VI marshall deal info

1 TGT Marshalls 1.txt BN Page of 06/09 May to Buy Marshall Field's From Target for $3.24 Bln (Update1) May to Buy Marshall Field's From Target for $3.24 Bln (Update1) (Adds sales in the fifth, 11th, and 13th paragraphs.) By Rachel Katz and Josh Fineman June (Bloomberg) May Department Stores Co agreed to buy the Marshall Field's department stores from No U.S discounter Target Corp for $3.24 billion in cash to spur sales growth after three years of declines The purchase includes Marshall Field's 62 stores, three distribution centers and $600 million of credit card receivables, St Louis-based May said in a statement Nine Mervyn's locations in the Minneapolis area are also part of the deal; Target plans to close them before August, cutting about 780 workers Marshall Field's sales have been rising along with most U.S department stores while those at May, the owner of Lord & Taylor and Foley's, have lagged Federated Department Stores Inc., owner of Macy's and Bloomingdale's, which had been competing for Marshall Field's, last month said they wouldn't overpay for the chain, which Target regarded as a drag on its discount business ``You need acquisitions as a way to grow,'' said Neil Stern, principal with retail consultant McMillan/Doolittle in Chicago ``This was probably the one that made the most sense for May.'' Marshall Field's 62 stores had been valued between $1.5 billion and $2.7 billion, according to analysts The chain, founded in 1852, had a pretax profit of $107 million on sales of $2.58 billion last year May had sales of $13.3 billion Federated spokeswoman Carol Sanger didn't return a call for comment Target's Payday Shares of Target rose as much as percent after the close of regular trading The sale will result in a gain of $1 billion, or more than $1 a share, the Minneapolis-based company said in a statement Earnings will be reduced by cents to cents in the fourth quarter because of the seasonality of Marshall Field's business, Target said in a recorded message Target, which has about 1,250 stores and plans to open about 70 more this year, faces growing competition from No retailer Wal-Mart Stores Inc Target will use the cash from the sale to pay down debt and buy back shares, the company said Mervyn's 257 other locations remain on the sales block More information on their future is expected in the next 60 to 90 days, Target said ``Without Marshall Field's and Mervyn's, Target is a pure discount-store operator, which could be a much more consistent grower,'' said David Keuler, who helps manage $60 billion at Mason Street Advisors in Milwaukee, including Target shares -==================== -Copyright (c) 2004, Bloomberg, L P Page of ``That's been the hope all along.'' Revenue at Mervyn's and Marshall Field's fell for the past three years, as consumers pared spending at department stores and shopped at Kohl's Corp and Target's discount stores Sales gains at Target stores averaged about 13 percent a year in that period Shares of Target rose to $48.39 at 6:24 p.m after falling Page TGT Marshalls 1.txt 57 cents to $45.63 in regular New York Stock Exchange composite trading Shares of May, which operates 438 stores, fell 29 cents to $28.88 in regular trading Same-Store Sales May's same-store sales fell 8.1 percent in April and 3.8 percent in May as competitors including Federated lured more shoppers with luxury and private brands Sales at Marshall Field's increased 0.6 percent in April and 1.7 percent in May Buying Marshall Field's will give May a dominant chain in Midwest markets including Chicago and brands name goods such as Thomas Pink, analysts said Marshall Field's flagship store on State Street in Chicago is the second-largest department store in the world, with 800,000 square feet on 10 floors Shoppers can buy $400 vases by Poole Pottery and $175 cookware from Le Creuset New Markets The acquisition, expected to be completed this quarter or next, will also add Wisconsin, North Dakota and Minnesota to the list of 36 states with May department stores May expects the purchase will add to earnings starting in fiscal 2005 The company also forecast pre-tax savings because of greater efficiencies of $85 million in fiscal 2005, $140 million in fiscal 2006, and $180 million a year thereafter May said it will keep the Marshall Field's name and operate it as a stand-alone business with the headquarters remaining in Minneapolis Linda Ahlers will remain as president of Marshall Field's May said it is evaluating how to use the Mervyn's stores Target also said its board authorized the company to buy back $3 billion in shares The repurchase is expected to be completed within two to three years (May's conference call on June 10 at 8:30 a.m New York time to discuss the purchase can be accessed at (1) (800) 299-8538 Passcode is 31801482.) Editors: Bielski, Blooston Story illustration: For a history of May's sales and earnings, see {MAY US DES5 } For a series of Bloomberg -==================== -Copyright (c) 2004, Bloomberg, L P Page of functions about May, see {CNP 10522190109 } Press the Space bar to pause, the Go key to continue To contact the reporter of this story: Rachel Katz in Princeton at (609) 750-4653 or rkatz3@bloomberg.net and Josh Fineman in Princeton at (1) (609) 750-4625 or jfineman@bloomberg.net To contact the editor responsible for this story: Vince Bielski in New York at (1) (212) 318-2077 or vbielski@bloomberg.net [TAGINFO] Page TGT Marshalls 2.txt Page PRN 07/30 The May Department Stores Company Announces Completion of of Its Acquisition of Marshall Field's ST LOUIS, July 30 /PRNewswire-FirstCall/ The May Department Stores Company (NYSE: MAY) announced today that its previously announced acquisition of the Marshall Field's department store group from Target Corporation will be effective at 11:59 p.m., July 31, 2004 The acquisition includes substantially all of the assets that comprise Marshall Field's, including 62 stores, inventory, customer receivables, and distribution centers As part of the transaction, May also is acquiring the real estate associated with nine Mervyn's store locations in the Twin Cities area The transfer of these stores is expected to occur during the third quarter of 2004 The Marshall Field's acquisition is being financed through $2.2 billion of long-term debt and $1.0 billion of short-term borrowings and cash on hand Effective with the closing of the Marshall Field's transaction, The May Department Stores Company will operate 497 department stores under the names of Famous-Barr, Filene's, Foley's, Hecht's, Kaufmann's, Lord & Taylor, L.S Ayres, Marshall Field's, Meier & Frank, Robinsons-May, Strawbridge's, and The Jones Store, as well as 220 David's Bridal stores, 454 After Hours Formalwear stores, and 10 Priscilla of Boston stores in its Bridal Group May operates in 46 states, the District of Columbia, and Puerto Rico For more information, contact Sharon Bateman at (314) 342-6494 SOURCE The May Department Stores Company -007/30/2004 /CONTACT: Sharon Bateman, The May Department Stores Company, +1-314-342-6494/ (MAY) CO: The May Department Stores Company; Target Corporation; Marshall Field's ST: Missouri IN: REA SU: TNM -0- (PRN) Jul/30/2004 15:57 GMT -==================== -############################ END OF STORY ############################## Page 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 (Date of earliest event reported) July 30, 2004 Target Corporation (Exact name of registrant as specified in its charter) Minnesota 1-6049 41-0215170 (State or other jurisdiction (Commission File (IRS Employer of incorporation) Number) Identification No.) 1000 Nicollet Mall 55403 Minneapolis, Minnesota (Address of principal executive offices) (Zip Code) Registrant’s telephone number, including area code (612) 304-6073 Item Disposition of Assets On July 30, 2004, Target Corporation announced that it has completed the sale of its Marshall Field’s business unit to The May Department Stores Company for $3.2 billion in cash An additional discussion of the transaction is provided in Target Corporation’s news release of July 30, 2004, which is attached as an exhibit to this report A copy of the asset purchase agreement is incorporated by reference in this report Reference is made to the asset purchase agreement for a full statement of the terms and conditions of the transaction Item Financial Statements and Exhibits (c) Exhibits Asset Purchase Agreement dated as of June 9, 2004 (exhibits and schedules omitted) (incorporated by reference to Exhibit of Registrant’s current report on Form 8-K filed on June 10, 2004) 99 News release dated July 30, 2004 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  2005 EDGAR Online, Inc Date: July 30, 2004 TARGET CORPORATION /s/ Timothy R Baer Timothy R Baer Senior Vice President, General Counsel and Corporate Secretary EXHIBIT INDEX Exhibit Description Method of Filing Asset Purchase Agreement dated as of June 9, 2004 (exhibits and schedules omitted) 99 News release dated July 30, 2004 Incorporated by Reference Filed Electronically Exhibit 99 FOR IMMEDIATE RELEASE Contact: Susan Kahn (investor) 612-761-6735 Cathy Wright (financial media) 612-761-6627 or 312-781-2979 Carolyn Brookter (media) 612-696-6557 TARGET CORPORATION COMPLETES SALE OF MARSHALL FIELD’S TO MAY DEPARTMENT STORES MINNEAPOLIS, July 30, 2004 — Target Corporation announced today that it has completed the sale of its Marshall Field’s business unit to The May Department Stores Company for approximately $3.2 billion in cash Substantially all of the assets directly involved in its Marshall Field’s business unit, including 62 Marshall Field’s stores, three distribution centers and approximately $600 million of Marshall Field’s credit card receivables were included in the transaction All current Marshall Field’s team members were offered employment by The May Department Stores Company Marshall Field’s is a traditional department store that emphasizes fashion leadership, quality merchandise and superior guest service It is headquartered in Minneapolis, operates 62 stores and employs approximately 25,000 team members in states in the upper Midwest In 2003, Marshall Field’s produced revenues of $2.6 billion and pretax segment profit of $107 million Following the sale of Marshall Field’s and the pending sale of Mervyn’s, Target Corporation will continue to operate Target Stores, a largestore, general-merchandise, discount format currently consisting of 1,272 stores in 47 states, as well as an on-line business called Target.com Target Corporation news releases are available at www.target.com or www.prnewswire.com ### End of Filing  2005 EDGAR Online, Inc 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 - June 10, 2004 Date of Earliest Event Reported - June 9, 2004 THE MAY DEPARTMENT STORES COMPANY (Exact name of Registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation) I-79 (Commission File Number) 43-1104396 (IRS Employer Identification No.) 611 Olive Street, St Louis, Missouri 63101 (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code: (314) 342-6300 Item Other Events and Regulation FD Disclosure On June 9, 2004, The May Department Stores Company, a New York corporation and wholly-owned subsidiary of the registrant (the "Company"), announced that it has entered into an Asset Purchase Agreement (the "Asset Purchase Agreement") with Target Corporation and certain of its affiliates Pursuant to the Asset Purchase Agreement, the Company will purchase from Target and other sellers listed in the Asset Purchase Agreement the assets and business of the Marshall Field's department store group of Target Under a separate agreement, the Company will also acquire from Target nine Mervyn's store locations in the Twin Cities area The total purchase price for both transactions is $3.240 billion in cash, subject to adjustments The Company expects to complete these acquisitions in its fiscal 2004 second or third quarter, subject to the satisfaction of customary closing conditions A copy of the Asset Purchase Agreement is attached as an exhibit to this Current Report on Form 8-K Item Financial Statements and Exhibits (c) Exhibits Exhibit No Exhibit 10.1 Asset Purchase Agreement dated as of June 9, 2004 among The May Department Stores Company, Target Corporation and other Sellers listed therein 99.1 Press Release, dated June 9, 2004 99.2 Power Point Presentation for June 10, 2004 Acquisition of Marshall Field's Investor/Analyst Conference Call Item Regulation FD Disclosure  2005 EDGAR Online, Inc By Name: Title: /s/ John L Dunham John L Dunham President -69- Exhibit 99.1 MAY NEWS MAY DEPARTMENT STORES COMPANY TO ACQUIRE MARSHALL FIELD'S Transaction Strengthens May's Position in Midwestern Metropolitan Areas ST LOUIS, June 9, 2004 - The May Department Stores Company [NYSE: MAY] announced today that it has entered into a definitive agreement to acquire the Marshall Field's department store group and nine Mervyn's store locations in the Twin Cities area from Target Corporation [NYSE: TGT] for a total consideration of $3.240 billion in cash, subject to adjustments The transaction is expected to be completed in May's fiscal 2004 second or third quarter Marshall Field's, which reported revenues of $2.58 billion and generated $107 million in segment earnings in fiscal 2003, has 62 stores primarily in the Chicago, Minneapolis and Detroit metropolitan areas Locations include its world-famous flagship store on State Street in the Chicago Loop and important flagship stores in Detroit, Minneapolis, and suburban Chicago With the addition of Marshall Field's, May will operate 500 department stores in 39 states Under the terms of the agreement, May will acquire all the assets that comprise Marshall Field's, including stores, inventory, customer receivables, and distribution centers in Chicago, Detroit and Minneapolis May is also acquiring the real estate associated with the nine Mervyn's stores Gene Kahn, May's chairman and chief executive