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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 1, 1999
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.
334,143,784 shares of common stock, $.50 par value, as of May 1,
1999.
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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 1, May 2, Jan. 30,
ASSETS 1999 1998 1999
Current Assets:
Cash and cash equivalents $ 152 $ 282 $ 112
Accounts receivable, net 1,906 1,877 2,144
Merchandise inventories 2,930 2,752 2,655
Other current assets 69 78 76
Total Current Assets 5,057 4,989 4,987
Property and Equipment, at cost 7,356 6,896 7,260
Accumulated Depreciation (2,850) (2,657) (2,747)
Net Property and Equipment 4,506 4,239 4,513
Goodwill and other assets 1,013 820 1,033
Total Assets $ 10,576 $ 10,048 $ 10,533
LIABILITIES AND SHAREOWNERS' EQUITY
Current Liabilities:
Current maturities of
long-term debt $ 104 $ 248 $ 98
Accounts payable 1,238 1,113 1,017
Accrued expenses 676 573 755
Income taxes 78 58 189
Total Current Liabilities 2,096 1,992 2,059
Long-term Debt 3,791 3,470 3,825
Deferred Income Taxes 489 458 482
Other Liabilities 306 273 309
ESOP Preference Shares 325 335 327
Unearned Compensation (277) (297) (305)
Shareowners' Equity 3,846 3,817 3,836
Total Liabilities and
Shareowners' Equity $ 10,576 $ 10,048 $ 10,533
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 1, May 2,
1999 1998
Net Retail Sales $ 2,941 $ 2,722
Revenues $ 3,053 $ 2,817
Cost of sales 2,150 1,983
Selling, general and
administrative expenses 629 584
Interest expense, net 71 67
Earnings before income taxes 203 183
Provision for income taxes 81 73
Net Earnings $ 122 $ 110
Basic earnings per share $ .35 $ .30
Diluted earnings per share $ .34 $ .29
Dividends paid per common share $ .22-1/4 $ .21-1/6
Weighted average shares outstanding:
Basic 334.7 346.6
Diluted 358.6 371.9
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 1, May 2,
1999 1998
Operating Activities:
Net earnings $ 122 $ 110
Depreciation and amortization 111 101
Decrease in working capital (excluding
cash, cash equivalents and short-term
debt) 3 83
Other, net 18 3
254 297
Investing Activities:
Net additions to property and equipment (97) (110)
(97) (110)
Financing Activities:
Net repayments of long-term debt (2) (1)
Net purchases of common stock (36) (25)
Dividend payments, net of tax benefit (79) (78)
(117) (104)
Increase in Cash and Cash Equivalents $ 40 $ 83
Cash paid during the period:
Interest $ 70 $ 76
Income Taxes 181 146
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 25-31) in the 1998 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 1999 and 1998.
Common Stock Repurchase Program. During the first quarter of 1999,
May's board of directors authorized a common stock repurchase
program of up to $500 million. As of May 1, 1999, May has
repurchased approximately $33 million of common stock, or
approximately .8 million shares at an average price of $40 per
share, under this program. Such purchases are being made in the
open market as market conditions and regulatory rules allow.
Common Stock Split. During the first quarter of 1999, the board of
directors approved a three-for-two common stock split for
distribution on March 22, 1999, equivalent to one share of common
stock for each two shares of common stock held by shareowners of
record on March 1, 1999. All share and per share data included in
this report have been restated to reflect the stock split.
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 1999
and 1998.
May 1, Jan. 30,
1999 1999
Financial Position
Current assets $ 5,052 $ 4,984
Noncurrent assets 5,588 5,557
Current liabilities 2,095 2,083
Noncurrent liabilities 7,786 7,815
13 Weeks Ended
May 1, May 2,
1999 1998
Operating Results
Revenues $ 3,053 $ 2,817
Cost of sales 2,150 1,983
Net earnings 75 63
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Earnings per share. The following tables reconcile net earnings
and weighted average shares outstanding to amounts used to
calculate basic and diluted earnings per share ("EPS") for the
periods shown (millions, except per share).
13 Weeks Ended
May 1, 1999 May 2, 1998
Earnings Shares EPS Earnings Shares EPS
Net earnings $ 122 $ 110
ESOP preference
shares' dividends (5) (5)
Basic EPS 117 334.7 $ 0.35 105 346.6 $ 0.30
ESOP preference
shares 4 21.7 4 22.5
Assumed exercise of
options (treasury
stock method) - 2.2 - 2.8
Diluted EPS $ 121 358.6 $ 0.34 $ 109 371.9 $ 0.29
Reclassifications. Certain prior period amounts have been
reclassified to conform with current year presentation.
