SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
(No Fee Required)
For The Year Ended December 31, 2002
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
(No Fee Required)
Commission File Number 1-79
A. Full title of the plan if different from that of the issuer named below:
THE MAY DEPARTMENT STORES COMPANY
PROFIT SHARING PLAN
B. Name of issuer of securities held pursuant to the plan and the
address of its principle executive office:
THE MAY DEPARTMENT STORES COMPANY
611 Olive Street
St. Louis, MO 63101
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<Table>
THE MAY DEPARTMENT STORES COMPANY
PROFIT SHARING PLAN
FINANCIAL STATEMENTS AND EXHIBITS
Listed below are all financial statements and exhibits filed as part of this
annual report on Form 11-K:
<s> <c>
Page of this
Financial Statements Form 11-K
Report of Deloitte & Touche LLP, Independent Auditors 3
Report of Arthur Andersen LLP, Independent Auditors 4
Financial Statements of the Plan:
Statements of Net Assets Available for Benefits-December 31, 2002 and
2001 5
Statements of Changes in Net Assets Available for Benefits for the Years
Ended December 31, 2002 and 2001 6
Notes to Financial Statements and Schedules 7
Form 5500, Schedule H, Line 4i-Schedule of Assets (Held at End of Year)
as of December 31, 2002 16
Form 5500, Schedule G, Part III-Schedule of Nonexempt Transactions for
the Year Ended December 31, 2002 21
Exhibits
Exhibit 23-Consent of Independent Auditors 22
Exhibit 23.2-Potential Limitation of Remedies Against Arthur Andersen LLP 23
Exhibit 99.1-Certification Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002 24
</Table>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Plan
Administrator of The May Department Stores Company Profit Sharing Plan had duly
caused this annual report to be signed on its behalf by the undersigned
thereunto duly authorized.
THE MAY DEPARTMENT STORES COMPANY
PROFIT SHARING PLAN
By: The May Department Stores Company
Date: June 30, 2003 By: /s/ Thomas D. Fingleton
Thomas D. Fingleton
Executive Vice President and
Chief Financial Officer
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INDEPENDENT AUDITORS' REPORT
Retirement Committee of the Board of Directors
The May Department Stores Company
We have audited the accompanying statement of net assets available for benefits
of The May Department Stores Company Profit Sharing Plan (the "Plan") as of
December 31, 2002, and the related statement of changes in net assets available
for benefits for the year then ended. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audit. The financial
statements of the Plan as of December 31, 2001 and for the year then ended were
audited by other auditors who have ceased operations. Those auditors expressed
an unqualified opinion on those financial statements in their report dated
March 22, 2002.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the net assets available for benefits of the Plan as of December 31,
2002, and the changes in its net assets available for benefits for the year
then ended, in conformity with accounting principles generally accepted in the
United States of America.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules listed in the
Table of Contents are presented for the purpose of additional analysis and are
not a required part of the basic financial statements, but are supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. These schedules are the responsibility of the Plan's management. Such
schedules have been subjected to the auditing procedures applied in our audit
of the basic 2002 financial statements and, in our opinion, are fairly stated
in all material respects when considered in relation to the basic financial
statements taken as a whole.
June 20, 2003
<Page>
This is a copy of the audit report previously issued by Arthur Andersen LLP
in connection with the Plan's filing on Form 11-K for the year ended December
31, 2001. This audit report has not been reissued by Arthur Andersen LLP in
connection with this filing on Form 11-K. See Exhibit 23.2 for further
discussion.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Retirement Committee of the Board of Directors of
The May Department Stores Company:
We have audited the accompanying statements of net assets available for
benefits of The May Department Stores Company Profit Sharing Plan (the Plan) as
of December 31, 2001 and 2000, and the related statements of changes in net
assets available for benefits for the years then ended. These financial
statements and the schedules referred to below are the responsibility of the
Plan Administrator. Our responsibility is to express an opinion on these
financial statements and schedules based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
December 31, 2001 and 2000, and the changes in net assets available for
benefits for the years then ended, in conformity with accounting principles
generally accepted in the United States.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets
and reportable transactions are presented for the purpose of additional
analysis and are not a required part of the basic financial statements but are
supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. The supplemental schedules and fund information have
been subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, are fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
/s/ ARTHUR ANDERSEN LLP
St. Louis, Missouri
March 22, 2002
<Page>
<Table>
THE MAY DEPARTMENT STORES COMPANY
PROFIT SHARING PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 2002 AND 2001
(In thousands)
<s> <c> <c>
2002 2001
ASSETS:
Investments, at fair value:
The May Department Stores Company:
ESOP preference stock $ 409,395 $ 707,837
Common stock 306,322 537,983
Commingled equity index funds 179,627 209,364
Short-term investments 122,365 95,794
U.S. government securities 54,515 41,996
Fixed income investments 32,459 24,501
Loans to members 4 8
Total investments 1,104,687 1,617,483
Other assets:
Dividends and interest receivable 1,548 1,289
Receivable-withholdings of member contributions 1,157 2,737
Receivable-employer contribution for David's Bridal Plan 488 -
Total assets 1,107,880 1,621,509
LIABILITIES:
Notes payable 151,647 203,964
Accrued interest payable 2,146 3,152
Net amount payable for investment securities transactions
and other 8,676 6,325
Accrued administrative expenses 784 1,326
Total liabilities 163,253 214,767
NET ASSETS AVAILABLE FOR BENEFITS $ 944,627 $ 1,406,742
See notes to financial statements.
