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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For The Quarterly Period Ended May 2, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________
Commission File Number 1-79
THE MAY DEPARTMENT STORES COMPANY
(Exact name of registrant as specified in its charter)
Delaware 43-1104396
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
611 Olive Street, St. Louis, Missouri 63101
(Address of principal executive offices) (Zip Code)
(314) 342-6300
(Registrant's telephone number,
including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the
Securities Exchange Act of 1934 during the preceding 12 months and
(2) has been subject to such filing requirements for the past 90
days. YES X NO
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
230,992,083 shares of common stock, $.50 par value, as of May 2,
1998.
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PART 1 - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
THE MAY DEPARTMENT STORES COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
(Millions)
May 2, May 3, Jan. 31,
ASSETS 1998 1997 1998
Current Assets:
Cash and cash equivalents $ 282 $ 109 $ 199
Accounts receivable, net 1,877 2,060 2,164
Merchandise inventories 2,752 2,636 2,433
Other current assets 78 126 82
Total Current Assets 4,989 4,931 4,878
Property and Equipment, at cost 6,896 6,489 6,787
Accumulated Depreciation (2,657) (2,304) (2,563)
Net Property and Equipment 4,239 4,185 4,224
Goodwill 746 771 752
Other Assets 74 88 76
Total Assets $ 10,048 $ 9,975 $ 9,930
LIABILITIES AND SHAREOWNERS' EQUITY
Current Liabilities:
Current maturities of
long-term debt $ 248 $ 361 $ 233
Accounts payable 1,113 1,072 842
Accrued expenses 573 601 640
Income taxes 58 58 151
Total Current Liabilities 1,992 2,092 1,866
Long-term Debt 3,470 3,722 3,512
Deferred Income Taxes 458 413 449
Other Liabilities 273 257 277
ESOP Preference Shares 335 346 337
Unearned Compensation (297) (314) (320)
Shareowners' Equity 3,817 3,459 3,809
Total Liabilities and
Shareowners' Equity $ 10,048 $ 9,975 $ 9,930
The accompanying notes to condensed consolidated financial
statements are an integral part of this balance sheet.
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THE MAY DEPARTMENT STORES COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
(Unaudited)
(Millions, except per share) 13 Weeks Ended
May 2, May 3,
1998 1997
Net Retail Sales $ 2,732 $ 2,573
Revenues $ 2,817 $ 2,675
Cost of sales 1,983 1,881
Selling, general and
administrative expenses 584 555
Interest expense, net 67 76
Earnings before income taxes 183 163
Provision for income taxes 73 65
Net earnings before extraordinary loss 110 98
Extraordinary loss related to early
extinguishment of debt - (4)
Net Earnings $ 110 $ 94
Basic earnings per share:
Net earnings before extraordinary loss $ .45 $ .39
Extraordinary loss - (.01)
Net Earnings $ .45 $ .38
Diluted earnings per share:
Net earnings before extraordinary loss $ .44 $ .38
Extraordinary loss - (.01)
Net Earnings $ .44 $ .37
Dividends paid per common share $ .31-3/4 $ .30
Weighted average shares outstanding:
Basic 231.1 235.5
Diluted 247.9 252.3
The accompanying notes to condensed consolidated financial
statements are an integral part of this statement.
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THE MAY DEPARTMENT STORES COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
(Millions) 13 Weeks Ended
May 2, May 3,
1998 1997
Operating Activities:
Net earnings and
depreciation/amortization $ 211 $ 194
Decrease in working capital (excluding
cash, cash equivalents and short-term
debt) 83 219
Other assets and liabilities, net 3 (1)
297 412
Investing Activities:
Net additions to property and equipment (110) (116)
(110) (116)
Financing Activities:
Net repayments of long-term debt (1) (1)
Net purchases of common stock (25) (212)
Dividend payments, net of tax benefit (78) (76)
(104) (289)
Increase in Cash and Cash Equivalents $ 83 $ 7
Cash paid during the period:
Interest $ 76 $ 83
Income Taxes 146 127
The accompanying notes to condensed consolidated financial
statements are an integral part of this statement.
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THE MAY DEPARTMENT STORES COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Interim Results. These unaudited condensed consolidated financial
statements have been prepared in accordance with the instructions
to Form 10-Q of The Securities and Exchange Commission and should
be read in conjunction with the Notes to Consolidated Financial
Statements (pages 21-27) in the 1997 Annual Report. In the opinion
of management, this information is fairly presented and all
adjustments (consisting only of normal recurring adjustments)
necessary for a fair statement of the results for the interim
periods have been included; however, certain items are included in
these statements based on estimates for the entire year. Also,
operating results of periods which exclude the Christmas season may
not be indicative of the operating results that may be expected for
the full fiscal year.
Inventories. Merchandise inventories are stated on the LIFO (last-
in, first-out) cost basis. The LIFO provision for the first
quarter was $8 million in 1998 and 1997.
