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UNITED STATES
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 November 1, 2003
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 by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). 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. 288,582,164 shares of common
stock, $.50 par value, as of November 29, 2003.
1
PART 1 - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
THE MAY DEPARTMENT STORES COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(millions)
Nov. 1, Nov. 2, Feb. 1,
ASSETS 2003 2002 2003
Current assets:
Cash and cash equivalents $ 65 $ 65 $ 55
Accounts receivable, net 1,449 1,540 1,741
Merchandise inventories 3,493 3,596 2,857
Other current assets 98 74 82
Total current assets 5,105 5,275 4,735
Property and equipment, at cost 9,294 9,523 9,205
Accumulated depreciation (4,139) (4,096) (3,739)
Property and equipment, net 5,155 5,427 5,466
Goodwill 1,468 1,433 1,441
Intangible assets, net 170 174 176
Other assets 129 115 131
Total assets $ 12,027 $ 12,424 $ 11,949
LIABILITIES AND SHAREOWNERS' EQUITY
Current liabilities:
Short-term debt $ 270 $ 618 $ 150
Current maturities of
long-term debt 235 315 139
Accounts payable 1,405 1,349 1,099
Accrued expenses 954 964 880
Income taxes payable 28 102 264
Total current liabilities 2,892 3,348 2,532
Long-term debt 3,802 4,041 4,035
Deferred income taxes 831 729 710
Other liabilities 525 396 524
ESOP preference shares 241 272 265
Unearned compensation (91) (152) (152)
Shareowners' equity 3,827 3,790 4,035
Total liabilities and
shareowners' equity $ 12,027 $ 12,424 $ 11,949
The accompanying notes to condensed consolidated financial
statements are an integral part of these balance sheets.
2
THE MAY DEPARTMENT STORES COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
(millions, except per share) 13 Weeks Ended 39 Weeks Ended
Nov. 1, Nov. 2, Nov. 1, Nov. 2,
2003 2002 2003 2002
Net sales $ 2,976 $ 2,992 $ 8,849 $ 9,118
Cost of sales:
Recurring 2,160 2,171 6,366 6,493
Restructuring markdowns 1 3 1 23
Selling, general, and
administrative expenses 658 691 1,955 2,006
Restructuring costs 5 6 323 85
Interest expense, net 78 96 238 265
Earnings (loss) before
income taxes 74 25 (34) 246
Provision (credit) for
income taxes 27 9 (43) 91
Net earnings $ 47 $ 16 $ 9 $ 155
Basic earnings (loss) per share $ .15 $ .05 $ (.01) $ .50
Diluted earnings (loss) per share $ .15 $ .05 $ (.01) $ .50
Dividends paid per
common share $ .24 $.23-3/4 $ .72 $ .71-1/4
Weighted average shares
outstanding:
Basic 290.0 288.3 289.9 288.1
Diluted 290.5 307.4 289.9 308.4
The accompanying notes to condensed consolidated financial
statements are an integral part of these statements.
3
THE MAY DEPARTMENT STORES COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(millions) 39 Weeks Ended
Nov. 1, Nov. 2,
2003 2002
Operating Activities:
Net earnings $ 9 $ 155
Adjustment for non-cash items included in earnings:
Depreciation and other amortization 420 406
Intangible asset amortization 6 8
Store divestiture asset impairments 317 -
Working capital changes:
Accounts receivable, net 292 398
Merchandise inventories (636) (721)
Other current assets (8) (19)
Accounts payable 306 326
Accrued expenses 102 99
Income taxes payable (135) (170)
Other, net 18 62
Cash flows from operations 691 544
Investing Activities:
Net additions to property and equipment, and
business combinations (480) (598)
Cash flows used for investing activities (480) (598)
Financing Activities:
Net short-term debt issuances 120 540
Net long-term debt repayments (77) (253)
Net repurchases of common stock (24) (2)
Dividend payments (220) (218)
Cash flows (used for) from financing activities (201) 67
Increase in cash and cash equivalents 10 13
Cash and cash equivalents,
beginning of period 55 52
Cash and cash equivalents,
end of period $ 65 $ 65
Cash paid during the period:
Interest $ 252 $ 299
Income taxes 85 223
The accompanying notes to condensed consolidated financial
statements are an integral part of these statements.
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 29-35) in the 2002 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. 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.
Restructuring Costs. Restructuring costs consisted of the following:
Store Divestitures - In the second quarter of 2003, the company announced its
intention to divest 34 underperforming department stores. These divestitures
will result in estimated total charges of $380 million, consisting of asset
impairments of $317 million, inventory liquidation losses of $25 million,
severance benefits of $23 million, and other charges of approximately $15
million. Approximately $50 million of the $380 million represents the cash cost
of the store divestitures, not including the benefit from future tax credits.
Of the $380 million in expected total charges, $6 million was recognized in the
third quarter and $324 million was recognized in the first nine months of 2003.
The company will continue to fulfill its obligations under existing agreements
with landlords and developers to operate each store until satisfactory
arrangements are negotiated. This process may take three or more years to
complete. Through the end of the 2003 third quarter, the company has closed two
of the 34 stores it intends to divest.
The significant components of the store divestiture costs and status of the
related liability are summarized below:
(millions) Balance
2003 Non-cash Nov. 1,
Charge Payments Uses 2003
Asset impairments $ 317 $ - $ (317) $ -
Severance benefits 4 (4) - -
Inventory liquidation losses 1 - (1) -
Other 2 (2) - -
Total $ 324 $ (6) $ (318) $ -
Asset impairment charges were recorded to reduce store assets to their estimated
fair values due to the shorter period over which they will be used. Estimated
fair values were based on estimated market values of similar assets. Severance
benefits are recognized as each store is closed. As of November 1, 2003,
severance benefits have been paid to 250 store and central office associates.
