| Document and Entity Information | ||
| 3 Months Ended
May. 01, 2010 | May. 28, 2010
| |
| Document Type | 10-Q | |
| Amendment Flag | false | |
| Document Period End Date | 2010-05-01 | |
| Document Fiscal Year Focus | 2,010 | |
| Document Fiscal Period Focus | Q1 | |
| Trading Symbol | M | |
| Entity Registrant Name | Macy's, Inc. | |
| Entity Central Index Key | 0000794367 | |
| Current Fiscal Year End Date | --01-29 | |
| Entity Filer Category | Large Accelerated Filer | |
| Entity Common Stock, Shares Outstanding | 422,106,453 |
| Consolidated Statements of Operations (USD $) | ||
| In Millions, except Per Share data | 3 Months Ended
May. 01, 2010 | 3 Months Ended
May. 02, 2009 |
| Net sales | $5,574 | $5,199 |
| Cost of sales | (3,378) | (3,219) |
| Gross margin | 2,196 | 1,980 |
| Selling, general and administrative expenses | (1,993) | (1,956) |
| Division consolidation costs | 0 | (138) |
| Operating income (loss) | 203 | (114) |
| Interest expense | (163) | (143) |
| Interest income | 1 | 2 |
| Income (loss) before income taxes | 41 | (255) |
| Federal, state and local income tax benefit (expense) | (18) | 167 |
| Net income (loss) | $23 | ($88) |
| Basic earnings (loss) per share | 0.05 | -0.21 |
| Diluted earnings (loss) per share | 0.05 | -0.21 |
| Consolidated Balance Sheets (USD $) | |||
| In Millions | May. 01, 2010
| Jan. 30, 2010
| May. 02, 2009
|
| Current Assets: | |||
| Cash and cash equivalents | $981 | $1,686 | $420 |
| Receivables | 273 | 358 | 254 |
| Merchandise inventories | 4,921 | 4,615 | 5,026 |
| Income tax receivable | 0 | 0 | 206 |
| Supplies and prepaid expenses | 266 | 223 | 253 |
| Total Current Assets | 6,441 | 6,882 | 6,159 |
| Property and Equipment-net of accumulated depreciation and amortization of $6,028, $5,782 and $5,690 | 9,294 | 9,507 | 10,226 |
| Goodwill | 3,743 | 3,743 | 3,743 |
| Other Intangible Assets-net | 668 | 678 | 707 |
| Other Assets | 490 | 490 | 496 |
| Total Assets | 20,636 | 21,300 | 21,331 |
| Current Liabilities: | |||
| Short-term debt | 685 | 242 | 135 |
| Merchandise accounts payable | 2,010 | 1,312 | 1,809 |
| Accounts payable and accrued liabilities | 2,127 | 2,626 | 2,223 |
| Income taxes | 55 | 68 | 0 |
| Deferred income taxes | 217 | 206 | 230 |
| Total Current Liabilities | 5,094 | 4,454 | 4,397 |
| Long-Term Debt | 7,503 | 8,456 | 8,719 |
| Deferred Income Taxes | 1,045 | 1,068 | 1,156 |
| Other Liabilities | 2,255 | 2,621 | 2,504 |
| Shareholders' Equity | 4,739 | 4,701 | 4,555 |
| Total Liabilities and Shareholders' Equity | $20,636 | $21,300 | $21,331 |
| Consolidated Balance Sheets (Parenthetical) (USD $) | |||
| In Millions | May. 01, 2010
| Jan. 30, 2010
| May. 02, 2009
|
| Property and Equipment, accumulated depreciation and amortization | $6,028 | $5,782 | $5,690 |
| Consolidated Statements of Cash Flows (USD $) | ||
| In Millions | 3 Months Ended
May. 01, 2010 | 3 Months Ended
May. 02, 2009 |
| Cash flows from operating activities: | ||
| Net income (loss) | $23 | ($88) |
| Adjustments to reconcile net income (loss) to net cash used by operating activities: | ||
| Division consolidation costs | 0 | 138 |
| Depreciation and amortization | 287 | 303 |
| Stock-based compensation expense | 29 | 27 |
| Amortization of financing costs and premium on acquired debt | (6) | (6) |
| Changes in assets and liabilities: | ||
| Decrease in receivables | 71 | 94 |
| Increase in merchandise inventories | (306) | (257) |
| Increase in supplies and prepaid expenses | (43) | (27) |
| (Increase) decrease in other assets not separately identified | 1 | (3) |
| Increase in merchandise accounts payable | 639 | 516 |
| Decrease in accounts payable and accrued liabilities not separately identified | (453) | (479) |
| Decrease in current income taxes | (12) | (234) |
| Increase (decrease) in deferred income taxes | (16) | 43 |
| Decrease in other liabilities not separately identified | (363) | (30) |
| Net cash used by operating activities | (149) | (3) |
| Cash flows from investing activities: | ||
| Purchase of property and equipment | (36) | (57) |
| Capitalized software | (24) | (18) |
| Disposition of property and equipment | 1 | 7 |
| Other, net | 15 | 14 |
| Net cash used by investing activities | (44) | (54) |
| Cash flows from financing activities: | ||
| Debt repaid | (505) | (837) |
