_________________________________________________________________
_________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report
(Date of earliest event reported)
November 17, 1998
SAKS INCORPORATED
(Formerly Proffitt's, Inc.)
(Exact name of registrant as specified in its charter)
Tennessee 1-13113 62-0331040
(State of incorporation) (Commission (I.R.S. Employer
File Number) Identification No.)
750 Lakeshore Parkway
Birmingham, Alabama 35211
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code (205) 940-4000
_________________________________________________________________
_________________________________________________________________
Item 5. Other Events
Saks Incorporated, formerly Proffitt's, Inc. (the "Company")
combined its business with Saks Holdings, Inc. ("Saks Holdings") on
September 17, 1998 and Carson Pirie Scott & Co. ("Carsons") on
January 31, 1998. The transactions were accounted for as a pooling
of interests. On November 17, 1998 the Company announced the
results for the third quarter and nine months ended October 31,
1998.
Item 7. Exhibits
Exhibit Number Description of Documents
99 Press Release dated November
17, 1997 regarding Saks
Incorporated's Record Operating
Results for the Third Quarter
Ended October 31, 1998
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
PROFFITT'S, INC.
Date: November 18, 1998
By: /s/ Brian J. Martin
______________________________
Brian J. Martin
Executive Vice President of Law
and General Counsel
EXHIBIT LIST
Exhibit Number Description of Documents Page No.
99 Press Release dated November 17,
1997 regarding Saks Incorporated's
Record Operating Results for the
Third Quarter Ended October 31, 1998
SAKS INCORPORATED
115 N. Calderwood Street, Alcoa, TN 37701
(423) 983-7000
SAKS INCORPORATED REPORTS RECORD OPERATING
RESULTS FOR THE THIRD QUARTER ENDED OCTOBER 31, 1998
Contact: Julia Bentley (investors)
(423) 981-6243
Jennifer Mann (media)
(212) 940-4259
The management of Saks Incorporated has scheduled a conference call at
10:00 a.m. Eastern Time on Wednesday, November 18, 1998, to discuss the
third quarter results. To participate, please call (816) 650-0773 (10
minutes prior to the call). There will be a replay of the call at 2:00
p.m. Eastern Time the same day. The dial-in number for the replay is (816)
650-0765.
Birmingham, Alabama (November 17, 1998)--Department store retailer
Saks Incorporated (NYSE: SKS) (the "Company") (formerly
Proffitt's, Inc.) today announced results for the third quarter and
nine months ended October 31, 1998.
The Company merged with Saks Holdings, Inc. ("SHI") on September
17, 1998 and Carson Pirie Scott & Co. ("Carson's") on January 31,
1998. Results discussed herein are consolidated and have been
restated to include SHI and Carson's for prior periods due to the
pooling-of-interests accounting treatment. Earnings per share
numbers below are diluted.
As previously announced, for the third quarter ended October 31,
1998, total Company sales were $1,472.8 million, a 4% increase over
sales of $1,417.0 million in the prior year. Total Company sales
were flat on a comparable stores basis for the third quarter. For
the nine months ended October 31, 1998, total Company sales were
$4,169.2 million compared to $3,907.5 million last year, a 7%
increase. On a comparable stores basis, year-to-date Company sales
increased 3% over last year.
Prior to certain charges outlined below, net income for the third
quarter ended October 31, 1998 totaled $53.9 million, or $.37 per
share, compared to $37.9 million, or $.27 per share, in the prior
year, representing a 42% increase in net income and a 37% increase
in earnings per share. For the quarter, weighted average diluted
shares outstanding totaled 145.9 million this year compared to
144.0 million last year.
Prior to certain charges outlined below, net income for the nine
months ended October 31, 1998 totaled $96.2 million, or $.66 per
share, compared to $63.4 million, or $.45 per share, in the prior
year, a 52% increase in net income and a 47% increase in earnings
per share. For the nine months, weighted average shares
outstanding totaled 146.3 million this year compared to 139.7
million last year.