Inventory liquidation losses are incurred to mark down inventory during
liquidation sales as stores are closed and are included in cost of sales.
Division Combinations - In 2002, the company recorded restructuring charges of
$102 million for the Filene's/Kaufmann's and Robinsons-May/Meier & Frank
division combinations and $12 million for the closure of the Arizona Credit
Center and realignment of the company's data center. Of the $114 million in
total charges, $9 million was recognized in the third quarter of 2002, $3
million of which was included as cost of sales. Charges of $108 million were
recognized in the first nine months of 2002, $23 million of which was included
as cost of sales.
5
Restructuring Costs (continued). The significant components of the division
combination costs and status of the related liability are summarized below:
(millions) Balance Balance
Total | Feb. 1, Non-cash Nov. 1,
Charge | 2003 Payments Uses 2003
Severance and |
relocation benefits $ 59 | $ 17 $ (13) $ - $ 4
Inventory alignment 23 | - - - -
Central office closure 15 | - - - -
Other 17 | 7 (2) (5) -
Total $114 | $ 24 $ (15) $ (5) $ 4
Severance and relocation benefits include severance for approximately 2,000
associates and the costs to relocate certain employees. Inventory alignment
includes the markdowns incurred to conform merchandise assortments and
synchronize pricing and promotional strategies. Central office closure primarily
includes accelerated depreciation of fixed assets in the closed central offices.
As of November 1, 2003, severance benefits of $4 million are payable to former
associates whose jobs were eliminated in these combinations. All severance will
be paid by the end of 2004.
Business Combinations. In the 2003 third quarter, the company purchased certain
assets of Desmonds Formalwear, consisting of 66 tuxedo rental and retail sales
locations in the Midwest. The company also purchased 7 tuxedo rental and retail
sales locations in Atlanta operating as Tyndall's Formal Wear. Earlier in 2003,
the company purchased 25 Modern Tuxedo stores in the Chicago metropolitan area.
The purchase price allocations for these business combinations are preliminary
and subject to final valuations. These acquisitions did not have a material
effect on the company's results of operations or financial position.
Income Taxes. The effective income tax rate was 37.0% for both the third
quarter of 2003 and 2002. The effective income tax rate for the first nine
months of 2003 was 126.8% due to a $31 million tax credit recorded in the first
quarter of 2003 upon the resolution of various federal and state income tax
issues. Excluding the $31 million tax credit, the company's estimated effective
tax rate for the first nine months of 2003 was 37.0%, compared with 37.0% for
the same period in 2002.
Inventories. Merchandise inventories are principally valued at the lower of
LIFO (last-in, first-out) cost basis or market using the retail method.
Earnings (Loss) per Share. The following tables reconcile net earnings and
weighted average shares outstanding to amounts used to calculate basic and
diluted earnings (loss) per share ("EPS") for the periods shown.
6
Earnings (Loss) per Share (continued).
(millions, except per share)
13 Weeks Ended
Nov. 1, 2003 Nov. 2, 2002
Earnings Shares EPS Earnings Shares EPS
Net earnings $ 47 $ 16
ESOP preference share
dividends (4) (5)
Basic EPS 43 290.0 $ .15 11 288.3 $ .05
ESOP preference shares - - 4 18.4
Assumed exercise of
options (treasury
stock method) - 0.5 - 0.7
Diluted EPS $ 43 290.5 $ .15 $ 15 307.4 $ .05
39 Weeks Ended
Nov. 1, 2003 Nov. 2, 2002
Earnings Shares EPS Earnings Shares EPS
Net earnings $ 9 $ 155
ESOP preference share
dividends (12) (14)
Basic EPS (3) 289.9 $ (.01) 141 288.1 $ .50
ESOP preference shares - - 13 18.7
Assumed exercise of
options (treasury
stock method) - - - 1.6
Diluted EPS $ (3) 289.9 $ (.01) $ 154 308.4 $ .50
Stock Compensation Plans. Effective February 2, 2003, the company adopted the
fair value recognition provisions of Statement of Financial Accounting Standards
(SFAS) No. 123, "Accounting for Stock-Based Compensation." The company adopted
SFAS No. 123 using the prospective transition method, under which all stock-
based compensation granted after February 2, 2003 is expensed using the fair
value method.
Stock option expense is recorded over each option grant's vesting period,
usually four years. Accordingly, the cost related to stock-based employee
compensation included in net earnings using the prospective method of transition
is less than it would have been had the fair value method been applied
retroactively to all outstanding grants. The following table illustrates the
pro forma effect on net earnings and earnings (loss) per share for the third
quarter and first nine months of 2003 if the fair value based method had been
applied retroactively to all outstanding unvested grants rather than
prospectively.
7
Stock Compensation Plans (continued).
