Exhibit F 

Case 1:07-cv-05862-RJH Document 35-7 Filed 11/08/2007 Page 1 of 14
Form 8-K 

Macy's, Inc. - M 

Filed: February 27, 2007 (period: February 27, 2007) 

Report of unscheduled material events or corporate changes. 

Case 1:07-cv-05862-RJH Document 35-7 Filed 11/08/2007 Page 2 of 14
Table of Contents 

Item 2.02. Results of Operations and Financial Condition.

SIGNATURE

Index to Exhibits

EX-99.1 (PRESS RELEASE)

Case 1:07-cv-05862-RJH Document 35-7 Filed 11/08/2007 Page 3 of 14
UNITED STATES 

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: February 27, 2007 

 

 

FEDERATED DEPARTMENT STORES, INC. 

 

7 West Seventh Street, Cincinnati, Ohio 45202 

 (513) 579-7000 

 

-and- 

 

151 West 34th Street, New York, New York 10001 

 (212) 494-1602 

 

 

Delaware 1-13536 13-3324058 

(State of Incorporation) (Commission File Number) (IRS Employer Identification No.) 

 

 

Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any 

of the following provisions: 

 

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) 

 

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) 

 

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) 

 

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) 

 

Case 1:07-cv-05862-RJH Document 35-7 Filed 11/08/2007 Page 4 of 14
 

 

Item 2.02. Results of Operations and Financial Condition.

 

 On February 27, 2007, Federated Department Stores, Inc. ("Federated") issued a press release announcing 

Federated's financial condition and results of operations as of and for the 14 and 53 weeks ended February 3, 

2007. The full text of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by 

reference. 

 

 The press release referred to above contains certain non-GAAP financial measures of diluted earnings per share 

from continuing operations, excluding May Company merger integration costs and related inventory valuation 

adjustments and the gains on the sale of credit card receivables. Management believes that diluted earnings per 

share from continuing operations, excluding May Company merger integration costs and related inventory 

valuation adjustments and the gains on the sale of credit card receivables, is a useful measure in evaluating 

Federated's ability to generate earnings from continuing operations and that providing such measure will allow 

investors to more readily compare the earnings referred to in the press release to the earnings provided by 

Federated in past and future periods. Management believes that excluding May Company merger integration 

costs and related inventory valuation adjustments and the gains on the sale of credit card receivables from these 

calculations is particularly useful where the amount of such items are not consistent in the periods presented. 

However, the reader is cautioned that any non-GAAP financial measures provided by Federated are provided 

in addition to, and not as an alternative for, Federated's reported results prepared in accordance with GAAP. 

Certain items that may have a significant impact on Federated's financial position, results of operations and 

cash flows must be considered when assessing Federated's actual financial condition and performance 

regardless of whether these items are included in these non-GAAP financial measures. Additionally, the 

methods used by Federated to calculate its non-GAAP financial measures may differ significantly from 

methods used by other companies to compute similar measures. As a result, any non-GAAP financial measures 

provided by Federated may not be comparable to similar measures provided by other companies. 

 

Item 9.01. Financial Statements and Exhibits.

 

 (d) Exhibits 

 

 99.1 Press Release of Federated dated February 27, 2007. 

 

 

 

 

 

FEDERATED DEPARTMENT STORES, INC. 

 

SIGNATURE

 

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. 

 

 FEDERATED DEPARTMENT STORES, INC. 

 

Dated: February 27, 2007 By: /s/ Dennis J. Broderick 

 Name: Dennis J. Broderick 

 Title: Senior Vice President, General Counsel and Secretary 

 

Case 1:07-cv-05862-RJH Document 35-7 Filed 11/08/2007 Page 5 of 14
 

Index to Exhibits

 

Index Number 

 

99.1 Press Release of Federated dated February 27, 2007. 

Case 1:07-cv-05862-RJH Document 35-7 Filed 11/08/2007 Page 6 of 14
Exhibit 99.1 

FEDERATED DEPARTMENT STORES, INC. 

