2. The purpose of this course and this paper is to successfully analyze, from a financial perspective,
prospective market domains and either real or self-created businesses to ascertain their ability to
grow and receive the financial assistance through investment to grow and maintain that business
either by means of enhancement or by expansion of the business into new areas by location or by
logistics and marketing. The company I chose to analyze is one that I have been a part of for
most of career. Macy’s is considered an industry leader in the Department Store Market Domain
and is the leading second tier department store chain in the United States. Macy’s became a
global company with brick and mortar expansion into the Persian Gulf and Ecommerce into
China. In order to keep growing, Macy’s will need to be more innovative in their retail approach
to fit changes in their economic market and customer demographics. This paper will examine
just how Macy’s can possibly achieve their long-term goals of becoming an industry leader on a
global scale. In turn, improving how they achieve their current objectives by examining their
financial status and how the upgrade of their latest innovations such as Omni-channel to expand
the amount of inventory that is ordered be directly shipped to the consumer from the supplier,
reexamining demand of merchandise that is seasonal and price simplification policies can
potentially expand the amount of revenue made by the company.
Organization
Macy’s, founded in 1858, is organized as a publicly traded Multinational Corporation based in
Cincinnati, Ohio, USA. Macy’s is mainly a second tier, though a first tier in some markets,
Department Store chain selling apparel, accessories, beauty, including furniture in both a
traditional setting as well as in E-commerce. Both traditional and electronic sales can and are
integrated as part of an Omni-channel sales distribution and marketing progress (Poloian, 2014).
Its primary customers are women 30-50 year’s old, career minded and single or raising families.
3. Macy’s will soon change its primary customer from Baby Boomers, they’re primary customers
since the mid 1990’s to Millennial’s who the company is expanding their marketing towards.
Recent marketing efforts geared their business closer to younger millennial customers to being in
a broader clientele.
By 2016, Macy’s will operate 770 stores in 45 states, Washington D.C., Guam as well operates
stores under the higher end Bloomingdales and Bloomingdales outlets stores and is currently
opening an off-price chain called Macy’s Backstage with 6 stores in greater New York City and
Northern New Jersey (Jennifer, D. P., 2015). Macy’s also operates a Bloomingdales in Dubai and
soon will open a Macy’s there as well (Macy’s 2015). At home Macy’s has shown the ability to
partner in store sales with various companies including Best Buy and Finish Line (Entertainment
Newsweekly, 2015). Macy’s also bought like the Makeup Company Blue Mercury allowing
Macy’s to diversify their product lines by adding companies rather than adding product.
Recently, Macy’s reached an agreement with the Chinese Retailer Alibaba to expand
Macy’s.com into China giving them access to world’s largest retail marketplace.
Macy’s is organized as a traditional Corporation licensed in Delaware with an Executive Team
lead by President Jeffrey Gennette and CEO Terry Lundgren. Macy’s also has a Board of
Directors, Chaired by Lundgren, finalizes all major sales, business and financial decisions. Sales
and Earnings are recorded in a monthly, quarterly and annual basis. Quarterly Reports include
updates on assets and liabilities as well as monitor cash flow for the period. The standard
business cycle is semi-annual (fall and spring seasons) the years 4th quarter (Nov-Jan) is the
stores busiest generating 35 percent of annual income and often can be the largest contributing
factor to the company’s fiscal prosperity.
Financial Performance
4. In the fiscal years 2012 to 2014, Macy’s has a record of modest sustained growth that rivals any
traditional Department Store retailer. In 2014, Macy’s success brought in sales of $28,107,000
as compared to $27,933,000 in 2013 and $27,689,000 in 2013 and 2012 respectively (Appendix
A). Meantime though cost of goods sold also increased, though it grew at a slower rate. This
along with respective increases in net income have resulted in higher revenues to allow Macy’s
to buy back and retire some stock to increase dividend potential. The end result was increases in
Stock Prices to $59.41 on January 30, 2015 from $39.52 in January, 2013. Dividends would be
paid at $1.1875 per share in January, 2015 compared to $.80 per share in January 2013 (Macy’s,
2015).