(millions, except per share) 13 Weeks Ended 39 Weeks Ended
Nov. 1, Nov. 2, Nov. 1, Nov. 2,
2003 2002 2003 2002
Net earnings, as reported $ 47 $ 16 $ 9 $ 155
Add: Compensation expense for
employee stock options
included in net earnings,
net of tax 1 - 2 -
Deduct: Total compensation expense
for employee stock options
determined under retroactive
fair value based method,
net of tax (6) (6) (19) (17)
Pro forma net earnings (loss) $ 42 $ 10 $ (8) $ 138
Earnings (loss) per share:
Basic - as reported (prospective) $ 0.15 $ 0.05 $ (.01) $ 0.50
Basic - pro forma (retroactive) $ 0.13 $ 0.03 $ (.07) $ 0.44
Diluted - as reported (prospective) $ 0.15 $ 0.05 $ (.01) $ 0.50
Diluted - pro forma (retroactive) $ 0.13 $ 0.03 $ (.07) $ 0.44
Lease Obligations. The company is a guarantor with respect to certain lease
obligations of previously divested businesses. The leases, two of which include
potential extensions to 2087, have future minimum lease payments aggregating
approximately $833 million, and are offset by payments from existing tenants and
subtenants. In addition, the company is liable for other expenses related to the
above leases, such as property taxes and common area maintenance, which are also
payable by the current tenants and subtenants. Potential liabilities related to
these guarantees are subject to certain defenses by the company. The company
believes that the risk of significant loss from these lease obligations is
remote.
Reclassifications. Certain prior period amounts have been reclassified to
conform with current year presentation.
Impact of New Accounting Pronouncements. In May 2003, the Financial Accounting
Standards Board issued SFAS No. 150, "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity." SFAS No. 150
establishes standards that require companies to classify certain financial
instruments as liabilities that were previously classified as equity. The
company did not reclassify any financial instruments as a result of adopting
SFAS No. 150.
8
Condensed Consolidating Financial Information. The company ("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, Priscilla of Boston, and David's Bridal, Inc. and subsidiaries,
including After Hours Formalwear, Inc.
Condensed consolidating balance sheets as of November 1, 2003, November 2,
2002,and February 1, 2003, the related condensed consolidating statements of
earnings for the thirteen week and thirty-nine week periods ended November 1,
2003 and November 2, 2002, and the related condensed consolidating statements of
cash flows for the thirty-nine week periods ended November 1, 2003 and November
2, 2002, are presented below.
Condensed Consolidating Balance Sheet
As of November 1, 2003
(Unaudited)
(millions)
Subsidiary Other
Parent Issuer Subsidiaries Eliminations Consolidated
ASSETS
Current assets:
Cash and cash equivalents $ - $ 52 $ 13 $ - $ 65
Accounts receivable, net - 1,442 43 (36) 1,449
Merchandise inventories - 3,394 99 - 3,493
Other current assets - 92 24 (18) 98
Total current assets - 4,980 179 (54) 5,105
Property and equipment, at cost - 9,068 226 - 9,294
Accumulated depreciation - (4,070) (69) - (4,139)
Property and equipment, net - 4,998 157 - 5,155
Goodwill - 1,129 339 - 1,468
Intangible assets, net - 5 165 - 170
Other assets - 119 10 - 129
Intercompany (payable)
receivable (820) 317 3,728 (3,225) -
Investment in subsidiaries 4,797 - - (4,797) -
Total assets $ 3,977 $11,548 $ 4,578 $ (8,076) $12,027
LIABILITIES AND SHAREOWNERS' EQUITY
Current liabilities:
Short-term debt $ - $ 270 $ - $ - $ 270
Current maturities of
long-term debt - 235 - - 235
Accounts payable - 1,306 99 - 1,405
Accrued expenses - 884 105 (35) 954
Income taxes payable - - 46 (18) 28
Total current liabilities - 2,695 250 (53) 2,892
Long-term debt - 3,801 1 - 3,802
Intercompany note payable
(receivable) - 3,225 - (3,225) -
Deferred income taxes - 766 65 - 831
Other liabilities - 516 9 - 525
Minority interest in subsidiary - 489 - (489) -
ESOP preference shares 241 - - - 241
Unearned compensation (91) (91) - 91 (91)
Shareowners' equity 3,827 147 4,253 (4,400) 3,827
Total liabilities and
shareowners' equity $ 3,977 $11,548 $ 4,578 $ (8,076) $12,027
9
Condensed Consolidating Financial Information (continued) -
Condensed Consolidating Statement of Earnings
For the Thirteen Weeks Ended November 1, 2003
(Unaudited)
(millions)
Subsidiary Other
Parent Issuer Subsidiaries Eliminations Consolidated
Net sales $ - $ 2,838 $ 589 $ (451) $ 2,976
Cost of sales - 2,135 467 (441) 2,161
Selling, general, and
administrative expenses - 602 71 (15) 658
Restructuring costs - 5 - - 5
Interest expense (income), net:
External - 78 - - 78
Intercompany - 71 (71) - -
Equity in earnings of subsidiaries (47) - - 47 -
Earnings (loss) before income taxes 47 (53) 122 (42) 74
Provision (credit) for income taxes - (16) 43 - 27
Net earnings (loss) $ 47 $ (37) $ 79 $ (42) $ 47
Condensed Consolidating Statement of Earnings
For the Thirty-nine Weeks Ended November 1, 2003
(Unaudited)
(millions)
Subsidiary Other
Parent Issuer Subsidiaries Eliminations Consolidated