</Table>
5
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<Table>
THE MAY DEPARTMENT STORES COMPANY
PROFIT SHARING PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEARS ENDED DECEMBER 31, 2002 AND 2001
(In thousands)
<s> <c> <c>
2002 2001
ADDITIONS:
Contributions:
Member $ 99,290 $ 93,672
Employer ESOP contribution 50,191 43,428
Transfers from merged plans 7,439 5,086
Total contributions 156,920 142,186
(Depreciation)/appreciation in fair value of investments:
The May Department Stores Company:
ESOP preference stock (259,866) 82,548
Common stock (198,621) 64,205
Commingled equity index fund (49,569) (27,319)
U.S. government securities 1,884 868
Fixed income investments 1,100 288
Total (depreciation)/appreciation in fair value
of investments (505,072) 120,590
Investment income:
Dividends 34,106 35,661
Interest 6,777 7,833
Total investment income 40,883 43,494
Total additions, net depreciation (307,269) 306,270
DEDUCTIONS:
Benefits paid to members (134,924) (122,514)
Interest expense (14,354) (18,551)
Administrative expenses (5,392) (4,874)
Cash dividend payments to members (176) -
Total deductions (154,846) (145,939)
(DECREASE) INCREASE IN NET ASSETS
AVAILABLE FOR BENEFITS (462,115) 160,331
NET ASSETS AVAILABLE FOR BENEFITS-Beginning of year 1,406,742 1,246,411
NET ASSETS AVAILABLE FOR BENEFITS-End of year $ 944,627 $1,406,742
See notes to financial statements.
</Table>
6
THE MAY DEPARTMENT STORES COMPANY
PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2002 AND 2001
1. DESCRIPTION OF THE PLAN
The following description of The May Department Stores Company Profit
Sharing Plan (the "Plan") is provided for financial statement purposes
only. Members should refer to the Plan document and Summary Plan Description
dated November 2002 for more complete information.
General
The Plan is a defined contribution profit sharing plan. The Plan
covers eligible associates of The May Department Stores Company, a Delaware
corporation ("May"), and its subsidiaries or affiliates who elect to
participate in the Plan. An associate's membership in the Plan is
voluntary.
Eligible Associates
An associate is eligible to join the Plan upon becoming a member of
The May Department Stores Company Retirement Plan. In general,
associates employed by May or any of its subsidiaries or affiliates
(excluding associates of After Hours Formalwear, Inc., foreign national
associates working in foreign countries and certain members of collective
bargaining units) become members of the May Retirement Plan upon attaining
age 21 and working for at least one year in which they are paid for 1,000
hours or more.
ESOP Feature
In 1989, the Plan was amended and restated to add an Employee
Stock Ownership Plan ("ESOP") feature and acquired 788,955 shares of
convertible preferred stock of May (the "ESOP Preference Shares"). Each
ESOP Preference Share cost $507, has a guaranteed minimum value of $507,
receives a fixed annual dividend of $38.03 and is convertible into 33.78747
shares of May common stock. The acquisition of the ESOP Preference Shares
was financed with the proceeds of a private placement to a group of
institutional investors for an aggregate principal amount of $400 million
(the "ESOP Loans") (see Note 5).
The ESOP Loans are repaid by the Plan from the following sources in the
following order: (a) dividends from May on ESOP Preference Shares
previously allocated to members; (b) dividends from May on unallocated
ESOP Preference Shares; and (c) contributions by May. During the term of
the ESOP Loans, the ESOP Preference Shares which have not been allocated to
members' company accounts serve as collateral for the ESOP Loans. The ESOP
Loans are guaranteed by May.
ESOP Preference Shares are initially held by the Plan in an Unallocated
account. As ESOP Loans are repaid, ESOP Preference Shares are released to a
suspense account pending allocation to the members' ESOP Preference Fund
accounts in satisfaction of the required dividend and employer allocation.
In November 2001, the Plan was amended to provide that the May Common Stock
Fund is an ESOP pursuant to Section 4975(e)(7) of the Internal Revenue
Code. This feature allows members with accounts in the May Common Stock
Fund to elect to either reinvest May common stock dividends into their Plan
accounts or to receive these dividends in cash each quarter.
Contributions
Plan members may contribute 1% to 25% (1% to 15% for "highly
compensated associates") of their pay as defined by the Plan. Contributions
may be made prior to federal and certain other income taxes pursuant to
Section 401(k) of the Internal Revenue Code.
7
<Page>
The employer allocation is variable and discretionary. Generally, the
Employer allocation for each Plan year is determined by multiplying a base
matching rate times members' basic contributions (generally, contributions
up to 5% of pay each paycheck), reduced by forfeitures, one-third of annual
dividends with respect to the ESOP Preference Shares, as defined,
administrative expenses and excess ESOP allocations from prior Plan years
(to the extent such amounts have not been previously used to reduce employer
allocations for earlier Plan years).