With the success these financial statements there is a need to be cautious there are two major
indicators that foreshadow problems for Macy’s. The first is the increased share of retail business
going to Ecommerce organizations such as Amazon.com (Covert, J., 2015, July 24). How much
these companies are selling and what they are selling especially if they are selling less clothing
and more electronics indicates that shoppers show signs of decreased sales due to reduced
amounts of discretionary income. The reports proved this as when sales failed to meet
expectations at most non electrics retailers Macy’s was no exception (FT.com, 2015). Macy’s
and many other retailers missed their both their first and second quarter sales projections (Macys,
2015) causing Macy’s to drop its stock value from a high of 79.05 in March to the present price
of 50.47 as of October 16, 2015 then dropped to 38.49 but recently rebounded to 40.89 at the
time of this report. (Marketwatch).
If there is one financial report that Macy’s is very good at maintaining relative stability even with
the changes is Cash Flow. For a retailer that is aggressively attempting and succeeding in
becoming a part of a global market having cash on hand to pay their employees and pay bills
5. while seeking financing for projects such as licensing agreements overseas and enhancing
distribution and information technology often require cash on hand. Macy’s annual cash flow
report indicate this use of cash in order to make necessary changes to the company in in both
2014 and 2015 Macy’s successfully maintain a free cash flow of 1.94 billion dollars
(Marketwatch) (Appendix C). As a means to increase the company’s Cash Flow and reduce the
number of fixed assets the company had. Macy’s made a decision to sell real estate holdings.
This allows Macy’s to increase their liquidity to either invest in the purchase of stock with the
help of the issuance of Bonds (Gurufocus, 2015) or to further invest in the corporate
infrastructure to enhance their supply chain capacity and maintain a decent amount of retained
earnings for their shareholders which allows investors to remain upbeat on the company despite
sales issues.
Financial Health
Macy’s has over the past couple years managed to stabilize much of their finances after years of
paying for the acquisition of May Company in 2006. Current and Quick Ratio have increased
modestly over the three year period. Profit Margin has increased as well from 1.53% in 2012 to
1.80% in 2014 Return on Equity was one of the biggest indicators that improved to 9.43% in
2014 from 6.99% in 2012 (Macys, 2015). Nearly every indicator grew in from 2013 to 2014 with
the exception of Days Sales Outstanding which actually drop slightly from 29.70 in 2013 to
29.17 in 2014(Appendix A). This was a sign that current sales are starting to lessen versus costs
and liability pressures and should be the case for long term concern to their price differentiation
strategy which utilized a near constant promotional cycle where sales especially in Fourth
Quarter even overlapped each other.
6. However, this ability of Macy’s and other retailer to accurately analyze business growth in 2015
had not quite picked up on this shift in the retail industry. With Macy’s missing both first and
second quarter projections (Appendix B). Instead of projected 2 percent gains in sales, Macy’s
sales including leased businesses fell flat (Newstex, 2015). Chairman and CEO Terry Lundgren
noted this in an interview on Bloomberg TV. “They're just not buying apparel and accessories
the way that we had planned and hoped that they would.” (Analyst Wire, 2015).
Investors in 2015 expressed concerns about Macy’s having too many fixed assets, particularly in
retail real estate. The Board of Directors implemented a strategy to sell all of Macy’s owned real
estate. The result of the sales of real estate would add to Macy’s cash flow. That being said, the
sales of certain real estate along with closures of underperforming stores will require greater
sales from all retail channels with less outlets from which the store will sell. Confidence still
abound at Macy’s does due to determining factors in investment for the company.
As of November 24, 2015, Macy's Inc.’s weighted average cost of capital is 8.93%. Macy's Inc.’s
return on invested capital is 14.01%. Macy's Inc. generates higher returns on investment than it
costs the company to raise the capital needed for that investment. It is earning excess returns. A
firm that expects to continue generating positive excess returns on new investments in the future
will see its value increase as growth increases (Gurufocus, 2015).