Common Stock Repurchase Program. On February 11, 1998,
registrant's board of directors authorized a common stock
repurchase program of up to $650 million. Through the end of the
1998 first quarter, registrant repurchased approximately $50
million of common stock under this program. Such purchases are
being made in the open market as market conditions and regulatory
rules allow.
Extraordinary Item. During the first quarter of 1997, registrant
recorded an extraordinary aftertax loss of $4 million ($5 million
pretax) or $.01 per share, as it retired $100 million of 9.875%
debentures due to mature June 1, 2017. The debentures were called
effective June 6, 1997, and, accordingly, were classified as
current maturities of long-term debt on the May 3, 1997 balance
sheet.
Summarized Financial Information - The May Department Stores
Company, New York. Summarized financial information for The May
Department Stores Company, New York, is set forth below for 1998
and 1997.
May 2, Jan. 31,
1998 1998
Financial Position
Current assets $ 4,989 $ 4,878
Noncurrent assets 5,113 5,048
Current liabilities 2,003 1,894
Noncurrent liabilities 7,400 7,437
13 Weeks Ended
May 2, May 3,
1998 1997
Operating Results
Revenues $ 2,817 $ 2,675
Cost of sales 1,983 1,881
Net earnings 63 45
Reclassifications. Certain prior period amounts have been
reclassified to conform with current year presentation.
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Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations
Financial Condition
Key financial ratios for the periods indicated are as follows:
May 2, May 3, Jan. 31,
1998 1997 1998
Current Ratio 2.5 2.4 2.6
Debt-Capitalization Ratio 44% 49% 44%
Fixed Charge Coverage* 4.2x 4.0x 4.1x
* Fixed charge coverage, which is presented for the 52 weeks
ended May 2, 1998, May 3, 1997 and January 31, 1998, is
defined as earnings before gross interest expense, the expense
portion of interest on the ESOP debt, rent expense and income
taxes divided by gross interest expense, interest expense on
the ESOP debt and total rent expense.
Registrant's first quarter 1998 current ratio increased compared
with first quarter 1997 primarily due to a decrease in current
maturities of long-term debt. The current ratio impact of the
merchandise inventory increase was offset by a corresponding
accounts payable increase.
Registrant's first quarter 1998 current ratio decreased compared
with year-end 1997 due to the seasonal nature of registrant's
business.
The first quarter 1998 debt-capitalization ratio decreased from the
first quarter 1997 due primarily to a $365 million reduction in
long-term debt outstanding. This reduction was funded by cash flow
from operations which was favorably impacted by lower accounts
receivable levels.
Registrant's fixed charge coverage ratio for the 52 weeks ended May
2, 1998 increased slightly as compared with the 52 week periods
ended May 3, 1997 and January 31, 1998 due primarily to increased
earnings and decreased interest expense. Interest expense
decreased due to lower average debt balances.
Results of Operations
Net retail sales represent the sales of stores operating at the end
of the latest period. They exclude finance charge revenue and the
sales of stores which have been closed and not replaced. Sales
percent increases are as follows:
Store-for-
Total Store
13 Weeks Ended May 2, 1998 6.2% 4.5%
Store-for-store sales represent sales of those stores open during
both periods.
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The following table presents the components of operating costs and
expenses, as a percent of revenues, for the first quarter of 1998
and 1997. Revenues include all sales from all stores operating
during the period and finance charge revenues of $82 million and
$89 million in 1998 and 1997, respectively. Finance charge
revenues have decreased 8.3% from 1997 due to increased use of
third-party credit cards.
1998 1997
Revenues 100.0% 100.0%
Cost of sales 70.4 70.3
Selling, general and
administrative expenses 20.7 20.8
Interest expense, net 2.4 2.8
Earnings before income taxes 6.5 6.1
Provision for income taxes 40.0* 40.0*
Net Earnings 3.9% 3.7%
*-Percent represents effective income tax rate.
Cost of sales was $1,983 million in the 1998 first quarter, up 5.4%
from $1,881 million in the 1997 first quarter. The overall
increase is primarily related to higher sales volume. As a percent
of revenues (which includes finance charge revenue), cost of sales
increased 0.1% from the first quarter of 1997. This rate increase
was comprised of a 0.3% increase resulting from a decrease in
finance charge revenues with no corresponding decrease in cost of
sales and a small deterioration in gross margin which were
partially offset by a decrease in buying costs.
Selling, general and administrative expenses were $584 million in
the 1998 first quarter, compared with $555 million in the 1997
first quarter, a 5.3% increase. The increase is primarily related
to higher sales volume. Selling, general and administrative
expenses, as a percent of revenues, decreased 0.1% for the first
quarter of 1998 as compared with 1997 mainly due to a decrease in
bad debt expense related to lower delinquency and charge-off rates
combined with decreased use of registrant's proprietary credit
cards.
Net interest expense for the first quarter 1998 and 1997 was as
follows (millions):
1998 1997
Interest expense $ 76 $ 83
Interest income (6) (4)
Capitalized interest (3) (3)
Net Interest Expense $ 67 $ 76
Net interest expense decreased in the 1998 first quarter due to
lower average long-term debt outstanding and higher average cash
equivalents. The higher average cash equivalents resulted
primarily from lower accounts receivable levels due to decreased
use of registrant's proprietary credit cards. As a percent of
revenues, net interest expense for the first quarter of 1998
decreased 0.4% from the first quarter of 1997.