The base matching rate is determined as follows: In the event May has
diluted earnings per share ("EPS") of its common stock for its most recent
fiscal year ("current year") resulting in a 6.0% increase over the EPS for
the fiscal year immediately preceding the current year, the base matching
rate will be 50%. For each percentage point increase over 6.0% or decrease
below 6.0%, there is a 1.25 percentage point increase in or decrease from
the 50% base matching rate.
ESOP Preference Shares are allocated to associates' accounts at their
original cost to the Plan of $15.01 per common share equivalent. Because
the ESOP Preference Shares are convertible into May common stock, the ESOP
Preference Shares are worth more than original cost when the market value
of May common stock is higher than $15.01 per share. This market value of
the employer allocation (including any supplemental contributions), divided
by associates' matchable contributions, is the effective matching rate. The
Plan's effective matching rate was 46% and 56% for the 2002 and 2001 Plan
years, respectively.
If the effective matching rate for a Plan year exceeds 100%, only ESOP
Preference Shares are used for the employer allocation and no May common
shares are contributed as a supplemental contribution. The effective
matching rate is also limited to 2.0 times the base matching rate. The base
matching rate formula may be adjusted at any time for unusual events
including discontinued operations, accounting changes, or items of
extraordinary gain or loss.
If the guaranteed minimum value of the ESOP Preference Shares allocated to
members' company accounts as a result of the ESOP Loan payments (principal
and interest) for a year is less than the employer allocation, then May
makes supplemental contributions to the Plan for the difference.
Supplemental contributions can be made either in shares of May common
stock or cash.
If the guaranteed minimum value of the ESOP Preference Shares released for
allocation to members' company accounts as a result of the ESOP Loan
payments is greater than the required employer allocation, any "excess"
would be applied (in accordance with applicable law) to satisfy required
employer allocations in future Plan years.
Investments
Members' contributions may be invested in any of seven
participant-directed investment funds:
Money Market Fund - Invests in the Bank of New York Collective
Short-Term Investment Fund which invests in short-term
(less than one year)obligations of high-quality issuers including
banks, corporations, municipalities, the U.S. Treasury and other
federal agencies.
Bond Index Fund - Invests primarily in corporate, U.S. Government,
federal agency and certain foreign government securities that make
up the Lehman Intermediate Government/Credit Bond Index. The Lehman
Intermediate Government/Credit Bond Index represents the combined
overall performance of intermediate-term, fixed income securities
that have maturities ranging from one to 10 years, with an average
maturity of four years.
8
<Page>
Balanced Equity/Bond Fund - Invests in the S&P 500 Equity Index
Fund and the Bond Index Fund, with a current targeted investment
allocation of approximately 60% to the S&P 500 Equity Index Fund
and 40% to the Bond Index Fund. The fund is rebalanced by the Plan's
Trustee at the end of each calendar quarter.
S&P 500 Equity Index Fund - Invests primarily in the Collective Daily
Stock Index Fund, a collective trust which invests in the common
stock of corporations that make up the Standard & Poor's 500 Composite
Stock Price Index. This index represents the composite performance of
500 major stocks in the United States. Investment mix is determined
based on the relative market size of the 500 corporations, with larger
corporations making up a higher proportion than smaller corporations.
Russell 2000 Equity Index Fund - Invests primarily in the Daily
Russell 2000 Equity Index Fund, a collective trust which invests in
the common stock of corporations that make up the Russell 2000
Index. This Index is commonly used to represent the small market
capitalization (small company) segment of the U.S. equity market.
Investment mix is determined based on the relative market size of
2,000 corporations, with larger corporations in this group making
up a higher proportion than smaller corporations.
International Equity Index Fund - Invests primarily in the Northern
Institutional International Equity Index Portfolio, a mutual fund
which invests in the common stock of corporations that make up the
Morgan Stanley Capital International Europe, Australasia and Far
East Index. Investment mix is determined based on the relative
country weights within the Index, with securities issued in
countries having larger economies making up a higher proportion
than countries with smaller economies.
May Common Stock Fund - Invests primarily in May common stock.
The Balanced Equity/Bond Fund, Russell 2000 Equity Index Fund and
International Equity Index Fund are new investment funds that were
established November 7, 2002.
Employer fund allocations and supplemental contributions are initially
invested in the ESOP Preference Fund and the May Common Stock Fund,
respectively. The employer allocation to the Plan for the year ended
December 31, 2002, was made in May 2003 and was be in the form of
34,043 ESOP Preference Shares.
The investments are exposed to various risks such as interest rate, credit
overall market volatility, political, currency and regulatory risks.
Further,due to the level of risk associated with certain investments, it
is reasonably possible that changes in the value of investments will occur
in the near term and such changes could materially affect the amounts
reported in the Statements of Net Assets Available for Benefits.
9
<Page>
Vesting
The method of calculating vesting service is the elapsed time
method. Elapsed time is measured by calculating the time which has elapsed
between the member's hire date and retirement date/termination date
(excluding certain break-in-service periods). Plan members are 100% vested
in May common stock dividends earned in their Company accounts after
January 1, 2002. Plan members are vested in the remainder of their Company
accounts in accordance with the following schedule:
Vesting Percentage
Prior to Effective
Years of Vesting Service January 2002 January 2002
Less than 2 years 0 % 20 %
3 years 20 % 40 %
4 years 40 % 60 %
5 years 60 % 80 %
6 years 80 % 100 %
7 years or more 100 % 100 %
Plan members are always fully vested in the value of their member accounts.