Potential Impacts of Augmenting the Omni-Channel Merchandising Concept
In order to implement any enhancements into a current organizations. The Business Plan has a
requirement to ensure that whatever risks are taken in the process of development and further
implementation including financial, time and contingency expenses as well as how much
potential gains that could be made by the changes made to this particular concepts. In 2005, as
7. traditional retailers were realizing the impacts, of running two retail channels one Ecommerce
and the other Brick and Mortar stores they realized that utilizing separated multi-channel retail
operations were eventually going to handicap those retail organizations committed to
maintaining those separate operations. The integration of the various retail business channels
within an organization was developed and given the name Omni-channel.
From the inauguration of this concept retailer began to work on technological and conceptual
improvements from the Omni-channel concept (Verhoef, P. C., et al., 2015). These
improvements like Buy Online, Pickup in Store concepts used by companies such as Best Buy
and Macy’s and Applications help customers find products available in distribution and in stores
and create packages from any wireless technology have made the traditional retail much more
accessible to the buyer (Prior, M., & Karr, A. J., 2013). The need to innovate the Omni-channel
retail concept and creating this flexibility was innovation that could, despite the amount of risk
due to competition, was deemed necessary throughout Department Store Retail (Laksmana, I.,
Yang, Y., 2015). There is still one issue that needs to be resolve and that is the ability of the
buyers to access particular products considered by retailers to be strictly seasonal. Often it is an
issue of the weather extending from one season to another and the product needed is no longer
available. Due to these issues, it is needed to see the amount of risk and the potential of
maintaining more basic items in some capacity available to customers on a year round basis. We
will also look at the opportunities that can be created by being able to order merchandise for our
customers directly from our suppliers.
The first thing we need to examine if you are traditional retailer is what products typically are
those items you sell that are typically sold as seasonal merchandise but most buyers consider
really to be needed on a year round basis. One item that is considered to be strictly seasonal as a
8. holiday gift item are travel kits for men, which are just available during the holidays. When
summer comes and vacation is close by, the customer finds there is no availability. The answer
to this make travel kits year round merchandise in limited styles and quantities in all locations or
be made available for order in locations that have availability year round as in the case of
swimwear that is available in Miami all year can then be ordered and shipped to New York for
sale when sales in store are not a peak.
Another means of getting merchandise to the customer is by skipping the stores logistical
channels altogether and having search and send orders be sent directly from the manufacturers.
Several department store clothing and footwear suppliers already provide the service to
department stores such as Dillard’s and Macy’s (Wireless News, 2014). However, less than 3%
of all store inventories can be ordered directly from the supplier and shipped to the end customer.
Being able to expand this enhancement to even double the amount of items to six percent of
merchandise ordered through the internet and brick and mortar that could be ordered this way.
Reducing supply chain costs, provides retailers with a broader picture of what the customer is a
buying in their store local trading areas. This will give Macy’s a retailing alternative to
Amazon.com’s selling merchandise online from a third-party and allow Macy’s to allocate
fulfillment to focus on expanding their basic merchandise assortments in the more localized
manner at distribution on items. This allows the retailer to free up the merchandising budget for
their brick-and-mortar stores to sell greater assortments of products including expanding certain
seasonal assortments to year round basic products.
The reasons for doing these augmentations are very simple and is based on the intensity of
competition not just between second tier department store retailers, but retailers on other tiers,
competing specialty stores and last but not least, e-commerce retailers. When you look at the
9. Herfindahl-Hirschmann Index for Department Store retailers it may not look like there’s much
competition, Macy’s is the dominant store with in that level. But as you expand to competitors
on all levels of department store retail, the amount of competition in the level of index for
Macy’s gets much smaller (Appendix C). Department Store Market Domain is classified as a
"moderately concentrated" market domain. If you add e-commerce retailers and specialty stores,
then you see to the degree of just how competitive retail is in the United States. The amount of
risk taking normally done in a very competitive industry such as retail is primarily geared to
perform two basic functions (Laksmana, I., Yang, Y., 2015). The first, is to satisfy the customer
by making products available to the customer at the best price possible. The second, is to have
merchandise available to the customer when the consumer needs to have that product available.
