Back to GetFilings.com
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark one)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended February 3, 1996
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)
New York 43-0398035
(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)
Registrant's telephone number, including area code: (314) 342-6300
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Common Stock, par value $.50 per share New York Stock Exchange
Preferred stock purchase rights New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
(Title of Class)
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 (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not
be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K. [ ]
Aggregate market value of registrant's common stock held by non-
affiliates as of April 6, 1996: $11,766,877,745
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date:
249,837,522 shares of common stock, $.50 par value, as of April 6,
1996.
Documents incorporated by reference:
1. Portions of Registrant's 1995 Annual Report to Shareowners are
incorporated into Parts I and II.
2. Portions of Registrant's 1996 Proxy Statement, dated April 22,
1996, are incorporated into Part III.
PART I
Items 1 and 2. Business and Description of Property
Registrant, a corporation, was organized under the laws of the
State of New York on June 4, 1910, as the successor to a business
founded by David May, who opened his first store in Leadville,
Colorado, in 1877. Registrant operates eight quality regional
department store companies nationwide. At fiscal year-end 1995,
registrant operated 346 department stores in 30 states and the
District of Columbia. The department store companies and their
headquarters are: Lord & Taylor, New York City; Hecht's,
Washington, D.C.; Foley's, Houston; Robinsons-May, Los Angeles;
Kaufmann's, Pittsburgh; Filene's, Boston; Famous-Barr, St. Louis;
and Meier & Frank, Portland, Ore.
In addition, registrant operates Payless ShoeSource, Inc.,
headquartered in Topeka, Kan. On January 17, 1996, registrant
announced the spin-off of Payless ShoeSource, Inc. as a tax-free
distribution to shareowners. The distribution will be effective
May 4, 1996. At fiscal 1995 year-end, 4,549 stores were operated
in 49 states, the District of Columbia, Puerto Rico and the Virgin
Islands.
Registrant employs approximately 61,000 full-time and 69,000 part-
time associates in 49 states, the District of Columbia, Puerto
Rico, the Virgin Islands and eight offices overseas. Approximately
24,000 are employees of Payless ShoeSource, Inc.
The following portions of registrant's 1995 Annual Report to
Shareowners are incorporated herein by reference: Management's
Discussion and Analysis (pages 12-16).
April 4, 1996 the registrant announced that it will acquire 13
Strawbridge & Clothier stores in the greater Philadelphia area in
a transaction expected to close in July, 1996, subject to customary
conditions, including approval by Strawbridge and Co.
("Strawbridge") shareowners and other regulatory approvals. The
Strawbridge department store assets will be acquired in exchange
for approximately 4.2 million shares of the registrant's common
stock and the assumption of debt and certain other liabilities.
The registrant has also agreed to issue additional shares of its
common stock in exchange for any cash proceeds from Strawbridge's
divestiture of its Clover discount division, net of certain transaction
expenses. The asset acquisition will be accounted for as a purchase
and funded principally with stock that the registrant intends to repurchase
in the open market from time to time as market conditions allow.
2
A. Property Ownership
(i) Department Stores
The following summarizes the property ownership of
department stores at February 3, 1996:
% of Gross
Number of Building
Stores Sq. Footage
Entirely or mostly owned* 190 59%
Entirely or mostly leased 94 26
Owned on leased land* 62 15
346 100%
* Includes a total of 19 department stores subject to
financing.
(ii) Payless ShoeSource, Inc.
Payless ShoeSource, Inc. store locations are
substantially all leased, usually on a 10- to 15-year
basis with renewal options.
B. Credit Sales
Sales at registrant's department stores are made for cash or
credit, including registrant's 30-day charge accounts and open-end
credit plans, which include revolving charge accounts and revolving
installment accounts. During the fiscal year ended February 3,
1996, 54.5% of the total sales of registrant's department stores
were made through registrant's credit plans. All sales of Payless
ShoeSource, Inc. are made either for cash or through third-party
credit cards.