Payment of Benefits
Amounts in a member's account and the vested portion of
a member's Company account may be distributed upon retirement, death,
disability or termination of employment. Distributions from the May Common
Stock Fund and ESOP Preference Fund are made in shares of May common stock
or cash. All other distributions are made in cash.
Administration of the Plan
The Plan is administered by a committee
consisting of at least five persons appointed by May. An administrative
subcommittee has the general responsibility for administration of the Plan
and an investment subcommittee establishes and monitors investment policies
and activities. The assets of the Plan are held in a trust for which The
Bank of New York is the Trustee.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Investments
The Plan's investments in common stock, U.S. government securities and
fixed income securities are stated at fair value based on publicly
reported price information. Investments in commingled equity index
funds are stated at fair value as determined by the investment manager.
Each ESOP Preference Share is valued at the greater of (a) the guaranteed
minimum value (original cost) of $507 per share (plus accrued dividends) or
(b) a conversion value equal to the market price of May common stock
multiplied by the conversion rate for each ESOP Preference Share. As of
December 31, 2002 and 2001, the ESOP Preference Shares were valued at their
conversion values of $776 and $1,249, respectively.
Purchases and sales of securities are recorded on a trade-date basis.
Interest income is recorded on the accrual basis. Dividend income is
recorded on the ex-dividend date. Realized gains and losses are recorded
using the average cost method.
Federal Income Taxes
The Trust established under the Plan to hold the Plan's assets is qualified
pursuant to Sections 401(a), 401(k) and 4975(e)(7) of the Internal Revenue
Code and accordingly, the Trust's net investment income is exempt from
income taxes. The Plan has received a favorable tax determination letter
dated October 9, 2002. The Plan has been amended since receiving the
determination letter. The Plan administrators believe that the amendments
do not affect the tax-exempt status of the Plan.
10
Employer allocations and contributions, member before-tax contributions and
any cumulative investment returns on member accounts are not taxable to the
members until distributions are made.
Administrative Expenses
All administrative expenses (including the allocable portion of expenses
for data processing services, and salaries and benefits for associates
providing services to the Plan) are paid by the Plan. May allocated
approximately $1,300,000 and $1,150,000 in administrative expenses to the
Plan in 2002 and 2001, respectively.
Valuation of the Trust
Effective November 7, 2002, the Plan was amended to provide for daily
valuations of participant accounts. Previously, accounts were valued as of
each calendar month-end.
The value of the ESOP Preference Fund is determined based on the greater of
the guaranteed minimum value (plus accrued dividends) or conversion value.
The unit values of the other investment funds are determined by dividing
the market value of the particular investment fund by the total number of
units outstanding in all member accounts in such investment fund. As of
each succeeding valuation date, the value of each fund is redetermined
and account balances in each fund are adjusted as follows:
(a) All payments made from an account (except for the ESOP Preference Fund
are valued based on the unit value as of the distribution date. Payments
from the ESOP Preference Fund are valued based on the greater of the
guaranteed minimum value (plus accrued dividends) or conversion value,
as of the distribution date.
(b) Member contributions during a calendar month are invested initially in
the Plan in a short-term investment fund, and are credited to the chosen
investment funds with accrued interest on the 21st of the following
calendar month. An equivalent number of additional units are credited to
the appropriate accounts in such investment fund based on the unit value
on the 21st. Employer allocations of ESOP Preference Shares are valued
at the greater of the guaranteed minimum value (plus accrued dividends)
or conversion value, as of the allocation date.
(c) In the event that a member's employment is terminated and a portion of
such member's Company account has been forfeited, the forfeited units or
ESOP Preference Shares shall be cancelled as of the last day of the Plan
year. The dollar amount of such forfeited units or ESOP Preference
Shares is reallocated among the remaining members of the Plan as of the
last day of the Plan year in the same manner as the employer allocation
for such year.
Use of Estimates
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 net assets available for benefits and the reported amounts of
additions to and deductions from net assets available for benefits during
the year. Actual results could differ from those estimates.
Transfers from Merged Plans
On July 31, 2002, the David's Bridal 401(k) Plan ("David's Bridal
Plan") was merged with the Plan. All assets in the David's Bridal Plan
were liquidated and transferred to the Plan from July 31, 2002, through
the period ending August 29, 2002. The 2002 employer allocation
attributable to David's Bridal Plan member contributions through the merger
date was $488,000, and was contributed to the Plan in May 2003.
Effective January 1, 2001, the Zions Cooperative Mercantile Institution
401(k) Plan ("ZCMI Plan") was merged with the Plan. During the 2000 Plan
year, associates with accounts in the ZCMI Plan were permitted to transfer
11
<Page>
their accounts to the Plan. All assets remaining in the ZCMI Plan were
transferred to the Plan effective January 1, 2001.