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations
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 1, 1999 8.0% 3.5%
Store-for-store sales represent sales of those stores open during
both periods. May discontinued its consumer electronics business
at the beginning of fiscal 1999. If consumer electronics sales had
been excluded from net retail sales in both years, the increase in
total sales and store-for-store sales would have been about 1%
higher.
The following table presents the components of costs and expenses,
as a percent of revenues, for the first quarter of 1999 and 1998.
Revenues include finance charge revenues, all sales from all stores
operating during the period and consumer electronics liquidation
sales in the first quarter of 1999.
1999 1998
Revenues 100.0% 100.0%
Cost of sales 70.4 70.4
Selling, general and
administrative expenses 20.6 20.7
Interest expense, net 2.3 2.4
Earnings before income taxes 6.7 6.5
Provision for income taxes 40.0* 40.0*
Net Earnings 4.0% 3.9%*
*-Percent represents effective income tax rate.
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Cost of sales was $2,150 million in the 1999 first quarter, up 8.4%
from $1,983 million in the 1998 first quarter. The overall
increase is primarily related to higher sales. As a percent of
revenues, cost of sales remained constant compared with the first
quarter of 1998. A small decline in gross margin resulting from
higher markdowns was offset by an improvement in buying and
occupancy expenses.
Selling, general and administrative expenses were $629 million in
the 1999 first quarter, compared with $584 million in the 1998
first quarter, a 7.7% 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 1999 as compared with 1998 mainly due to improved
expense leverage as a result of store-for-store sales increases.
Net interest expense for the first quarter 1999 and 1998 was as
follows (millions):
1999 1998
Interest expense $ 78 $ 76
Interest income (4) (6)
Capitalized interest (3) (3)
Net Interest Expense $ 71 $ 67
Net interest expense increased in the 1999 first quarter due to
both higher average long-term debt outstanding and lower average
cash equivalents.
Operating results for the trailing years were as follows (millions,
except per share):
52 Weeks Ended
May 1, May 2,
1999 1998
Net retail sales $ 13,279 $ 12,439
Revenues $ 13,649 $ 12,827
Net earnings $ 861 $ 791
Diluted earnings per share $ 2.35 $ 2.10
Financial Condition
Key financial ratios for the periods indicated are as follows:
May 1, May 2, Jan. 30,
1999 1998 1999
Current Ratio 2.4 2.5 2.4
Debt-Capitalization Ratio 45% 44% 45%
Fixed Charge Coverage* 4.5x 4.2x 4.5x
* Fixed charge coverage, which is presented for the 52 weeks
ended May 1, 1999, May 2, 1998 and January 30, 1999, 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.
Year 2000 Readiness. In 1996, May began assessing and preparing its
critical information systems, communications networks, equipment,
and facilities for the year 2000. As of the end of fiscal 1998, May
completed this assessment and substantially completed the coding,
testing, and installation of necessary modifications. May is
testing certain interfaces with some merchandise and service
vendors for year 2000 compliance through July of 1999. Since May is
substantially complete with its modifications, the company does not
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expect any material disruption of business. Through participation
in a National Retail Federation sponsored survey and other means,
May is receiving assurances from its primary merchandise vendors
and service providers regarding their year 2000 readiness.
May developed and maintains most of its application systems
internally. In fiscal 1998, May used approximately 15% of its
information systems resources to address companywide year 2000
issues. May's use of outside consultants and contractors to address
year 2000 compliance has not been significant. The cost of the
company's year 2000 effort will total approximately $6 million.
May incurred and expensed substantially all these costs prior to
fiscal 1999.
Under the most reasonably likely worst case scenario, May does not
anticipate more than isolated, temporary disruptions of its
operations caused by year 2000 failures affecting either the
company or its primary merchandise and service vendors. May expects
that its technically trained personnel, working in cooperation with
key vendors and service providers, should be able to address year
2000 system issues that may arise. To the extent May's vendors are
unable to deliver products and provide services due to their own
year 2000 issues, May believes it will generally have alternative
sources for comparable products and services and does not expect to
experience any material business disruptions. Many risks, however,
such as the failure to perform by public utilities,
telecommunications providers, and financial institutions, and the
impact of the year 2000 issue on the economy as a whole, are
outside May's control and could adversely affect the company and
its ability to conduct business. While May has made a significant
effort to address all anticipated risks within its control, this is
an event without precedent; consequently, there can be no assurance
that the year 2000 issue will not have a material adverse impact on
May's financial condition, operating results, or business.