Contacts: 

 Media - Jim Sluzewski 

 513/579-7764 

 Investor - Susan Robinson 

 513/579-7780 

 

FEDERATED REPORTS FOURTH QUARTER EARNINGS OF 

 $1.45 PER DILUTED SHARE FROM CONTINUING OPERATIONS 

Diluted EPS from continuing operations, excluding merger integration costs and inventory valuation adjustments, is $1.66 - 

exceeding the company's guidance 

 CINCINNATI, Ohio, February 27, 2007 - Federated Department Stores, Inc. today reported diluted earnings per share from 

continuing operations of $1.45 for the 14-week fourth quarter of 2006, ended Feb. 3, 2007. This compares with diluted earnings per 

share from continuing operations of $1.22 for the 13-week period ended Jan. 28, 2006. 

 Excluding May Company merger integration costs and related inventory valuation adjustments of $177 million ($110 million after 

tax or 21 cents per diluted share), fourth quarter diluted earnings per share from continuing operations were $1.66. This exceeds the 

company's prior guidance, provided on Feb. 8, 2007, for earnings of $1.55 to $1.60 per share excluding merger integration costs and 

related inventory valuation adjustments. Earnings for the 2006 fourth quarter include a gain of approximately $54 million ($34 million 

after tax or 6 cents per diluted share) related to completion of the company's debt tender offer, as previously announced. 

 (Editor's Note: Federated this morning issued three additional news releases - one declaring a regular quarterly dividend, one 

announcing an increase in Federated's stock buyback program, and another announcing plans for a corporate name change.) 

 For the full 53 weeks of fiscal 2006, Federated reported earnings per diluted share from continuing operations of $1.80, compared 

to $3.16 per share for the 52 weeks of fiscal 2005. Excluding the May Company merger integration costs and related inventory 

valuation adjustments of 72 cents per diluted share ($628 million pre-tax, $393 million after tax) and a gain on the sale of receivables 

of 22 cents per diluted share ($191 million pre-tax, $119 million after tax), earnings from continuing operations per diluted share for 

fiscal 2006 were $2.30. This compares with fiscal 2005 earnings per diluted share from continuing operations of $2.55, excluding 

merger integration costs, related inventory valuation adjustments and a gain on the sale of credit receivables. Fiscal 2005 earnings 

include May Company results from Aug. 30 forward. 

 Terry J. Lundgren, Federated's chairman, president and chief executive officer, said, "This was a superb finish to an extraordinary 

year in the history of our company. We navigated through a significant amount of change in 2006, and we now look forward to 

focusing on intensive execution of our strategic priorities in 2007 as we continue to build the Macy's and Bloomingdale's brands 

nationwide." 

Sales

 Sales in the 14-week fourth quarter of 2006 totaled $9.159 billion, a decrease of 4.3 percent from total sales of $9.571 billion in the 

13-week fourth quarter last year. Total sales for the fourth quarter of 2006 were impacted by the closing of approximately 80 

duplicative store locations over the past year. On a 13-week comparable same-store basis, Federated's sales for the fourth quarter were 

up 6.1 percent. 

 Federated's fiscal 2006 sales totaled $26.970 billion, an increase of 20.5 percent from sales of $22.390 billion in fiscal 2005. On a 

52-week comparable same-store basis, Federated's sales for fiscal 2006 were up 4.4 percent. 

 In the fourth quarter of 2006, the company opened a new Bloomingdale's in San Diego, CA, and a Bloomingdale's replacement 

store in Boston, MA. Macy's stores damaged by Hurricane Wilma in 2005 were reopened in Miami and Ft. Lauderdale, FL. 

Operating Income

 Federated's operating income totaled $1.260 billion or 13.8 percent of sales for the 14-week quarter ended Feb. 3, 2007, compared 

to operating income of $1.194 billion or 12.5 percent of sales for the 13-week quarter ended Jan. 28, 2006. Federated's fourth quarter 

2006 operating income includes $177 million in May Company integration costs and related inventory valuation adjustments. Fourth 

quarter 2005 operating income includes $131 million in May Company integration costs and related inventory valuation adjustments. 