3. INVESTMENTS
The fair value of the Plan's investments that represent 5% or more of the
Plan's net assets available for benefits as of December 31, 2002 and 2001,
are as follows (dollars in thousands):
<Table>
December 31, 2002 December 31, 2001
Number of Shares Fair Number of Shares Fair
or Principal Value or Principal Value
<s> <c> <c> <c> <c>
ESOP Preference Stock:
Unallocated (nonparticipant-
directed) 181,078 $ 140,596 229,150 $ 286,314
Member allocated (non-
participant-directed through
November 6, 2002) 346,195 268,799 337,364 421,523
Total 527,273 $ 409,395 566,514 $ 707,837
May Common Stock:
Nonparticipant-directed - $ - 3,733,002 $ 138,046
Participant-directed 13,329,909 306,322 10,814,939 399,937
Total 13,329,909 $ 306,322 14,547,941 $ 537,983
Northern Trust Collective Daily
Stock Index Fund 7,669,613 $ 175,635 7,123,604 $ 209,364
The Bank of New York
Collective Short-Term
Investment Fund-Master Notes 122,364,848 $ 122,365 95,794,505 $ 95,794
At December 31, 2002, the Plan beneficially owned May's Common Stock and May's
ESOP Preference Shares, representing 10% of the voting power of the Company.
</Table>
12
<Page>
4. NONPARTICIPANT-DIRECTED NET ASSETS
Effective November 7, 2002, the Plan was amended to allow all investments
in the May Common Stock Fund and ESOP Preference Fund (allocated accounts)
to be participant-directed. Previously, only investments in these funds
allocated to participants over the age of 55 were eligible to be
transferred to other funds. The change in net assets below includes all
activity in these funds through December 31, 2002. Information about the
net assets and the significant components of the changes in net assets
relating to the nonparticipant-directed investments is as follows
(dollars in thousands):
<Table>
December 31,
2002 2001
<s> <c> <c>
Investments:
ESOP Preference Stock $ 140,596 $ 707,837
May Common Stock - 138,046
Short-term investments 3,765 515
Total investments 144,361 846,398
Note payable (151,647) (203,964)
Employer allocation (26,432) -
Accrued interest payable (2,146) (2,886)
Other 5 (831)
$ (35,859) $ 638,717
Year Ended December 31,
2002 2001
Changes in net assets:
Employer ESOP contributions $ 50,191 $ 43,428
Net (depreciation) appreciation in fair value of investments (316,078) 117,737
Dividends 23,844 23,793
Interest income 46 58
Benefits paid to participants (43,222) (34,463)
Interest expense (14,354) (18,551)
Administrative expenses (848) (873)
Transfers to participant-directed investments (361,451) (8,090)
$ (661,872) $ 123,039
</Table>
At December 31, 2001, the nonparticipant-directed May Common Stock Fund and
ESOP Preference Funds (allocated accounts) included approximately $50.6
million and $124.5 million, respectively, attributable to participants over
the age of 55. These amounts were eligible for transfer to other funds at
the discretion of the participants.
13
<Page>
5. NOTES PAYABLE
Notes payable as of December 31 consisted of the following
(dollars in thousands):
<Table>
2002 2001
<s> <c> <c>
ESOP notes payable-Series B, 8.49%, due April 30, 2004 $ 151,647 $ 203,964
</Table>
The scheduled principal payments for the Series B ESOP notes payable for
the remaining two years are as follows: 2003, $60,787,000; and 2004,
$90,860,000. As of December 31, 2002 and 2001, the estimated fair value of
the ESOP notes payable was approximately $163,102,000 and $234,212,000,
respectively.
6. RELATED PARTIES
Certain plan investments are shares of The Bank of New York Collective
Short-Term Investment Fund. The Bank of New York is the Trustee of the Plan
and, therefore, these transactions qualify as party-in-interest. In
addition, the Plan paid the Trustee approximately $732,000 and $765,000 in
administrative expenses as trustee fees in 2002 and 2001, respectively.
7. RECONCILIATION TO FORM 5500
As of December 31, 2002 and 2001, the Plan had approximately $6,783,000
and $10,364,000, respectively, of pending distributions to participants.
These amounts are included in net assets available for benefits. For
reporting on the Plan's Form 5500, these amounts will be classified as
benefit claims payable with a corresponding reduction in net assets
available for benefits. The following table reconciles the financial
statements to the Form 5500 which will be filed by the Plan for the Plan
years ended December 31, 2002 and 2001 (dollars in thousands):
<Table>
2002
Benefits Net Assets
Payable to Benefits Available
Participants Paid for Benefits
<s> <c> <c> <c>
Per 2002 financial statements $ - $ 134,924 $ 944,139
Pending benefit distributions-December 31, 2002 6,783 6,783 (6,783)
Pending benefit distributions-December 31, 2001 - (10,364) -
Per 2002 Form 5500 $ 6,783 $ 131,343 $ 937,356
2001
Benefits Net Assets
Payable to Benefits Available
Participants Paid for Benefits
Per 2001 financial statements $ - $ 122,514 $ 1,406,742
Pending benefit distributions-December 31, 2001 10,364 10,364 (10,364)
Pending benefit distributions-December 31, 2002 - (10,117) -
Per 2001 Form 5500 $ 10,364 $ 122,761 $ 1,396,378
</Table>
14
<Page>
8. DISTRIBUTION OF ASSETS UPON TERMINATION OF THE PLAN
May reserves the right to terminate the Plan, in whole or in part, at any
time. If an employer shall cease to be a participating employer in the
Plan, the accounts of the members of the withdrawing employer shall be
revalued as if such withdrawal date were a valuation date. The Plan
Committee is then to direct the Trustee either to distribute the accounts
of the members of the withdrawing employer as of the date of such
withdrawal on the same basis as if the Plan had been terminated, or to
deposit in a trust established by the withdrawing employer, pursuant to a
plan substantially similar to the Plan, assets equal in value to the assets
allocable to the accounts of the members of the withdrawing employer.
