)
Intercompany, net 46 - (46) - -
(27) 350 (47) - 276
Decrease in cash and
Cash equivalents - (97) (2) - (99)
Cash and cash equivalents,
beginning of year - 137 19 - 156
Cash and cash equivalents,
end of year $ - $ 40 $ 17 $ - $ 57
8
CONDENSED CONSOLIDATING FINANCIAL INFORMATION (continued) -
Condensed Consolidating Balance Sheet
As of April 29, 2000
(Millions)
Subsidiary Other
Parent Issuer Subsidiaries Eliminations Consolidated
ASSETS
Current assets:
Cash and cash equivalents $ - $ 27 $ 13 $ - $ 40
Accounts receivable, net - 1,913 36 (36) 1,913
Merchandise inventories - 3,169 22 - 3,191
Other current assets - 81 2 - 83
Total assets - 5,190 73 (36) 5,227
Property and equipment, at cost - 7,927 18 - 7,945
Accumulated depreciation - (3,126) (10) - (3,136)
Property and equipment, net - 4,801 8 - 4,809
Goodwill and other assets - 1,043 1 - 1,044
Intercompany receivable
(payable) (242) 113 129 - -
Investment in subsidiaries 4,886 - - (4,886) -
Total assets $ 4,244 $11,147 $ 211 $(4,522) $11,080
LIABILITIES AND SHAREOWNERS' EQUITY
Current liabilities:
Notes payable $ - $ 49 $ - $ - $ 49
Current maturities of long-
term debt - 260 - - 260
Accounts payable - 1,283 40 - 1,323
Accrued expenses 11 829 20 (36) 824
Income taxes payable 25 74 1 - 100
Total current liabilities 36 2,495 61 (36) 2,556
Long-term debt - 3,709 - - 3,709
Intercompany note payable
(receivable) - 3,200 (3,200) - -
Deferred income taxes - 548 - - 548
Other liabilities - 741 - (434) 307
ESOP preference shares 311 - - - 311
Unearned compensation - (248) - - (248)
Shareowners' equity 3,897 702 3,350 (4,052) 3,897
Total liabilities and
shareowners' equity $ 4,244 $11,147 $ 211 $ (4,522) $11,080
9
CONDENSED CONSOLIDATING FINANCIAL INFORMATION (continued) -
Condensed Consolidating Statement of Earnings
For the Thirteen Weeks Ended April 29, 2000
(Millions)
Subsidiary Other
Parent Issuer Subsidiaries Eliminations Consolidated
Revenues $ - $ 3,050 $ 208 $ (208) $ 3,050
Cost of sales - 2,143 190 (192) 2,141
Selling, general and
administrative expenses - 656 3 (21) 638
Interest expense (income), net:
External - 71 - - 71
Intercompany - 71 (71) - -
Equity in earnings of subsidiaries (120) - - 120 -
Earnings before income taxes 120 109 86 (115) 200
Provision for income taxes - 50 30 - 80
Net earnings $ 120 $ 59 $ 56 $ (115) $ 120
Condensed Consolidating Statement of Cash Flows
For the Thirteen Weeks Ended April 29, 2000
(Millions)
Subsidiary Other
Parent Issuer Subsidiaries Eliminations Consolidated
Operating activities:
Net earnings $ 120 $ 59 $ 56 $ (115) $ 120
Equity in earnings
of subsidiaries (120) - - 120 -
Depreciation and amortization - 119 - - 119
(Increase) Decrease in working
capital 21 (27) (23) - (29)
Other, net 242 (260) 27 (5) 4
263 (109) 60 - 214
Investing activities:
Net additions to property and
equipment - (153) - - (15)
- (153) - - (153)
Financing activities:
Net issuances of notes payable - 49 - - 49
Net issuances of long-term debt - 192 - - 192
Net (purchases) issuances of
common stock (229) 6 - - (223)
Dividend payments (81) 1 - - (80)
Intercompany activity, net 47 10 (57) - -
(263) 258 (57) - (62)
(Decrease)increase in cash and
cash equivalents - (4) 3 - (1)
Cash and cash equivalents,
beginning of year - 31 10 - 41
Cash and cash equivalents,
end of year $ - $ 27 $ 13 $ - $ 40
10
CONDENSED CONSOLIDATING FINANCIAL INFORMATION (continued) -
Condensed Consolidating Balance Sheet
As of February 3, 2001
(Millions)
Subsidiary Other
Parent Issuer Subsidiaries Eliminations Consolidated
ASSETS
Current assets:
Cash and cash equivalents $ - $ 137 $ 19 $ - $ 156