 The company's operating income for fiscal 2006 was $1.836 billion or 6.8 percent of sales, compared to $2.424 billion or 10.8 

percent of sales in fiscal 2005. Fiscal 2006 operating income includes pre-tax gains of $191 million on the sale of receivables to Citi 

Case 1:07-cv-05862-RJH Document 35-7 Filed 11/08/2007 Page 7 of 14
and May Company integration costs and related inventory valuation adjustments of $628 million. Fiscal 2005 operating income 

includes a pre-tax gain of $480 million on the sale of receivables to Citi and May Company merger integration costs and related

inventory valuation adjustments of $194 million. 

Cash Flow

 In fiscal 2006, Federated generated $3.692 billion in cash flow from continuing operating activities, compared to $4.145 billion in 

fiscal 2005. Federated generated $1.273 billion of cash from continuing investing activities in fiscal 2006, compared to $4.701 billion 

used by continuing investing activities in fiscal 2005. Cash used by continuing financing activities was $4.013 billion in fiscal 2006, 

compared to $58 million the previous year. 

 Cash generated from continuing operating activities in 2006 includes $1.860 billion in proceeds from the sale of the May Company 

credit card receivables. Cash from continuing investing activities in 2006 includes $1.047 billion in proceeds from the sale of Lord & 

Taylor, $740 million in proceeds from the sale of David's Bridal and Priscilla of Boston, and Federated's re-purchase of $1.141 billion 

in credit card receivables from General Electric Capital Corporation, which were then sold to Citi for $1.323 billion (for a net increase 

of $182 million), as well as $679 million from the disposal of property and equipment, primarily from the sale of 63 duplicate store 

locations. 

 Cash from continuing financing activities reflects the issuance of $1.146 billion of senior notes and the repayment of $2.680 billion 

of debt, including $1.0 billion pursuant to a debt tender offer. The debt tender offer was financed by senior notes and other debt 

repayments were financed from the proceeds of the sale transactions mentioned above. 

 The company used approximately $2.5 billion of excess cash to repurchase approximately 62 million shares of Federated common 

stock in fiscal 2006. At the end of the year, the company had remaining authorization to purchase up to approximately $170 million of 

common stock. When added to an additional authorization of $4 billion announced today, less the approximately $2 billion initial 

buyback under the accelerated share repurchase program announced today, the total current authorization is approximately $2.170

billion. 

2007 Guidance

 Federated expects same-store sales to increase by 2 percent to 3.5 percent in fiscal 2007, including a same-store sales increase of 

2.5 percent to 3.5 percent in the first quarter, 1.5 percent to 2.5 percent in the second quarter, and 2 percent to 3.5 percent in the third 

and fourth quarters combined. 

 Total sales for fiscal 2007 are expected to be between $27.1 billion and $27.6 billion, including $6 billion to $6.1 billion in the first 

quarter, $6.1 billion to $6.2 billion in the second quarter, and $15.0 billion to $15.3 billion for the third and fourth quarters combined. 

 Annual earnings of $2.45 to $2.60 per diluted share, excluding merger integration costs of between $100 million and $125 million, 

are expected for fiscal 2007. This includes 15 to 20 cents per diluted share in the first quarter, 40 to 45 cents per diluted share in the 

second quarters and $1.85 to $2.00 per diluted share in the third and fourth quarters combined. 

 The company plans to open seven new stores in 2007 - Macy's in Bolingbrook, IL, Boston, MA, Collierville, TN, and Austin, TX; 

a Macy's Furniture Gallery in Lake Grove, NY; and Bloomingdale's in Costa Mesa, CA, and Chevy Chase, MD. In addition, a 

replacement Macy's Furniture Gallery will open in Littleton, CO. 

 Federated, with corporate offices in Cincinnati and New York, is one of the nation's premier retailers, with fiscal 2006 sales of $27 

billion. Federated operates more than 850 department stores in 45 states, the District of Columbia, Guam and Puerto Rico under the 

names of Macy's and Bloomingdale's. The company also operates macys.com, bloomingdales.com and Bloomingdale's By Mail. 