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Operating results for the trailing years were as follows (millions,
except per share):
52 Weeks Ended
May 2, May 3,
1998 1997
Net retail sales $ 12,490 $ 11,708
Revenues $ 12,827 $ 12,164
Net earnings $ 791 $ 749
Diluted earnings per share $ 3.17 $ 2.84
PART II - OTHER INFORMATION
Item 1 - 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 2 - Changes in Securities - None.
Item 3 - Defaults Upon Senior Securities - None.
Item 4 - Submission of Matters to a Vote
of Security Holders - None.
Item 5 - Other Information - None.
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
(3) - By-Laws of Registrant, as amended
(11) - Computation of Net Earnings Per Share
(12) - Computation of Ratio of Earnings to Fixed Charges
(27) - Financial Data Schedule
(b) Reports on Form 8-K
A report dated February 12, 1998 which contained a press
release announcing registrant's annual results which included
Condensed Consolidated Results of Operations (for the fiscal
year and fourth quarter) a Condensed Consolidated Balance
Sheet and Notes to Condensed Consolidated Financial
Information as of and for the fiscal quarter and years ending
January 31, 1998 and February 1, 1997.
A report dated March 20, 1998 which contained a press release
announcing registrant's declaration of a new quarterly
dividend and the date of the annual meeting of shareowners.
A report dated April 22, 1998, which contained information
concerning debt ratings and incorporated by reference
registrant's Annual Report on Form 10-K for the fiscal year
ended January 31, 1998.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
THE MAY DEPARTMENT STORES COMPANY
(Registrant)
Date: June 9, 1998 /s/ John L. Dunham
John L. Dunham
Executive Vice President and
Chief Financial Officer
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BY-LAWS
OF
THE MAY DEPARTMENT STORES COMPANY
(a Delaware Corporation)
(as amended through May 22, 1998)
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ARTICLE I.
MEETINGS OF SHAREOWNERS
Section 1. The annual meeting of shareowners shall be
held on such date (not more than thirteen months after the most
recent annual meeting) and at such place and time as may be fixed
by the board and stated in the notice thereof, for the purpose of
the election of directors and for the transaction of only such
other business as is properly brought before the meeting in
accordance with these By-laws. The annual meeting may be
adjourned from day to day until its business is completed.
Section 2. Written notice of the date, time and place of
each annual meeting of the shareowners shall be mailed not less
than ten nor more than sixty days previous to the date of such
meeting, postage prepaid, to each shareowner of record in the
Company entitled to vote thereat, at such address as shall appear
on the books of the Company.
Section 3. The business transacted at any special
meeting of shareowners shall be confined to the object or objects
specified in the notice therefor, and matters germane thereto.
Section 4. Written notice of every special meeting of
shareowners stating the date, time, place and object thereof,
shall be mailed, postage prepaid, not less than ten nor more than
sixty days before the date specified for such meeting to each
shareowner of record in the Company entitled to vote thereat, at
such address as shall appear on the books of the Company.
Section 5. Except as otherwise provided in the
Certificate of Incorporation, and subject to the provisions and
limitations therein contained, at all meetings of shareowners
each shareowner of record shall be entitled to cast one vote for
each share appearing on the stock book of the Company as standing
in his name, which vote may be cast either in person or by proxy,
or power of attorney, but no proxy shall be voted on after three
years from its date.
Section 6. Whenever a shareowner shall vote by proxy,
the authority or proxy shall be in writing, subscribed by the
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shareowner in whose name the said stock shall stand on the books
of the Company, and shall, if requested by any shareowner, or
proxy, be exhibited at the time of such meeting to the presiding
officer and filed by him with the secretary of the Company.
Section 7. No shareowner who is in default in the
payment of any part of his subscription for any stock of the
Company or who is disqualified by law, shall be entitled to vote
at any meeting of shareowners.
Section 8. Every pledgor of stock standing in his name
on the books of the Company shall be deemed the owner thereof.
Section 9. Except as otherwise provided by law, the
Certificate of Incorporation or these By-laws, the owners of not
less than a majority of the shares issued and outstanding,
entitled to vote thereat, present in person or by proxy or power
of attorney, are requisite for and shall constitute a quorum at
all meetings of shareowners for the transaction of business,
including the election of directors. The owners of a majority of
the shares present in person or by proxy or power of attorney at
any meeting, whether or not constituting a quorum, shall have
power to adjourn the meeting from time to time (provided that
each adjournment shall be for a period not exceeding twenty
days), without notice other than announcement at the meeting, and
at any adjourned meeting, any business may be transacted which
might have been transacted at the meeting as originally notified.