The next step in this process will be to see if these augmentations of the Omni-channel concept
can enhance the amount of business a retailer can make; all the while, maintaining or even
reducing the cost of goods sold and to measure the impact on customer and supplier service.
The potential costs may at first seem major, and yes there will be some impacts made on several
aspects financially. The first is in cost of goods sold, keeping inventory either extended further
into the next season or the case of some primarily summer seasonal items year round in some
areas requires increased overhead. Second, if seasonal inventory is stored at those warmer
weather stores, there will be needed allocations far as inventory goes to take away from the
general inventory budgets to accommodate greater physical quantities of these non-seasonal
items (Appendix B). This may have a short term consequence of reducing sales as inventory
allocates due to these changes. How these changes as a whole will not have a grave impact as
these changes in the end effect approximate, 2 percent increase of Macy’s total inventory.
Roughly the inventory budget would need to increase about an additional 35 million dollars for
10. the FY 2016 for the initial investment of new basic year-round merchandise. Also IT investments
to enhance these innovations only modest software upgrades which can cost up to
$1,000,000(USD) in implementation and training. However, this can lead to further and potential
repeat business throughout all of Macy’s channels as a result of increased use of all of Macy’s
retail sales portals. Many of which are worth looking at in depth.
The potential 2016 growth of direct sales through these augmentations is roughly 1 to 2 percent
overall sales roughly $300-600,000,000 (annual) cause of the use of ordering direct from the
manufacturer on several items added to the current list, this will allow the retailer to be able to
streamline some inventories to make augmenting the seasonal merchandise plan much easier to
follow (Appendix E).
As Macy’s face challenges to bring improvement in their sales against the increasingly tense
competition from retailers of all shapes from other big box retailers to specialty store to
Ecommerce retailers. Macy’s, as they streamline the number of their stores, needs to be able to
show that they can make their business both more efficient as well provide the assortments the
customer is looking for. The augmentation of both expanding the availability of certain seasonal
merchandise and getting customer orders shipped directly from the supplier stems the lost
revenue due greater competition for our consumers disposable income as well as greater ability
for our products that we sell from a variety of competition. Setting pricing policies that simplify
the Omni-channel shopping experience.
Summary:
Macy’s has enjoyed a long history of providing the buying public with the best products at prices
that can attract a large number of consumers. A traditional brick and mortar store chain, it is now
11. enjoying success as an online retailer and has integrated their retail channels following the Omni-
channel merchandising process. However, it is, like most retailers, facing a slowdown in sales
due to several factors in the marketplace in the US. In order to retain business domestically and
fulfill its wants to expand into the global market place. Macy’s requires and will prefer to
reallocate assets and to create the finances to achieve them including the sales of their real estate
properties. In order to maintain present goals to meet their obligations to their shareholders, they
will need to reallocate their investments into upgrading their distribution and their supplier
networks while bring innovation into their brick and mortar operations while continuing a
modest strategic downsizing of their current stores while continuing to show a reduced customer
demographic. There will be some short term costs. If Macy’s can be successful in transforming
itself into a global force in retail, the long term benefits will most provide stakeholders of the
company mutual benefit.
12. Sources:
Internet Sources:
Macys Website retrieved October 8, 2015 from www.macys.com
Marketwatch Website retrieved October 18, 2015 from www.marketwatch.com
Gurufocus weighted cost of capitol report retrieved November 24, 2015 from
http://www.gurufocus.com/term/wacc/M/Weighted%2BAverage%2BCost%2BOf%2BCapital%
2B%2528WACC%2529/Macy%2527s%2BInc
Written Sources:
Poloian, L. R., (2014). Retailing principles: A global outlook (4th ed.). New York: Fairchild
Publications.