officer, said, "We are delighted to welcome this venerable and nationally recognized, premier department store company as a division of May and to welcome the Marshall Field's associates to our company This unique opportunity to add to our department store portfolio will provide a great value to our shareowners It will allow us to combine the best of Marshall Field's and May to further expand and enhance the products and services we can provide to our customers Among the benefits we see is that this combination will produce excellent economies of scale, improved buying power, and an expanded distribution network." After completion of the acquisition and its integration into May, the company expects to realize pre-tax synergies of $85 million in fiscal year 2005, $140 million in fiscal year 2006, and $180 million per year thereafter The acquisition is expected to be accretive to earnings per share in fiscal year 2005 and beyond May will retain the Marshall Field's nameplate and operate it as one of the stand-alone department store divisions under the May umbrella May also intends to maintain the product exclusives - such as Frango mints - that are long-standing traditions at Marshall Field's Linda L Ahlers will remain as president of Marshall Field's, and headquarters for the division will remain in Minneapolis May will offer employment to all Marshall Field's associates - more The acquisition is subject to customary closing conditions, including Hart-Scott-Rodino approval under the United States antitrust laws The transaction does not require shareowner approvals for either May or Target The May Department Stores Company currently operates 438 department stores under the names of Lord & Taylor, Famous-Barr, Filene's, Foley's, Hecht's, Kaufmann's, L.S Ayres, Meier & Frank, Robinsons-May, Strawbridge's, and The Jones Store, as well as 217 David's Bridal stores, 456 After Hours Formalwear stores, and 10 Priscilla of Boston stores in its Bridal Group May operates in 46 states, the District of Columbia, and Puerto Rico  2005 EDGAR Online, Inc This announcement may contain, in addition to historical information, certain forward-looking statements that involve risks and uncertainties Actual results could differ materially from those currently anticipated as a result of a number of factors, including risks and uncertainties discussed in The May Department Stores Company's filings with the Securities and Exchange Commission Those factors include, among other things, the competitive environment in the retailing industry in general and in the specific market areas in which May and its divisions operate, including consumer confidence, changes in discretionary consumer spending, changes in costs of goods and services and economic conditions in general, unseasonable weather and those risks generally associated with the integration of Marshall Field's with May There can be no assurance that the acquisition will close, as to the timing of the closing, that the integration will be successful or without unanticipated costs or that anticipated synergies or other benefits will be realized The May Department Stores Company assumes no obligation to update any forward-looking statements as a result of new information or future events or developments To view a map showing May and Marshall Field's department store locations across the country, please see http://www.mayco.com/common/0609files.jsp Note: A live Webcast of a conference call with analysts can be accessed through May's Web site, beginning at 8:30 a.m EDT, June 10, 2004 Pre-registration is required Marshall Field's Stores acquired by The May Department Stores Company: MARKET ILLINOIS Chicago LOCATION STORE Aurora Bloomingdale Chicago, Illinois Calumet City Chicago Joliet Lake Forest Northbrook Oak Brook Oak Brook Orland Park Schaumburg Schaumburg Skokie Fox Valley Center Stratford Square State Street River Oaks Center Water Tower Louis Joliet Mall Market Square Northbrook Court Oakbrook Center Mall Oakbrook Center Furniture Orland Square Woodfield Mall Woodfield Mall Home Old Orchard Chicago cont Vernon Hills West Dundee Hawthorn Center Spring Hill Mall Rockford Rockford, Illinois Cherryvale Mall INDIANA Fort Wayne South Bend MICHIGAN Detroit Fort Wayne Mishawaka Glenbrook Square University Park Mall Ann Arbor Dearborn Fort Gratiot Harper Woods Novi Southfield Sterling Heights Taylor Troy Troy Waterford Briarwood Fairlane Town Center Birchwood Mall Eastland Center Twelve Oaks Mall Northland Shopping Center Lakeside Mall Southland Center Oakland Mall The Somerset Collection Summit Place Mall  2005 EDGAR Online, Inc Westland Flint Grandville Kentwood Battle Portage Lansing Okemos Saginaw Traverse City Westland Center Genesee Valley Shopping Center Rivertown Crossings Woodland Mall CreekLakeview Square Mall The Crossroads Lansing Mall Meriden Mall Fashion Square Mall Grand Traverse Mall Rochester St Cloud Brooklyn Center Burnsville Edina Edina Maplewood Minnetonka Roseville Roseville St Paul Rochester St Cloud Brookdale Shopping Center Burnsville Center Southdale Southdale Home Maplewood Mall Ridgedale Mall Rosedale Center Rosedale Center Home Downtown Apache Mall Crossroads Center NORTH DAKOTA Bismark Fargo Grand Rapids Bismark Fargo Grand Forks Kirkwood Mall West Acres Shopping Center Columbia Mall Flint Grand Rapids Kalamazoo Lansing Saginaw Traverse City MINNESOTA Minneapolis-St Paul OHIO Toledo Toledo Franklin Park Mall SOUTH DAKOTA Sioux Falls The Empire Mall WISCONSON Appleton Eau Claire La Crosse Madison Milwaukee Appleton Eau Claire La Crosse Madison Wauwatosa Fox River Mall Oakwood Mall Valley View Mall Hilldale Mayfair Mall LOCATION STORE MERVYN'S LOCATION MARKET MINNESOTA Minneapolis St Paul Brookdale Shopping Center Eden Prairie Center Maplewood Mall Midway Center Northtown Mall Rosedale Shopping Center Southdale Shopping Center Tamarack Village  2005 EDGAR Online, Inc 10 Construction in progress Accumulated depreciation Property and equipment, net 11,222 (643,982) 857,019 Due from affiliate Prepaid pension and other Total assets 1,329,913 233,351 $3,493,289 Liabilities and shareholder's investment Current liabilities: Accounts payable Accrued liabilities Current portion of capital leases Total current liabilities $ 190,650 222,908 833 414,391 Note payable to affiliate Capital leases, net of current portion Deferred taxes and other long-term liabilities 948,325 9,036 188,190 Shareholder's investment: Common stock Additional paid-in capital Retained earnings Total shareholder's investment Total liabilities and shareholder's investment 11,645 1,921,700 1,933,347 $3,493,289 See accompanying notes Marshall Field's Statement of Cash Flows (In Thousands) Year Ended January 31, 2004 Operating activities Net earnings Reconciliation to cash flow: Depreciation and amortization Bad debt provision Deferred tax provision Loss on disposal of fixed assets, net Other non-cash items affecting earnings Changes in operating accounts providing cash: Accounts