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Macy’s, Inc. Reports Its Fourth Consecutive Year Of Double-Digit Growth In Earnings Per Share

All statements in this press release that are not statements of historical fact are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are based upon the current beliefs and expectations of Macy’s management and are subject to significant risks and uncertainties. Actual results could differ materially from those expressed in or implied by the forward-looking statements contained in this release because of a variety of factors, including variability in the costs of providing healthcare and retirement benefits to current or former employees, conditions to, or changes in the timing of, proposed transactions, prevailing interest rates and non-recurring charges, competitive pressures from specialty stores, general merchandise stores, off-price and discount stores, manufacturers’ outlets, the Internet, mail-order catalogs and television shopping and general consumer spending levels, including the impact of the availability and level of consumer debt, the effect of weather and other factors identified in documents filed by the company with the Securities and Exchange Commission.

# # #

(NOTE: Additional information on Macy’s, Inc., including past news releases, is available at www.macysinc.com/pressroom. A webcast of Macy’s, Inc.’s call with analysts and investors will be held today (Feb. 26) at 10:30 a.m. (ET). The webcast is accessible to the media and general public via the company's website at www.macysinc.com. Analysts and investors may call in on 1-888-277-7060, passcode 4317621. A replay of the conference call can be accessed on the website or by calling 1-888 203-1112 (same passcode) about two hours after the conclusion of the call.)

 
 
MACY’S, INC.
 

Consolidated Statements of Income (Unaudited)

 

(All amounts in millions except percentages and per share figures)

           
14 Weeks Ended 13 Weeks Ended
February 2, 2013 January 28, 2012

$

 

% to Net sales

$

 

% to Net sales

 
Net sales $ 9,350 $ 8,724
 
Cost of sales (Note 1)   5,554   59.4 %   5,151   59.0 %
 
Gross margin 3,796 40.6 % 3,573 41.0 %
 
Selling, general and administrative expenses (2,400 ) (25.7 %) (2,314 ) (26.6 %)
 

Impairments, store closing costs and gain on sale of leases (Note 2)

  (5 ) (0.0 %)   25   0.3 %
 
Operating income 1,391 14.9 % 1,284 14.7 %
 
Interest expense – net (106 ) (108 )
 
Premium on early retirement of debt (Note 3)   (133 )   -  
 
Income before income taxes 1,152 1,176
 
Federal, state and local income tax expense (Note 4)   (422 )   (431 )
 
Net income $ 730   $ 745  
 
Basic earnings per share $ 1.86   $ 1.77  
 
Diluted earnings per share $ 1.83   $ 1.74  
 
Average common shares:
Basic 392.3 420.0
Diluted 399.4 427.3
 
End of period common shares outstanding 387.7 414.2
 
Depreciation and amortization expense $ 267 $ 267
 
 
 

MACY’S, INC.

 

Consolidated Statements of Income (Unaudited)

 
Notes:
 
(1)     Merchandise inventories are valued at the lower of cost or market using the last-in, first-out (LIFO) retail inventory method. Application of the LIFO retail inventory method did not result in the recognition of any LIFO charges or credits affecting cost of sales for the 14 weeks ended February 2, 2013 or the 13 weeks ended January 28, 2012.
 
(2)

For the 14 weeks ended February 2, 2013, includes $4 million of asset impairment charges primarily related to the store closings announced in January 2013 and $1 million of other costs and expenses primarily related to the announced store closings. For the 13 weeks ended January 28, 2012, included a gain of $54 million from the sale of store leases related to the 2006 divestiture of Lord & Taylor, partially offset by $22 million of asset impairment charges and $7 million of other costs and expenses primarily related to the store closings announced in January 2012. For the 14 weeks ended February 2, 2013, these costs amounted to $.01 per diluted share and for the 13 weeks ended January 28, 2012, the net after tax gain amounted to $.04 per diluted share.

 
(3) For the 14 weeks ended February 2, 2013, includes approximately $133 million on a pre-tax basis, or $85 million after tax or $.21 per diluted share, of expenses associated with the early retirement of approximately $700 million of outstanding debt.
 
(4) Federal, state and local income taxes differ from the federal income tax statutory rate of 35%, principally because of the effect of state and local taxes, including the settlement of various tax issues and tax examinations.
 
 
 
MACY’S, INC.
 

Consolidated Statements of Income (Unaudited)

 

(All amounts in millions except percentages and per share figures)

           
53 Weeks Ended 52 Weeks Ended
February 2, 2013 January 28, 2012

$

 

% to Net sales

$

 

% to Net sales

 
Net sales $ 27,686 $ 26,405
 
Cost of sales (Note 1)   16,538   59.7 %   15,738   59.6 %
 
Gross margin 11,148 40.3 % 10,667 40.4 %
 
Selling, general and administrative expenses (8,482 ) (30.7 %) (8,281 ) (31.4 %)
 

Impairments, store closing costs and gain on sale of leases (Note 2)

  (5 ) (0.0 %)   25   0.1 %
 
Operating income 2,661 9.6 % 2,411 9.1 %
 
Interest expense – net (422 ) (443 )
 
Premium on early retirement of debt (Note 3)   (137 )   -  
 
Income before income taxes 2,102 1,968
 
Federal, state and local income tax expense (Note 4)   (767 )   (712 )
 
Net income $ 1,335   $ 1,256  
 
Basic earnings per share $ 3.29   $ 2.96  
 
Diluted earnings per share $ 3.24   $ 2.92  
 
Average common shares:
Basic 405.5 424.5
Diluted 412.2 430.4
 
End of period common shares outstanding 387.7 414.2
 
Depreciation and amortization expense $ 1,049 $ 1,085
 
 
 

MACY’S, INC.

