Consolidated Statements of Income (Unaudited)(Note 1)
(All amounts in millions except percentages and per share figures)
| |
26 Weeks Ended
July 30, 2011 |
|
26 Weeks Ended
July 31, 2010 |
| |
|
$ |
|
% to
Net Sales |
|
$ |
|
% to
Net Sales |
| |
| Net sales |
|
$11,828 |
|
|
|
$11,111 |
|
|
| |
| Cost of sales (Note 2) |
|
7,043 |
|
59.5% |
|
6,592 |
|
59.3% |
| |
| Gross margin |
|
4,785 |
|
40.5% |
|
4,519 |
|
40.7% |
| |
| Selling, general and administrative expenses |
|
(3,949) |
|
(33.4%) |
|
(3,946) |
|
(35.5%) |
| |
| Operating income |
|
836 |
|
7.1% |
|
573 |
|
5.2% |
| |
| Interest expense - net (Note 3) |
|
(227) |
|
|
|
(292) |
|
|
| |
| Income before income taxes |
|
609 |
|
|
|
281 |
|
|
| |
| Federal, state and local income tax expense (Note 4) |
|
(237) |
|
|
|
(111) |
|
|
| |
| Net income |
|
$372 |
|
|
|
$170 |
|
|
| |
| Basic earnings per share |
|
$.87 |
|
|
|
$.40 |
|
|
| |
| Diluted earnings per share |
|
$.86 |
|
|
|
$.40 |
|
|
| |
| Average common shares: |
| Basic |
|
426.3 |
|
|
|
422.8 |
|
|
| Diluted |
|
432.3 |
|
|
|
426.3 |
|
|
| |
| End of period common shares outstanding |
|
427.4 |
|
|
|
422.2 |
|
|
| |
| Depreciation and amortization expense |
|
$536 |
|
|
|
$575 |
|
|
Notes:
(1) Because of the seasonal nature of the retail business, the results of operations for the 26 weeks ended July 30, 2011 and July 31, 2010 (which do not include the Christmas season) are not necessarily indicative of such results for the fiscal year.
(2) Merchandise inventories are primarily valued at the lower of cost or market
using the last-in, first-out (LIFO) retail inventory method. Application of this
method did not impact cost of sales for the 26 weeks ended July 30, 2011 or July
31, 2010.
(3) Interest expense for the 26 weeks ended July 31, 2010, included approximately
$27 million on a pre-tax basis, or $17 million after tax or $.04 per diluted
share, of expenses associated with the early retirement of approximately $500
million of outstanding debt.
(4) Federal, state and local income taxes differ from the federal income tax
statutory rate of 35%, principally because of the effect of state and local
taxes, including the settlement of various tax issues and tax examinations.
Additionally, income tax expense for the 26 weeks ended July 31, 2010 reflected
a $4 million reduction of deferred tax assets due to the enactment of healthcare
reform legislation. The reduction was required as a result of the elimination of
the deductibility of retiree health care payments to the extent of tax-free
Medicare Part D subsidies that are received. The change in deductibility is
effective February 3, 2013.
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