Net sales $ - $ 8,376 $ 1,488 $ (1,015) $ 8,849
Cost of sales - 6,229 1,130 (992) 6,367
Selling, general, and
administrative expenses - 1,782 212 (39) 1,955
Restructuring costs - 323 - - 323
Interest expense (income), net:
External - 238 - - 238
Intercompany - 213 (213) - -
Equity in earnings of subsidiaries (9) - - 9 -
Earnings (loss) before income taxes 9 (409) 359 7 (34)
Provision (credit) for income taxes - (173) 130 - (43)
Net earnings (loss) $ 9 $ (236) $ 229 $ 7 $ 9
10
Condensed Consolidating Financial Information (continued) -
Condensed Consolidating Statement of Cash Flows
For the Thirty-nine Weeks Ended November 1, 2003
(Unaudited)
(millions)
Subsidiary Other
Parent Issuer Subsidiaries Eliminations Consolidated
Operating activities:
Net earnings (loss) $ 9 $ (236) $ 229 $ 7 $ 9
Equity in earnings
of subsidiaries (9) - - 9 -
Depreciation and other
amortization - 398 22 - 420
Intangible asset amortization - 1 5 - 6
Store divestiture
asset impairments - 317 - - 317
Increase (decrease) in
working capital (4) (108) 33 - (79)
Other, net 150 (29) (87) (16) 18
Cash flows from operations 146 343 202 - 691
Investing activities:
Net additions to property and
equipment, and business
combinations - (406) (74) - (480)
Cash flows used for
investing activities - (406) (74) - (480)
Financing activities:
Net short-term debt issuances - 120 - - 120
Net long-term debt repayments - (52) (25) - (77)
Net issuances (repurchases) of
common stock (33) 9 - - (24)
Dividend payments (221) 1 - - (220)
Intercompany activity, net 108 - (108) - -
Cash flow (used for) from
financing activities (146) 78 (133) - (201)
Increase (decrease) in cash and
cash equivalents - 15 (5) - 10
Cash and cash equivalents,
beginning of period - 37 18 - 55
Cash and cash equivalents,
end of period $ - $ 52 $ 13 $ - $ 65
11
Condensed Consolidating Financial Information (continued) -
Condensed Consolidating Balance Sheet
As of November 2, 2002
(Unaudited)
(millions)
Subsidiary Other
Parent Issuer Subsidiaries Eliminations Consolidated
ASSETS
Current assets:
Cash and cash equivalents $ - $ 47 $ 18 $ - $ 65
Accounts receivable, net - 1,533 43 (36) 1,540
Merchandise inventories - 3,513 83 - 3,596
Other current assets - 57 17 - 74
Total current assets - 5,150 161 (36) 5,275
Property and equipment, at cost - 9,343 180 - 9,523
Accumulated depreciation - (4,049) (47) - (4,096)
Property and equipment, net - 5,294 133 - 5,427
Goodwill - 1,129 304 - 1,433
Intangible assets, net - 7 167 - 174
Other assets - 105 10 - 115
Intercompany (payable)
receivable (937) 487 3,650 (3,200) -
Investment in subsidiaries 4,848 - - (4,848) -
Total assets $ 3,911 $12,172 $ 4,425 $ (8,084) $12,424
LIABILITIES AND SHAREOWNERS' EQUITY
Current liabilities:
Short-term debt $ - $ 618 $ - $ - $ 618
Current maturities of
long-term debt - 315 - - 315
Accounts payable - 1,243 106 - 1,349
Accrued expenses 1 911 89 (37) 964
Income taxes payable - 77 25 - 102
Total current liabilities 1 3,164 220 (37) 3,348
Long-term debt - 4,039 2 - 4,041
Intercompany note payable
(receivable) - 3,200 - (3,200) -
Deferred income taxes - 660 69 - 729
Other liabilities - 387 9 - 396
Minority interest in subsidiary - 475 - (475) -
ESOP preference shares 272 - - - 272
Unearned compensation (152) (152) - 152 (152)
Shareowners' equity 3,790 399 4,125 (4,524) 3,790
Total liabilities and
shareowners' equity $ 3,911 $12,172 $ 4,425 $ (8,084) $12,424
12
Condensed Consolidating Financial Information (continued) -
Condensed Consolidating Statement of Earnings
For the Thirteen Weeks Ended November 2, 2002
(Unaudited)
(millions)
Subsidiary Other
Parent Issuer Subsidiaries Eliminations Consolidated
Net sales $ - $ 2,875 $ 627 $ (510) $ 2,992
Cost of sales - 2,162 516 (504) 2,174
Selling, general, and
administrative expenses - 647 57 (13) 691
Restructuring costs - 6 - - 6
Interest expense (income), net:
External - 97 (1) - 96
Intercompany - 71 (72) 1 -
Equity in earnings of subsidiaries (16) - - 16 -
Earnings (loss) before income taxes 16 (108) 127 (10) 25
Provision (credit) for income taxes - (37) 46 - 9
Net earnings (loss) $ 16 $ (71) $ 81 $ (10) $ 16
Condensed Consolidating Statement of Earnings
For the Thirty-nine Weeks Ended November 2, 2002
(Unaudited)
(millions)
Subsidiary Other
Parent Issuer Subsidiaries Eliminations Consolidated
Net sales $ - $ 8,711 $ 1,433 $ (1,026) $ 9,118
Cost of sales - 6,402 1,124 (1,010) 6,516
Selling, general, and
administrative expenses - 1,861 178 (33) 2,006
Restructuring costs - 85 - - 85
Interest expense (income), net:
External - 266 (1) - 265
Intercompany - 213 (213) - -
Equity in earnings of subsidiaries (155) - - 155 -
Earnings (loss) before income taxes 155 (116) 345 (138) 246
Provision (credit) for income taxes - (35) 126 - 91
Net earnings (loss) $ 155 $ (81) $ 219 $ (138) $ 155
13
Condensed Consolidating Financial Information (continued) -
Condensed Consolidating Statement of Cash Flows
For the Thirty-nine Weeks Ended November 2, 2002
(Unaudited)
(millions)
Subsidiary Other
Parent Issuer Subsidiaries Eliminations Consolidated
Operating activities:
Net earnings (loss) $ 155 $ (81) $ 219 $ (138) $ 155