 All statements in this press release that are not statements of historical fact are forward-looking statements within the meaning of 

the Private Securities Litigation Reform Act of 1995. Such statements are based upon the current beliefs and expectations of 

Federated's management and are subject to significant risks and uncertainties. Actual results could differ materially from those 

expressed in or implied by the forward-looking statements contained in this release because of a variety of factors, including 

conditions to, or changes in the timing of, proposed transactions, prevailing interest rates, competitive pressures from specialty stores, 

general merchandise stores, manufacturers' outlets, off-price and discount stores, new and established forms of home shopping 

(including the Internet, mail-order catalogs and television) and general consumer spending levels, including the impact of the 

availability and level of consumer debt, the effect of weather and other factors identified in documents filed by the company with the 

Securities and Exchange Commission. 

 (NOTE: Additional information on Federated is available on the Internet at www.fds.com/pressroom. A webcast of Federated's

fourth quarter earnings call with analysts will be held beginning at 11 a.m. ET on Tuesday, Feb. 27. Pre-registration is requested. The 

webcast is accessible to the media and general public in real time either via the company's Web site at www.fds.com or by calling in 

on 1-800-946-0782 passcode 4159572. The webcast will be archived for replay beginning approximately two hours after the 

conclusion of the live call.) 

FEDERATED DEPARTMENT STORES, INC. 

Case 1:07-cv-05862-RJH Document 35-7 Filed 11/08/2007 Page 8 of 14
Consolidated Statements of Income (Unaudited) (Note 1)

 (All amounts in millions except percentages and per share figures) 

 14 Weeks Ended 13 Weeks Ended 

 February 3, 2007 January 28, 2006 

 

 $ 

% to 

 Net sales $ 

% to 

 Net sales

 

Net sales $ 9,159 $ 9,571 

 

Cost of sales - recurring (Note 2) 5,409 59.1% 5,658 59.1% 

Gross margin - recurring 3,750 40.9% 3,913 40.9% 

 

Inventory valuation adjustments - 

 May integration (Note 3) (10) (0.1%) (25) (0.3%)

 

Gross margin 3,740 40.8% 3,888 40.6% 

 

Selling, general and administrative expenses (2,313) (25.2%) (2,588) (27.0%)

May integration costs (Note 4) (167) (1.8%) (106) (1.1%)

 

Operating income 1,260 13.8% 1,194 12.5% 

Interest expense - net (Note 5) (49) (127) 

 

Income from continuing operations before income taxes 1,211 1,067 

Federal, state and local income tax expense (Note 6) (451) (389) 

 

Income from continuing operations 760 678 

Discontinued operations, net of income taxes (Note 7) (27) 21 

 

Net income $ 733 $ 699 

Basic earnings (loss) per share: 

 Income from continuing operations $ 1.47 $ 1.24 

 Income (loss) from discontinued operations (.05) .04 

 Net income $ 1.42 $ 1.28 

 

Diluted earnings (loss) per share (Note 8): 

 Income from continuing operations $ 1.45 $ 1.22 

 Income (loss) from discontinued operations (.05) .04 

 Net income $ 1.40 $ 1.26 

 

Average common shares: 

 Basic 516.0 545.8 

 Diluted 523.7 554.3 

 

Depreciation and amortization expense $ 320 $ 337 

FEDERATED DEPARTMENT STORES, INC. 

 Consolidated Statements of Income (Unaudited) (Note 1)

Notes: 

(1) The May Department Stores Company ("May") was acquired August 30, 2005. The results of operations of May have been 

included in Federated's results of operations from the date of the acquisition. The sale of the Lord & Taylor division was completed in 

Case 1:07-cv-05862-RJH Document 35-7 Filed 11/08/2007 Page 9 of 14
October 2006, and the sale of David's Bridal and Priscilla of Boston was completed in January 2007. Share and per share amounts

have been adjusted for the two-for-one stock split effected in the form of a stock dividend distributed on June 9, 2006. 

(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 14 weeks ended February 3, 2007 or the 13 weeks ended 

January 28, 2006. 

(3) Represents inventory valuation adjustments associated with the combination and integration of Federated and May merchandise

assortments. 