receivable Inventory Income taxes receivable Other current assets Other assets Due from affiliate Accounts payable Accrued liabilities Cash flow provided by operating activities Investing activities Expenditures for property and equipment Proceeds from disposals of property and equipment Cash flow required for investing activities  2005 EDGAR Online, Inc $ 50,857 115,715 23,820 21,592 3,916 (853) 35,837 (3,538) 34,204 (3,252) (17,145) (137,111) 33,339 (36,495) 120,886 (131,733) 17,725 (114,008) 24 Financing activities Dividends Reductions of capital leases Cash flow required for financing activities (12,453) (833) (13,286) Net decrease in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year $ (6,408) 22,234 15,826 See accompanying notes Marshall Field's Statement of Shareholder's Investment (In Thousands) Common Stock February 1, 2003 Net earnings Stock options Dividends January 31, 2004 $2 $2 Additional Paid-In Capital $ 5,079 6,566 $11,645 Retained Earnings $1,883,296 50,857 (12,453) $1,921,700 Total $1,888,377 50,857 6,566 (12,453) $1,933,347 See accompanying notes Marshall Field's Notes to Financial Statements January 31, 2004 Summary of Accounting Policies Organization Marshall Field's, an operating segment of Target Corporation, is a traditional department store that emphasizes fashion leadership, quality merchandise and superior guest service It is headquartered in Minneapolis, operates 62 stores and employs approximately 25,000 team members in states in the upper Midwest Marshall Field's offers credit to qualified guests through a proprietary store brand credit card program Marshall Field's credit card operations drive revenue growth and are considered an integral component of our retail operations Consolidation The financial statements include the balances of Marshall Field's and related liquor licensing entities (collectively, Marshall Field's) after elimination of material intercompany balances and transactions The liquor entities are wholly owned subsidiaries of Target Corporation Use of Estimates The preparation of our financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes Actual  2005 EDGAR Online, Inc 25 results may differ from those estimates Fiscal Year Our fiscal year ends on the Saturday nearest January 31 Unless otherwise stated, references to year in this report relate to fiscal year rather than to calendar year Fiscal year 2003 consisted of 52 weeks Revenues Revenue from retail sales is recognized at the time of sale Net credit card revenues are comprised of finance charges and late fees from Marshall Field's proprietary credit card holders Net credit card revenues are recognized according to the contractual provisions of the credit card agreement If an account is written off, any uncollected finance charges or late fees are recorded as a reduction of credit card revenue The amount of our retail sales charged to our credit cards was $1 billion in 2003 Marshall Field's Notes to Financial Statements (continued) Consideration Received From Vendors We collect consideration from our vendors (referred to as "vendor income") primarily as a result of our promotional, advertising and compliance programs Promotional and advertising allowances are intended to offset our costs of promoting and selling the vendors' merchandise in our stores and are recognized when we incur the cost or complete the promotion Under our compliance programs, vendors are charged for merchandise shipments that not meet our requirements, such as late or incomplete shipments We record these allowances when the violation occurs In the first quarter of 2003, we adopted Emerging Issues Task Force (EITF) Issue No 02-16, Accounting by a Customer (Including a Reseller) for Certain Consideration Received from a Vendor Under the new guidance, cash consideration received from a vendor is presumed to be a reduction of the prices of the vendor's products or services and should be classified as a reduction in cost of sales If the cash consideration is for assets or services delivered to the vendor, it should be characterized as revenue If the cash consideration is a reimbursement of costs incurred to sell the vendor's products, it should be characterized as a reduction of that cost Due to the adoption of EITF Issue No 02-16, certain vendor income items are classified as inventory purchases and recognized into income as the vendor's merchandise is sold This treatment had no material impact on sales, cash flows or financial position for any period and had a positive impact of $1 million on pretax net earnings in 2003 As required by EITF Issue No 02-16, the guidance was applied on a prospective basis only In 2003, we classified certain vendor income as inventory purchases that would have been classified as selling, general and administrative expense prior to the adoption of EITF Issue No 0216 as it did not meet the specific, incremental or identifiable criteria specified in the new guidance Buying and Occupancy Expenses Buying expenses primarily consist of salaries and expenses incurred by our merchandising operations, while our occupancy expenses primarily consist of rent, depreciation, property taxes and other operating costs of our retail and distribution facilities Buying and occupancy expenses classified in selling, general and administrative expenses were $139 million in 2003 In addition, we recorded $85 million of depreciation expense for our retail and distribution facilities in 2003 Marshall Field's Notes to Financial Statements (continued) Advertising Costs Advertising costs, included in selling, general and administrative expense, are expensed as incurred and were $133 million for 2003 Advertising vendor income recorded within advertising expense was approximately $20 million in 2003 Accounts Receivable Accounts receivable are recorded net of an allowance for expected losses The allowance, recognized in an amount equal to the anticipated future write-offs based on delinquencies, risk scores, aging trends, industry risk trends and our historical experience, was $25 million at January 31, 2004  2005 EDGAR Online, Inc 26 Inventory Our inventory and the related cost of sales are accounted for under the retail inventory accounting method using the last-in, first-out (LIFO) basis Inventory is stated at the lower of LIFO cost or market In 2003, Marshall Field's inventory balance was $325 million In 2003, we reduced our cumulative LIFO provision from $39 million to $24 million Property and Equipment Property and equipment are recorded at cost, less accumulated depreciation Depreciation is computed using the straight-line method over estimated useful lives Depreciation expense for 2003 was $112 million Accelerated depreciation methods are generally used for income tax purposes Repair and maintenance costs were $25 million in 2003 Estimated useful lives by major asset category are as follows: Buildings and improvements Fixtures and equipment Computer hardware and software 8-39 years 4-15 years years Property