Equity in earnings of subsidiaries (155) - - 155 -
Depreciation and other
amortization - 382 24 - 406
Intangible asset amortization - 2 6 - 8
Increase (decrease) in
working capital (5) (132) 50 - (87)
Other, net 95 112 (128) (17) 62
Cash flows from operations 90 283 171 - 544
Investing activities:
Net additions to property and
equipment, and business
combinations - (569) (29) - (598)
Cash flows used for investing
activities - (569) (29) - (598)
Financing activities:
Net short-term debt issuances - 540 - - 540
Net long-term debt repayments - (253) - - (253)
Net issuances (repurchases) of
common stock (10) 8 - - (2)
Dividend payments (220) 2 - - (218)
Intercompany activity, net 140 - (140) - -
Cash flows (used for) from
financing activities (90) 297 (140) - 67
Increase in cash and
cash equivalents - 11 2 - 13
Cash and cash equivalents,
beginning of period - 36 16 - 52
Cash and cash equivalents,
end of period $ - $ 47 $ 18 $ - $ 65
14
Condensed Consolidating Financial Information (continued) -
Condensed Consolidating Balance Sheet
As of February 1, 2003
(Unaudited)
(millions)
Subsidiary Other
Parent Issuer Subsidiaries Eliminations Consolidated
ASSETS
Current assets:
Cash and cash equivalents $ - $ 37 $ 18 $ - $ 55
Accounts receivable, net - 1,733 44 (36) 1,741
Merchandise inventories - 2,787 70 - 2,857
Other current assets - 62 23 (3) 82
Total current assets - 4,619 155 (39) 4,735
Property and equipment, at cost - 9,024 181 - 9,205
Accumulated depreciation - (3,690) (49) - (3,739)
Property and equipment, net - 5,334 132 - 5,466
Goodwill - 1,129 312 - 1,441
Intangible assets, net - 6 170 - 176
Other assets - 122 9 - 131
Intercompany (payable)
receivable (671) 254 3,617 (3,200) -
Investment in subsidiaries 4,824 - - (4,824) -
Total assets $ 4,153 $11,464 $ 4,395 $ (8,063) $11,949
LIABILITIES AND SHAREOWNERS' EQUITY
Current liabilities:
Short-term debt $ - $ 150 $ - $ - $ 150
Current maturities of
long-term debt - 139 - - 139
Accounts payable - 1,021 78 - 1,099
Accrued expenses 5 823 88 (36) 880
Income taxes payable - 244 23 (3) 264
Total current liabilities 5 2,377 189 (39) 2,532
Long-term debt - 4,034 1 - 4,035
Intercompany note payable
(receivable) - 3,200 - (3,200) -
Deferred income taxes - 646 64 - 710
Other liabilities - 987 10 (473) 524
ESOP preference shares 265 - - - 265
Unearned compensation (152) (152) - 152 (152)
Shareowners' equity 4,035 372 4,131 (4,503) 4,035
Total liabilities and
shareowners' equity $ 4,153 $11,464 $ 4,395 $ (8,063) $11,949
15
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations
Net Sales. Net sales include merchandise sales and lease department income.
Store-for-store sales compare sales of stores open during both periods beginning
the first day a new store has prior-year sales and exclude sales of stores
closed during both periods. Net sales and related decreases were as follows:
(dollars in millions) Percent Store-for-Store
2003 2002 Decrease Decrease
Third quarter $2,976 $2,992 (0.5)% (2.4)%
First nine months 8,849 9,118 (2.9) (4.8)
The total net sales decrease of $16 million for the 2003 third quarter was
principally due to a $72 million decrease in store-for-store sales offset by $68
million of new store sales. The total net sales decrease of $269 million for the
first nine months of 2003 was principally due to a $436 million decrease in
store-for-store sales offset by $202 million of new store sales. The decrease
in store-for-store sales is characterized by decreases in the number of
transactions and the average price per item, partially offset by an increase
in the number of items per transaction.
The following table presents the statements of earnings as a percent of net
sales.
Third Quarter First Nine Months
2003 2002 2003 2002
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of sales:
Recurring 72.6 72.6 71.9 71.2
Restructuring markdowns 0.0 0.1 0.0 0.3
Selling, general, and
administrative expenses 22.1 23.1 22.1 22.0
Restructuring costs 0.2 0.2 3.7 0.9
Interest expense, net 2.6 3.2 2.7 2.9
Earnings (loss) before income taxes 2.5 0.8 (0.4) 2.7
Income taxes 37.0* 37.0* 126.8* 37.0*
Net earnings 1.6% 0.5% 0.1% 1.7%
* - Percent represents effective income tax rate.
Cost of Sales. Recurring cost of sales includes the cost of merchandise,
inbound freight, distribution expenses, and buying and occupancy costs.
Restructuring markdowns in 2003 consist of inventory liquidation losses incurred
to mark down inventory during liquidation sales as stores to be divested are
closed. Restructuring markdowns in 2002 consist of markdowns incurred to
conform merchandise assortments and synchronize pricing and promotional
strategies during the division combinations.
Recurring cost of sales was $2,160 million in the 2003 third quarter, compared
to $2,171 million in the 2002 third quarter. For the first nine months of 2003,
recurring cost of sales was $6,366 million, compared to $6,493 million in the
same 2002 period. Restructuring markdowns were $3 million and $23 million in
the third quarter and first nine months of 2002, respectively.