| Dividends paid | (21) | (21) |
| Increase (decrease) in outstanding checks | 1 | (50) |
| Acquisition of treasury stock | (1) | 0 |
| Issuance of common stock | 14 | 0 |
| Net cash used by financing activities | (512) | (908) |
| Net decrease in cash and cash equivalents | (705) | (965) |
| Cash and cash equivalents at beginning of period | 1,686 | 1,385 |
| Cash and cash equivalents at end of period | 981 | 420 |
| Supplemental cash flow information: | ||
| Interest paid | 150 | 145 |
| Interest received | 1 | 5 |
| Income taxes paid (net of refunds received) | $78 | $28 |
| Summary of Significant Accounting Policies | |
| 3 Months Ended
May. 01, 2010 | |
| Summary of Significant Accounting Policies | 1. Summary of Significant Accounting Policies Macys, Inc. and subsidiaries (the Company) is a retail organization operating retail stores and Internet websites under two brands (Macys and Bloomingdales) that sell a wide range of merchandise, including mens, womens and childrens apparel and accessories, cosmetics, home furnishings and other consumer goods. The Companys operations include approximately 850 stores in 45 states, the District of Columbia, Guam and Puerto Rico, as well as macys.com and bloomingdales.com. A description of the Companys significant accounting policies is included in the Companys Annual Report on Form 10-K for the fiscal year ended January30, 2010 (the 2009 10-K). The accompanying Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and notes thereto in the 2009 10-K. Net sales include merchandise sales, leased department income, shipping and handling fees and sales to third party retailers. Beginning with the first quarter of 2010, the Company began including sales of private brand goods directly to third party retailers and sales of excess inventory to third parties in net sales. These items were previously reported, net of the related cost of sales, in selling, general and administrative expenses. This change in presentation had an immaterial impact on reported net sales, does not impact comparable store sales, net income (loss) or diluted earnings (loss) per share, and was not applied retroactively to periods ended prior to May1, 2010. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Such estimates and assumptions are subject to inherent uncertainties, which may result in actual amounts differing from reported amounts. The Consolidated Financial Statements for the 13 weeks ended May1, 2010 and May2, 2009, in the opinion of management, include all adjustments (consisting only of normal recurring adjustments) considered necessary to present fairly, in all material respects, the consolidated financial position and results of operations of the Company. Because of the seasonal nature of the retail business, the results of operations for the 13 weeks ended May1, 2010 and May2, 2009 (which do not include the Christmas season) are not necessarily indicative of such results for the full fiscal year. Certain reclassifications were made to the prior fiscal years amounts to conform with the classifications of such amounts for the current fiscal year. In December 2009, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No.2009-16, relating to the accounting and disclosures for transfers of financial assets. This guidance requires entities to provide more information about sales of securitized financial assets and similar transactions, particularly if t |
| Division Consolidation Costs and Store Closing Related Costs | |
| 3 Months Ended
May. 01, 2010 | |
| Division Consolidation Costs and Store Closing Related Costs | 2. Division Consolidation Costs and Store Closing Related Costs In 2008, the Company began a localization initiative called My Macys. This initiative was intended to strengthen local market focus and enhance selling service in an effort to both accelerate same-store sales growth and reduce expenses. To maximize the results from My Macys, the Company took action, initially in selected markets, that: concentrated more management talent in local markets, effectively reducing the span of control over local stores; created new positions in the field to work with planning and buying executives in helping to understand and act on the merchandise needs of local customers; and empowered locally based executives to make more and better decisions. In