and equipment include an allocation of common assets from Target Corporation The gross and net book values of these assets were $126 million and $47 million, respectively, at January 31, 2004 Marshall Field's Notes to Financial Statements (continued) We follow Statement of Financial Accounting Standards (SFAS) No 144, Accounting for the Impairment or Disposal of Long-Lived Assets, which requires companies to review long-lived assets when events or changes in circumstances indicate that the carrying value of the asset may not be recoverable In accordance with this guidance, all long-lived assets are reviewed when events or changes in circumstances indicate that the carrying value of the asset may not be recoverable We review most assets at the store level, which is the lowest level of assets for which there are identifiable cash flows The carrying amount of the store assets is compared to the expected undiscounted future cash flows to be generated by those assets over the estimated remaining useful life of the primary asset Cash flows are projected for each store based upon historical results and expectations In cases where the expected future cash flows and fair value are less than the carrying amount of the assets, those stores are considered impaired, and the assets are written down to fair value Fair value is based on appraisals or other reasonable methods to estimate fair value Impairment losses are included in depreciation expense for held and used assets and are included within selling, general and administrative expense on assets classified as held for sale Our fixed asset impairment tests, performed in accordance with the applicable accounting guidance, assumed our business would continue indefinitely Changes in these assumptions could impact the results of our analysis We did not record an impairment loss for stores classified as held for use in 2003 Intangible Assets Intangible assets are recorded within other long-term assets at cost less accumulated amortization Amortization is computed on intangible assets with definite useful lives using the straight-line method over estimated useful lives that range from to 15 years Amortization expense for 2003 was $4 million At January 31, 2004, net goodwill and intangible assets were $110 million These assets included $95 million of goodwill and intangible assets with indefinite useful lives Discounted cash flow models were used in determining fair value for the purposes of the required annual goodwill impairment analysis Management used other market data to validate the results of our analysis No impairments were recorded in 2003 as a result of the tests performed Marshall Field's Notes to Financial Statements (continued)  2005 EDGAR Online, Inc 27 Accounts Payable Our accounting policy is to reduce accounts payable when checks to vendors clear the bank from which they were drawn Outstanding checks included in accounts payable were $50 million at January 31, 2004 Commitments and Contingencies At January 31, 2004, our debt, lease and royalty contractual obligations were as follows: Payments Due by Period Less Than Year 1-3 Years 3-5 Years Total After Years (In Thousands) Long-term debt* Capital lease obligations** Operating leases** Royalties $ 948,325 13,412 37,304 4,713 $ 1,717 4,450 2,163 $ 3,470 9,398 2,550 $ 3,640 7,705 - $948,325 4,585 15,751 - Contractual cash obligations $1,003,754 $8,330 $15,418 $11,345 $968,661 * Required principal payments only ** Total contractual lease payments Commitments for the purchase, construction, lease or remodeling of real estate, facilities and equipment were approximately $5 million at January 31, 2004 Throughout the year, we enter into various commitments to purchase inventory In addition to the accounts payable reflected in our statement of financial position, we had commitments with various vendors for the purchase of inventory as of January 31, 2004 These purchase commitments are cancelable by their terms The above table excludes these commitments 10 Marshall Field's Notes to Financial Statements (continued) We are exposed to claims and litigation arising out of the ordinary course of business and use various methods to resolve these matters in a manner that serves the best interest of our shareholder and other constituents The dispute resolution methods that we use include vigorous litigation, when necessary, and alternatives such as settlement discussions, where appropriate, to reduce the costs of litigation Our policy is to fully disclose pending lawsuits and other known claims that we expect may have a material impact on our results of operations or financial position However, management, after consulting with legal counsel, does not believe the currently identified claims and litigation meet this criterion Leases Assets held under capital leases are included in property and equipment and are charged to depreciation and interest over the life of the lease Operating leases are not capitalized and lease rentals are expensed Rent expense on buildings, classified in selling, general and administrative expense, includes percentage rents that are based on a percentage of retail sales over stated levels Total rent expense was $5 million in 2003 Most of the long-term leases include options to renew, with terms varying from to 30 years Certain leases also include options to purchase the property Future minimum lease payments required under noncancelable lease agreements existing at January 31, 2004 were: Operating Leases Capital Leases $ 4,450 4,906 4,492 $ 1,717 1,718 1,752 (In Thousands) 2004 2005 2006  2005 EDGAR Online, Inc 28 2007 2008 After 2008 Total future minimum lease payments Less interest Present value of minimum lease payments (includes current portion of $1 million) 3,978 3,727 15,751 $37,304 1,820 1,820 4,585 13,412 (3,543) $ 9,869 11 Marshall Field's Notes to Financial Statements (continued) Income Taxes Marshall Field's is included in the consolidated federal income tax return filed for Target Corporation and its subsidiaries Marshall Field's tax provision was determined by applying Target Corporation's tax rates to Marshall Field's income and allowing for Marshall Field's tax credits Reconciliation of tax rates is as follows: 2003 Federal statutory rate State income taxes, net of federal tax benefit Work opportunity tax credits Other Effective tax rate 35.0% 2.9 (0.4) 0.7 38.2% The components of the provision for income taxes were: Income Tax Provision: Expense (In Thousands) 2003 Current: Federal State $ 8,658 1,244 9,902 Deferred: Federal State 19,132 2,460 21,592 $31,494 Total 12 Marshall Field's Notes to Financial Statements (continued) The components of the net deferred tax assets/(liabilities) were: Net Deferred Tax Assets/(Liabilities) (In Thousands) January 31,  2005 EDGAR Online, Inc 29 2004 Gross deferred tax assets: Self-insured benefits Deferred compensation Inventory Accounts receivable valuation allowance Postretirement health care obligation Other $ Gross deferred