|View printer-friendly version|
|Federated Announces Credit Facility Consolidation|
CINCINNATI--(BUSINESS WIRE)--Oct. 25, 2005--Federated Department Stores, Inc. (NYSE:FD)(PCX:FD) today announced it will consolidate credit-related support facilities acquired in its merger with The May Department Stores Company. These moves will improve operating efficiencies and enhance customer service by coordinating technology and capital investments.
May Company's Earth City credit center in St. Louis will be retained as a fourth operational hub of Federated's Cincinnati-based Financial, Administrative and Credit Services (FACS) Group division.
Earth City will join current FACS facilities in Mason, OH, Clearwater, FL, and Tempe, AZ, in servicing private label and VISA credit card accounts for each of Federated's department store divisions. FACS also performs a variety of non-store services for customers and employees.
In addition, Federated will expand the main FACS facility in Mason, OH, while phasing out former May Company credit operations in Lorain and Parma, OH, and Houston, TX, beginning in spring 2006. Included are the Lorain credit facility and credit billing functions housed at May's Great Lakes Data Center (with a total of approximately 760 positions), a credit remittance center in Parma (approximately 35 positions) and the Houston credit center (approximately 380 positions).
Executives at these facilities will be asked to express their interest in relocating to other FACS operations with open positions. The company reiterated its pledge to May Company associates that there will be no workforce reductions or job eliminations as a result of the merger prior to March 1, 2006.
"Consolidation decisions are the result of careful study regarding the size and location of facilities required to support the combined company's financial credit and administrative services needs," said FACS Group President Amy Hanson. "With the May Company merger, we will be able to combine the best of two excellent credit operations. By consolidating and streamlining our organization, we will maintain and improve the high quality and efficiency of service our customers and associates have come to expect."
Credit facility consolidations are consistent with Federated's previously announced estimates to realize approximately $175 million in cost synergies in 2006 and $450 million in annual cost synergies in 2007 and beyond as a result of the May Company merger. Expenses associated with the consolidations are included in the previously announced estimate of approximately $1 billion in one-time costs spread over three years beginning in 2005.
This document contains statements about expected future events that are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, Federated's expectations regarding the anticipated closings of the remaining credit portfolio transactions, statements about the benefits of the credit portfolio sales and the marketing initiatives, including future financial and operating results, the company's plans, objectives, expectations and intentions and other statements that are not historical facts. 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 the forward-looking statements contained in this document because of a variety of factors, including the conditions to closing of the proposed transactions contained in the transaction agreements. Additional factors that may affect the future results of Federated are set forth in its filings with the SEC, which are available at www.fds.com.
Federated, with corporate offices in Cincinnati and New York, is one of the nation's premier retailers, with 2004 sales of more than $15.6 billion. With the May Company's 487 department stores and 710 bridal and formalwear stores in 47 states, the District of Columbia and Puerto Rico, Federated operates nearly 950 department stores and more than 700 bridal and formalwear stores in 49 states, the District of Columbia, Guam and Puerto Rico under the names of Macy's, Bloomingdale's, Famous-Barr, Filene's, Foley's, Hecht's, Kaufmann's, Lord & Taylor, L.S. Ayres, Marshall Field's, Meier & Frank, Robinsons-May, Strawbridge's, The Jones Store, David's Bridal, After Hours Formalwear and Priscilla of Boston. The company also operates macys.com and Bloomingdale's By Mail.
(NOTE: Additional information on Federated, including past news releases, is available at www.fds.com/pressroom.)
CONTACT: Federated Department Stores, Inc.