Macy's 2009 Annual Report Download - page 74

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Interest expense is as follows:
2009 2008 2007
(millions)
Interest on debt ............................................................ $587 $621 $617
Amortization of debt premium ................................................ (33) (34) (37)
Amortization of financing costs ............................................... 10 7 6
Interest on capitalized leases ..................................................354
567 599 590
Less interest capitalized on construction ......................................... 5 11 11
$562 $588 $579
Future maturities of long-term debt, other than capitalized leases and premium on acquired debt, are shown
below:
(millions)
Fiscal year:
2011 ......................................................... $ 662
2012 ......................................................... 1,663
2013 ......................................................... 138
2014 ......................................................... 508
2015 ......................................................... 756
After 2015 ..................................................... 4,429
Between January 30, 2010 and the date of this report, consistent with its strategy to reduce its indebtedness,
the Company has used approximately $526 million of cash to repurchase approximately $500 million of
indebtedness prior to its maturity. In connection with these repurchases, the Company has recognized additional
interest expense of approximately $27 million due to the expenses associated with the early retirement of this
debt.
The rate of interest payable in respect of $650 million in aggregate principal amount of the Company’s
senior notes outstanding at January 30, 2010 was increased by one percent per annum to 8.875% in April 2009 as
a result of a downgrade of the notes by specified rating agencies. The rate of interest payable in respect of these
senior notes outstanding at January 30, 2010 could increase or decrease by up to one percent per annum from its
current level in the event of one or more downgrades or upgrades of the notes by specified rating agencies.
On February 10, 2009, the Company, through its wholly owned subsidiary, Macy’s Retail Holdings, Inc.,
completed a cash tender offer pursuant to which it purchased approximately $199 million of its outstanding
6.30% Senior Notes due April 1, 2009 (resulting in approximately $151 million of such notes remaining
outstanding until they were paid at maturity on April 1, 2009) and approximately $481 million of its outstanding
4.80% Senior Notes due July 15, 2009 (resulting in approximately $119 million of such notes remaining
outstanding until they were paid at maturity on July 15, 2009) for aggregate consideration, including accrued and
unpaid interest, of approximately $686 million. By using cash on hand to repurchase and retire this debt early,
the Company has reduced its interest expense in 2009 by approximately $7 million, net of expenses associated
with the debt tender offer.
On June 23, 2008, the Company issued $650 million aggregate principal amount of 7.875% senior notes due
2015. The net proceeds of the debt issuance were used for the repayment of amounts due on debt maturing in
2008.
F-26