As expected, the Company incurred certain charges for the third
quarter and nine months ended October 31, 1998, primarily related
to the merger with SHI. These charges, as well as third quarter
and year-to-date current and prior year net income and diluted
earnings per share performance, are summarized as follows (amounts
may not foot due to rounding):
<TABLE>
Quarter Ended Nine Months Ended
----------------------------- -----------------------------
10/31/98 11/1/97 10/31/98 11/1/97
------------------ ---------------- ----------------- ------------------
After After After After
Tax $ EPS Tax $ EPS Tax$ EPS Tax $ EPS
----- ----- ----- ----- ----- ----- ----- -----
(in mil.) (in mil.) (in mil.) (in mil.)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net income before
certain charges $53.9 $.37 $37.9 $ .27 $96.2 $.66 $63.4 $.45
Certain charges:
SHI merger trans-
action costs (43.9) (.31) (43.9) (.31)
SHI restructuring
& integration costs (25.3) (.18) (25.3) (.18)
Restructuring &
integration costs
associated with
prior mergers &
acquisitions (3.8) (.03) 1.1 .01 (7.4) (.05) (0.8) (.01)
Balance sheet write-
offs and accruals (74.0) (.52) (74.0) (.52)
Loss on long-lived
assets (10.4) (.07) (0.1) -- (11.6) (.08) (0.1) --
Year 2000 expense (0.6) -- (0.2) -- (3.1) (.02) (2.8) (.02)
Extraordinary loss
on debt exting-
uishment (21.6) (.15) (0.6) -- (21.9) (.15) (5.1) (.04)
Charges associated
with closed stores (2.0) (.01) (5.9) (.04)
ESOP expenses (8.4) (.06) (9.5) (.07)
NOL recognition 9.3 .06 9.9 .07
---- ---- ---- ---- ---- ---- ---- ----
Total of certain
charges (181.6) (1.26) 1.1 .01 (193.2) (1.35) (8.4) (.07)
---- ---- ---- ---- ---- ---- ---- ----
Net income (loss)
after certain
charges ($127.7) ($.89) $39.0 $.27 ($96.9) ($.68) $55.0 $.39
</TABLE>
SHI merger transaction costs consisted principally of investment
banking, legal, and accounting fees; transfer taxes; and other
contractual costs. Restructuring and integration charges
associated with the SHI merger related principally to severance,
the consolidation of certain administrative operations, and the
write-off of duplicate assets. Restructuring and integration
charges associated with prior mergers and acquisitions primarily
related to the conversion of redundant operating systems. Balance
sheet write-offs and accruals consisted principally of (i) charges
associated with revaluing SHI's inventories consistent with the
Company's practices, which include markdowns associated with both
aged merchandise and excessive quantities; (ii) additional accruals
for SHI legal claims and self-insurance liabilities; and (iii) the
termination of certain interest rate hedging agreements. The loss
on long-lived assets principally was comprised of the write-off of
leasehold improvements associated with the relocation of the Saks
Fifth Avenue store in Dallas and costs associated with terminating
plans for certain SHI new store projects which do not meet the
Company's investment return criteria. The Year 2000 expenses
related to systems assessments and modifications necessary for the
Company to become Year 2000 compliant. The extraordinary loss on
debt extinguishment related to various balance sheet restructuring
transactions principally initiated as a result of the SHI merger.
Charges associated with closed stores related to the closing of
certain SHI stores in 1998.
Of the aforementioned third quarter charges, cash and non-cash
charges are detailed as follows (in millions):
Non-cash Cash Total
------- ------- -------
Certain charges:
SHI merger transaction costs $2.4 $41.5 $43.9
SHI restructuring & integration
costs 15.7 9.6 25.3
Restructuring & integration
costs associated with prior
mergers & acquisitions -- 3.8 3.8
Balance sheet write-offs and
accruals 63.1 10.9 74.0
Loss on long-lived assets 10.4 -- 10.4
Year 2000 expense -- 0.6 0.6
Extraordinary loss on debt
extinguishment 4.2 17.4 21.6
Charges associated with closed
stores -- 2.0 2.0
---- ---- ----
Total certain charges $95.8 $85.8 $181.6
After recognition of the certain charges outlined above, the
Company realized a net loss for the third quarter ended October 31,
1998 of $127.7 million, or $.89 per share, compared to net income
of $39.0 million, or $.27 per share, last year. After these
charges, the net loss for the nine months ended October 31, 1998
totaled $96.9 million, or $.68 per share, compared to net income of
$55.0 million, or $.39 per share, last year.