If the Plan is terminated at any time or contributions are completely
discontinued and May determines that the Trust shall be terminated, the
members' Company accounts shall become fully vested and nonforfeitable, all
accounts shall be revalued as if the termination date were a valuation date
and such accounts shall be distributed to members.
If the Plan is terminated or contributions completely discontinued but May
determines that the Trust shall be continued pursuant to the terms of the
Trust agreement, no further contributions shall be made by members or the
employer and the members' Company accounts shall become fully vested, but
the Trust shall be administered as though the Plan were otherwise in effect.
* * * * * *
15
<Page>
<Table>
THE MAY DEPARTMENT STORES COMPANY
PROFIT SHARING PLAN
FORM 5500, SCHEDULE H, PART IV, LINE 4i-
SCHEDULE OF ASSETS HELD AT END OF YEAR
DECEMBER 31, 2002
(Cost and Fair Value in Thousands)
Employer #: 43-1104396
Plan #: 003
(c)
Number of
Shares or (e)
(b) Principal (d) Fair
(a) Identity of issue Amount Cost Value
<s> <c> <c> <c>
ESOP PREFERENCE STOCK:
* The May Department Stores Company ESOP
Preference Stock:
Unallocated 181,078 $ 91,807 $ 140,596
Allocated 346,195 176,341 268,799
ESOP Preference Stock Total 268,148 409,395
MAY COMMON STOCK:
* The May Department Stores Company Common Stock 13,329,909 286,490 306,322
COMMINGLED EQUITY INDEX FUNDS:
Northern Trust Collective Daily Stock Index Fund 7,669,613 242,369 175,635
Daily Russell 2000 Equity Index Fund 141,343 2,424 2,399
Northern Institutional International Equity Index Portfolio 216,200 1,638 1,593
Commingled Equity Index Funds Total 246,431 179,627
SHORT-TERM INVESTMENTS:
* The Bank of New York Collective Short-Term Investment
Fund-Master Notes 122,364,848 122,365 122,365
U.S GOVERNMENT SECURITIES:
U.S. Treasury Notes:
6.5%, due 10/15/06 4,550,000 5,171 5,227
5.75%, due 8/15/03 3,750,000 3,795 3,854
6.875%, due 5/15/06 1,445,000 1,595 1,663
5.625%, due 5/15/08 1,050,000 1,106 1,191
5.75%, due 8/15/10 405,000 434 466
5.0%, due 8/15/11 4,350,000 4,661 4,770
6.625%, due 5/15/07 6,385,000 6,974 7,452
13.75%, due 8/15/04 525,000 810 629
5.25%, due 5/15/04 6,250,000 6,346 6,584
Total U.S. Treasury Notes 30,892 31,836
(Continued)
</Table>
16
<Page>
<Table>
(c)
Number of
Shares or (e)
(b) Principal (d) Fair
(a) Identity of issue Amount Cost Value
<s> <c> <c> <c>
U.S. GOVERNMENT SECURITIES (Continued):
U.S. Government Agency Securities:
Federal National Mortgage Association:
7.0%, due 7/15/05 6,785,000 $ 7,303 $ 7,608
6.0%, due 5/15/08 800,000 829 906
Federal Home Loan Mortgage Corp.:
5.75%, due 4/15/08 5,000,000 5,569 5,612
6.0%, due 6/15/11 1,470,000 1,639 1,665
6.22%, due 3/24/03 200,000 181 202
6.25%, due 7/15/04 5,000,000 5,329 5,356
6.625%, due 9/15/09 750,000 883 880
Interamerican Development Bank-5.75%,
due 2/26/08 400,000 398 450
Total U.S. government agency securities 22,131 22,679
U.S. Government Securities Total 53,023 54,515
FIXED INCOME INVESTMENTS:
Bank Corporate Bonds:
Bank America Corp., 7.125%, due 9/15/06 400,000 438 456
Bayerische Landesbank, 5.875%, due 12/01/08 450,000 450 488
Morgan JP & Co., Inc., 5.75%, due 2/25/04 300,000 310 313
Morgan JP & Co., Inc., 6.7%, due 11/1/07 150,000 161 165
National Australia, 8.6%, due 5/19/10 450,000 449 567
Wachovia, 6.25%, due 8/4/08 500,000 541 554
Wells Fargo & Co., 7.25%, due 8/24/05 400,000 437 449
Total bank corporate bonds 2,786 2,992
Finance and Insurance Corporate Bonds:
Allstate Corp., 7.2%, due 12/1/09 300,000 344 348
Assoc. Corp. of NA., 5.8%, due 4/20/04 650,000 648 682
AXA Financial, Inc., 7.75%, due 8/1/10 400,000 427 453
Boeing Cap Corp., 6.1%, due 3/1/11 200,000 200 207
Citigroup Inc., 7.375%, due 4/2/07 325,000 336 354
Citigroup Inc., 7.25%, due 10/1/10 300,000 340 348
Credit Suisse First Boston USA, 6.125%, due 11/15/11 300,000 297 313