Section 10. The board of directors, in advance of the
meeting of shareowners, shall appoint not less than two persons
who are not directors to serve as inspectors of election. It
shall be their duty to receive and canvass the votes for election
of directors and on any proposal voted on by ballot and to
certify the results to the chairman. In all cases where the
right to vote upon any share of the Company shall be questioned,
it shall be the duty of the inspectors to examine the stock
ledger of the Company as evidence of the shares held, and all
shares that appear standing thereon in the name of any person or
persons may be voted upon by such person or persons. Each
inspector of election before entering upon the duties of such
office shall take and subscribe the following oath before an
officer authorized by law to administer oaths: "I do solemnly
swear that I will execute the duties of an inspector of the
election now to be held with strict impartiality and according to
the best of my ability."
Section 11. To be properly brought before the annual or
any special shareowners' meeting, business must be either (a)
specified in the notice of meeting (or any supplement thereto)
given by or at the direction of the board, (b) otherwise properly
brought before the meeting by or at the direction of the board or
(c) otherwise properly brought before the meeting by a
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shareowner. In addition to any other applicable requirements,
for business to be properly brought before the annual or any
special shareowners' meeting by a shareowner, the shareowner must
have given timely notice thereof in writing to the secretary of
the Company. To be timely, a shareowner's notice must be
delivered to or mailed and received at the principal executive
offices of the Company not less than 75 days nor more than 90
days prior to the meeting; provided, however, that in the event
that less than 90 days' notice or prior public disclosure of the
date of the meeting is given or made to shareowners, notice by
the shareowner to be timely must be so received not later than
the close of business on the 15th day following the day on which
such notice of the date of the meeting was mailed or such public
disclosure was made, whichever first occurs. Such shareowner's
notice to the secretary shall set forth as to each matter the
shareowner proposes to bring before the meeting (i) a brief
description of the business desired to be brought before the
meeting and the reasons for conducting such business at the
meeting, (ii) the name and record address of the shareowner
proposing such business, (iii) the class and number of shares of
common stock of the Company which are beneficially owned by the
shareowner and (iv) any material interest of the shareowner in
such business.
Notwithstanding anything in the By-laws to the contrary, no
business shall be conducted at the annual or any special meeting
except in accordance with the procedures set forth in this
Section 11, provided, however, that nothing in this Section 11
shall be deemed to preclude discussion by any shareowner of any
business properly brought before the meeting.
The chairman of the meeting shall, if the facts warrant,
determine and declare to the meeting that business was not
properly brought before the meeting in accordance with the
provisions of this Section 11, and if he should so determine and
declare, any such business not properly brought before the
meeting shall not be transacted.
Section 12. Except as provided in Section 1 of Article
II, only persons who are nominated in accordance with the
following procedures shall be eligible for election as directors.
Nominations of persons for election to the board of directors of
the Company at the annual meeting may be made at that meeting by
or at the direction of the board of directors, by any nominating
committee or person appointed by the board of directors or by any
shareowner of the Company entitled to vote for the election of
directors at the meeting who complies with the notice procedures
set forth in this Section 12. Such nominations, other than those
made by or at the direction of the board of directors, shall be
made pursuant to timely notice in writing to the secretary of the
Company. To be timely, a shareowner's notice must be delivered
to or mailed and received at the principal executive offices of
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the Company not less than 75 days nor more than 90 days prior to
the meeting; provided, however, that in the event that less than
90 days' notice or prior public disclosure of the date of the
meeting is given or made to shareowners, notice by the shareowner
to be timely must be so received not later than the close of
business on the 15th day following the day on which such notice
of the date of the meeting was mailed or such public disclosure
was made, whichever first occurs. Such shareowner's notice to
the secretary shall set forth (a) as to each person whom the
shareowner proposes to nominate for election or re-election as a
director, (i) the name, age, business address and residence
address of the person, (ii) the principal occupation or
employment of the person, (iii) the class and number of shares of
common stock of the Company which are beneficially owned by the
person, and (iv) any other information relating to the person
that is required to be disclosed in solicitations for proxies for
election of directors pursuant to Section 14 of the Securities
Exchange Act of 1934, as amended; and (b) as to the shareowner
giving the notice (i) the name and record address of the
shareowner and (ii) the class and number of shares of common
stock of the Company which are beneficially owned by the
shareowner. Such notice shall be accompanied by the executed
consent of each nominee to serve as a director if so elected. The
Company may require any proposed nominee to furnish such other
information as may reasonably be required by the Company to
determine the eligibility of such proposed nominee to serve as a
director of the Company.
The chairman of the meeting shall, if the facts warrant,
determine and declare to the meeting that a nomination was not
made in accordance with the foregoing procedure, and if he should
so determine and declare, the defective nomination shall be
disregarded.
ARTICLE II.
THE BOARD OF DIRECTORS
Section 1. The business and affairs of the Company shall
be managed and conducted by or under the direction of a board of
fourteen directors.
Newly created directorships resulting from an increase in
the number of directors and vacancies occurring in the board of
directors for any reason may be filled by vote of a majority of
the directors then in office, although less than a quorum or by
the sole remaining director. A director elected to fill a newly
created directorship, and a director elected to fill a vacancy,
shall hold office for the remainder of the term of the Class to
which such director was elected and until his successor shall be
chosen and qualified in his stead.