In the fourth quarter of 1998, the Company expects to incur
approximately $11 million in after-tax charges, principally non-cash
and primarily related to the extinguishment of SHI's
convertible debt and conforming employee benefits of acquired
businesses to those of the Company. In 1999, the Company expects
to incur approximately $25 million in after-tax charges
(approximately $19 million of cash charges and $6 million of
non-cash charges) primarily related to systems conversions for SHI and
other acquired companies. In addition, the Company will be
reviewing the financial performance of two to seven SHI stores
where the Company's established investment return criteria are not
being met. The Company could incur charges, primarily non-cash, if
any of these units are closed. The Company also expects to incur
additional Year 2000 costs of approximately $.5 million after-tax
in the fourth quarter of 1998 and approximately $1.5 million after-tax in 1999.
R. Brad Martin, Chairman and Chief Executive Officer of Saks
Incorporated, commented, "Our record operating results for the
third quarter and nine months, prior to certain charges, are a
reflection of enhanced merchandise margins, continued leverage on
operating expenses primarily achieved through the realization of
synergies, and improved contribution from our proprietary credit
card operations."
Mr. Martin continued, "Appropriate merger, restructuring, and
integration and other charges primarily related to the Saks
Holdings transaction have been recorded in the third quarter, and
our resulting balance sheet is well-structured."
Saks Incorporated consummated the purchase of 14 store locations,
along with certain inventory and accounts receivable, from
Dillard's, Inc. on October 2, 1998. Immediately following the
closing of the transaction, the stores were converted into the
Company's stores and began operating under the following
nameplates: Proffitt's (6 stores); Parisian (5 stores); McRae's (1
store); Younkers (1 store); and Herberger's (1 store). This
transaction is being accounted for as a purchase. The Company will
acquire a 15th store, a Dillard's store in Baton Rouge, Louisiana,
on December 1, 1998, which will be operated as a Parisian store.
These stores added 2.6 million square feet to the Company's
existing square footage base (prior to SHI), representing an 11%
increase. Consistent with purchase accounting practices, the
Company's historical financial statements have not been restated to
include the operations of these stores; however, the forward-looking
financial information below reflects the addition of these
units.
During the third quarter, the Company opened a 45,000 square foot
Herberger's store in Missoula, Montana and completed a 47,000
square foot expansion of the Herberger's Kearney, Nebraska store.
The Company also completed expansions totaling 110,000 square feet
to Parisian units in Montgomery and Florence, Alabama. On November
12, the Company opened an 100,000 square foot Saks Fifth Avenue
Full-Line store in Tampa, Florida. Later this month, a 50,000
square foot Saks Fifth Avenue Resort store will open in Palm
Desert, California, and in December, a 38,000 square foot Saks
Fifth Avenue Main Street store will open in Pasadena, California.
Mr. Martin commented, "The addition of the fifteen former Dillard's
locations and the acquisition of Brody's earlier this year, along
with new unit construction and expansion throughout the year, will
add approximately 3.2 million square feet to our existing
department store base, representing incremental growth of 13% prior
to Saks Holdings. This expansion performance is more than double
the rate of quality annual square footage growth we have targeted
and certainly demonstrates the growth opportunities available to
our business. To date, we have committed to add 1.2 million square
feet of store space across our various store formats in 1999, and
we continue to negotiate for other growth opportunities that meet
our financial and strategic criteria."
Management reiterated its comfort with expected cost and growth
synergies related to the SHI merger of approximately $10 million to
$12 million in 1998, approximately $60 million to $70 million in
1999, and approximately $75 million to $85 million in 2000. The
operating synergies include consolidation of certain back office
and administrative functions, elimination of duplicate corporate
expenses, realization of scale economies and purchasing power, and
the implementation of best practices. Targeted areas for synergies
include proprietary credit card administration, distribution and
logistics, information technology, telecommunications, supply and
services purchasing, media purchasing, private brand development
and sourcing, and interest savings related to refinancing
activities.
Mr. Martin noted, "The synergy process related to the Saks Holdings
merger is progressing on schedule. I am quite pleased with the
smooth integration of our businesses while maintaining focus on our
customers and on executing our operating plans. Throughout this
process, the cost savings that have been identified are consistent
with our initial estimates."