February 2009, the Company announced the expansion of the My Macys localization initiative across the country. As My Macys was rolled out nationally to new local markets in 2009, the Companys Macys branded stores were reorganized into a unified operating structure, through division consolidations, to support the Macys business. Division central office organizations were eliminated in New York-based Macys East, San Francisco-based Macys West, Atlanta-based Macys Central and Miami-based Macys Florida. The New York-based Macys Home Store and Macys Corporate Marketing divisions no longer exist as separate entities. Home Store functions were integrated into the Macys national merchandising, merchandise planning, stores and marketing organizations. Macys Corporate Marketing was integrated into the new unified marketing organization. The New York-based Macys Merchandising Group was refocused solely on the design, development and marketing of the Macys family of private brands. The following table shows for the 13 weeks ended May1, 2010, the beginning and ending balance of, and the activity associated with, the severance accrual established in connection with the division consolidation and localization initiative announced in February 2009: January30, 2010 Payments May1, 2010 (millions) Severance costs $ 69 $ (49 ) $ 20 The Company expects to pay out the accrued severance costs, which are included in accounts payable and accrued liabilities on the Consolidated Balance Sheets, prior to July31, 2010. Additionally, the Company paid out the $2 million of accrued severance costs established in connection with the store closings announced in January 2010, which were included in accounts payable and accrued liabilities on the Consolidated Balance Sheets as of January30, 2010, during the 13 weeks ended May1, 2010. During the 13 weeks ended May2, 2009, the Company recorded $138 million of costs and expenses associated with the division consolidation and localization initiative announced in February 2009, consisting primarily of severance costs and other human resource-related costs. The following table shows for the 13 weeks ended May2, 2009, the beginning and ending balance of, and the activity associated with, the severance accrual established in connection with the division consolidation and localization initiative announced in February 2009: |
| Earnings (Loss) Per Share | |
| 3 Months Ended
May. 01, 2010 | |
| Earnings (Loss) Per Share | 3. Earnings (Loss) Per Share The following tables set forth the computation of basic and diluted earnings (loss) per share: 13 Weeks Ended May1, 2010 May2, 2009 Income Shares Loss Shares (millions, except per share figures) Net income (loss) and average number of shares outstanding $ 23 421.4 $ (88 ) 420.1 Shares to be issued under deferred compensation plans 1.2 1.3 $ 23 422.6 $ (88 ) 421.4 Basic earnings (loss) per share $ .05 $ (.21 ) Effect of dilutive securitiesstock options, restricted stock and restricted stock units 3.6 0 $ 23 426.2 $ (88 ) 421.4 Diluted earnings (loss) per share $ .05 $ (.21 ) In addition to the stock options, restricted stock and restricted stock units reflected in the foregoing table, stock options to purchase 32.1million shares of common stock at prices ranging from $20.89 to $46.15 per share and 935,000 shares of restricted stock were outstanding at May1, 2010, but were not included in the computation of diluted earnings per share for the 13 weeks ended May1, 2010 because their inclusion would have been antidilutive. Stock options to purchase 42.2million shares of common stock at prices ranging from $8.76 to $46.15 per share, 371,000 shares of restricted stock and 2.9million shares of performance-based restricted stock units were outstanding at May2, 2009, but were not included in the computation of diluted loss per share for the 13 weeks ended May2, 2009 because, as a result of the Companys net loss during this period, their inclusion would have been antidilutive. |
| Financing | |
| 3 Months Ended
May. 01, 2010 | |