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Section 2. The directors shall prescribe rules and
regulations for voting at all elections and shall cause the
result of each such election to be filed with the minutes of the
proceedings of the board of directors, or of any committee of the
board of directors appointed in accordance with Section 12 of
this Article II.
Section 3. The board of directors at its first meeting
after each annual meeting of shareowners, or at any subsequent
meeting at which such action may be appropriate, shall elect a
chairman of the executive committee, a chairman of the board, a
president, a vice chairman of the board, one or more vice
presidents, a secretary, a controller, and a treasurer, and such
other officers as it may determine. The board of directors shall
by resolution provide for the authority and duties of any and all
such officers in the management of the Company to the extent not
so provided in these By-laws.
The dates of the commencement and expiration of the term of
office of any such officer may be fixed by the board of directors
at the time of his election; but unless so fixed, such officer
shall hold office from the date of his election until the first
meeting of the board of directors following the next ensuing
annual meeting of shareowners, or until his successor is elected.
The chairman of the executive committee, the chairman of the
board, the president and the vice chairman of the board shall be
members of the board of directors. No other officers need be
members of the board of directors.
Any two offices, except the offices of president and
secretary, may be held by the same person.
Section 4. If for any reason the election of officers
shall not be held on or as of the date fixed therefor, the board
of directors shall designate another day for such election.
Section 5. The board of directors may also appoint such
additional officers and agents, including additional vice
presidents, one or more assistant treasurers, one or more
assistant secretaries and one or more assistant controllers, as
it may from time to time deem advisable, and may remove any of
the persons so appointed at its pleasure, and may, in its
discretion, contract for a definite period of employment for any
officer or agent upon such terms as it may deem advisable. The
board of directors may by resolution provide for the powers and
duties of any and all such additional officers and agents so
appointed.
Section 6. Except as may be otherwise specifically
provided by law, the Certificate of Incorporation or these
By-laws, at all meetings of the board of directors, a majority of
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the entire board of directors shall constitute a quorum for the
transaction of business and the act of a majority of the
directors present at any meeting at which there is a quorum shall
be the act of the board of directors. If a quorum shall not be
present at any meeting of the board of directors, the directors
present thereat may adjourn the meeting from time to time,
without notice other than announcement at the meeting, until a
quorum shall be present.
All matters coming before the board of directors shall,
except as otherwise provided by the General Corporation Law of
the State of Delaware ("GCL") or by these By-laws, be determined
by a majority vote of the members present, provided that a quorum
shall be present.
Any one or more members of the board of directors or of any
committee thereof may participate in any meeting of such board or
of such committee thereof by means of a conference telephone or
similar communications equipment allowing all persons
participating in the meeting to hear each other at the same time.
Participation by such means shall constitute presence in person
at any such meeting.
Section 7. The directors may hold their meetings and
cause the books of the Company (except the Stock and Transfer
Books) to be kept within or without the State of Delaware, at
such place or places as they may from time to time determine.
Section 8. Subject to Section 15 of this Article II,
there shall be an annual meeting of the board of directors on the
day of the annual meeting of shareowners in each year or as soon
thereafter as convenient, such annual meeting to be at such place
and time (and, if applicable, on such date) as the chairman of
the board shall designate by written notice to the directors, and
regular meetings shall be held on such dates and at such times
and places either as the directors shall by resolution provide or
as the chairman of the board shall designate by written notice to
the directors. Except as above provided, no notice of said annual
meeting or such regular meetings of the board of directors need
be given.
Section 9. Special meetings of the board of directors
may be called by the chairman of the executive committee, the
chairman of the board, the president, the vice chairman of the
board, or the secretary or the treasurer. Notice thereof stating
the place, date and hour of the meeting shall be given to each
director either by mail not less than forty-eight (48) hours
before the date of the meeting, by telephone or facsimile
transmission not later than the day preceding the date of such
meeting, or on such shorter notice as the person or persons
calling such meeting may deem necessary or appropriate in the
circumstance. Special meetings shall be called by one of the
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foregoing officers in like manner on the written request of five
directors, specifying the object or objects of such special
meeting. In the event that one of the foregoing officers shall
fail to call a meeting within two days after receipt of such
request, such meeting may be called in like manner by the
directors making such request.
Section 10. If any vacancy shall occur in the board of
directors by reason of death, removal, resignation or otherwise,
such vacancy may be filled by the vote of a majority of the
remaining directors then in office, although less than a quorum,
or by a sole remaining director.
Section 11. Any director may resign his office at any
time, such resignation to be made in writing and delivered to the
chairman of the executive committee, the chairman of the board,
the president, the vice chairman of the board, or the secretary.
