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Saks Incorporated Announces Results For The Second Quarter And Six Months Ended August 3, 2013

Additional factors that may cause Saks’ actual results to differ materially from those described in the forward-looking statements may be found in Saks’ filings with the SEC, including its Annual Report on Form 10-K for the fiscal year ended February 2, 2013, its Quarterly Reports on Form 10-Q, and its Current Reports on Form 8-K, which may be accessed via the Internet at www.sec.gov.

The Company undertakes no obligation to correct or update any forward-looking statements, whether as a result of new information, future events, or otherwise.

Additional Information and Where to Find It

This press release does not constitute a solicitation of any vote or approval. In connection with the proposed merger, Saks will file with the Securities and Exchange Commission (the “SEC”) and mail or otherwise provide to its shareholders a proxy statement regarding the proposed transaction. BEFORE MAKING ANY VOTING DECISION, SAKS’ SHAREHOLDERS ARE URGED TO READ THE PROXY STATEMENT IN ITS ENTIRETY WHEN IT BECOMES AVAILABLE AND ANY OTHER DOCUMENTS FILED WITH THE SEC IN CONNECTION WITH THE PROPOSED MERGER OR INCORPORATED BY REFERENCE THEREIN BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED MERGER AND THE PARTIES TO THE PROPOSED MERGER. Investors and security holders may obtain a free copy of the proxy statement and other documents that Saks files with the SEC (when available) from the SEC’s website at www.sec.gov and Saks’ website at www.saksincorporated.com. In addition, the proxy statement and other documents filed by Saks with the SEC (when available) may be obtained from Saks free of charge by directing a request to Saks Incorporated, Investor Relations Department, 12 East 49th Street, New York, New York 10017, 865-981-6243.

Saks and its directors, executive officers and employees may be deemed, under SEC rules, to be participants in the solicitation of proxies from Saks’ shareholders with respect to the proposed acquisition of Saks by HBC. Security holders may obtain information regarding the names, affiliations and interests of such individuals in Saks Annual Report on Form 10-K for the fiscal year ended February 2, 2013, and its definitive proxy statement for the 2013 annual meeting of shareholders. Additional information regarding the interests of such individuals in the proposed acquisition of Saks by HBC will be included in the proxy statement relating to such acquisition when it is filed with the SEC. These documents may be obtained free of charge from the SEC’s website at www.sec.gov and Saks website at www.saksincorporated.com.
 
SAKS INCORPORATED & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollar amounts in thousands, except per share amounts)
           
(UNAUDITED)
Three Months Ended
August 3, 2013 July 28, 2012
 
Net sales $ 707,838 100.0 % $ 704,115 100.0 %
Cost of sales   448,740   63.4 %   442,034   62.8 %
Gross margin 259,098 36.6 % 262,081 37.2 %
 
Selling, general and administrative expenses 210,370 29.7 % 190,730 27.1 %
Other operating expenses:
Property and equipment rentals 26,966 3.8 % 26,082 3.7 %
Depreciation and amortization 31,608 4.5 % 30,222 4.3 %
Taxes other than income taxes 19,935 2.8 % 21,007 3.0 %
Store pre-opening costs 842 0.1 % 3,217 0.5 %
Impairments and dispositions   1,881   0.3 %   4,680   0.7 %
Operating loss (32,504 ) -4.6 % (13,857 ) -2.0 %
 
Other income (expense):
Interest expense (5,579 ) -0.8 % (9,552 ) -1.4 %
Other income (expense), net   (4 ) 0.0 %   624   0.1 %
Loss before income taxes (38,087 ) -5.4 % (22,785 ) -3.2 %
 
Benefit for income taxes   (18,507 ) -2.6 %   (10,488 ) -1.5 %
Net loss $ (19,580 ) -2.8 % $ (12,297 ) -1.7 %
 

Loss per share:
Basic $ (0.13 ) $ (0.08 )
Diluted $ (0.13 ) $ (0.08 )
 
Weighted-average common shares:
Basic 145,504 151,231
Diluted 145,504 151,231
 
           
SAKS INCORPORATED & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollar amounts in thousands, except per share amounts)
 
(UNAUDITED)
Six Months Ended
August 3, 2013 July 28, 2012
 
Net sales $ 1,501,033 100.0 % $ 1,457,722 100.0 %
Cost of sales   889,884   59.3 %   861,176   59.1 %
Gross margin 611,149 40.7 % 596,546 40.9 %
 
Selling, general and administrative expenses 421,895 28.1 % 380,754 26.1 %
Other operating expenses:
Property and equipment rentals 54,944 3.7 % 52,243 3.6 %
Depreciation and amortization 60,926 4.1 % 59,072 4.1 %
Taxes other than income taxes 43,734 2.9 % 44,385 3.0 %
Store pre-opening costs 1,040 0.1 % 4,063 0.3 %
Impairments and dispositions   5,681   0.4 %   4,990   0.3 %
Operating income 22,929 1.5 % 51,039 3.5 %
 
Other income (expense):
Interest expense (13,382 ) -0.9 % (18,959 ) -1.3 %
Loss on extinguishment of debt (13,012 ) -0.9 % - 0.0 %
Other income, net   78   0.0 %   1,447   0.1 %
Income (loss) before income taxes (3,387 ) -0.2 % 33,527 2.3 %
 
Provision (benefit) for income taxes   (3,802 ) -0.3 %   13,679   0.9 %
Net income $ 415   0.0 % $ 19,848   1.4 %
 
Earnings per share:
Basic $ 0.00 $ 0.13
Diluted $ 0.00 $ 0.13
 
Weighted-average common shares:
Basic 145,334 152,955
Diluted 147,655 155,936
 
       
SAKS INCORPORATED & SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands)
 
 
(UNAUDITED)
August 3, July 28,
2013 2012
ASSETS
Current assets
Cash and cash equivalents $ 10,096 $ 138,981
Merchandise inventories 832,511 749,087
Other current assets 119,817 86,852
Deferred income taxes, net   76,899   99,407
Total current assets 1,039,323 1,074,327
 
Property and equipment, net 931,865 872,070
Deferred income taxes, net 119,818 121,602
Other assets   10,825   24,816
TOTAL ASSETS $ 2,101,831 $ 2,092,815
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Trade accounts payable $ 146,429 $ 132,990
Accrued expenses 259,225 222,214
Accrued compensation and related items 38,048 41,779
Current portion of long-term debt   102,049   8,905
Total current liabilities 545,751 405,888
 
Long-term debt 239,600 374,348
Other long-term liabilities   161,376   161,389
Total liabilities 946,727 941,625
Commitments and contingencies
Shareholders' equity   1,155,104   1,151,190
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 2,101,831 $ 2,092,815

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