Macy's, Inc.; Macy’s and best buy partner to test consumer electronics departments in Macy’s
stores. (2015). Entertainment Newsweekly,, 97. Retrieved from
http://ezproxy.snhu.edu/login?url=http://search.proquest.com/docview/1712937410?accountid=3
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Covert, J. (2015, Jul 24). Amazon $265B warrior tops Walmart’s cap. New York Post Retrieved
from
http://ezproxy.snhu.edu/login?url=http://search.proquest.com/docview/1698407634?accountid=3
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L2 think tank: Will Macy’s acquisition of blue mercury change beauty search? (2015). . .
Chatham: Newstex. Retrieved from
13. http://ezproxy.snhu.edu/login?url=http://search.proquest.com/docview/1666365177?accountid=3
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Proactive investors: Macy's to close 35-40 stores in early 2016 to trim costs. (2015). (). Chatham:
Newstex. Retrieved from
http://ezproxy.snhu.edu/login?url=http://search.proquest.com/docview/1710269754?accountid=3
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Jennifer, D. P. (2015). Can Macy’s win in the off-price market? National Real Estate Investor,
Retrieved from
http://ezproxy.snhu.edu/login?url=http://search.proquest.com/docview/1682241267?accountid=3
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US department store chain Macy’s disappoints. (2015). FT.Com, Retrieved from
http://ezproxy.snhu.edu/login?url=http://search.proquest.com/docview/1687764014?accountid=3
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Macy's Chmn & CEO terry lundgren intvd on bloomberg TV. (2015). Analyst Wire,
Verhoef, P. C., Kannan, P. K., & Inman, J. J. (2015). From multi-channel retailing to omni-
channel retailing. Journal of Retailing, 91(2), 174-181.
doi:http://dx.doi.org/10.1016/j.jretai.2015.02.005
Prior, M., & Karr, A. J. (2013). Macy's working on in-store pickup. Wwd, 206(64), 2.
Laksmana, I., Yang, Y., (2015), “Product market competition and corporate investment
decisions”, Review of Accounting and Finance, Vol. 14 iss 2 pp. 128-148 retrieved from
http://dx.doi.org/10.1108/RAF-11-2013-0123
14. CommerceHub reports 2013 retail gross merchandise value. (2014). Wireless News, Retrieved
from
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Macy's backstage unveils new pilot store locations in metro New York City. (2015). Wireless
News, Retrieved from
http://ezproxy.snhu.edu/login?url=http://search.proquest.com/docview/1687868355?accountid=3
783
15. Appendix A: Annual Statements (Million $)
Balance Sheet 2014 2013 2012
Assets
Cash 2,246.00$ 2,273.00$ 1,836.00$ (Million $)
Accounts Receivable 424.00$ 339.00$ 390.00$
Inventory Prepaid and other current 6,009.00$ 6,065.00$ 5,754.00$
Total Current Assets 8,679.00$ 8,688.00$ 7,876.00$
Gross Fixed Assets 12,782.00$ 12,932.00$ 969.00$
Less: accumulated depreciation -$ -$ -$
Net Fixed Assets 12,782.00$ 12,932.00$ 13,115.00$
Total Assets 21,461.00$ 21,620.00$ 20,991.00$