Devon Fing Corp. ULC, 6.875%, due 9/30/11 80,000 80 89
EOP OPER LTD, 8.375%, due 3/15/06 150,000 162 169
Ford Motor Credit Co., 6.875%, due 2/1/06 200,000 196 200
Ford Motor Credit Co., 7.375%, due 10/28/09 200,000 1,223 1,189
General Electric Cap., 8.85%, due 4/1/05 300,000 364 341
General Electric Cap., 5.875%, due 2/15/12 750,000 801 802
(Continued)
</Table>
17
<Page>
<Table>
(c)
Number of
Shares or (e)
(b) Principal (d) Fair
(a) Identity of issue Amount Cost Value
<s> <c> <c> <c>
FIXED INCOME INVESTMENTS (Continued):
Finance and Insurance Corporate Bonds (Continued):
General Mills Inc., 5.125%, due 2/15/07 350,000 $ 349 $ 372
General Motors Accep., 6.75%, due 1/15/06 600,000 616 621
Goldman Sachs Group, Inc., 6.875%, due 1/15/11 250,000 255 279
Goldman Sachs Group, Inc., 6.65%, due 5/15/09 150,000 164 165
Household Finance Corp., 5.75%, due 1/30/07 500,000 497 523
Household Finance Corp., 6.5%, due 1/24/06 650,000 657 692
Lehman Brothers Hldg., 7.0%, due 2/1/08 150,000 168 170
Lehman Brothers Hldg., 8.25%, due 6/15/07 80,000 93 94
Lehman Brothers Hldg., 6.25%, due 5/15/06 350,000 368 383
Marsh & McLennan Cos., Inc., 6.625%, due 6/15/04 400,000 398 427
Mellon Finl Co., 6.0%, due 3/1/04 400,000 389 419
Merrill Lynch & Co., 6.15%, due 1/26/06 275,000 298 298
Morgan Stanley Dean Witter, 6.1%, due 4/15/06 400,000 400 436
National City Bank Louisville, 6.3%, due 2/15/11 200,000 180 219
Pfizer, Inc., 3.625%, due 11/1/04 500,000 504 515
Simon Debartolo Group, 6.875%, due 11/15/06 500,000 498 544
Toyota Motor Corp., 5.5%, due 12/15/08 450,000 449 489
Unilever Cap., 7.125%, due 11/1/10 125,000 136 148
Verizon Global, 7.25%, due 12/1/10 650,000 705 739
Washington Mutual, 6.875%, due 6/15/11 400,000 414 449
Total finance and insurance corporate bonds 12,956 13,477
Industrial Corporate Bonds:
Alcoa, Inc., 5.875%, due 6/1/06 100,000 100 110
AOL Time Warner, Inc., 6.125%, due 4/15/06 100,000 100 103
Atlantic Richfield Co., 5.9%, due 4/15/09 450,000 448 501
Boeing Cap., 6.5%, due 2/15/12 60,000 64 64
Bristol Myers Squibb, 4.75%, due 10/1/06 125,000 125 132
Burlington Northern, 7.125%, due 12/15/10 400,000 400 462
Comcast Cable, 6.75%, due 1/30/11 400,000 376 416
Comcast Cable, 6.375%, due 1/30/06 100,000 96 105
Comcast Cable, 6.875%, due 6/15/09 200,000 199 213
Conagra Foods, Inc., 6.0%, due 9/15/06 600,000 598 657
Cox Communications, 7.75%, due 11/1/10 160,000 175 182
Daimler Chrysler, 6.4%, due 5/15/06 350,000 360 377
EOP OPER LTD, 6.75%, due 2/15/12 100,000 107 107
General Motors Corp., 7.1%, due 3/15/06 300,000 303 312
International Business Machine, 5.375%, due 2/1/09 400,000 399 433
International Paper, 8.125%, due 7/8/05 100,000 111 112
Kellogg Co., 6.0%, due 4/1/06 400,000 399 434
Lockheed Martin, 8.2%, due 12/1/09 350,000 404 432
National Rural Utils., 7.25%, due 3/1/12 500,000 507 573
(Continued)
</Table>
18
<Page>
<Table>
(c)
Number of
Shares or (e)
(b) Principal (d) Fair
(a) Identity of issue Amount Cost Value
<s> <c> <c> <c>
FIXED INCOME INVESTMENTS (Continued):
Industrial Corporate Bonds:
Raytheon Co., 6.75%, due 8/15/07 550,000 $ 591 $ 610
SBC Comm., 5.75%, due 5/2/06 300,000 323 325
Safeway Inc., 6.5%, due 3/1/11 200,000 205 218
Viacom, Inc., 7.70%, due 7/30/10 150,000 161 178
Wal-Mart Stores, 6.55%, due 8/10/04 650,000 665 699
Weyerhaeuser Co., 6.75%, due 3/15/12 500,000 526 545
Total industrial corporate bonds 7,742 8,300
Oil Corporate Bonds:
Pemex, 9.03%, due 2/15/11 200,000 225 236
Phillips Pete Co., 8.75%, due 5/15/10 600,000 699 751
Total oil corporate bonds 924 987
Telephone Corporate Bonds:
AT&T Wireless Sves, Inc., 7.875%, due 3/1/11 200,000 200 201
Bellsouth Corp., 5.0%, due 10/15/06 100,000 100 107
British Telecom Plc., 7.875%, due 12/15/05 300,000 308 338
Sprint Capital Corp., 7.625%, due 1/30/11 300,000 290 285
Deutsche Telekom, 8.5%, due 6/15/10 550,000 600 633
France Telecom, 7.7%, due 3/1/06 125,000 125 137