Section 12. The board of directors shall appoint an
executive committee, which shall consist of one or more directors
and may from time to time designate the number of such executive
committee members that shall constitute a quorum and may provide
for the holding of regular meetings thereof. In the absence of
any such designation, a majority of the members of the executive
committee shall constitute a quorum. To the extent permitted by
law (including, without limitation, Section 141(c)(2) of the GCL)
and by the Certificate of Incorporation, the executive committee
shall have and may exercise all the powers vested in the board of
directors during the intervals between the meetings of the board
of directors. The affirmative vote of a majority of those
present at a meeting of the executive committee, at which a
quorum is present, shall be necessary for the adoption of any
resolution. The executive committee shall, whenever called upon,
report to the board of directors and be subject to its direction,
and the board of directors may remove members and appoint new
members thereof to fill vacancies therein, and may increase or
decrease the membership thereof. Meetings of the executive
committee shall be called by the chairman of the executive
committee or, upon the request of not less than two members, by
the secretary by notice deposited in the mail, sent by telegram
or delivered by hand not less than two days prior to the date of
such meeting. Waiver of notice by any member of the executive
committee, whether before or after the meeting to which such
waiver relates, shall be equivalent to notice.
The board of directors may appoint such other committees,
each consisting of one or more directors, as the board of
directors may at any time and from time to time deem appropriate;
subject to the limitations contained in Section 141(c)(2) of the
GCL, the board of directors from time to time may by resolution
prescribe for each such committee such duties, powers and
authority as the board of directors shall deem appropriate.
7
<PAGE>
Section 13. In addition to the powers by these By-laws
expressly conferred upon them, the board of directors may
exercise such powers and do such lawful acts and things as are
not prohibited by law or required by the Certificate of
Incorporation or by these By-laws to be exercised and done by the
shareowners.
Section 14. Directors as such may be paid such
compensation as the board of directors may from time to time
determine. Nothing herein contained shall be construed to
preclude any director from serving the Company in any other
capacity and receiving compensation therefor.
Section 15. Anything in this Article II to the contrary
notwithstanding, any action required or permitted to be taken by
the board of directors at any regular, annual or special meeting
thereof, or by any committee thereof, may be taken without a
meeting if all members of the board of directors or such
committee consent in writing to the adoption of a resolution
authorizing the action. The resolution and the written consents
thereto by the members of the board of directors or such
committee shall be filed with the minutes of the proceedings of
the board of directors or such committee.
Section 16. No contract or transaction between the
Company and one or more of its directors or officers, or between
the Company and any other corporation, partnership, association,
or other organization in which one or more of its directors or
officers are directors or officers, or have a financial interest,
shall be void or voidable solely for this reason, or solely
because the director or officer is present at or participates in
the meeting of the board of directors or committee thereof which
authorizes the contract or transaction, or solely because his or
their votes are counted for such purpose if (i) the material
facts as to his or their relationship or interest and as to the
contract or transaction are disclosed or are known to the board
of directors or the committee, and the board of directors or
committee in good faith authorizes the contract or transaction by
the affirmative votes of a majority of the disinterested
directors, even though the disinterested directors be less than a
quorum; or (ii) the material facts as to his or their
relationship or interest and as to the contract or transaction
are disclosed or are known to the shareowners entitled to vote
thereon, and the contract or transaction is specifically approved
in good faith by vote of the shareowners; or (iii) the contract
or transaction is fair as to the Company as of the time it is
authorized, approved or ratified, by the board of directors, a
committee thereof or the shareowners. Common or interested
directors may be counted in determining the presence of a quorum
at a meeting of the board of directors or of a committee which
authorizes the contract or transaction.
8
<PAGE>
ARTICLE III.
ELECTED OFFICERS
The elected officers of the Company shall be the chairman of
the executive committee, the chairman of the board, the
president, the vice chairman of the board, the secretary, the
treasurer, the controller, and such other officers of the Company
as shall be elected by the board of directors.
ARTICLE IV.
AUTHORITY AND DUTIES OF OFFICERS
Each officer of the Company shall be subject to the control
of the board of directors and shall have such duties in the
management of the Company as may be provided by appropriate
resolution of the board of directors and/or provided in these
By-laws.
ARTICLE V.
DUTIES OF OFFICERS MAY BE DELEGATED
In the case of the absence of any officer of the Company, or
for any other reason that the board of directors may deem
sufficient, the board of directors may delegate the powers or
duties of such officer to any other officer or to any other
director, or to any other person for the time being.
ARTICLE VI.
INDEMNIFICATION
Section 1. The Company shall indemnify to the fullest
extent authorized or permitted by law (as now or hereafter in
effect) any person made, or threatened to be made a party to or
otherwise involved in any action or proceeding (whether civil or
criminal or otherwise) by reason of the fact that he, his
testator or intestate, is or was a director or officer of the
Company or by reason of the fact that such director or officer,
at the request of the Company, is or was serving any other
corporation, partnership, joint venture, trust, employee benefit
plan or other enterprise, in any capacity. Nothing contained
herein shall affect any rights to indemnification to which
employees other than directors and officers may be entitled by
law. No amendment or repeal of this Section 1 shall apply to or
have any effect on any right to indemnification provided
hereunder with respect to any acts or omissions occurring prior
to such amendment or repeal.