| Financing | 4. Financing During the 13 weeks ended May1, 2010, consistent with its strategy to reduce its indebtedness, the Company used approximately $526 million of cash to repurchase approximately $500 million of indebtedness prior to maturity. The repurchases included approximately $425 million of 5.35% senior notes due 2012, approximately $57 million of 6.625% senior notes due 2011, approximately $9 million of 8.0% senior debentures due 2012, and approximately $9 million of 7.45% senior debentures due 2011. In connection with these repurchases, the Company recognized additional interest expense of approximately $27 million due to the expenses associated with the early retirement of this debt. On February10, 2009, the Company completed a cash tender offer pursuant to which it purchased approximately $199 million of its outstanding 6.30% senior notes due April1, 2009 (resulting in approximately $151 million of such notes remaining outstanding until they were paid at maturity on April1, 2009) and approximately $481 million of its outstanding 4.80% senior notes due July15, 2009 (resulting in approximately $119 million of such notes remaining outstanding until they were paid at maturity on July15, 2009) for aggregate consideration, including accrued and unpaid interest, of approximately $686 million. |
| Benefit Plans | |
| 3 Months Ended
May. 01, 2010 | |
| Benefit Plans | 5. Benefit Plans The Company has a funded defined benefit plan (Pension Plan) and a defined contribution plan, which cover substantially all employees who work 1,000 hours or more in a year. The Company also has an unfunded defined benefit supplementary retirement plan, which provides benefits, for certain employees, in excess of qualified plan limitations. In addition, certain retired employees currently are provided with specified health care and life insurance benefits (Postretirement Obligations). Eligibility requirements for such benefits vary, but generally state that benefits are available to eligible employees who were hired prior to a certain date and retire after a certain age with specified years of service. Certain employees are subject to having such benefits modified or terminated. The actuarially determined components of the net periodic benefit cost are as follows: 13WeeksEnded May1, 2010 May2, 2009 (millions) Pension Plan Service cost $ 24 $ 22 Interest cost 39 43 Expected return on assets (54 ) (46 ) Recognition of net actuarial loss 15 0 Amortization of prior service cost 0 0 $ 24 $ 19 Supplementary Retirement Plan Service cost $ 2 $ 1 Interest cost 9 11 Recognition of net actuarial loss 1 0 Amortization of prior service cost 0 0 $ 12 $ 12 Postretirement Obligations Service cost $ 0 $ 0 Interest cost 4 5 Recognition of net actuarial gain (1 ) (2 ) Amortization of prior service cost 0 0 $ 3 $ 3 During the 13 weeks ended May1, 2010, the Company made a funding contribution to the Pension Plan of $325 million. During the 13 weeks ended May2, 2009, the Company made a funding contribution to the Pension Plan of approximately $30 million. In March 2010, President Obama signed into law the Patient Protection and Affordable Care Act and the Health Care and Education Affordability Reconciliation Act of 2010 (the 2010 Acts). Included among the major provisions of these laws is a change in the tax treatment related to the Medicare Part D subsidy. The Companys postretirement obligations reflect estimated federal subsidies expected to be received under the Medicare Prescription Drug, Improvement and Modernization Act of 2003. Under the 2010 Acts, the Companys deductions for retiree prescription drug benefits will be reduced by the amount of Medicare Part D subsidies received beginning February3, 2013. The Company recorded a $4 million deferred tax expense to reduce its deferred tax asset as a result of the elimination of the deductibility of retiree health care payments to the extent of tax-free Medicare Part D subsidies that are received. Based on data currently available, the Company is not able at this time to determine the ongoing impact that the other provisions of the 2010 Acts will have on the Company-sponsored medica |
| Accumulated Other Comprehensive Loss | |
| 3 Months Ended
May. 01, 2010 | |
| Accumulated Other Comprehensive Loss | 6. Accumulated Other Comprehensive Loss The following table shows the beginning and ending balance of, and the activity associated with, accumulated other comprehensive loss, net of income tax effects, for the 13 weeks ended May1, 2010 and May2, 2009: May1, 2010 May2, 2009 (millions) Accumulated other comprehensive loss, at beginning of period $ (753 ) $ (486 ) Unrealized gain (loss) on marketable securities, net of income tax effect of $1 million and $2 million (2 ) 4 Post employment and postretirement benefit plans: Recognition of net actuarial (gain) loss, net of income tax effect of $6 million and $1 million 9 (1 ) Accumulated other comprehensive loss, at end of period $ (746 ) $ (483 ) |