tax liabilities: Property and equipment Pension Other 11,744 12,177 13,904 9,428 31,586 23,171 102,010 (74,359) (46,407) (32,888) (153,654) $ (51,644) Total Other Long-Term Liabilities In addition to the deferred taxes discussed above, the major components of other long-term liabilities at January 31, 2004 includes obligations for worker's compensation and general liability costs and retiree medical expenses 13 Marshall Field's Notes to Financial Statements (continued) Stock Option Plans Certain key employees participate in Target Corporation stock option plans These long-term incentive plans provide for the granting of stock options and performance share awards or a combination of awards which are granted in Target Corporation common stock A majority of the awards are non-qualified stock options that vest annually in equal amounts over a four-year period These options expire no later than ten years after the date of grant Performance share awards are issuable in the future based upon the attainment of specified levels of future financial performance of Target Corporation as a whole Awards granted to key employees under the Target Corporation stock option plan are accounted for using the fair-value-based method to record stock-based compensation Stock-based compensation expense for 2003 was $7 million Marshall Field's Participants Options and Performance Share Awards Outstanding Performance Options Shares Total Outstanding Currently Exercisable Number of Average Options Price* (Options and shares in thousands) February 1, 2003 Granted Canceled Exercised January 31, 2004 4,375 493 (55) (468) 4,345 $25.48 38.52 35.15 11.19 $28.38 Number of Options Average Price* Potentially Issuable 2,912 $21.19 46 51 2,966 $25.06 97 14  2005 EDGAR Online, Inc 30 Marshall Field's Notes to Financial Statements (continued) Options Outstanding Options Outstanding Range of Number Average Average Exercise Prices Outstanding Life** Price* (Options in thousands) $ 5.81 $10.00 $20.00 $30.00 $40.00 Total - $ 9.99 $19.99 $29.99 $39.99 $41.16 537 573 539 2,254 442 4,345 2.7 4.0 5.0 7.9 8.1 6.4 Currently Exercisable Number Average Exercisable Price* $ 8.64 17.30 26.38 33.94 40.84 $28.38 537 573 539 1,118 199 2,966 $ 8.64 17.30 26.38 33.49 40.80 $25.06 * Weighted average exercise price ** Weighted average contractual life remaining in years The Black-Scholes model was used to estimate the fair value of the options at grant date based on the following assumptions: 2003 Dividend yield Volatility Risk-free interest rate Expected life in years Weighted average fair value at grant date 0.8% 29.0% 3.0% 5.0 $11.21 Defined Contribution Plans Employees who meet certain eligibility requirements can participate in Target Corporation's defined contribution 401(k) plan by investing up to 80% of their compensation We match 100% of each employee's contribution up to 5% of respective total compensation Our contribution to the plan is initially invested in Target Corporation common stock Benefits expense related to these matching contributions was $14 million in 2003 15 Marshall Field's Notes to Financial Statements (continued) In addition, certain employees participate in Target Corporation's other non- qualified, unfunded plans that allow participants who are otherwise limited by qualified plan statutes or regulations to defer compensation and earn returns either tied to the results of the 401(k) plan investment choices or market levels of interest rates Marshall Field's recognized benefits expense for these non-qualified plans of $2 million in 2003 Pension and Postretirement Health Care Benefits We have qualified defined benefit pension plans that cover all employees who meet certain age, length of service and hours worked per year requirements We also have unfunded non-qualified pension plans for employees who have qualified plan compensation restrictions Benefits are provided based upon years of service and the employee's compensation Retired employees also become eligible for certain health care benefits if they meet minimum age and service requirements and agree to contribute a portion of the cost The Medicare Prescription Drug, Improvements and Modernization Act of 2003 (the Act) was signed into law in December 2003 The Act  2005 EDGAR Online, Inc 31 introduces a prescription drug benefit under Medicare (Medicare Part D), as well as a federal subsidy to sponsors of retiree health care benefit plans that provide a prescription drug benefit that is at least actuarially equivalent to Medicare Part D In May 2004, the Financial Accounting Standards Board (FASB) issued Staff Position (FSP) No 106-2, Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003 This FSP is effective for interim or annual periods beginning after June 15, 2004 The accumulated postretirement benefit obligation and the net periodic benefit cost in these financial statements not reflect the effect of the subsidy because we have not yet concluded whether the benefits provided by our plan are actuarially equivalent to Medicare Part D under the Act 16 Marshall Field's Notes to Financial Statements (continued) Obligations and Funded Status at October 31, 2003 Change in Benefit Obligation Pension Benefits Postretirement Health Care Benefits (In Thousands) Benefit obligation at beginning of measurement period Service cost Interest cost Actuarial loss Benefits paid Benefit obligation at end of measurement period $335,427 10,778 21,755 42,708 (25,099) $385,569 $ 79,563 393 5,323 1,423 (6,443) $ 80,259 Change in Plan Assets Pension Benefits Postretirement Health Care Benefits (In Thousands) Fair value of plan assets at beginning of measurement period $352,037 Actual return on plan assets 67,217 Employer contribution 21,894 Benefits paid (24,623) Fair value of plan assets at end of measurement period $416,525 Funded status Unrecognized actuarial loss/(gain) Unrecognized prior service cost Net amount recognized $ 30,956 104,613 (12,981) $122,588 $ 6,443 (6,443) $ $(80,259) (3,447) 889 $(82,817) 17 Marshall Field's Notes to Financial Statements (continued) Amounts recognized in the statement of financial position consist of: Pension  2005 EDGAR Online, Inc Postretirement Health Care 32 Benefits Benefits (In Thousands) Prepaid benefit cost Accrued benefit cost Net amount recognized $122,588 $122,588 $ (82,817) $(82,817) The accumulated benefit obligation for all defined benefit pension plans was $355 million at October 31, 2003 The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for the pension plans with an accumulated benefit obligation in excess of plan assets were $1 million, $1 million and $-0-, respectively, as of October 31, 2003 Net Pension and Postretirement Health Care Benefits Expense Pension Benefits Postretirement Health Care Benefits (In Thousands) Service cost benefits earned during the period Interest cost on projected benefit obligation Expected return on assets Recognized losses Recognized prior service cost Total $ 10,778 21,755 (35,552) 5,545 (1,807) $ 719 $ $ 393 5,323 61 386 6,163 The amortization of any prior service cost is determined using a straight-line amortization of the cost over the average remaining service period of employees expected to receive benefits under the plan 18 Marshall Field's Notes to Financial Statements (continued) Assumptions Weighted average assumptions used to determine benefit obligations at October 31, 2003: Pension Benefits Discount rate Average assumed rate of compensation increase Postretirement Health Care Benefits 6.25% 3.25 6.25% n/a Weighted average assumptions used to determine net periodic benefit cost for the year ended October 31, 2003: Pension Benefits Discount rate 7.00%  2005 EDGAR Online, Inc Postretirement Health Care Benefits 7.00% 33 Expected long-term rate of return on plan assets Average assumed rate of compensation increase 8.50 4.00 n/a n/a Our rate of return on qualified plans' assets has averaged 5.4% and 9.6% per year over the five-year and ten-year periods ended October 31, 2003 (our measurement date) After that date, we reduced our expected long-term rate of return on plans' assets to 8.0% per year An increase in the cost of covered health care benefits of 6.0% was assumed for 2003 and 2004 The rate is assumed to remain at 6.0% in the future The health care cost trend rate assumption may have a significant effect on the amounts reported 19 Marshall Field's Notes to Financial Statements (continued) A 1% change in assumed health care cost trend rates would have the following effects: 1% Increase (In Thousands) Effect on total of service and interest cost components of net periodic postretirement health care benefit cost $ 334 Effect on the health care component of the postretirement benefit obligation 4,816 1% Decrease $ (315) (4,575) Additional Information Our pension plan weighted average asset allocations at October 31, 2003 by asset category are as follows: 2003 Asset category Equity securities Debt securities Real estate Other Total 56% 26 13 100% Our asset allocation strategy for 2004 targets 55% in equity securities, 25% in debt securities, 5% in real estate and 15% in other assets Equity securities include Target Corporation common stock in amounts substantially less than 0.5% of total plan assets at October 31, 2003 Other assets include private equity, mezzanine and distressed debt and timber Our expected long- term rate of return assumptions as of October 31, 2003 are 8.5%, 5.5%, 7.0% and 10.0% for equity securities, debt securities, real estate and other assets, respectively Contributions Given the qualified pension plans' funded position, we are not required to make any contributions in 2004 In similar situations in the past, we have chosen to make discretionary contributions for various purposes, including minimizing Pension Benefit Guaranty Corporation premium payments and maintaining the fully funded status of the plans In 2004, such discretionary contributions could range from $-0- to $35 million We expect to make contributions in the range of $5 million to $10 million to our other postretirement benefit plans in 2004 20 Marshall Field's  2005 EDGAR Online, Inc 34 Notes to Financial Statements (continued) Estimated Future Benefit Payments The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid: Pension Benefits Postretirement Health Care Benefits (In Thousands) 2004 2005 2006 2007 2008 2009-2013 $ 25,000 25,000 25,000 25,000 25,000 125,000 $ 6,854 7,128 7,413 7,672 7,941 42,730 Related-Party Transactions Note Payable Marshall Field's holds a note payable to Target Corporation for $948 million maturing in 2011 at a rate to be calculated each year that is equal to Target Corporation's interest expense for the fiscal year divided by Target Corporation's average debt outstanding for the fiscal year (4.9% in 2003) Accrued interest at January 31, 2004, was $38 million Shared Services Certain shared services, such as technology support, finance, assets protection, facility operations, property development and transportation, are provided by Target Corporation The costs of providing these services are allocated to Marshall Field's without a premium through corporate expense allocation processes The total expenses charged to Marshall Field's during 2003 were $54 million These expenses are reflected in selling, general and administrative expenses 21 Marshall Field's Notes to Financial Statements (continued) In addition to the shared services, Target Corporation pays Marshall Field's employees' health plan, dental plan and life insurance claims and transfers the costs to Marshall Field's The claim transfers totaled $48 million in 2003 Associated Merchandising Company (AMC), a wholly owned subsidiary of Target Corporation, provides inventory sourcing services to Marshall Field's During 2003, inventory purchases using AMC sourcing services were $53 million The amount owed to AMC associated with those purchases was $6 million at January 31, 2004 The above transactions occurred in the normal course of business during the year Accounting Pronouncements 2004 Adoptions In January 2003, the FASB issued Interpretation No 46, Consolidation of Variable Interest Entities, an interpretation of Accounting Research Bulletin No 51 (FIN 46) FIN 46 will be effective no later than the end of the first reporting period that ends after March 15, 2004 FIN 46 requires the consolidation of entities in which an enterprise absorbs a majority of the entity's expected losses, receives a majority of the entity's expected residual returns, or both, as a result of ownership, contractual or other financial interest in the entity Currently, entities are generally consolidated by an enterprise when it has a controlling financial interest through ownership of a majority voting interest in the entity We not expect the adoption of FIN 46 to have a material impact on our net earnings, cash flows or financial position 2003 Adoptions  2005 EDGAR Online, Inc 35 In the first quarter of 2003, we adopted SFAS No 143, Accounting for Asset Retirement Obligations The adoption did not have an impact on current year net earnings, cash flows or financial position In the first quarter of 2003, we adopted SFAS No 146, Accounting for Costs Associated with Exit or Disposal Activities SFAS No 146 requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred instead of recognizing the liability at the date of commitment to an exit plan as was previously allowed The adoption of SFAS No 146 did not have a material impact on current year net earnings, cash flows or financial position 22 Marshall Field's Notes to Financial Statements (continued) In the second quarter of 2003, we adopted SFAS No 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities SFAS No 149 amends and clarifies accounting for derivative instruments and is effective for contracts entered into or modified after June 30, 2003 The adoption of SFAS No 149 did not have an impact on current year net earnings, cash flows or financial position In the third