 

Consolidated Statements of Income (Unaudited)

 
Notes:
 
(1)     Merchandise inventories are valued at the lower of cost or market using the last-in, first-out (LIFO) retail inventory method. Application of the LIFO retail inventory method did not result in the recognition of any LIFO charges or credits affecting cost of sales for the 53 weeks ended February 2, 2013 or the 52 weeks ended January 28, 2012.
 
(2) For the 53 weeks ended February 2, 2013, includes $4 million of asset impairment charges primarily related to the store closings announced in January 2013 and $1 million of other costs and expenses primarily related to the announced store closings. For the 52 weeks ended January 28, 2012, included a gain of $54 million from the sale of store leases related to the 2006 divestiture of Lord & Taylor, partially offset by $22 million of asset impairment charges and $7 million of other costs and expenses primarily related to the store closings announced in January 2012. For the 53 weeks ended February 2, 2013, these costs amounted to $.01 per diluted share and for the 52 weeks ended January 28, 2012, the net after tax gain amounted to $.04 per diluted share .
 
(3) For the 53 weeks ended February 2, 2013, includes approximately $137 million on a pre-tax basis, or $87 million after tax or $.21 per diluted share, of expenses associated with the early retirement of approximately $873 million of outstanding debt.
 
(4) Federal, state and local income taxes differ from the federal income tax statutory rate of 35%, principally because of the effect of state and local taxes, including the settlement of various tax issues and tax examinations.
 
 
 
MACY’S, INC.
 

Consolidated Balance Sheets (Unaudited)

 

(millions)

           
February 2, January 28,
2013 2012
ASSETS:
Current Assets:
Cash and cash equivalents $ 1,836 $ 2,827
Receivables 371 368
Merchandise inventories 5,308 5,117
Prepaid expenses and other current assets   361   465
Total Current Assets 7,876 8,777
 
Property and Equipment – net 8,196 8,420
Goodwill 3,743 3,743
Other Intangible Assets – net 561 598
Other Assets   615   557
 
Total Assets $ 20,991 $ 22,095
 
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current Liabilities:
Short-term debt $ 124 $ 1,103
Merchandise accounts payable 1,579 1,593
Accounts payable and accrued liabilities 2,610 2,788
Income taxes 355 371
Deferred income taxes   407   408
Total Current Liabilities 5,075 6,263
 
Long-Term Debt 6,806 6,655
Deferred Income Taxes 1,238 1,141
Other Liabilities 1,821 2,103
Shareholders’ Equity   6,051   5,933
 
Total Liabilities and Shareholders’ Equity $ 20,991 $ 22,095
 
 
 
MACY’S, INC.
 

Consolidated Statements of Cash Flows (Unaudited)

 

(millions)

           

53 Weeks Ended February 2, 2013

52 Weeks Ended January 28, 2012

Cash flows from operating activities:
Net income $ 1,335 $ 1,256

Adjustments to reconcile net income to net cash provided by operating activities:

Impairments, store closing costs and gain on sale of leases

5 (25 )
Depreciation and amortization 1,049 1,085
Stock-based compensation expense 61 70

Amortization of financing costs and premium on acquired debt

(16 ) (15 )
Changes in assets and liabilities:
(Increase) decrease in receivables 7 (37 )
Increase in merchandise inventories (191 ) (359 )

(Increase) decrease in prepaid expenses and other current assets

75 (99 )

Decrease in other assets not separately identified

23 8
Increase in merchandise accounts payable 23 143

Increase (decrease) in accounts payable and accrued liabilities not separately identified

(33 ) 109
Increase (decrease) in current income taxes (16 ) 188
Increase in deferred income taxes 14 153

Decrease in other liabilities not separately identified

  (75 )   (384 )
Net cash provided by operating activities   2,261     2,093  
 
Cash flows from investing activities:
Purchase of property and equipment (698 ) (555 )
Capitalized software (244 ) (209 )
Disposition of property and equipment 66 114
Proceeds from insurance claims - 6
Other, net   13     27  
Net cash used by investing activities   (863 )   (617 )
 

Cash flows from financing activities:

Debt issued 1,000 800
Financing costs (11 ) (20 )
Debt repaid (1,803 ) (454 )
Dividends paid (324 ) (148 )
Increase (decrease) in outstanding checks (88 ) 49
Acquisition of treasury stock (1,397 ) (502 )
Issuance of common stock   234     162  
Net cash used by financing activities   (2,389 )   (113 )
 
Net increase (decrease) in cash and cash equivalents (991 ) 1,363
Cash and cash equivalents at beginning of period   2,827     1,464  
 
Cash and cash equivalents at end of period $ 1,836   $ 2,827  
 




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