| Fair Value Measurements | |
| 3 Months Ended
May. 01, 2010 | |
| Fair Value Measurements | 7. Fair Value Measurements The following table shows the Companys financial assets that are required to be measured at fair value on a recurring basis at May1, 2010: Total FairValueMeasurements Level1 Level2 Level3 (millions) Marketable equity and debt securities $ 81 $ 30 $ 51 $ 0 The following table shows the Companys financial assets that are required to be measured at fair value on a recurring basis at May2, 2009: Total FairValueMeasurements Level1 Level2 Level3 (millions) Marketable equity and debt securities $ 80 $ 31 $ 49 $ 0 Other financial instruments not measured at fair value on a recurring basis include cash and cash equivalents, receivables, short-term debt, merchandise accounts payable, accounts payable and accrued liabilities and long-term debt. With the exception of long-term debt, the carrying amount approximates fair value because of the short maturity of these instruments. The fair values of long-term debt, excluding capitalized leases, are estimated based on the quoted market prices for publicly traded debt or by using discounted cash flow analyses, based on the Companys current incremental borrowing rates for similar types of borrowing arrangements. The following table shows the estimated fair values of certain financial instruments of the Company at May1, 2010: Notional Amount Carrying Amount Fair Value (millions) Long-term debt $ 7,209 $ 7,474 $ 7,372 |
| Condensed Consolidating Financial Information | |
| 3 Months Ended
May. 01, 2010 | |
| Condensed Consolidating Financial Information | 8. Condensed Consolidating Financial Information The senior notes and senior debentures of the Company, which constitute debt obligations of Macys Retail Holdings, Inc. (Subsidiary Issuer), a wholly-owned subsidiary of Macys, Inc. (Parent), are fully and unconditionally guaranteed by Parent. In the following condensed consolidating financial statements, Other Subsidiaries includes all other direct subsidiaries of Parent, including FDS Bank, Leadville Insurance Company and Snowdin Insurance Company, Macys Merchandising Group, Inc. and its subsidiary Macys Merchandising Group International, LLC. Subsidiary Issuer includes operating divisions and non-guarantor subsidiaries of the Subsidiary Issuer on an equity basis. The assets and liabilities and results of operations of the non-guarantor subsidiaries of the Subsidiary Issuer are also reflected in Other Subsidiaries. Condensed Consolidating Balance Sheets as of May1, 2010,May2, 2009 and January30, 2010, the related Condensed Consolidating Statements of Operations for the 13 weeks ended May1, 2010 and May2, 2009, and the related Condensed Consolidating Statements of Cash Flows for the 13 weeks ended May1, 2010 and May2, 2009 are presented on the following pages. Condensed Consolidating Balance Sheet As of May1, 2010 (millions) Parent Subsidiary Issuer Other Subsidiaries Consolidating Adjustments Consolidated ASSETS: Current Assets: Cash and cash equivalents $ 611 $ 42 $ 328 $ 0 $ 981 Receivables 0 40 233 0 273 Merchandise inventories 0 2,638 2,283 0 4,921 Supplies and prepaid expenses 0 96 170 0 266 Deferred income tax assets 0 0 33 (33 ) 0 Income tax receivable 39 0 0 (39 ) 0 Total Current Assets 650 2,816 3,047 (72 ) 6,441 Property and Equipmentnet 0 5,250 4,044 0 9,294 Goodwill 0 3,315 428 0 3,743 Other Intangible Assetsnet 0 208 460 0 668 Other Assets 4 125 361 0 490 Deferred Income Tax Assets 20 0 0 (20 ) 0 Intercompany Receivable 1,659 0 2,469 (4,128 ) 0 Investment in Subsidiaries 2,544 2,813 0 (5,357 ) 0 Total Assets $ 4,877 $ 14,527 $ 10,809 $ (9,577 ) $ 20,636 LIABILITIES AND SHAREHOLDERS EQUITY: Current Liabilities: Short-term debt $ 0 $ 682 $ 3 $ 0 $ 685 Merchandise accounts payable 0 983 1,027 0 2,010 Accounts payable and accrued liabilities 84 981 1,062 0 2,127 Income taxes 0 17 77 (39 ) 55 Deferred income taxes 0 250 0 (33 ) 217 Total |