Liabilities and Equity
Accounts Payable 4,802.00$ 4,501.00$ 4,189.00$
Notes Payable 76.00$ 463.00$ 124.00$
Other Current Liabilities 658.00$ 762.00$ 762.00$
Total current liabilities 5,536.00$ 5,726.00$ 5,075.00$
and other liabilites 10,547.00$ 9,645.00$ 9,865.00$
Total Debt 16,083.00$ 15,371.00$ 14,940.00$
Common Stock (100,000 shares) 340.60$ 364.90$ 405.50$
Total Common Equity 5,378.00$ 6,249.00$ 6,051.00$
Total Liabilities and Equity 21,461.00$ 21,620.00$ 20,991.00$
Income Statement
Sales and Interest Income 28,107.00$ 27,933.00$ 27,689.00$
Cost of Goods Sold 16,863.00$ 16,725.00$ 16,538.00$
Other Expenses 8,442.00$ 8,528.00$ 8,487.00$
Total Oper Exp. Ex Dep and Amor 25,305.00$ 25,253.00$ 25,025.00$
EBITDA 2,802.00$ 2,680.00$ 2,664.00$
Depreciation and Amortization 1,036.00$ 1,020.00$ 1,049.00$
Earning before interest and taxes 1,766.00$ 1,660.00$ 1,615.00$
Interest Expense 395.00$ 390.00$ 425.00$
Earning Before Taxes 1,371.00$ 1,270.00$ 1,190.00$
Taxes 864.00$ 804.00$ 767.00$
Net Income 507.00$ 466.00$ 423.00$
Earning Per Share 4.30$ 3.93$ 3.29$
Dividends PerShare 1.19$ 0.95$ 0.80$
Book Value Per Share 19.07$ 12.15$ 12.22$
Stock Price 59.41$ 42.54$ 39.52$
Shares Outstanding 355.20$ 364.90$ 405.50$
Tax Rate
Ratios
Current Ratio 1.57 1.52 1.55
Quick Ratio 0.48 0.46 0.44
Inventory Turnover 2.81 4.61 4.81
Days Sales Outstanding 29.17 29.70 24.20
Fixed Assets Turnover 2.20 2.16 2.11
Total Assets Turnover 1.31 1.29 1.32
Debt to Asset Ratio 0.75 0.71 0.71
Times Interest Earned 4.47 4.26 3.80
Operating Margin 6.28% 5.94% 5.83%
Profit Margin 1.80% 1.67% 1.53%
Basic Working Power 8.23% 7.68% 7.69%
Return On Assets 2.36% 2.16% 2.02%
Return On Equity 9.43% 7.46% 6.99%
Price/Earnings 13.82 10.82 12.01
Market/Book 3.12 3.50 3.23
Book Value Per Share 19.07 12.15 12.22
16. Appendix B Quarterly Statements Retained Earnings Statement for 1st Qtr. 2015
$
% to Net
sales $
% to Net
sales
Net sales 6,232$ 6,279$
Cost of sales (Note 2) 3,800 61.0% 3,836 61.1%
Gross margin 2,432 39.0% 2,443 38.9%
Selling, general and administrative expenses (2,023) (32.4%) (2,000) (31.8%)
Operating income 409 6.6% 443 7.1%
Interest expense - net (95) (100)
Income before income taxes 314 343
Federal, state and local income tax expense (Note 3) (121) (119)
Net income 193$ 224$
Basic earnings per share 0.57$ 0.61$
Diluted earnings per share 0.56$ 0.60$
Average common shares:
Basic 340.7 365.9
Diluted 346.5 372.6
End of period common shares outstanding 337.6 361.8
Depreciation and amortization expense 259$ 253$
13 Weeks Ended
May 2, 2015
13 Weeks Ended
May 3, 2014
17. Appendix C - 2014 Herfindahl Hirschmann Index –Department Stores
HHI - Department Store Retail - FY 2014
Retailer Sales (Million$) %Share (% share)2
Macy's $27.93 30.67% 940.41
Dillard's $6.12 6.72% 45.16
Belk $4.00 4.39% 19.29
Boston Group $2.83 3.11% 9.68
Hudson’s Bay $3.10 3.40% 11.58
Nordstrom $13.51 14.83% 219.89
Boscov's $1.05 1.15% 1.33
JC Penney $12.26 13.46% 181.10
Kohl's $19.03 20.89% 436.58