9
<PAGE>
Section 2. The Company may purchase and maintain
insurance on behalf of any person who is or was a director,
officer, employee or agent of the Company or was serving at the
request of the Company as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise against any liability
asserted against him and incurred by him in any such capacity, or
arising out of his status as such, whether or not the Company
would have the power to indemnify him against such liability
under the provisions of the law. The Company may create a trust
fund, grant a security interest and/or use other means
(including, without limitation, letters of credit, surety bonds
and/or other similar arrangements), as well as enter into
contracts providing for indemnification to the fullest extent
authorized or permitted by law and including as part thereof any
or all of the foregoing, to ensure the payment of such sums as
may become necessary to effect full indemnification.
Section 3. The rights to indemnification conferred in
this Article VI shall not be exclusive of any other right which
any person may have or hereafter acquire under any statute, the
Certificate of Incorporation of the Company, these By-laws or any
agreement, vote of stockholders or directors or otherwise.
ARTICLE VII.
POWER OF OFFICERS TO CONTRACT, ETC.
Section 1. All contracts and agreements, purporting to
be the act of this Company shall be signed by such officer(s) of
the Company or other person(s) as may be designated by resolution
of the board of directors, in order that the same shall be
binding upon the Company.
Section 2. The board of directors may, from time to
time, authorize any officer or officers of the Company, or any
other person or persons, to sign, countersign and endorse bills
of exchange, checks, notes, leases, deeds and other instruments,
agreements and documents in behalf of the Company.
ARTICLE VIII.
ORDER OF BUSINESS
Section 1. The order of business at all meetings of the
shareowners shall be as follows:
1. The election of directors.
2. Other matters to be acted upon.
3. The reports of officers.
10
<PAGE>
4. Election of inspectors of election.
The order of business at any meeting may be changed by a
vote of the owners of a majority of the shares represented at
such meeting.
Section 2. The order of business at meetings of the
board of directors shall be as the directors may determine.
ARTICLE IX.
SHARES OF STOCK
Section 1. The interest of each shareowner shall be
evidenced by a certificate or certificates for shares of stock of
the Company in such form as the board of directors may from time
to time prescribe. The certificates of stock shall be signed by
the chairman of the executive committee, the chairman of the
board, the president, the vice chairman of the board, or a vice
president and the treasurer or an assistant treasurer or the
secretary or an assistant secretary and sealed with the seal of
the Company, and shall be countersigned and registered in such
manner, if any, as the board of directors may by resolution
prescribe; provided that, in case such certificates are required
by such resolution to be signed by a transfer agent or transfer
clerk and by a registrar, the signatures of the above designated
officers and the seal of the Company upon such certificates may
be facsimiles, engraved or printed. In case any such officer who
has signed or whose facsimile signature has been placed upon such
certificate shall have ceased to be such before such certificate
is issued, it may be issued with the same effect as if such
officer had not ceased to be such at the date of its issue.
Section 2. Shares of stock of the Company shall be
transferred only on the books of the Company, by the holder
thereof in person or by his attorney, upon surrender for
cancellation of certificates for the same number of shares, with
an assignment and power of transfer endorsed thereon or attached
thereto, duly executed, with such proof of the authenticity of
the signature as the Company or its agents may reasonably
require.
Section 3. The board of directors may direct a new
certificate or certificates of stock to be issued in the place of
any certificate or certificates theretofore issued and alleged to
have been lost, stolen or destroyed; but the board of directors,
when authorizing the issue of such new certificate or
certificates, may in its discretion require the owner of the
stock represented by the certificate so lost, stolen or
destroyed, or his legal representatives, to execute and deliver
to the Company a bond with one or more sureties, in such sum as
11
<PAGE>
it may direct, indemnifying the Company and its agents against
any claim that may be made against it by reason of the issue of
such new certificate. The board of directors, however, may
refuse to authorize any such new certificate except upon the
order of a court having jurisdiction in such matter.
Section 4. The board of directors may from time to time
appoint such transfer agents and registrars of shares as it may
deem advisable and may define their powers and duties.
ARTICLE X.
DIVIDENDS
Subject to the limitations and provisions set forth in the
Certificate of Incorporation of the Company, dividends on the
stock of the Company shall be paid at such times and in such
amounts as the board of directors shall, from time to time,
determine.
ARTICLE XI.
CORPORATE SEAL
The corporate seal shall consist of the words "THE MAY
DEPARTMENT STORES COMPANY" arranged in a circular around the
words and figures "Corporate Seal -- Delaware" and shall be kept
by the secretary in the office of the Company. The impression of
the seal may be made and attested upon contracts, certificates of
stock and other papers requiring the seal of the Company, when
authorized by resolution of the board of directors, by the
secretary, or by an assistant secretary or by any other officer
of the Company, and the board of directors may authorize the use
of a duplicate corporate seal by any assistant secretary or other
officer of the Company.
ARTICLE XII.
FISCAL YEAR
The fiscal year of the Company shall end on the Saturday
closest to the 31st day of January in each year.
ARTICLE XIII.