In 1991, registrant formed May National Bank of Arizona (MBA) and
May National Bank of Ohio (MBO), which are indirectly wholly owned
and consolidated subsidiaries of registrant.
During the last fiscal year, MBA and MBO extended credit to certain
customers of registrant's Robinsons-May, Kaufmann's, Famous-Barr
and Meier & Frank department stores companies. Throughout 1995,
MBA and MBO sold the resulting accounts receivables at face value,
to the registrant. In addition, MBA and MBO process remittances
for their parent, May Funding, Inc. and its other subsidiaries.
MBA and MBO receive processing fee revenue for this service.
C. Competition in Retail Merchandising
Registrant's retail merchandising business is conducted under
highly competitive conditions. During the past several years, the
retail industry has seen major changes which have increased
competition. Although registrant is one of the nation's largest
department store retailers, it has thousands of competitors at the
local level which compete with registrant's individual department
and Payless ShoeSource, Inc. stores. Competition at the local
level is characterized by numerous factors including convenience of
facilities, reputation, procurement of merchandise, product mix,
advertising, price, quality, service and credit availability.
Registrant believes that it is in a strong competitive position
with regard to each of these factors. Registrant has been able to
perform in a competitive environment through effective
merchandising.
3
D. Executive Officers of Registrant
The names and ages (as of April 24, 1996) of all executive officers
of registrant, and the positions and offices held with registrant
by each such person are as follows:
Name Age Positions and Offices
David C. Farrell 62 Chairman and Chief Executive Officer
Thomas A. Hays 63 Deputy Chairman
Jerome T. Loeb 55 President and Chief Financial Officer
Richard L. Battram 61 Executive Vice Chairman
Eugene S. Kahn 46 Vice Chairman
Anthony J. Torcasio 50 President and Chief Executive Officer,
May Merchandising Company
Louis J. Garr, Jr. 56 Executive Vice President and General
Counsel
R. Dean Wolfe 52 Executive Vice President
William D. Edkins 43 Senior Vice President
Lonny J. Jay 54 Senior Vice President
Jan R. Kniffen 47 Senior Vice President
Richard A. Brickson 48 Secretary and Senior Counsel
Martin M. Doerr 41 Vice President
Andrew T. Hall 35 Vice President
Each of the above named executive officers shall remain in office
until the annual meeting of directors following the next annual
meeting of shareowners of registrant, or until their respective
successors shall have been elected and shall qualify. Mr. Hays
announced his retirement effective April 30, 1996, at which time
Mr. Loeb will assume Mr. Hays' responsibilities. On April 22, 1996
registrant announced the appointment of Mr. John L. Dunham as
executive vice president and chief financial officer, effective May
1, 1996. On February 16, 1996 registrant announced the appointment
of Mr. Kahn as vice chairman. At the same time, registrant named
both Mr. Kahn and Mr. Torcasio as members of the registrant's Board
of Directors. Messrs. Farrell, Hays, Loeb and Battram also serve
as directors of registrant.
Each of the executive officers has been an officer of registrant
for at least the last five years, with the following exceptions:
Mr. Kahn served as president of the former G. Fox division from
1990 to 1992 and as president and chief executive officer of
Filene's from 1992 to March, 1996 when he became vice chairman.
Mr. Torcasio served as president and chief executive officer of the
former L.S. Ayres division from 1988 to 1991 and as president and
chief executive officer of Famous-Barr from 1991 to 1993 when he
became president and chief executive officer of May Merchandising
Company and became an executive officer of registrant. Mr. Doerr
was associated with the public accounting firm of Arthur Andersen
LLP from 1976 to 1992 and became an executive officer of registrant
in 1994. Mr. Hall was associated with the public accounting firm
of Arthur Andersen LLP from 1983 to 1993 and became an executive
officer of registrant in 1994.
4
Item 3. 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 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to a vote of security holders
during the 13 weeks ended February 3, 1996.
PART II
Item 5. Market for Registrant's Common Equity and Related
Shareowner Matters
Common Stock Dividends and Market Prices (page 16) of registrant's
1995 Annual Report to Shareowners are incorporated herein by
reference.
