Macy's 2010 Annual Report Download - page 34

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increased or decreased, respectively. Increasing or decreasing the assumed weighted average rate of increase of
future compensation levels by 0.25% would increase or decrease the projected benefit obligation at January 29,
2011 by approximately $16 million and change estimated 2011 pension expense by approximately $4 million.
New Pronouncements
In January 2010, the FASB issued Accounting Standards Update No. 2010-06, which provides amendments
and requires new disclosures relating to ASC Topic 820, “Fair Value Measurements and Disclosures,” and also
conforming amendments to guidance relating to ASC Topic 715, “Compensation – Retirement Benefits.” The
Company adopted this guidance on January 31, 2010, except for the disclosure requirement regarding purchases,
sales, issuances and settlements in the rollforward of activity in Level 3 fair value measurements, which the
Company adopted on January 30, 2011. This guidance is limited to the form and content of disclosures, and the
portion thereof that has been adopted did not have a material impact on the Company’s consolidated financial
position, results of operations or cash flows. The Company does not anticipate that the full adoption of this
guidance will have a material impact on the Company’s consolidated financial position, results of operations or
cash flows.
In July 2010, the FASB issued Accounting Standard Update No. 2010-20, which amends various sections of
ASC Topic 310, “Receivables,” relating to a company’s allowance for credit losses and the credit quality of its
financing receivables. The amendment requires companies to provide disaggregated levels of disclosure by
portfolio segment and class of financing receivable to enable users of the financial statements to understand the
nature of credit risk, how the risk is analyzed in determining the related allowance for credit losses and changes
to the allowance during the reporting period. The Company adopted this guidance as of January 29, 2011, except
as it relates to disclosures regarding activities during a reporting period, which is effective for interim and annual
periods beginning on or after December 31, 2010. This guidance is limited to the form and content of disclosures.
The initial adoption did not have, and the full adoption is not expected to have, an impact on the Company’s
consolidated financial position, results of operations or cash flows.
In December 2010, the FASB issued Accounting Standard Update No. 2010-28, which amends ASC Topic
350, “Goodwill and Other,” relating to the goodwill impairment test of a reporting unit with zero or negative
carrying amounts. This guidance is effective for interim and annual periods beginning after December 15, 2010.
The Company does not anticipate that the adoption of this guidance will have a material impact on the
Company’s consolidated financial position, results of operations or cash flows.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
The Company is exposed to market risk from changes in interest rates that may adversely affect its financial
position, results of operations and cash flows. In seeking to minimize the risks from interest rate fluctuations, the
Company manages exposures through its regular operating and financing activities and, when deemed
appropriate, through the use of derivative financial instruments. The Company does not use financial instruments
for trading or other speculative purposes and is not a party to any leveraged financial instruments.
The Company is exposed to interest rate risk through its borrowing activities, which are described in Note 8
to the Consolidated Financial Statements. The majority of the Company’s borrowings are under fixed rate
instruments. However, the Company, from time to time, may use interest rate swap and interest rate cap
agreements to help manage its exposure to interest rate movements and reduce borrowing costs. At January 29,
2011, the Company was not a party to any derivative financial instruments and based on the Company’s lack of
market risk sensitive instruments outstanding at January 29, 2011, the Company has determined that there was no
material market risk exposure to the Company’s consolidated financial position, results of operations or cash
flows as of such date.
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