Recurring cost of sales as a percent of net sales was 72.6% for both the third
quarter of 2003 and 2002. For the 2003 third quarter, a 0.3% increase in
16
occupancy costs was offset by a 0.3% decrease in the cost of merchandise. For
the 39 weeks ended November 1, 2003, recurring cost of sales as a percent of net
sales increased 0.7%, principally due to a 0.6% increase in occupancy costs.
Selling, General, and Administrative Expenses. Selling, general, and
administrative expenses were $658 million in the 2003 third quarter, compared
with $691 million in the 2002 third quarter. For the first nine months of 2003,
selling, general, and administrative expenses were $1,955 million, compared with
$2,006 million in the 2002 period.
Selling, general, and administrative expenses as a percent of net sales
decreased from 23.1% in the third quarter of 2002 to 22.1% in the third quarter
of 2003, principally due to an 0.8% decrease in payroll costs, a 0.5% decrease
in advertising costs, and a 0.3% decrease in credit costs, offset by a 0.4%
increase in pension costs. Selling, general, and administrative expenses as a
percent of net sales increased from 22.0% in the first nine months of 2002 to
22.1% in the first nine months of 2003. For the first nine months of 2003,
pension costs increased 0.3% and other expenses increased 0.3%, offset by a 0.3%
decrease in credit expense and a 0.2% decrease in advertising costs.
Restructuring Costs. In the second quarter of 2003, we announced our intention
to divest 34 underperforming department stores. These divestitures will result
in estimated total charges of $380 million, consisting of asset impairments of
$317 million, inventory liquidation losses of $25 million, severance benefits of
$23 million, and other charges of approximately $15 million. Approximately $50
million of the $380 million represents the cash cost of the store divestitures,
not including the benefit from future tax credits. Of the $380 million in
expected total charges, $6 million, or $0.01 per share, was recognized in the
2003 third quarter and $324 million, or $0.70 per share, was recognized in the
first nine months of 2003.
We will continue to fulfill our obligations under existing agreements with
landlords and developers to operate each store until satisfactory arrangements
are negotiated. This process may take three or more years to complete. Through
the end of the 2003 third quarter, we have closed two of the 34 stores we intend
to divest.
Asset impairment charges were recorded to reduce store assets to their estimated
fair values due to the shorter period over which they will be used. Estimated
fair values were based on estimated market values of similar assets. Severance
benefits are recognized as each store is closed. As of November 1, 2003,
severance benefits of $4 million have been paid to 250 store and central office
associates. Inventory liquidation losses and other costs of $3 million have
been recognized to date.
In 2002, we recorded restructuring charges of $102 million for the
Filene's/Kaufmann's and Robinsons-May/Meier & Frank division combinations and
$12 million for the closure of the Arizona Credit Center and realignment of the
company's data center. Of the $114 million in total charges, $9 million, or
$0.02 per share, was recognized in the third quarter of 2002, $3 million of
which was included as cost of sales. Charges of $108 million, or $0.22 per
share, was recognized in the first nine months of 2002, of which $23 million was
included as cost of sales. As of November 1, 2003, severance benefits of $4
million are payable to former associates whose jobs were eliminated in these
combinations. All severance will be paid by the end of 2004.
Business Combinations. In the 2003 third quarter, we purchased certain assets
of Desmonds Formalwear, consisting of 66 tuxedo rental and retail sales
locations in the Midwest. We also purchased 7 tuxedo rental and retail sales
locations in Atlanta operating as Tyndall's Formal Wear. Earlier in 2003, we
purchased 25 Modern Tuxedo stores in the Chicago metropolitan area. The
17
purchase price allocations for these business combinations are preliminary and
subject to final valuations. These acquisitions did not have a material effect
on our results of operations or financial position.
Interest Expense. Components of net interest expense were (millions):
Third Quarter First Nine Months
2003 2002 2003 2002
Interest expense $ 82 $ 102 $ 252 $ 290
Interest income - - (1) (7)
Capitalized interest (4) (6) (13) (18)
Net interest expense $ 78 $ 96 $ 238 $ 265
Interest expense principally relates to long-term debt. The decrease in
interest expense for the third quarter and first nine months of 2003 is due to
$10 million of early debt redemption costs in the 2002 third quarter and a
decrease in long-term debt.
Short-term borrowings were (dollars in millions):
Third Quarter First Nine Months
2003 2002 2003 2002
Average balance outstanding $137 $287 $236 $149
Average interest rate on
average balance 1.3% 1.8% 1.3% 1.8%
Income Taxes. The effective income tax rate for the first nine months of 2003
was 126.8% due to a $31 million tax credit recorded in the first quarter of 2003
upon the resolution of various federal and state income tax issues. Excluding
the $31 million tax credit, our estimated effective tax rate for the first nine
months of 2003 was 37.0%, compared with 37.0% for the same period in 2002.
Trailing Years' Results. Operating results for the trailing years were as
follows (millions, except per share):
Nov. 1, Nov. 2,
2003 2002
Net sales $ 13,222 $ 13,693
Net earnings $ 396 $ 586
Diluted earnings per share $ 1.25 $ 1.86
Financial Condition
Cash Flows. Cash flows from operations were $691 million and $544 million in
the first nine months of 2003 and 2002, respectively. The 2003 increase in
operating cash flows is primarily due to a decrease in cash paid for income
taxes and the effect of inventory balance changes, partially offset by a
decrease in cash flow from accounts receivable.