Item 6. Selected Financial Data
The Eleven Year Financial Summary (pages 28 and 29) of registrant's
1995 Annual Report to Shareowners is incorporated herein by
reference.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Management's Discussion and Analysis (pages 12-16) and Notes to
Consolidated Financial Statements (pages 21-27) of registrant's
1995 Annual Report to Shareowners are incorporated herein by
reference.
Item 8. Financial Statements and Supplementary Data
Consolidated Financial Statements (pages 17-20), Notes to
Consolidated Financial Statements (pages 21-27) and Report of
Independent Public Accountants (page 30) of registrant's 1995
Annual Report to Shareowners are incorporated herein by reference.
5
QUARTERLY RESULTS (Unaudited)
Quarterly results are determined in accordance with the annual
accounting policies and include certain items based upon estimates
for the entire year. Summarized quarterly results for the last two
years were as follows:
(millions, except
per share) 1995
Quarter First Second Third Fourth Year
Revenues $ 2,218 $ 2,325 $ 2,569 $ 3,840 $ 10,952
Cost of sales $ 1,543 $ 1,625 $ 1,798 $ 2,495 $ 7,461
Net Earnings:
Continuing operations $ 87 $ 107 $ 110 $ 396 $ 700
Discontinued operatio 27 34 25 (31) 55
Impact of spin-off of
discontinued operation - - - - -
Before extraordinary loss 114 141 135 365 755
Extraordinary loss
related to early
extinguishment
of debt - - - (3) (3)
Net Earnings 114 141 135 362 752
Primary earnings
per share:
Continuing operations $ 0.33 $ 0.41 $ 0.42 $ 1.57 $ 2.73
Discontinued operation 0.11 0.14 0.10 (0.13) 0.22
Impact of spin-off of
discontinued operation - - - - -
Before extraordinary loss 0.44 0.55 0.52 1.44 2.95
Extraordinary loss
related to early
extinguishment
of debt - - - (0.01) (0.01)
Primary earnings
per share 0.44 0.55 0.52 1.43 2.94
Fully diluted earnings
per share:
Continuing operations $ 0.32 $ 0.40 $ 0.41 $ 1.48 $ 2.61
Discontinued operation 0.10 0.13 0.09 (0.11) 0.21
Impact of spin-off of
discontinued operation - - - - -
Before extraordinary loss 0.42 0.53 0.50 1.37 2.82
Extraordinary loss
related to early
extinguishment
of debt - - - (0.01) (0.01)
Fully Diluted Earnings
Per Share $ 0.42 $ 0.53 $ 0.50 $ 1.36 $ 2.81
6
(millions, except
per share) 1994
Quarter First Second Third Fourth Year
Revenues $ 2,105 $ 2,162 $ 2,404 $ 3,436 $ 10,107
Cost of sales $ 1,463 $ 1,510 $ 1,679 $ 2,227 $ 6,879
Net Earnings:
Continuing operations $ 77 $ 93 $ 105 $ 375 $ 650
Discontinued operation 35 37 34 26 132
Impact of spin-off of
discontinued operation - - - - -
Before extraordinary loss 112 130 139 401 782
Extraordinary loss
related to early
extinguishment
of debt - - - - -
Net Earnings 112 130 139 401 782
Primary earnings
per share:
Continuing operations $ 0.29 $ 0.35 $ 0.40 $ 1.49 $ 2.53
Discontinued operation 0.14 0.15 0.14 0.10 0.53
Impact of spin-off of
discontinued operation - - - - -
Before extraordinary loss 0.43 0.50 0.54 1.59 3.06
Extraordinary loss
related to early
extinguishment
of debt - - - - -
Primary earnings
per share 0.43 0.50 0.54 1.59 3.06
Fully diluted earnings
per share:
Continuing operations $ 0.28 $ 0.35 $ 0.38 $ 1.42 $ 2.43
Discontinued operation 0.13 0.14 0.13 0.09 0.49
Impact of spin-off of
discontinued operation - - - - -
Before extraordinary loss 0.41 0.49 0.51 1.51 2.92
Extraordinary loss
related to early
extinguishment
of debt - - - - -
Fully Diluted Earnings
Per Share $ 0.41 $ 0.49 $ 0.51 $ 1.51 $ 2.92
7
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
None.