(4) Represents costs and expenses associated with the integration and consolidation of May's operations into Federated's operations, 

primarily related to store and distribution center closings, system conversions and other operational consolidations. 

(5) Interest expense - net for the 14 weeks ended February 3, 2007 includes a gain of approximately $54 million, or $.06 per diluted 

share, related to the completion of the debt tender offer. Interest expense - net for the 13 weeks ended January 28, 2006 includes 

approximately $17 million of interest income related to the settlement of various tax examinations. 

(6) Income tax expense for the 13 weeks ended January 28, 2006 includes a $10 million reduction in tax expense related to the 

settlement of various tax examinations. 

(7) Represents the results of operations of the acquired businesses of Lord & Taylor and the Bridal Group, including David's Bridal, 

After Hours Formalwear and Priscilla of Boston. For the 14 weeks ended February 3, 2007, discontinued operations includes the loss 

on disposal of David's Bridal and Priscilla of Boston of $22 million on a pre-tax basis, or $18 million after income taxes, or $.03 per 

diluted share. The loss on disposal reflects a reduction to the fair value of the assets sold based on the actual purchase agreement. 

(8) For the 14 weeks ended February 3, 2007 and the 13 weeks ended January 28, 2006, May integration costs and related inventory 

valuation adjustments (see Notes 3 and 4) amounted to $.21 and $.15 per diluted share, respectively. 

FEDERATED DEPARTMENT STORES, INC. 

Consolidated Statements of Income (Unaudited) (Note 1)

 (All amounts in millions except percentages and per share figures) 

 53 Weeks Ended 52 Weeks Ended 

 February 3, 2007 January 28, 2006 

 

 $ 

% to 

 Net sales $ 

% to 

 Net sales

 

Net sales $ 26,970 $ 22,390 

 

Cost of sales - recurring (Note 2) 16,019 59.4% 13,272 59.3% 

 

Gross margin - recurring 10,951 40.6% 9,118 40.7% 

 

Inventory valuation adjustments - 

 May integration (Note 3) (178) (0.7%) (25) (0.1%)

 

Gross margin 10,773 39.9% 9,093 40.6% 

 

Selling, general and administrative expenses (8,678) (32.2%) (6,980) (31.2%)

 

May integration costs (Note 4) (450) (1.6%) (169) (0.7%)

 

Gains on the sale of accounts receivable (Note 5) 191 0.7% 480 2.1% 

 

Operating income 1,836 6.8% 2,424 10.8% 

 

Case 1:07-cv-05862-RJH Document 35-7 Filed 11/08/2007 Page 10 of 14
Interest expense - net (Note 6) (390) (380) 

 

Income from continuing operations before income taxes 1,446 2,044 

Federal, state and local income tax expense (Note 7) (458) (671) 

 

Income from continuing operations 988 1,373 

Discontinued operations, net of income taxes (Note 8) 7 33 

 

Net income $ 995 $ 1,406 

Basic earnings per share: 

 Income from continuing operations $ 1.83 $ 3.22 

 Income from discontinued operations .01 .08 

 Net income $ 1.84 $ 3.30 

 

Diluted earnings per share (Note 9): 

 Income from continuing operations $ 1.80 $ 3.16 

 Income from discontinued operations .01 .08 

 Net income $ 1.81 $ 3.24 

 

Average common shares: 

 Basic 540.0 426.1 

 Diluted 547.7 434.5 

 

Depreciation and amortization expense $ 1,265 $ 976 

FEDERATED DEPARTMENT STORES, INC. 

 Consolidated Statements of Income (Unaudited) (Note 1)

Notes: 

(1) The May Department Stores Company ("May") was acquired August 30, 2005. The results of operations of May have been 

included in Federated's results of operations from the date of acquisition. The sale of the Lord & Taylor division was completed in 

October 2006, and the sale of David's Bridal and Priscilla of Boston was completed in January 2007. Share and per share amounts

have been adjusted for the two-for-one stock split effected in the form of a stock dividend distributed on June 9, 2006. 