Forward-looking Statements. Management's Discussion and Analysis
contains forward-looking statements as defined by the Private
Securities Litigation Reform Act of 1995. While such statements
reflect all available information and management's judgment and
estimates of current and anticipated conditions and circumstances,
prepared with the assistance of specialists within and outside the
company, many factors outside of May's control exist that have an
impact on its operations. Such factors include, but are not limited
to: competitive changes; general and regional economic conditions;
consumer preferences and spending patterns; availability of
adequate locations for building or acquiring new stores; ability to
hire and retain qualified associates; possible widespread inability
to perform due to year 2000 issues by merchandise vendors, public
utilities, telecommunications providers, and financial
institutions; and the general economic impact of the year 2000
issues. Because of these factors, actual performance could differ
materially from that described in the forward-looking statements.
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.
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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
(3a) - Amended and Restated Certificate of Incorporation of
May, dated May 22, 1996, is incorporated by reference
to Exhibit 4(a) of Post Effective Amendment No. 1 to
Form S-8, filed May 29, 1996
(3b) - Certificate of Amendment of the Amended and Restated
Certificate of Incorporation, dated May 21, 1999
(3c) - By-Laws of May, as amended
(12) - Computation of Ratio of Earnings to Fixed Charges
(15) - Letter Re: Unaudited Interim Financial Information
(27) - Financial Data Schedule
(b) Reports on Form 8-K
A report dated April 21, 1999 which contained information
concerning debt ratings and incorporated by reference May's
Annual Report on Form 10-K for the fiscal year ended January
30, 1999.
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 8, 1999 /s/ John L. Dunham
John L. Dunham
Executive Vice President and
Chief Financial Officer
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Shareowners of
The May Department Stores Company:
We have reviewed the accompanying condensed consolidated balance
sheet of The May Department Stores Company (a Delaware corporation)
and subsidiaries as of May 1, 1999, and the related condensed
consolidated statements of earnings and cash flows for the thirteen
week period then ended. These financial statements are the
responsibility of the Company's management.
We conducted our review in accordance with standards established by
the American Institute of Certified Public Accountants. A review
of interim financial information consists principally of applying
analytical procedures to financial data and making inquires of
persons responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which
is the expression of an opinion regarding the financial statements
taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications
that should be made to the condensed consolidated financial
statements referred to above for them to be in conformity with
generally accepted accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the consolidated balance sheet of The May
Department Stores Company as of January 30, 1999, and the related
consolidated statements of earnings and cash flows for the year
then ended (not presented separately herein), and in our report
dated February 10, 1999, we expressed an unqualified opinion on
those financial statements. In our opinion, the information set
forth in the accompanying condensed consolidated balance sheet as
of January 30, 1999, is fairly stated, in all material respects, in
relation to the consolidated balance sheet from which it has been
derived.
Arthur Andersen LLP
St. Louis, Missouri
May 28, 1999
Exhibit 15
To the Board of Directors and Shareowners of
The May Department Stores Company:
We are aware that The May Department Stores Company, Inc. has
incorporated by reference in its Registration Statements on Form
S-3 (No. 333-71413, 333-71413-01, 333-11539 and 333-11539-01) and
Form S-8 (No. 33-21415, 33-98045, 33-58985, 333-00957 and
333-76227) its Form 10-Q for the quarter ended May 1, 1999, which
includes our report dated May 28, 1999 covering the unaudited
interim financial information contained therein. Pursuant to
Regulation C of the Securities Act of 1933, that report is not
considered a part of the registration statement prepared or
certified by our firm or a report prepared or certified by our firm
within the meaning of Sections 7 and 11 of the Act.
Arthur Andersen LLP
St. Louis, Missouri
June 8, 1999
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Exhibit 3b
STATE OF DELAWARE
CERTIFICATE OF AMENDMENT
OF THE AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
THE MAY DEPARTMENT STORES COMPANY
The May Department Stores Company, a corporation organized and
existing under and by virtue of the General Corporation Law of
the State of Delaware, does hereby certify as follows:
FIRST: That at a meeting of the Board of Directors of The May
Department Stores Company (the "Company" or the "Corporation") on
March 19, 1999 a resolution was duly adopted setting forth a
proposed amendment of the Amended and Restated Certificate of
Incorporation of the Company, declaring the said amendment to be
advisable and calling a meeting of the shareowners of the Company
for consideration thereof. The resolution setting forth the
proposed amendment is as follows:
"RESOLVED, that the first paragraph of Article Fourth of the
Amended and Restated Certificate of Incorporation of the
Company be amended so that the first paragraph of Article
Fourth shall read in its entirety as follows, such amendment
to be effective forthwith;
The total number of shares of stock which the
Corporation shall have authority to issue is
1,025,000,000 consisting of 1,000,000,000 shares of
common stock, par value $.50 per share (the "Common
Stock"), and 25,000,000 shares of preference stock, par
value $.50 per share (the "Preference Shares")."
SECOND: That thereafter, the Board of Directors of the Company
did thereby recommend to the shareowners of the Company that they
adopt the above-captioned resolution at the 1999 annual
shareowners' meeting held on May 21, 1999 which meeting was duly
called and held upon notice in accordance with Section 222 of the
General Corporation Law of the State of Delaware (the "Law") at
which meeting the necessary number of shares as required by
statute were voted in favor of the amendment.