Royal KPN., 8.0%, due 10/1/10 200,000 213 234
Total telephone corporate bonds 1,836 1,935
Utility Corporate Bonds:
PSEG Pwr., 7.75%, due 4/15/11 90,000 91 95
Progress Energy, 7.1%, due 3/1/11 250,000 272 276
Total utility corporate bonds 363 371
Asset Backed Securities-
Continental Airls., 7.918%, due 5/1/10 150,000 132 133
Transportation Corporate Bonds:
CXC Corp., 6.25%, due 10/15/08 350,000 349 389
Fedex Corp., 6.875%, due 2/15/06 500,000 504 555
Union Pac., 6.5%, due 4/15/12 400,000 399 449
Total transportation corporate bonds 1,252 1,393
Foreign Obligations:
British Columbia Prov. Canada, 5.375%, due 450,000 448 495
Hydro-Quebec Debenture, Series IF, 7.375%,
due 2/1/03 150,000 161 151
(Continued)
</Table>
19
<Page>
<Table>
(c)
Number of
Shares or (e)
(b) Principal (d) Fair
(a) Identity of issue Amount Cost Value
<s> <c> <c> <c>
FIXED INCOME INVESTMENTS(Continued):
Foreign Obligations:
Province of Ontario, Canada Debenture, 7.375%,
due 1/27/03 400,000 $ 415 $ 402
Finland Rep NT, 7.875%, due 7/28/04 225,000 230 246
Republic of Italy, 7.25%, due 2/7/05 400,000 409 441
United Mexican STS S/T/N, 8.375%, due 1/14/11 700,000 752 791
Total foreign obligations 2,415 2,526
Miscellaneous-ERAC USA Fin. Co., 8.0%,
due 1/15/11 300,000 300 345
Fixed Income Investments Total 30,706 32,459
* LOANS TO MEMBERS (Interest rates range
from 9.75% to 10.5%) 4 4
TOTAL ASSETS HELD AT DECEMBER 31, 2002 $ 1,007,167 $ 1,104,687
* Also a party-in-interest. (Concluded)
</Table>
20
<Table>
THE MAY DEPARTMENT STORES COMPANY
PROFIT SHARING PLAN
FORM 5500, SCHEDULE G, PART III
SCHEDULE OF NONEXEMPT TRANSACTIONS
YEAR ENDED DECEMBER 31, 2002
(In Thousands)
Employer #: 43-1104396
Plan #: 003
(a) (b) (c) (h) (i)
Description of
Relationship to Transaction Including
to Plan, Maturity Date, Rate of Current
Identity of Employer or Other Interest, Collateral and Cost of Value of
Party Involved Party-in-Interest Par or Maturity Value Asset Asset
<s> <c> <c> <c> <c>
The May Department Sponsor Following the Plan's merger $ 163,065 $ 164,273
Stores Company with the David's Bridal 401(k)
Plan on July 31, 2002, assets
which were mistakenly
contributed as an employer
contribution to the David's
Bridal 401(k) Plan, were
Returned to May, the
sponsor of the merged plans.
</Table>
21
<Page>
Exhibit 23
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statements Nos.
333-00957 and 333-76227 of The May Department Stores Company on Form S-8 of
our report dated June 20, 2003, appearing in this Annual Report on Form 11-K of
The May Department Stores Company Profit Sharing Plan for the year ended
December 31, 2002.
/s/DELOITTE & TOUCHE, LLP
St. Louis, Missouri
June 27, 2003
22
<Page>
Exhibit 23.2
POTENTIAL LIMITATION OF REMEDIES AGAINST ARTHUR ANDERSEN LLP
This Annual Report does not include a consent from Arthur Andersen LLP related
to the audited 2001 financial statements included in this Annual Report as the
company was unable to obtain such written consent after reasonable efforts. The
lack of such consent may cause a limitation in the remedies available against
Arthur Andersen LLP in connection with the 2001 financial statements.
23
<Page>
Exhibit 99.1
Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Annual Report of The May Department Stores Company
Profit Sharing Plan (the "Plan") on Form 11-K for the year ended December 31,
2002, 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 May Department Stores Company, each certify, pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 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 Plan.
Dated: June 30, 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
A signed original of this written statement required by Section 906 has been
provided to The May Department Stores Company and will be retained by The May
Department Stores Company and furnished to the Securities and Exchange
Commission or its staff upon request.
24