(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 53 weeks ended February 3, 2007 or the 52 weeks ended 

January 28, 2006. 

(3) Represents inventory valuation adjustments associated with the combination and integration of Federated and May merchandise

assortments. 

 (4) Represents costs and expenses associated with the integration and consolidation of May's operations into Federated's operations, 

primarily related to store and distribution center closings, system conversions and other operational consolidations. The May 

integration costs for the 53 weeks ended February 3, 2007 were partially offset by gains from the sale of Federated locations. 

(5) Represents the gain recognized on the sale of the Company's proprietary and non-proprietary credit card accounts and related 

receivables. For the 53 weeks ended February 3, 2007, the after-tax net gain amounted to $.22 per diluted share. For the 52 weeks 

ended January 28, 2006, the after-tax net gain amounted to $.89 per diluted share. 

(6) Interest expense - net for the 53 weeks ended February 3, 2007 includes a gain of approximately $54 million, or $.06 per diluted 

share, related to the completion of the debt tender offer and approximately $17 million of interest income related to the settlement of 

various tax examinations. Interest expense - net for the 52 weeks ended January 28, 2006 includes approximately $17 million of 

interest income related to the settlement of various tax examinations (see Note 7). 

(7) Income tax expense for the 53 weeks ended February 3, 2007 reflects approximately $80 million of tax benefits related to the 

settlement of various tax examinations, primarily attributable to losses related to the disposition of a former subsidiary. Income tax 

expense for the 52 weeks ended January 28, 2006 was reduced by approximately $85 million to recognize capital loss carryforwards 

realized as a result of the sale of certain credit card accounts receivable and $10 million related to the settlement of various tax 

Case 1:07-cv-05862-RJH Document 35-7 Filed 11/08/2007 Page 11 of 14
examinations. 

(8) Represents the acquired operations of Lord & Taylor and the Bridal Group, including David's Bridal, After Hours Formalwear and 

Priscilla of Boston. For the 53 weeks ended February 3, 2007, discontinued operations includes the loss on disposal of the Lord & 

Taylor division of $63 million on a pre-tax basis, or $38 million after income taxes, or $.07 per diluted share and the loss on disposal 

of David's Bridal and Priscilla of Boston of $22 million on a pre-tax basis, or $18 million after income taxes, or $.03 per diluted share. 

The losses on disposal reflect reductions to the fair value of the assets sold based on the actual purchase agreements. 

(9) For the 53 weeks ended February 3, 2007 and 52 weeks ended January 28, 2006, May integration costs and related inventory 

valuation adjustments (see Notes 3 and 4) amounted to $.72 and $.28 per diluted share, respectively. 

 

FEDERATED DEPARTMENT STORES, INC. 

 Consolidated Balance Sheets (Unaudited)

 (millions) 

 

 February 3, January 28, 

 2007 2006 

ASSETS: 

 Current Assets: 

 Cash and cash equivalents $ 1,211 $ 248

 Accounts receivable 517 2,522

 Merchandise inventories 5,317 5,459

 Supplies and prepaid expenses 251 203

 Assets of discontinued operations 126 1,713

 Total Current Assets 7,422 10,145

 

 Property and Equipment - net 11,473 12,034

 Goodwill 9,204 9,520

 Other Intangible Assets - net 883 1,080

 Other Assets 568 389

 

 Total Assets $ 29,550 $ 33,168

 

LIABILITIES AND SHAREHOLDERS' EQUITY: 

 Current Liabilities: 

 Short-term debt $ 650 $ 1,323

 Accounts payable and accrued liabilities 4,944 5,246

 Income taxes 665 454

 Deferred income taxes 52 103

 Liabilities of discontinued operations 48 464

 Total Current Liabilities 6,359 7,590

 

 Long-Term Debt 7,847 8,860

 Deferred Income Taxes 1,728 1,704

 Other Liabilities 1,362 1,495

 Shareholders' Equity 12,254 13,519

 

 Total Liabilities and Shareholders' Equity $ 29,550 $ 33,168

 

FEDERATED DEPARTMENT STORES, INC. 