The Company is also releasing certain additional forward-looking
information primarily relating to the fourth quarter of 1998 and
1999 that is attached hereto under the caption "Forward-looking
Information for 1998 and 1999."
Saks Incorporated operates over 340 department stores and four
free-standing furniture stores under the names of Saks Fifth
Avenue, Proffitt's, McRae's, Younkers, Parisian, Herberger's,
Carson Pirie Scott, Bergner's, Boston Store, and Off 5th. The
Company also operates two direct mail businesses, Folio and Bullock
& Jones.
Forward-looking Information for 1998 and 1999
Saks Incorporated
As of November 17, 1998
The following 1998 and 1999 information, as well as certain of the
information presented in the attached press release that addresses
future results or expectations, is considered "forward-looking"
information within the definition of the Federal securities laws.
The forward-looking information is premised on many factors, some
of which are outlined below. Actual consolidated results might
differ materially from projected forward-looking information if
there are any material changes in management's assumptions.
The forward-looking information and statements are based on a
series of projections and estimates and involve certain risks and
uncertainties. Potential risks and uncertainties include such
factors as the level of consumer spending for apparel and other
merchandise carried by the Company; the competitive pricing
environment within the department and specialty store industries;
the effectiveness of planned advertising, marketing, and
promotional campaigns; appropriate inventory management;
realization of planned synergies; effective cost containment; and
solution of Year 2000 systems issues by the Company and its
suppliers. For additional information regarding these and other
risk factors, please refer to the Company's public filings with the
Securities and Exchange Commission, which may be accessed via EDGAR
through the internet at www.sec.gov.
For the combined business, management is comfortable with estimated
revenues in the $2.0 billion to $2.1 billion range for the fourth
quarter of 1998, in the $6.2 billion to $6.3 billion range for
1998, and in the $6.6 billion to $7.0 billion range for 1999.
Based on these revenue ranges, management believes a reasonable
earnings target is between $142 million and $146 million, or $.96
and $.97 per diluted share, in the fourth quarter of 1998; between
$238 million and $243 million, or $1.63 and $1.65 per diluted
share, for the full year of 1998; and between $330 million and $340
million, or $2.20 and $2.25 per diluted share, for 1999. These
earnings per share targets are before certain charges which could
include: restructuring and integration charges related to the SHI
merger and to prior mergers; gains (losses) from long-lived assets;
Year 2000 charges; extraordinary loss on extinguishment of debt;
charges associated with closed stores; and other merger-related
write-offs and accruals. Estimates of these future charges are
discussed below. Management's major assumptions in reaching these
earnings per share targets include:
* Moderate comparable store sales growth.
* Consideration of planned store openings, expansions, and
renovations.
* An annualized fully costed gross margin percent in 1998 of
approximately 35.5% to 36.1% (gross margin for the combined
Company for 1997 was 35.2%).
* Achieving continued leverage of SG&A expenses due to economies
of scale and the successful implementation of targeted synergies
and best practices (SG&A for the combined Company was 20.3% of
sales in 1997). Finance charge income generated from the
Company's proprietary credit cards, netted against the finance
charges allocated to the third party purchasers of these
accounts, is now included as a reduction in SG&A expense.
* Annual depreciation charges (excluding goodwill amortization)
totaling approximately $144 million to $147 million for 1998.
Capital expenditures for the combined Company are expected to
total approximately $400 million in 1998, which includes
approximately $40 million of expenditures for the purchase of
properties that were previously managed under operating lease
arrangements. This capital expenditure number does not include
the purchase price for the acquisition of Brody's (3/98),
Bullock & Jones (7/98), the Dillard's stores (10/98 and 12/98),
or three former Montgomery Ward stores (11/98).
* Goodwill amortization of approximately $12 million for 1998.
Goodwill has been recorded primarily as a result of the
acquisitions of McRae's (1994), Parisian (1996), Brody's (1998),
Bullock & Jones (1998), and the 14 stores from Dillard's (1998)
and is being amortized over periods of 20 to 40 years.
* Interest expense of approximately $112 million to $116 million
for 1998 based on assumed financing levels and current interest
rates.
* Finance charges allocated to the third party purchasers of the
Company's proprietary accounts receivable of approximately $68
million to $70 million.