Accounts receivable, net - 2,076 43 (38) 2,081
Merchandise inventories - 2,877 61 - 2,938
Other current assets - 86 10 (1) 95
Total current assets - 5,176 133 (39) 5,270
Property and equipment, at cost - 8,093 74 - 8,167
Accumulated depreciation - (3,254) (14) - (3,268)
Property and equipment, net - 4,839 60 - 4,899
Goodwill and other assets - 1,062 343 - 1,405
Intercompany receivable
(payable) (648) 449 199 - -
Investment in subsidiaries 4,808 - - (4,808) -
Total assets $ 4,160 $11,526 $ 735 $(4,847) $11,574
LIABILITIES AND SHAREOWNERS' EQUITY
Current liabilities:
Current maturities of long-
term debt $ - $ 85 $ - $ - $ 85
Accounts payable - 922 43 - 965
Accrued expenses 6 857 47 (39) 871
Income taxes payable
(receivable) - 299 (6) - 293
Total current liabilities 6 2,163 84 (39) 2,214
Long-term debt - 4,531 3 - 4,534
Intercompany note payable
(receivable) - 3,200 (3,200) - -
Deferred income taxes - 583 3 - 586
Other liabilities - 777 - (442) 335
ESOP preference shares 299 - - - 299
Unearned compensation - (249) - - (249)
Shareowners' equity 3,855 521 3,845 (4,366) 3,855
Total liabilities and
shareowners' equity $ 4,160 $11,526 $ 735 $(4,847) $11,574
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
Net retail sales (sales) represent sales of stores operating at the
end of the latest period including lease department sales and
excluding finance charge revenues and the sales of stores that have
been closed and not replaced. Store-for-store sales represent
sales of those stores open during both periods. David's Bridal
sales are included in total sales for fiscal 2001 but are not
included in store-for-store sales. Sales percent increases
(decreases) are:
Store-for-
Total Store
13 Weeks Ended May 5, 2001 3.7% (1.1)%
The following table presents the components of costs and expenses,
as a percent of revenues, for the first quarter of 2001 and 2000.
Revenues include sales from all stores operating during the period,
finance charge revenues and lease department income.
2001 2000
Revenues 100.0% 100.0%
Cost of sales 69.8 70.2
Selling, general and
administrative expenses 21.8 20.9
Interest expense, net 2.8 2.4
Earnings before income taxes 5.6 6.5
Provision for income taxes 38.8* 40.0*
Net Earnings 3.5% 3.9%
*-Percent represents effective income tax rate.
Cost of sales was $2,202 million in the 2001 first quarter, up 2.9%
from $2,141 million in the 2000 first quarter. As a percent of
revenues, cost of sales decreased 0.4% compared with the first
quarter of 2000 principally due to the addition of David's Bridal,
partially offset by buying and occupancy costs, which grew at a
faster rate than revenues.
Selling, general and administrative expenses were $688 million in
the 2001 first quarter, compared with $638 million in the 2000
first quarter, a 7.7% increase. Selling, general and administrative
expenses as a percent of revenues increased 0.9% compared with the
first quarter of 2000 due to the addition of David's Bridal and
payroll, advertising, credit, and employee benefit expenses, which
grew at a faster rate than revenues.
12
Net interest expense for the first quarter 2001 and 2000 was
(millions):
2001 2000
Interest expense $ 94 $ 79
Interest income (4) (4)
Capitalized interest (4) (4)
Net Interest Expense $ 86 $ 71
Interest expense principally relates to long-term debt. In 2000,
we issued $1.1 billion in new debt of which $875 million was issued
subsequent to the first quarter of 2000. In the first quarter of
2001, we financed the previously described business combination and
store purchases principally through short-term borrowings and cash
and cash equivalents.