 Consolidated Statements of Cash Flows (Unaudited)

 (millions) 

 53 Weeks Ended 

 February 3, 2007

52 Weeks Ended 

 January 28, 2006

Cash flows from continuing operating activities: 

Case 1:07-cv-05862-RJH Document 35-7 Filed 11/08/2007 Page 12 of 14
 Net income $ 995 $ 1,406 

 Adjustments to reconcile net income to net cash 

 provided by continuing operating activities: 

 Income from discontinued operations (7) (33)

 Gains on the sale of accounts receivable (191) (480)

 Stock-based compensation expense 91 10 

 May integration costs 628 194 

 Depreciation and amortization 1,265 976 

 Amortization of financing costs and premium on 

 acquired debt (49) (20)

 Gain on early debt extinguishment (54) - 

 Changes in assets and liabilities: 

 Proceeds from the sale of proprietary accounts 

 receivable 1,860 2,195 

 (Increase) decrease in proprietary and other accounts 

 receivable not separately identified 207 (147)

 (Increase) decrease in merchandise inventories (51) 495 

 (Increase) decrease in supplies and prepaid expenses (41) 122 

 (Increase) decrease in other assets not separately 

 identified 25 (2)

 Decrease in accounts payable and accrued 

 liabilities not separately identified (841) (444)

 Increase (decrease) in current income taxes (139) 49 

 Decrease in deferred income taxes (18) (36)

 Increase (decrease) in other liabilities not 

 separately identified 12 (140)

 Net cash provided by continuing operating activities 3,692 4,145 

 

Cash flows from continuing investing activities: 

 Purchase of property and equipment (1,317) (568)

 Capitalized software (75) (88)

 Proceeds from the disposition of Lord & Taylor 1,047 - 

 Proceeds from the disposition of David's Bridal and 

 Priscilla of Boston 740 - 

 Repurchase of accounts receivable (1,141) - 

 Proceeds from the sale of repurchased accounts receivable 1,323 - 

 Proceeds from hurricane insurance claim 17 - 

 Disposition of property and equipment 679 19 

 Proceeds from the sale of non-proprietary accounts 

 receivable - 1,388 

 Acquisition of The May Department Stores Company, 

 net of cash acquired - (5,321)

 Increase in non-proprietary accounts receivable - (131)

 Net cash provided (used) by 

 continuing investing activities 1,273 (4,701)

FEDERATED DEPARTMENT STORES, INC. 

 Consolidated Statements of Cash Flows (Unaudited)

 (millions) 

 53 Weeks Ended 

 February 3, 2007

52 Weeks Ended 

 January 28, 2006

Cash flows from continuing financing activities: 

 Debt issued 1,146 4,580 

 Financing costs (10) (2)

 Debt repaid (2,680) (4,755)

 Dividends paid (274) (157)

 Decrease in outstanding checks (77) (53)

 Acquisition of treasury stock (2,500) (7)

 Issuance of common stock 382 336 

Case 1:07-cv-05862-RJH Document 35-7 Filed 11/08/2007 Page 13 of 14
 

 Net cash used by continuing financing activities (4,013) (58)

 

Net cash provided (used) by continuing operations 952 (614)

 

Net cash provided (used) by discontinued operating activities (2) 63 

Net cash used by discontinued investing activities (97) (61)

Net cash provided (used) by discontinued financing activities 110 (8)

Net cash provided (used) by discontinued operations 11 (6)

 

Net increase (decrease) in cash and cash equivalents 963 (620)

Cash and cash equivalents at beginning of period 248 868 

 

Cash and cash equivalents at end of period $ 1,211 $ 248 

Notes: 

(1) Certain reclassifications were made to prior period amounts to conform with the classifications of such amounts for the most recent 

period. 

(2) Stock-based compensation consists of compensation expense for restricted stock grants, stock credit plans and stock options. 

_______________________________________________ 

 Created by 10KWizard www.10KWizard.comSource: Macy's, Inc., 8-K, February 27, 2007

Case 1:07-cv-05862-RJH Document 35-7 Filed 11/08/2007 Page 14 of 14