PART III
Items 10, 11, 12, 13. Directors and Executive Officers of
Registrant, Executive Compensation,
Security Ownership of Certain Beneficial
Owners and Management, Certain
Relationships and Related Transactions
Pursuant to paragraph G (Information to be Incorporated by
Reference) of the General Instructions to Form 10-K, the
information required by Items 10, 11, 12 and 13 (other than
information about executive officers of registrant) is incorporated
by reference from the definitive proxy statement dated April 22,
1996, and filed pursuant to Regulation 14A. Information about
executive officers of registrant is set forth in Part I of this
Form 10-K, under the heading "Items 1. and 2. Business and
Description of Property."
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K
(a) Documents filed as part of this report:
(1) Financial Statements. Incorporated by reference to
registrant's 1995 Annual Report to Shareowners (Exhibit
13):
Page in
Annual Report
Financial Statements-
Consolidated Statement of Earnings for
the three fiscal years ended
February 3, 1996 17
Consolidated Balance Sheet -
February 3, 1996, and January 28, 1995 18
Consolidated Statement of Cash Flows
for the three fiscal years ended
February 3, 1996 19
Consolidated Statement of Shareowners'
Equity for the three fiscal years
ended February 3, 1996 20
Notes to Consolidated Financial Statements 21-27
Report of Independent Public Accountants 30
Page in
this Report
(2) Supplemental Financial Statement
Schedule (for the three fiscal years
ended February 3, 1996):
Report of Independent Public Accountants
on Schedule II 12
II Valuation and Qualifying Accounts 13
8
Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K (continued)
(3) Exhibits: Location
3(a) Restated Certificate of Incorporated
Incorporation of by Reference
Registrant, dated March 22, 1994 to Exhibit
3(a) of
Annual Report
on Form 10-K,
filed April
20, 1994.
3(b) By-Laws of Registrant, as amended Incorporated
by Reference
to Exhibit
4(b) of Form
S-8, filed
April 1,
1996.
11 Computation of Net Earnings Filed
Per Share herewith.
12 Computation of Ratio of Filed
Earnings to Fixed Charges herewith.
13 The May Department Stores Filed
Company 1995 Annual Report to herewith.
Shareowners (only those portions
specifically incorporated by
reference shall be deemed filed
with the Commission)
21 Subsidiaries of Registrant Filed
herewith.
23 Consent of Independent Public Page 12 of
Accountants this Report.
27 Financial Data Schedule Filed
herewith.
99 Form 11-K Annual Report of the Filed
Profit Sharing and Savings Plan herewith.
of The May Department Stores
Company for the fiscal year ended
December 31, 1995
(4) Reports on Form 8-K
A report dated January 17, 1996 which contained a release
announcing the registrant's intent to spin-off Payless
ShoeSource, Inc., its chain of self-service family shoe
stores, to the registrant's shareowners in a tax-free
distribution expected to be completed in late Spring
1996.
All other schedules and exhibits of registrant for which provision
is made in the applicable regulations of the Securities and
Exchange Commission have been omitted, as they are not required or
are inapplicable or the information required thereby has been given
otherwise.
9
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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
Date: April 24, 1996 By: /s/ Jerome T. Loeb
Jerome T. Loeb
Director, President and
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of registrant and in the capacities and on the dates
indicated.