Von Maur $1.25 1.37% 1.88
Total Sales: $91.08 Total HHI: 1866.91
18. Appendix D: Cash Flow Statements
Operating Activities
Fiscal year is February-January. All values USD millions. 2013 2014 2015
Net Income before Extra ordinaries 1.34B 1.49B 1.53B
Depreciation, Depletion & Amortization 1.05B 1.02B 1.04B
Depreciation and Depletion 1.01B 986M 1.01B
Amortization of Intangible Assets 37M 34M 31M
Deferred Taxes & Investment Tax Credit 14M (142M) 29M
Deferred Taxes 14M (142M) 29M
Investment Tax Credit - - -
Other Funds 50M 338M 155M
Funds from Operations 2.45B 2.7B 2.75B
Extra ordinaries - - -
Changes in Working Capital (187M)(153M) (37M)
Receivables 7M (58M) 22M
Accounts Payable (10M) 149M 20M
Other Assets/Liabilities 23M (2M) (54M)
Net Operating Cash Flow 2.26B 2.55B 2.71B
19. Investing Activities
2013 2014 2015
Capital Expenditures (942M) (863M) (1.07B)
Capital Expenditures (Fixed Assets) (698M) (607M) (770M)
Capital Expenditures (Other Assets) (244M) (256M) (298M)
Net Assets from Acquisitions 0 0 0
Sale of Fixed Assets & Businesses 66M 132M 172M
Purchase/Sale of Investments 0 0 0
Purchase of Investments 0 0 0
Sale/Maturity of Investments 0 0 0
Other Uses 0 (57M) (74M)
Other Sources 13M 0 -
Net Investing Cash Flow (863M) (788M) (970M)
Financing Activities
2013 2014 2015
Cash Dividends Paid - Total (324M) (359M) (421M)
Common Dividends (324M) (359M) (421M)
Preferred Dividends 0 0 0
20. Change in Capital Stock (1.16B) (1.26B) (1.64B)
Repurchase of Common & Preferred Stk. (1.4B) (1.57B) (1.9B)
Sale of Common & Preferred Stock 234M 315M 258M
Proceeds from Stock Options 234M 315M 258M
Other Proceeds from Sale of Stock 0 0 0
Issuance/Reduction of Debt, Net (814M) 267M 165M
Change in Current Debt 0 0 0
Change in Long-Term Debt (814M) 267M 165M
Issuance of Long-Term Debt 989M 391M 1.04B
Reduction in Long-Term Debt (1.8B) (124M) (870M)
Other Funds (88M) 24M 133M
Other Uses (88M) 0 0
Other Sources 0 24M 133M
Net Financing Cash Flow (2.39B) 1.32B) (1.77B)
Exchange Rate Effect 0 0 0
Miscellaneous Funds 0 0 0
Net Change in Cash (991M) 437M (27M)
Free Cash Flow 1.56B 1.94B 1.94B
21. Appendix E: Forecast for FY 2016-2018
Financial Analysis and Fiscal Projections - Income Statement (2015-2018)
Income Statement FY 2018 FY 2017 FY 2016
Sales and Interest Income 29,302.12$ 28,587.43$ 28,095.76$
Cost of Goods Sold 17,750.00$ 17,650.00$ 17,115.95$
Other Expenses 8,300.00$ 8,250.00$ 8,100.00$
Total Oper Exp. Ex Dep and Amor 26,050.00$ 25,900.00$ 25,215.95$
EBITDA 3,252.12$ 2,687.43$ 2,879.81$
Depreciation and Amortization 1,075.00$ 1,055.00$ 1,040.00$
Earning before interest and taxes 2,177.12$ 1,632.43$ 1,839.81$
Interest Expense 390.00$ 365.00$ 325.00$
Earning Before Taxes 1,787.12$ 1,267.43$ 1,514.81$
Taxes 825.00$ 775.00$ 740.00$
Net Income 962.12$ 492.43$ 774.81$
Earning Per Share 5.30$ 4.65$ 5.25$
Dividends PerShare 1.31$ 1.22$ 1.14$
Book Value Per Share 20.59$ 19.53$ 18.35$
Stock Price 64.20$ 61.35$ 57.50$
Shares Outstanding 322.50$ 330.00$ 335.00$