AMENDMENTS
In furtherance and not in limitation of the powers conferred
by statute, the board of directors, by vote of two-thirds of the
entire board of directors of the Company, is expressly authorized
to adopt, repeal, alter, amend or rescind the foregoing By-laws
at any meeting of the board of directors, provided that the
12
<PAGE>
substance of the proposed amendment or addition or the subject
matter thereof shall have been submitted in writing at a
preceding meeting of the board of directors or notice thereof
shall have been given to the directors; waiver of notice by any
director being deemed equivalent to such notice to him.
The By-laws may also be amended at any general or special
meeting ofshareowners, provided notice of the proposed amendment
shall have been given in the call for such meeting.
ARTICLE XIV.
WAIVER OF NOTICE
Any notice required to be given by law or by the Certificate
of Incorporation or by these By-laws may be waived in writing,
and such waiver may be made either before or after the act or
event to which the same relates.
13
<PAGE> Exhibit 11
THE MAY DEPARTMENT STORES COMPANY
COMPUTATION OF NET EARNINGS PER SHARE
13 Weeks Ended
(millions, except per share) May 2, May 3,
1998 1997
Net earnings before extraordinary loss $ 110 $ 98
ESOP Preferred Dividends, net of tax
benefit on unallocated shares (5) (5)
Net earnings available for common shareowners
before extraordinary loss 105 93
Extraordinary loss - (4)
Total net earnings available for
common shareowners $ 105 $ 89
Average common shares outstanding 231.1 235.5
Basic earnings per share before
extraordinary loss $ 0.45 $ 0.39
Extraordinary loss - (.01)
Total Basic earnings per share $ 0.45 $ 0.38
Diluted Computation:
Adjusted net earnings available before
extraordinary loss $ 105 $ 93
Earnings impact of assumed conversion of
ESOP Preference Shares, net of tax
benefit on unallocated common shares 4 4
Adjusted net earnings available
before extraordinary loss - DILUTED 109 97
Extraordinary loss - (4)
Total adjusted net earnings
available - DILUTED $ 109 $ 93
Average common shares outstanding 231.1 235.5
ESOP Preference Shares 14.9 15.4
Common Share equivalents (CSE's) attributable
to the treasury stock method 1.9 1.4
Average Common Stock and CSE's 247.9 252.3
Diluted earnings per share before
extraordinary loss $ 0.44 $ 0.38
Extraordinary loss - (.01)
Total Diluted Earnings per share $ 0.44 $ 0.37
<PAGE>
<TABLE>
<CAPTION>
Exhibit 12
THE MAY DEPARTMENT STORES COMPANY AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
FOR THE FIVE FISCAL YEARS ENDED JANUARY 31, 1998 AND FOR THE
THIRTEEN WEEKS ENDED MAY 2, 1998, AND MAY 3, 1997
13 Weeks Ended Fiscal Year Ended
May 2, May 3, Jan. 31, Feb. 1, Feb. 3, Jan. 28, Jan. 29,
1998 1997 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings Available for Fixed Charges:
Pretax earnings from continuing
operations $ 183 $ 163 $ 1,279 $ 1,232 $ 1,160 $ 1,079 $ 957
Fixed charges (excluding interest
capitalized and pretax preferred
stock dividend requirements) 86 93 363 346 317 293 305
Dividends on ESOP Preference Shares (6) (7) (26) (26) (28) (28) (28)
Capitalized interest amortization 2 2 6 6 5 4 4
265 251 1,622 1,558 1,454 1,348 1,238
Fixed Charges:
Gross interest expense (a) $ 84 $ 91 $ 353 $ 341 $ 316 $ 289 $ 295
Interest factor attributable to
rent expense 6 6 23 22 20 19 20
90 97 376 363 336 308 315
Ratio of Earnings to Fixed Charges 3.0 2.6 4.3 4.3 4.3 4.4 3.9
(a) Represents interest expense on long-term and short-term debt, ESOP debt and amortization of
debt discount and debt issue expense.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE MAY
DEPARTMENT STORES COMPANY FORM 10-Q FOR THE QUARTER ENDED MAY 2, 1998 AND IS
QUALIFIED IN ITS ENTIRETY TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-30-1999
<PERIOD-END> MAY-02-1998
<CASH> 13
<SECURITIES> 269
<RECEIVABLES> 1,960
<ALLOWANCES> 83
<INVENTORY> 2,752
<CURRENT-ASSETS> 4,989
<PP&E> 6,896
<DEPRECIATION> 2,657
<TOTAL-ASSETS> 10,048
<CURRENT-LIABILITIES> 1,922
<BONDS> 3,470
0
0
<COMMON> 0
<OTHER-SE> 3,817
<TOTAL-LIABILITY-AND-EQUITY> 10,048
<SALES> 2,732
<TOTAL-REVENUES> 2,817
<CGS> 1,983
<TOTAL-COSTS> 1,983
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 67
<INCOME-PRETAX> 183
<INCOME-TAX> 73
<INCOME-CONTINUING> 110
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 110
<EPS-PRIMARY> 0.45
<EPS-DILUTED> 0.44
</TABLE>