quarter of 2003, we adopted SFAS No 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity SFAS No 150 clarifies the classification and measurement of certain financial instruments with characteristics of both liabilities and equity and is effective for financial instruments entered into or modified after May 31, 2003 or otherwise for the first interim period beginning after June 15, 2003 The adoption of SFAS No 150 did not have an impact on current year net earnings, cash flows or financial position Subsequent Events Subsequent to January 31, 2004, Target Corporation reached an agreement to sell substantially all of the operating assets of Marshall Field's for approximately $3.2 billion in cash The sale, which is subject to regulatory approval, is expected to be finalized during fiscal year 2004 23 Exhibit 99.4 UNAUDITED PRO FORMA FINANCIAL INFORMATION The following unaudited pro forma financial information is based upon the historical financial statements of The May Department Stores Company and Marshall Field's and was prepared to illustrate the effects of our acquisition of Marshall Field's and the financing related to the transaction We prepared the unaudited pro forma financial information to reflect the acquisition as if it had occurred February 2, 2003 for the pro forma consolidated statements of earnings for the thirteen weeks ended May 1, 2004 and the year ended January 31, 2004 Certain information normally included in financial statements prepared in accordance with generally accepted accounting principles has been omitted pursuant to the rules and regulations of the Securities and Exchange Commission The unaudited pro forma financial information is presented for informational purposes only, is not necessarily indicative of actual results of operations had the acquisition been effective February 2, 2003, does not reflect potential synergies, integration costs and other such costs or savings, and is not indicative of future results The May Department Stores Company Unaudited Pro Forma Consolidated Statement of Earnings Thirteen Weeks Ended May 1, 2004 (millions, except per share) May Net sales $ 2,963 Marshall Field's $  2005 614 Pro Forma Adjustments $ (30) (a) EDGAR Online, Inc Pro Forma Consolidated $ 3,547 36 Cost of sales: Recurring Restructuring markdowns Selling, general, and administrative expenses Restructuring costs Interest expense, net Earnings before income taxes Provision for income taxes Net earnings Basic earnings per share Diluted earnings per share 2,120 334 - $ 639 76 121 45 76 259 12 $ $ 25 24 Weighted average shares outstanding: Basic Diluted $ 73 - $ (b)(c) 2,527 (103) (a)(b)(c)(d) 21 (d)(e) (21) (8) (f) (13) $ 795 109 109 40 69 $ $ 23 22 291.4 308.3 291.4 308.3 The May Department Stores Company Unaudited Pro Forma Consolidated Statement of Earnings Fiscal Year Ended January 31, 2004 (millions, except per share) May Net sales Cost of sales: Recurring Restructuring markdowns Selling, general, and administrative expenses Restructuring costs Interest expense, net Earnings before income taxes Provision for income taxes Net earnings $ 13,343 Basic earnings per share Diluted earnings per share Weighted average shares outstanding: Basic Diluted Marshall Field's $ 2,584 9,372 1,429 - $ 2,686 322 318 639 205 434 1,026 47 82 31 51 $ $ 1.44 1.41 $ Pro Forma Adjustments $ (125) (a) 281 - $ Pro Forma Consolidated $ 15,802 (b)(c) 11,082 (409) (a)(b)(c)(d) 86 (d)(e) (83) (31) (f) (52) $ 3,303 322 451 638 205 433 $ $ 1.44 1.41 289.9 307.0 289.9 307.0 Notes to the Unaudited Pro Forma Financial Information (a) Represents reclassification of finance charge revenues and late fees from Marshall Field's proprietary credit card program from net sales to a component of selling, general, and administrative expenses to align with the reporting of similar transactions by May Finance charge revenues and late fees of $30 million and $125 million were reclassified for the thirteen weeks ended May 1, 2004 and year ended January 31, 2004, respectively In addition, finance charge revenues have been adjusted to remove amounts earned from charges at the seller's other retail divisions that will no longer be earned by Marshall Field's Accordingly, finance charge revenues included in selling, general, and administrative expenses were reduced by $2 million and $6 million for the thirteen weeks ended May 1, 2004 and year ended January 31, 2004, respectively (b) Represents reclassification of buying and occupancy expenses from selling, general, and administrative expenses to cost of sales to align the  2005 EDGAR Online, Inc 37 reporting of these expenses with May's accounting policies Buying and occupancy costs of $73 million and $281 million were reclassified to cost of sales from selling, general, and administrative expenses for the thirteen weeks ended May 1, 2004 and year ended January 31, 2004, respectively (c) Represents an adjustment of Marshall Field's depreciation and amortization expense to reflect the amounts on the accounting base recognized in recording the acquisition A reduction in depreciation and amortization of $7 million and $29 million has been made for the thirteen weeks ended May 1, 2004 and year ended January 31, 2004, respectively (d) Represents a reclassification of interest received on intercompany balances from selling, general, and administrative expenses to interest expense, net Interest received of $5 million and $20 million was reclassified for the thirteen weeks ended May 1, 2004 and year ended January 31, 2004, respectively (e) Represents an adjustment to increase interest expense for borrowings used to finance the current acquisition of Marshall Field's This is partially offset by an adjustment to reduce interest expense for interest incurred by Marshall Field's related to debt retained by the seller, net of the interest received on intercompany balances from the seller Additional interest expense of $26 million and $106 million for the thirteen weeks ended May 1, 2004 and year ended January 31, 2004, respectively was recorded (f) Represents adjustments to income tax expense to reflect the impact of the various adjustments to the statements of earnings discussed above Net adjustments of $8 million and $31 million for the thirteen weeks ended May 1, 2004 and year ended January 31, 2004, respectively, were recorded End of Filing  2005 EDGAR Online, Inc 38 ... traditions at Marshall Field's Linda L Ahlers will remain as president of Marshall Field's, and headquarters for the division will remain in Minneapolis May will offer employment to all Marshall Field's... Rochester St Cloud Brooklyn Center Burnsville Edina Edina Maplewood Minnetonka Roseville Roseville St Paul Rochester St Cloud Brookdale Shopping Center Burnsville Center Southdale Southdale Home... forward-looking statements as a result of new information or future events or developments May Transaction Overview May Transaction Overview - Structure: - Cash Purchase of Marshall Field's assets and nine