Short-term borrowings for the first quarter were (dollars in
millions):
2001 2000
Average balance outstanding $112 $17
Average interest rate on
average balance 4.8% 6.0%
The effective income tax rate for the first quarter of 2001 was
38.8%, compared with 40.0% in the first quarter of 2000, as a
result of implementing corporate structure changes which favorably
impact our effective tax rate.
Operating results for the trailing years were (millions, except per
share):
52 Weeks Ended
May 5, April 29,
2001 2000
Net retail sales $ 14,516 $ 13,927
Revenues 14,614 13,927
Net earnings 847 925
Diluted earnings per share 2.61 2.61
Financial Condition
Cash Flows. Cash flows from operations (net earnings plus
depreciation and amortization) was $239 million in the first
quarter of 2001 and 2000. A portion of the cash flows from
operations was used to fund seasonal working capital changes
during the quarter as detailed on the accompanying condensed
consolidated statement of cash flows.
Available Credit and Debt Ratings. We can borrow up to $878
million under our credit agreements. In addition, we have filed
with the Securities and Exchange Commission shelf registration
statements that enable us to issue up to $775 million of debt
securities.
13
Financial Ratios. Key financial ratios for the periods indicated
are:
May 5, April 29, Feb. 3,
2001 2000 2001
Current Ratio 2.0 2.0 2.4
Debt-to-Capitalization Ratio 52% 46% 50%
Fixed Charge Coverage* 3.8x 4.8x 4.0x
The debt-to-capitalization ratio increased as of May 5, 2001 and
February 3, 2001 compared with April 29, 2000 due to the issuance
of debt and the repurchase of May common stock subsequent to April
29, 2000. The fixed charge coverage ratio for the 52 weeks ended
May 5, 2001 declined from the 52 weeks ended April 29, 2000 due to
higher interest expense and lower operating earnings.
* Fixed charge coverage, which is presented for the 52 weeks
ended May 5, 2001, April 29, 2000 and February 3, 2001, is
defined as earnings before gross interest expense, the expense
portion of interest on the ESOP debt, rent expense and income
taxes divided by gross interest expense, interest expense on
the ESOP debt and total rent expense.
Recent Sales Results
Sales for the four-week period ended June 2, 2001 were $1.10
billion, a 5.8% increase from $1.04 billion in the similar period
last year. Store-for-store sales increased 1.1%. Sales for the
first seventeen weeks of fiscal 2001 were $4.23 billion, a 4.2%
increase over $4.06 billion during the first seventeen weeks of
fiscal 2000. Store-for-store sales decreased 0.5%. Sales
comparisons in May 2001 benefited from the movement of a major
sales promotion event from the first week of fiscal June to the
last week of fiscal May 2001. The company anticipates its June
performance will be adversely impacted by the shift in the
promotional calendar.
Forward-looking Statements
Management's Discussion and Analysis contains forward-looking
statements as defined by the Private Securities Litigation Reform
Act of 1995. While such statements reflect all available
information and management's judgment and estimates of current and
anticipated conditions and circumstances and are prepared with the
assistance of specialists within and outside the company, there are
many factors outside of our control that have an impact on our
operations. Such factors include, but are not limited to:
competitive changes, general and regional economic conditions,
consumer preferences and spending patterns, availability of
adequate locations for building or acquiring new stores, and our
ability to hire and retain qualified associates. Because of these
factors, actual performance could differ materially from that
described in the forward-looking statements.
14
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings
There are no material pending legal proceedings, other than
ordinary routine litigation incidental to the business, to which
registrant or any of its subsidiaries is a party or of which any
of their property is the subject.
Item 2 - Changes in Securities - None.
Item 3 - Defaults Upon Senior Securities - None.
Item 4 - Submission of Matters to a Vote of Security Holders -
None.
Item 5 - Other Information - None.