* Average diluted shares outstanding of approximately 146 million
to 147 million for 1998 and approximately 150 million to 152
million for 1999.
Diluted earnings per share for the combined Company (on a restated
basis to include SHI and before certain charges) were $.21 for the
first quarter of 1998, $.08 for the second quarter, and $.37 for
the third quarter. Management believes a reasonable estimate for
diluted EPS (before certain charges) would be between $.96 and $.97
for the fourth quarter and between $1.63 and $1.65 for the full
year of 1998. This compares to 1997 diluted earnings per share by
quarter (on a restated basis to include SHI and before certain
charges) of $.16, $.03, $.27, and $.77 for the first, second,
third, and fourth quarters, respectively, and $1.24 for the year.
In the fourth quarter of 1998, the Company expects to incur
approximately $11 million in after-tax charges, principally
non-cash and primarily related to the extinguishment of SHI's
convertible debt and conforming employee benefits of acquired
businesses to those of the Company. In 1999, the Company expects
to incur approximately $25 million in after-tax charges
(approximately $19 million of cash charges and $6 million
of non-cash charges) primarily related to systems conversions for SHI and
other acquired companies. In addition, the Company will be
reviewing the financial performance of two to seven SHI stores
where the Company's established investment return criteria are not
being met. The Company could incur charges, primarily non-cash, if
any of these units are closed. The Company also expects to incur
additional after-tax Year 2000 costs of approximately $.5 million
in the fourth quarter of 1998 and approximately $1.5 million in
1999.
####
SAKS INCORPORATED
Consolidated Statements of Income (Unaudited)
(Dollars In Thousands, Except for Per Share Data)
NON GAAP
<TABLE>
1998 1997
YTD Third Quarter YTD Third Quarter
-------------------- --------------------
<S> <C> <C> <C> <C>
Net sales $4,169,163 100.0% $3,907,510 100.0%
Cost of sales 2,677,090 64.2% 2,540,006 65.0%
----------- -----------
Gross margin 1,492,073 35.8% 1,367,504 35.0%
Selling, general and admin-
istrative expenses 893,605 21.4% 846,527 21.7%
Other operating expenses:
Property and equipment rentals 133,169 3.2% 112,020 2.9%
Depreciation & other amortization 111,434 2.7% 99,695 2.6%
Taxes other than income taxes 108,487 2.6% 100,185 2.6%
Store pre-opening costs 6,128 0.1% 12,804 0.3%
----------- -----------
Operating income 239,250 5.7% 196,273 5.0%
Other income (expense):
Interest expense (76,425) -1.8% (86,876) -2.2%
Other income (expense), net (240) 0.0% (733) 0.0%
----------- -----------
Income before provision for income
taxes and other charges 162,585 3.9% 108,664 2.8%
Provision for income taxes 66,364 1.6% 45,292 1.2%
----------- -----------
Income before other charges 96,221 2.3% 63,372 1.6%
Other charges: (net of tax)
Merger, restructuring and
integration costs (76,632) -1.8% (803) 0.0%
Writeoffs and accruals (74,028) -1.8% - 0.0%
(Gains) losses from long-
lived assets (11,560) -0.3% (119) 0.0%
Year 2000 expense (3,097) -0.1% (2,823) -0.1%
Extraordinary loss on extin-
guishment of debt (21,890) -0.5% (5,084) -0.1%
Charges associated with closed
stores (5,952) -0.1% - 0.0%
ESOP expenses - 0.0% (9,486) -0.2%
NOL recognition - 0.0% 9,929 0.3%
----------- -----------
(193,159) -4.6% (8,386) -0.2%
----------- -----------
Net income (loss) $(96,938) -2.3% $54,986 1.4%
=========== ===========
Basic earnings (loss) per common share:
Before other charges $0.67 $0.46
After other charges $(0.68) $0.40
Diluted earnings (loss) per common share:
Before other charges $0.66 $0.45
After other charges $(0.68) $0.39
Weighted average common shares:
Basic 142,631 136,369
Diluted before other charges 146,282 139,727
Diluted after other charges 142,631 139,727
SAKS INCORPORATED
Consolidated Statements of Income (Unaudited)
(Dollars In Thousands, Except for Per Share Data)
NON GAAP
1998 1997
Third Quarter Third Quarter
-------------------- --------------------
<S> <C> <C> <C> <C>
Net sales $1,472,817 100.0% $1,417,041 100.0%
Cost of sales 918,656 62.4% 903,197 63.7%
----------- -----------
Gross margin 554,161 37.6% 513,844 36.3%
Selling, general and
administrative expenses 308,770 21.0% 304,056 21.5%
Other operating expenses:
Property and equipment rentals 49,252 3.3% 41,972 3.0%
Depreciation & other amortization 39,864 2.7% 34,342 2.4%
Taxes other than income taxes 35,018 2.4% 31,735 2.2%
Store pre-opening costs 3,130 0.2% 7,569 0.5%
----------- -----------
Operating income 118,127 8.0% 94,170 6.6%
Other income (expense):
Interest expense (27,133) -1.8% (29,379) -2.1%
Other income (expense), net (994) -0.1% (1,122) -0.1%
----------- -----------
Income before provision for
income taxes and other
charges 90,000 6.1% 63,669 4.5%
Provision for income taxes 36,075 2.4% 25,802 1.8%
----------- -----------
Income before other charges 53,925 3.7% 37,867 2.7%
Other charges: (net of tax)
Merger, restructuring and
integration costs (73,002) -5.0% 1,120 0.1%
Writeoffs and accruals (74,028) -5.0% 0.0%
(Gains) losses from long-
lived assets (10,429) -0.7% (100) 0.0%
Year 2000 expense (580) 0.0% (206) 0.0%
Extraordinary loss on extin-
guishment of debt (21,556) -1.5% (612) 0.0%
Charges associated with closed
stores (2,040) -0.1% - 0.0%
ESOP expenses - 0.0% (8,382) -0.6%
NOL recognition - 0.0% 9,307 0.7%
----------- -----------
(181,635) -12.3% 1,127 0.1%
----------- -----------
Net income (loss) $(127,710) -8.7% $38,994 2.8%
=========== ===========
Basic earnings (loss) per common share:
Before other charges $0.38 $0.27
After other charges $(0.89) $0.28
Diluted earnings (loss) per common share:
Before other charges $0.37 $0.27
After other charges $(0.89) $0.27
Weighted average common shares:
Basic 143,289 138,009
Diluted before other charges 145,918 143,983
Diluted after other charges 143,289 143,983
</TABLE>
SAKS INCORPORATED
Consolidated Statements of Income (Unaudited)
(Dollars In Thousands, Except for Per Share Data)
GAAP
<TABLE>
1998 1997
Third Quarter Third Quarter
-------------------- -----------------------
<S> <C> <C> <C> <C>
Net sales $1,472,817 100.0% $1,417,041 100.0%
Cost of sales 988,769 67.1% 903,197 63.7%
----------- -----------
Gross margin 484,048 32.9% 513,844 36.3%
Selling, general and administr-
ative expenses 345,947 23.5% 304,471 21.5%
Other operating expenses:
Property and equipment rentals 49,252 3.3% 41,972 3.0%
Depreciation & other amortization 39,864 2.7% 34,342 2.4%
Taxes other than income taxes 35,018 2.4% 31,735 2.2%
Store pre-opening costs 3,130 0.2% 7,569 0.5%
Merger, restructuring and
integration costs 92,777 6.3% (1,830) -0.1%
Losses from long-lived assets 17,096 1.2% 161 0.0%
Year 2000 expense 951 0.1% 343 0.0%
ESOP expenses 0.0% 7,938 0.6%
----------- -----------
Operating income (loss) (99,987) -6.8% 87,143 6.1%
Other income (expense):
Interest expense (27,133) -1.8% (29,379) -2.1%
Other income (expense), net (18,407) -1.2% (707) 0.0%
----------- -----------
Income (loss) before provision
for income taxes and extra-
ordinary item (145,527) -9.9% 57,057 4.0%
Provision (benefit) for income
taxes (39,373) -2.7% 17,451 1.2%
----------- -----------
Income (loss) before extra-
ordinary item (106,154) -7.2% 39,606 2.8%
Extraordinary loss on extin-
guishment of debt, net of tax (21,556) -1.5% (612) 0.0%
----------- -----------
Net income (loss) $(127,710) -8.7% $38,994 2.8%
=========== ===========
