Exhibit 99.2
May
The May Department Stores Company
$2.2 Bn Unsecured Debt Offering
July 2004
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Safe Harbor Statement/Acquisition Disclosure
This announcement may contain, in addition to historical information,
certain forward-looking statements that involve risks and
uncertainties. Actual results could differ materially from those
currently anticipated as a result of a number of factors, including
risks and uncertainties discussed in The May Department Stores
Company's filings with the Securities and Exchange Commission. Those
factors include, among other things, the competitive environment in the
retailing industry in general and in the specific market areas in which
May and its divisions operate, including consumer confidence, changes
in discretionary consumer spending, changes in costs of goods and
services and economic conditions in general, unseasonable weather and
those risks generally associated with the integration of Marshall
Field's with May. There can be no assurance that the acquisition will
close, as to the timing of the closing, that the integration will be
successful or without unanticipated costs or that anticipated synergies
or other benefits will be realized. The May Department Stores Company
assumes no obligation to update any forward-looking statements as a
result of new information or future events or developments.
May
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Offering Summary
Issuer.............................May Department Stores
Offering Size......................$2.2 Bn
Securities.........................144A Senior Notes with Reg. Rights
Maturities.........................[TBD]
Ratings............................[TBD]
Optional Redemption................Make Whole Call at T + [TBD] bps
Event Call.........................[TBD]
Use of Proceeds....................Acquisition of Marshall Field's
Joint Book-Runners.................Citigroup, JP Morgan, Morgan Stanley
May
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Compelling Investment Opportunity
- - May Department Stores is a pre-eminent department store retailer
with FY 2003 net sales of approximately $13.3 billion
- - Acquisition of Marshall Field's gives May an established and widely
recognized franchise with leading market share positions in Chicago,
Detroit and Minneapolis
- - May has a strong and highly respected management team with
significant industry and acquisition integration experience (e.g.,
Foley's, Filene's, Bridal Group)
- - May has committed to discontinue share repurchase programs until
debt ratios return to more normal levels
- - May is committed to paying down significant portions of the
acquisition debt using strong near-term free cash flow
May
4
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Favorable Retail Environment
- - The department store environment (for both May and Field's) turned
positive in the fourth quarter and that trend continues
- - Lord & Taylor operating performance has improved significantly due
to its merchandise repositionings
- - Lord & Taylor divestitures are going faster than planned; we expect
less than 10 stores will remain open at year end
- - Fall 2004 sales are expected to be in-line with our current
performance
- - May's operating cash flow remains strong and Field's will add to
this
May
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Marshall Field's Opportunity
- - The Field's acquisition presented a unique and important strategic
opportunity
- - Marshall Field's is an established and widely-recognized name
- - We will enter three new large markets (Chicago, Minneapolis,
Detroit) as the pre-eminent department store retailer
- - There are no significant issues of store overlap or the need for
extensive divestitures of unproductive properties
- - The stores are in excellent physical condition (State Street has
recently had a facelift), requiring no special additional capital
- - For the first time in many years, Field's will now be owned and run
by a department store company, and receive the benefits from being
part of a like-minded culture
May
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Transaction Overview
- - Structure:
- Cash Purchase of Marshall Field's assets and nine Mervyn's Twin
Cities locations for $3.24 billion
- 2/3 long-term borrowing, 1/3 cash and short term borrowing
- - Approvals:
- Regulatory approvals customary to a transaction of this type
- No shareholder approval required
- - Closing:
- Expected by the end of July
May
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Strategic Rationale for the Acquisition
- - Gives May leading positions with a nationally recognized
name plate in three large Midwestern metro markets:
Chicago, Detroit, and Minneapolis
- - Estimated $85 million in synergies in FY 2005, $140 million in FY
2006 and $180 million per year thereafter
- - Opportunity to leverage:
- May's economies of scale
- May's department store operating efficiencies
- Field's upscale merchandise assortments
- May's breadth of proprietary product to supplement Field's
current proprietary programs
- Field's dedicated consumer base, especially its focus on
"zoomers," teamed with May's strategic offense and focus on
attracting younger customers
May
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May and Marshall Field's
Department Stores
May - 438
Marshall Field's - 62
[Map]
May
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Integration Strategy
- - Field's to be operated as a separate division within May
- - Field's leadership team to work with May team to ensure seamless
integration
- Additionally, the Target organization is working to facilitate
the integration process
- - Capitalize on May's prior successful acquisition and integration
experiences, e.g., Foley's, Filene's, Bridal Group
- - Introduce May's operational department store efficiencies to
Marshall Field's, e.g., IT integration
May
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Earnings Improvement Opportunities
- - Estimated annual earnings synergies (principally expense) of $85
million in 2005, $140 million in 2006 and $180 million per year
thereafter
- - Major expense synergies are in IT costs and associated payroll,
credit operations and retiree medical expenses
- - Field's will benefit from the cross-fertilization of expense
savings/merchandising ideas from May's department store divisions
- - May will benefit from Field's extensive experience in higher-end
merchandising
- - Merchandising synergies include
- Increased private label penetration at Field's
- Benefits of May's comparative merchandising information at
Marshall Field's
- Use of Marshall Field's, especially the State Street store, as a
"merchandise learning laboratory"
- Access to vendors that Field's does business with that May does
not
- Increased scale with vendors
May
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Expected Sources and Uses
$MM
Sources Amount Uses Amount
Cash on Hand 625 Field's Purchase 3,240
Price
Fall 2004 Cash Flow 315
Short-Term Debt(CP) 300 High Coupon 200
Debt Repayment
New Long-Term Debt 2,200
Total Sources 3,440 Total Uses 3,440
- We anticipate replacing our current $1.0 billion in bank lines
with a $1.3-$1.5 billion 5-year revolving credit facility this
August
- We continue to retain a significant level of unencumbered accounts
receivable and real estate assets
May
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Financial Policy
- - Due to the Field's acquisition, the $500 million special share
repurchase authorized in February, 2004 has been suspended. $18
million was repurchased prior to the suspension
- - No share repurchases will occur until our debt ratio is reduced to
more normal levels
- - Funding approximately $1 billion of this financing in short and
intermediate-term maturities reflects May's commitment to reduce
debt levels with its strong near-term cash flows
May
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Compelling Investment Opportunity
- - May Department Stores is a pre-eminent department store retailer
with FY 2003 net sales of approximately $13.3 billion
- - Acquisition of Marshall Field's gives May an established and widely
recognized franchise with leading market share positions in Chicago,
Detroit and Minneapolis
- - May has a strong and highly respected management team with
significant industry and acquisition integration experience (e.g.,
Foley's, Filene's, Bridal Group)
- - May has committed to discontinue share repurchase programs until
debt ratios return to more normal levels
- - May is committed to paying down significant portions of the
acquisition debt using strong near-term free cash flow
May
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May
The May Department Stores Company
Lord & Taylor Famous Barr Filene's
Foley's Hecht's Kaufmann's
L.S. Ayres Marshall Field's Meier & Frank
Robinsons May Strawbridge's The Jones Store
David's Bridal After Hours Formalwear Priscilla of Boston
May
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