THIRD: That the said amendment was duly adopted in accordance
with the provisions of Section 242 of the Law.
FOURTH: That the capital of the Company shall not be reduced
under or by reason of said amendment.
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IN WITNESS WHEREOF, The May Department Stores Company has caused
this Certificate of Amendment to be signed by Richard A.
Brickson, its Secretary, and such authorized officer acknowledges
that the facts stated herein are true and that he signed this
Certificate of Amendment as his free act and deed under penalties
of perjury this 21st day of May, 1999.
THE MAY DEPARTMENT STORES COMPANY
/s/ Richard A. Brickson
Richard A. Brickson, Secretary
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Exhibit 3c
BY-LAWS
OF
THE MAY DEPARTMENT STORES COMPANY
(a Delaware Corporation)
(as amended through May 21, 1999)
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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.
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Section 6. Each shareowner entitled to vote at a meeting
of shareowners or to express consent or dissent to corporate
action in writing without a meeting may authorize another person
or persons to act for such shareowner by proxy by any means
authorized by the board and lawful under the Delaware General
Corporation Law.
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)
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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
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 90 days nor more than 105
days prior to the anniversary date of the immediately preceding
annual meeting of shareowners; provided, however, that in the
event that the annual or special meeting is called for a date
that is not within thirty days before or after such anniversary
date, notice by the shareowner to be timely must be so received
not later than the close of business on the 15th day following
the first day on which notice or public disclosure of the date of
the meeting is given or made to shareowners. Public disclosure
shall include, but not be limited to, disclosure in a filing with
the Securities and Exchange Commission or similar governmental
agency. 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
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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
the Company not less than 90 days nor more than 105 days prior to
the anniversary date of the immediately preceding annual meeting
of shareowners; provided, however, that in the event that the
annual meeting is called for a date that is not within thirty
days before or after such anniversary date, notice by the
shareowner to be timely must be so received not later than the
close of business on the 15th day following the first day on
which notice or public disclosure of the date of the meeting is
given or made to shareowners. Public disclosure shall include,
but not be limited to, disclosure in a filing with the Securities
and Exchange Commission or similar governmental agency. 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.
<PAGE>
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.
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
<PAGE>
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
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.
<PAGE>
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
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
<PAGE>
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.
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
<PAGE>
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.
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
<PAGE>
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.
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.
<PAGE>
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.
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
<PAGE>
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
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.
<PAGE>
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
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.
<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 30, 1999 AND FOR THE
THIRTEEN WEEKS ENDED MAY 1, 1999, AND MAY 2, 1998
13 Weeks Ended Fiscal Year Ended
May 1, May 2, Jan. 30, Jan. 31, Feb. 1, Feb. 3, Jan. 28,
1999 1998 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings Available for Fixed Charges:
Pretax earnings from continuing
operations $ 203 $ 183 $ 1,395 $ 1,279 $ 1,232 $ 1,160 $ 1,079
Fixed charges (excluding interest
capitalized and pretax preferred
stock dividend requirements) 88 86 344 363 346 317 293
Dividends on ESOP Preference Shares (6) (6) (25) (26) (26) (28) (28)
Capitalized interest amortization 2 2 7 6 6 5 4
287 265 1,721 1,622 1,558 1,454 1,348
Fixed Charges:
Gross interest expense (a) $ 85 $ 84 $ 339 $ 353 $ 341 $ 316 $ 289
Interest factor attributable to
rent expense 6 6 21 23 22 20 19
91 90 360 376 363 336 308
Ratio of Earnings to Fixed Charges 3.2 3.0 4.8 4.3 4.3 4.3 4.4
(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 1, 1999 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-29-2000
<PERIOD-END> MAY-01-1999
<CASH> 18
<SECURITIES> 134
<RECEIVABLES> 1,977
<ALLOWANCES> 71
<INVENTORY> 2,930
<CURRENT-ASSETS> 5,057
<PP&E> 7,356
<DEPRECIATION> 2,850
<TOTAL-ASSETS> 10,576
<CURRENT-LIABILITIES> 2,096
<BONDS> 3,791
0
0
<COMMON> 0
<OTHER-SE> 3,846
<TOTAL-LIABILITY-AND-EQUITY> 10,576
<SALES> 2,941
<TOTAL-REVENUES> 3,053
<CGS> 2,150
<TOTAL-COSTS> 2,150
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 71
<INCOME-PRETAX> 203
<INCOME-TAX> 81
<INCOME-CONTINUING> 122
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 122
<EPS-BASIC> .35
<EPS-DILUTED> .34
</TABLE>