Basic earnings (loss) per common share:
Before extraordinary item $(0.74) $0.29
After extraordinary item $(0.89) $0.28
Diluted earnings (loss) per common share:
Before extraordinary item $(0.74) $0.28
After extraordinary item $(0.89) $0.27
Weighted average common shares:
Basic 143,289 138,009
Diluted 143,289 143,983
</TABLE>
SAKS INCORPORATED
Consolidated Statements of Income (Unaudited)
(Dollars In Thousands, Except for Per Share Data)
GAAP
<TABLE>
1998 1997
YTD Third Quarter YTD Third Quarter
-------------------- -------------------------
<S> <C> <C> <C> <C>
Net sales $4,169,163 100.0% $3,907,510 100.0%
Cost of sales 2,750,189 66.0% 2,540,006 65.0%
------------ -----------
Gross margin 1,418,974 34.0% 1,367,504 35.0%
Selling, general and administr-
ative expenses 934,192 22.4% 846,942 21.7%
Other operating expenses:
Property and equipment rentals 133,169 3.2% 112,020 2.9%
Depreciation & other amortization 111,434 2.7% 99,695 2.6%
Taxes other than income taxes 108,487 2.6% 100,185 2.6%
Store pre-opening costs 6,128 0.1% 12,804 0.3%
Merger, restructuring and integr-
ation costs 98,728 2.4% 1,272 0.0%
Losses from long-lived assets 18,951 0.5% 191 0.0%
Year 2000 expense 5,078 0.1% 4,705 0.1%
ESOP expenses 0.0% 9,470 0.2%
------------ -----------
Operating income 2,807 0.1% 180,220 4.6%
Other income (expense):
Interest expense (76,425) -1.8% (86,876) -2.2%
Other income (expense), net (17,653) -0.4% (318) 0.0%
------------ -----------
Income (loss) before provision
for income taxes and extra-
ordinary item (91,271) -2.2% 93,026 2.4%
Provision (benefit) for income
taxes (16,223) -0.4% 32,956 0.8%
------------ -----------
Income (loss) before extra-
ordinary item (75,048) -1.8% 60,070 1.5%
Extraordinary loss on extinguishment
of debt, net of tax (21,890) -0.5% (5,084) -0.1%
------------ -----------
Net income (loss) $(96,938) -2.3% $54,986 1.4%
============ ===========
Basic earnings (loss) per
common share:
Before extraordinary item $(0.53) $0.44
After extraordinary item $(0.68) $0.40
Diluted earnings (loss) per
common share:
Before extraordinary item $(0.53) $0.43
After extraordinary item $(0.68) $0.39
Weighted average common shares:
Basic 142,631 136,369
Diluted 142,631 139,727
</TABLE>
SAKS INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<TABLE>
October 31, November 1,
1998 January 31, 1997
(Unaudited) 1998 (Unaudited)
----------- ----------- -----------
<S> <C> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $3,937 $50,864 $37,651
Trade accounts receivable 182,898 412,209 380,324
Merchandise inventories 1,768,242 1,244,682 1,562,152
Other current assets 77,301 111,621 89,503
Deferred income taxes 12,593 71,814 19,449
----------- ----------- -----------
Total current assets 2,044,971 1,891,190 2,089,079
Property and equipment, net 2,061,741 1,725,979 1,658,486
Goodwill and intangibles, net 518,275 327,307 360,802
Deferred income taxes 345,055 257,848
Other assets 73,376 67,929 73,807
----------- ----------- -----------
TOTAL ASSETS $5,043,418 $4,270,253 $4,182,174
=========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Trade accounts payable $546,752 $333,794 $582,283
Accrued expenses and other
current liabilities 484,437 454,034 355,313
Current portion of long-term debt 12,632 13,058 43,266
----------- ----------- -----------
Total current liabilities 1,043,821 800,886 980,862
Senior debt 1,692,538 1,093,806 1,069,797
Deferred income taxes 31,123
Other long-term liabilities 148,421 144,068 140,879
Subordinated debt 276,000 286,964 387,334
Shareholders' equity 1,882,638 1,944,529 1,572,179
----------- ----------- -----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $5,043,418 $4,270,253 $4,182,174
=========== =========== ===========
</TABLE>