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
(3) - Bylaws of May, as amended
(12) - Computation of Ratio of Earnings to Fixed Charges
(15) - Letter Re: Unaudited Interim Financial Information
(b) Reports on Form 8-K
A report dated April 25, 2001, which contained information
concerning debt ratings and incorporated by reference
registrant's Annual Report on Form 10-K for the fiscal year
ended February 3, 2001.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
THE MAY DEPARTMENT STORES COMPANY
(Registrant)
Date: June 12, 2001 /s/ Thomas D. Fingleton
Thomas D. Fingleton
Executive Vice President and
Chief Financial Officer
15
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Shareowners of
The May Department Stores Company:
We have reviewed the accompanying condensed consolidated balance
sheet of The May Department Stores Company (a Delaware corporation)
and subsidiaries as of May 5, 2001, and April 29, 2000, and the
related condensed consolidated statements of earnings and cash
flows for the thirteen week periods ended May 5, 2001 and April 29,
2000. These financial statements are the responsibility of the
Company's management.
We conducted our review in accordance with standards established by
the American Institute of Certified Public Accountants. A review
of interim financial information consists principally of applying
analytical procedures to financial data and making inquiries of
persons responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which
is the expression of an opinion regarding the financial statements
taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications
that should be made to the financial statements referred to above
for them to be in conformity with accounting principles generally
accepted in the United States.
We have previously audited, in accordance with auditing standards
generally accepted in the United States, the consolidated balance
sheet of The May Department Stores Company as of February 3, 2001,
(not presented separately herein), and in our report dated February
14, 2001, we expressed an unqualified opinion on that statement.
In our opinion, the information set forth in the accompanying
condensed consolidated balance sheet as of February 3, 2001, is
fairly stated, in all material respects, in relation to the
consolidated balance sheet from which it has been derived.
/s/ Arthur Andersen LLP
St. Louis, Missouri
June 12, 2001
Exhibit 15
To the Board of Directors and Shareowners of
The May Department Stores Company:
We are aware that The May Department Stores Company, Inc. has
incorporated by reference in its Registration Statements on Form
S-3 (No. 333-42940, 333-42940-01, 333-71413 and 333-71413-01) and
Form S-8 (No. 33-21415, 33-58985, 333-59792 and 333-76227) its Form
10-Q for the quarter ended May 5, 2001, which includes our report
dated June 12, 2001 covering the unaudited interim financial
information contained therein. Pursuant to Regulation C of the
Securities Act of 1933, that report is not considered a part of the
registration statement prepared or certified by our firm or a
report prepared or certified by our firm within the meaning of
Sections 7 and 11 of the Act. It should be noted that we have not
performed any procedures subsequent to June 12, 2001.
/s/ Arthur Andersen LLP
St. Louis, Missouri
June 12, 2001
16
Exhibit 12
THE MAY DEPARTMENT STORES COMPANY AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
FOR THE FIVE FISCAL YEARS ENDED FEBRUARY 3, 2001 AND FOR THE
THIRTEEN WEEKS ENDED MAY 5, 2001, AND APRIL 29, 2000
13 Weeks Ended Fiscal Year Ended
May 5, April 29, Feb. 3, Jan. 29, Jan. 30, Jan. 31, Feb. 1,
2001 2000 2001 2000 1999 1998 1997
Earnings Available for Fixed Charges:
Pretax earnings from continuing
operations $ 177 $ 200 $ 1,402 $ 1,523 $ 1,395 $ 1,279 $ 1,232
Fixed charges (excluding interest
capitalized and pretax preferred
stock dividend requirements) 103 87 406 346 344 363 346
Dividends on ESOP Preference Shares (5) (6) (23) (24) (25) (26) (26)
Capitalized interest amortization 2 2 8 7 7 6 6
277 283 1,793 1,852 1,721 1,622 1,558
Fixed Charges:
Gross interest expense (a) $ 99 $ 85 $ 395 $ 340 $ 339 $ 353 $ 341
Interest factor attributable to
rent expense 8 6 28 22 21 23 22
107 91 423 362 360 376 363
Ratio of Earnings to Fixed Charges 2.6 3.1 4.2 5.1 4.8 4.3 4.3
(a) Represents interest expense on long-term and short-term debt, ESOP debt and amortization of
debt discount and debt issue expense.