Liquidity, Available Credit, and Debt Ratings. We finance our activities
primarily with cash flows from operations, borrowings under credit facilities
and issuances of long-term debt. We can borrow up to $1.0 billion under our
credit agreements, consisting of a $700 million multi-year credit agreement and
a $300 million 364-day credit agreement, which was renewed August 4, 2003. In
addition, we have filed with the Securities and Exchange Commission shelf
registration statements that enable us to issue up to $525 million of debt
securities.
18
As of November 29, 2003, our bonds are rated Baa1 by Moody's Investors Service,
Inc. and BBB+ by Standard & Poor's Corporation. Our commercial paper is rated
Prime-2 by Moody's and A-2 by Standard & Poor's. Our senior unsecured bank
credit agreements are rated Baa1 by Moody's.
Subsequent to the third quarter, we entered into an agreement with The Gingiss
Group, Inc., a national tuxedo rental and sales chain, to purchase 125 stores
and related leases, trade names, and inventory. The agreement is pending
completion of a sale auction and approval of the U.S. Bankruptcy Court for the
District of Delaware, where the Gingiss bankruptcy is pending. This acquisition
would not have a material effect on our results of operations or financial
position.
Financial Ratios. Key financial ratios as of and for the thirty-nine weeks ended
November 1, 2003 and November 2, 2002, and as of and for the fifty-two weeks
ended February 1, 2003 are as follows:
Nov. 1, Nov. 2, Feb. 1,
2003 2002 2003
Current Ratio 1.8 1.6 1.9
Debt-Capitalization Ratio 50% 53% 48%
Fixed Charge Coverage 0.8x 1.7x 2.8x
The decline in the fixed charge coverage ratio for the first nine months of 2003
is due to the store divestiture restructuring charges reducing earnings.
Impact of New Accounting Pronouncements
In May 2003, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 150, "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity." SFAS No. 150
establishes standards that require companies to classify certain financial
instruments as liabilities that were previously classified as equity. We did
not reclassify any financial instruments as a result of adopting SFAS No. 150.
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, our ability to hire and retain qualified associates, and our ability to
manage the business to minimize the disruption of sales and customer service as
a result of the restructuring activities. Because of these factors, actual
performance could differ materially from that described in the forward-looking
statements.
Item 3 - Quantitative and Qualitative Disclosures About Market Risk.
Our exposure to market risk primarily arises from changes in interest rates on
short-term debt. Short-term debt has generally been used to finance seasonal
working capital needs resulting in minimal exposure to interest rate
fluctuations. Long-term debt is at fixed interest rates. Our merchandise
purchases are denominated in United States dollars. Operating expenses of our
international offices located outside the United States are generally paid in
local currency and are not material. During the first nine months of fiscal
2003 and fiscal 2002, we did not enter into any derivative financial
instruments.
19
Item 4 - Controls and Procedures.
As of the end of the period covered by this Quarterly Report on Form 10-Q, we
carried out an evaluation, under the supervision and with the participation of
the company's management, including the Chief Executive Officer and Chief
Financial Officer, of the effectiveness of the design and operation of our
disclosure controls and procedures (as defined in Rules 13a-14 and 15d-14 of the
Securities Exchange Act of 1934, as amended). Based upon that evaluation, the
Chief Executive Officer and Chief Financial Officer have concluded that our
disclosure controls and procedures are effective. There have been no significant
changes in our internal controls or in other factors that could significantly
affect these controls subsequent to the date the controls were evaluated.
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings
The company is involved in claims, proceedings, and litigation arising
from the operation of its business. The company does not believe any such
claim, proceeding, or litigation, either alone or in the aggregate, will
have a material adverse effect on the company's consolidated financial
statements taken as a whole.
Item 2 - Changes in Securities and Use of Proceeds - 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
12 - Computation of Ratio of Earnings to Fixed Charges
15 - Letter Regarding Unaudited Interim Financial Information
31.1 - Certification Pursuant to Exchange Act 13a-15 and 15d-15(e)
31.2 - Certification Pursuant to Exchange Act 13a-15 and 15d-15(e)
32 - Certification Pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002(18 U.S.C. Section 1350, as adopted)
(b) Reports on Form 8-K
A report dated November 12, 2003, which furnished a company press
release announcing its financial results for the 13 and 39 weeks ended
November 1, 2003.
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: December 5, 2003
/s/ Thomas D. Fingleton
Thomas D. Fingleton
Executive Vice President and
Chief Financial Officer
20
INDEPENDENT ACCOUNTANTS' REPORT
Board of Directors and Shareowners
The May Department Stores Company
We have reviewed the accompanying condensed consolidated balance sheets of The
May Department Stores Company and subsidiaries (the "Company") as of November 1,
2003 and November 2, 2002, and the related condensed consolidated statements of
earnings for the thirteen and thirty-nine week periods ended November 1, 2003
and November 2, 2002, and of cash flows for the thirty-nine week periods ended
November 1, 2003 and November 2, 2002. These financial statements are the
responsibility of the Company's management.
We conducted our reviews 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 of making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted
in accordance with auditing standards generally accepted in the United States of
America, 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 reviews, we are not aware of any material modifications that should
be made to such condensed consolidated financial statements for them to be in
conformity with accounting principles generally accepted in the United States of
America.