Date Signature Title
Principal Executive Officer:
April 24, 1996 /s/ David C. Farrell Director, Chairman
David C. Farrell and Chief
Executive Officer
Principal Financial and
Accounting Officer:
April 24, 1996 /s/ Jerome T. Loeb Director,
Jerome T. Loeb President and
Chief Financial
Officer
Directors:
April 24, 1996 /s/ Thomas A. Hays Director and
Thomas A. Hays Deputy Chairman
April 24, 1996 /s/ Richard L. Battram Director and
Richard L. Battram Executive Vice
Chairman
10
Date Signature Title
April 24, 1996 /s/ Eugene S. Kahn Director and Vice
Eugene S. Kahn Chairman
April 24, 1996 /s/ Anthony J. Torcasio Director,
Anthony J. Torcasio President and
Chief Executive
Officer, May
Merchandising
Company
April 24, 1996 /s/ Helene L. Kaplan Director
Helene L. Kaplan
April 24, 1996 /s/ Edward H. Meyer Director
Edward H. Meyer
April 24, 1996 /s/ Russell E. Palmer Director
Russell E. Palmer
April 24, 1996 /s/ Andrall E. Pearson Director
Andrall E. Pearson
April 24, 1996 /s/ Michael R. Quinlan Director
Michael R. Quinlan
April 24, 1996 /s/ William P. Stiritz Director
William P. Stiritz
April 24, 1996 /s/ Robert D. Storey Director
Robert D. Storey
April 24, 1996 /s/ Murray L. Weidenbaum Director
Murray L. Weidenbaum
April 24, 1996 /s/ Edward E. Whitacre, Jr. Director
Edward E. Whitacre, Jr.
11
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To The May Department Stores Company:
We have audited, in accordance with generally accepted auditing
standards, the consolidated financial statements included in The
May Department Stores Company's Annual Report to Shareowners
incorporated by reference in this Form 10-K, and have issued our
report thereon dated February 26, 1996. Our audit was made for the
purpose of forming an opinion on those statements taken as a whole.
Schedule II included in this Form 10-K is the responsibility of the
company's management and is presented for the purpose of complying
with the Securities and Exchange Commission's rules and is not part
of the consolidated financial statements. The Schedule has been
subjected to the auditing procedures applied in the audit of the
consolidated financial statements and, in our opinion, fairly
states in all material respects the financial data required to be
set forth therein in relation to the consolidated financial
statements taken as a whole.
ARTHUR ANDERSEN LLP
1010 Market Street
St. Louis, Missouri 63101-2089
February 26, 1996
Exhibit 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our reports included or incorporated by reference
in this Annual Report on Form 10-K for the year ended February 3,
1996 into the Company's previously filed Registration Statements on
Form S-3 (No. 33-38585, 33-46021, 33-55255 and 33-62075) and Form
S-8 (No. 33-26016, 33-38104, 33-51849, 33-58985 and 333-00957).
ARTHUR ANDERSEN LLP
1010 Market Street
St. Louis, Missouri 63101-2089
April 24, 1996
12
SCHEDULE II
THE MAY DEPARTMENT STORES COMPANY AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE THREE FISCAL YEARS ENDED February 3, 1996
(Millions)
Charges
Balance to costs Balance
beginning and Deductions end of
of period expenses (a) period
FISCAL YEAR ENDED
FEBRUARY 3, 1996
Allowance for
doubtful accounts $ 78 $ 88 $ (82) $ 84
FISCAL YEAR ENDED
JANUARY 28, 1995
Allowance for
doubtful accounts $ 76 $ 77 $ (75) $ 78
FISCAL YEAR ENDED
JANUARY 29, 1994:
Allowance for
doubtful accounts $ 82 $ 70 $ (76) $ 76
(a) Write-off of accounts determined to be uncollectible, net of
recoveries of $24 million in 1995, $23 million in 1994 and $22
million in 1993.
13
Exhibit 21
THE MAY DEPARTMENT STORES COMPANY AND SUBSIDIARIES
SUBSIDIARIES OF REGISTRANT
The corporations listed below are subsidiaries of registrant, and
all are included in the consolidated financial statements of
registrant as subsidiaries (unnamed subsidiaries, considered in the
aggregate as a single subsidiary, would not constitute a
significant subsidiary):
Jurisdiction
in which
Name organized
May Capital, Inc. Delaware
May Funding, Inc. Nevada
Payless Holdings, Inc. Delaware
Payless ShoeSource, Inc. Missouri