We have previously audited, in accordance with auditing standards generally
accepted in the United States of America, the consolidated balance sheet of the
Company as of February 1, 2003, and the related consolidated statements of
earnings, shareowners' equity, and cash flows for the year then ended (not
presented herein); and in our report dated February 12, 2003, we expressed an
unqualified opinion (which includes explanatory paragraphs relating to (1) the
adoption of a new accounting principle and (2) the application of procedures
relating to certain other disclosures and reclassifications of financial
statement amounts related to the 2001 and 2000 consolidated financial statements
that were audited by other auditors who have ceased operations and for which we
have expressed no opinion or other form of assurance other than with respect to
such disclosures and reclassifications) on those consolidated financial
statements. In our opinion, the information set forth in the accompanying
condensed consolidated balance sheet as of February 1, 2003 is fairly stated, in
all material respects, in relation to the consolidated balance sheet from which
it has been derived.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
St. Louis, Missouri
December 4, 2003
Exhibit 12
THE MAY DEPARTMENT STORES COMPANY AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
FOR THE FIVE FISCAL YEARS ENDED FEBRUARY 1, 2003 AND FOR THE
THIRTY-NINE WEEKS ENDED NOVEMBER 1, 2003 AND NOVEMBER 2, 2002
(dollars in millions)
39 Weeks Ended Fiscal Year Ended
Nov. 1, Nov. 2, Feb. 1, Feb. 2, Feb. 3, Jan. 29, Jan. 30,
2003 2002 2003 2002 2001 2000 1999
Earnings Available for Fixed Charges:
Pretax earnings (loss) $ (34) $ 246 $ 820 $1,139 $1,402 $1,523 $1,395
Fixed charges (excluding interest
capitalized and pretax preferred
stock dividend requirements) 276 310 405 411 406 346 344
Dividends on ESOP preference shares (14) (16) (20) (22) (23) (24) (25)
Capitalized interest amortization 7 7 9 8 8 7 7
$ 235 $ 547 $1,214 $1,536 $1,793 $1,852 $1,721
Fixed Charges:
Gross interest expense (a) $ 260 $ 301 $ 392 $ 401 $ 395 $ 340 $ 339
Interest factor attributable to
rent expense 30 27 36 32 28 22 21
$ 290 $ 328 $ 428 $ 433 $ 423 $ 362 $ 360
Ratio of Earnings to Fixed Charges 0.8 1.7 2.8 3.5 4.2 5.1 4.8
(a) Represents interest expense on long-term and short-term debt, ESOP debt and
amortization of debt discount and debt issue expense.
Exhibit 15
December 4, 2003
The May Department Stores Company
St. Louis, Missouri
We have made a review, in accordance with standards established by the American
Institute of Certified Public Accountants, of the unaudited interim condensed
consolidated financial information of The May Department Stores Company and
subsidiaries (the "Company") for the thirteen and thirty-nine week periods ended
November 1, 2003 and November 2, 2002, as indicated in our report dated December
4, 2003; because we did not perform an audit, we expressed no opinion on that
information.
We are aware that our report referred to above, which is included in your
Quarterly Report on Form 10-Q for the quarter ended November 1, 2003, is
incorporated by reference in Registration Statements Nos. 333-59792, 333-76227,
333-00957, and 333-103352 on Form S-8 and Registration Statements Nos. 333-42940
and 333-42940-01 on Form S-3.
We also are aware that the aforementioned report, pursuant to Rule 436(c) under
the Securities Act of 1933, is not considered a part of the Registration
Statement prepared or certified by an accountant or a report prepared or
certified by an accountant within the meaning of Sections 7 and 11 of that Act.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
St. Louis, Missouri
Exhibit 31.1
CERTIFICATION
I, Eugene S. Kahn, certify that:
1. I have reviewed this quarterly report on Form 10-Q of The May Department
Stores Company;
2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant
and have:
a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in
which this report is being prepared;
b) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
c) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's
most recent fiscal quarter (the registrant's fourth fiscal quarter in
the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant's internal
control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation of internal control over financial reporting,
to the registrant's auditors and the audit committee of the registrant's
board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
control over financial reporting.
Date: December 5, 2003 /s/ Eugene S. Kahn
Eugene S. Kahn
Chairman of the Board and
Chief Executive Officer
Exhibit 31.2
CERTIFICATION
I, Thomas D. Fingleton, certify that:
1. I have reviewed this quarterly report on Form 10-Q of The May Department
Stores Company;
2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant
and have:
a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in
which this report is being prepared;
b) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
c) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's
most recent fiscal quarter (the registrant's fourth fiscal quarter in
the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant's internal
control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation of internal control over financial reporting,
to the registrant's auditors and the audit committee of the registrant's
board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
control over financial reporting.
Date: December 5, 2003 /s/ Thomas D. Fingleton
Thomas D. Fingleton
Executive Vice President and
Chief Financial Officer
Exhibit 32
CERTIFICATION PURSUANT TO SECTION 906 OF
THE SARBANES-OXLEY ACT OF 2002 (18 U.S.C. Section 1350, as adopted)
In connection with the Quarterly Report of The May Department Stores Company
(the "Company") on Form 10-Q for the period ending November 1, 2003, as filed
with the Securities and Exchange Commission on the date hereof (the "Report"),
we, Eugene S. Kahn, Chairman of the Board and Chief Executive Officer, and
Thomas D. Fingleton, Executive Vice President and Chief Financial Officer of the
Company, each certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(18 U.S.C. Section 1350, as adopted), that:
1. The Report fully complies with the requirements of section 13(a) or
section 15(d) of the Securities Exchange Act of 1934, and
2. The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations
of the Company.
Dated: December 5, 2003
/s/ Eugene S. Kahn /s/ Thomas D. Fingleton
Eugene S. Kahn Thomas D. Fingleton
Chairman of the Board and Executive Vice President and
Chief Executive Officer Chief Financial Officer