Macy's 2012 Annual Report Download - page 68

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
F-21
A breach of a restrictive covenant in the Company’s credit agreement or the inability of the Company to maintain the
financial ratios described above could result in an event of default under the credit agreement. In addition, an event of default
would occur under the credit agreement if any indebtedness of the Company in excess of an aggregate principal amount of $150
million becomes due prior to its stated maturity or the holders of such indebtedness become able to cause it to become due prior
to its stated maturity. Upon the occurrence of an event of default, the lenders could, subject to the terms and conditions of the
credit agreement, elect to declare the outstanding principal, together with accrued interest, to be immediately due and payable.
Moreover, most of the Company’s senior notes and debentures contain cross-default provisions based on the non-payment at
maturity, or other default after an applicable grace period, of any other debt, the unpaid principal amount of which is not less
than $100 million that could be triggered by an event of default under the credit agreement. In such an event, the Company’s
senior notes and debentures that contain cross-default provisions would also be subject to acceleration.
Commercial Paper
The Company is a party to a $1,500 million unsecured commercial paper program. The Company may issue and sell
commercial paper in an aggregate amount outstanding at any particular time not to exceed its then-current combined borrowing
availability under the bank credit agreement described above. The issuance of commercial paper will have the effect, while such
commercial paper is outstanding, of reducing the Company’s borrowing capacity under the bank credit agreement by an amount
equal to the principal amount of such commercial paper. The Company had no commercial paper outstanding under its
commercial paper program throughout all of 2012 and 2011.
This program, which is an obligation of a 100%-owned subsidiary of Macy’s, Inc., is not secured. However, Parent has
fully and unconditionally guaranteed the obligations.
Senior Notes and Debentures
The senior notes and the senior debentures are unsecured obligations of a 100%-owned subsidiary of Macy’s, Inc. and
Parent has fully and unconditionally guaranteed these obligations (see Note 16, “Condensed Consolidating Financial
Information”).
Other Financing Arrangements
At February 2, 2013 and January 28, 2012, the Company had dedicated $37 million and $52 million, respectively, of cash,
included in prepaid expenses and other current assets, which is used to collateralize the Company’s issuances of standby letters
of credit. There were $34 million of other standby letters of credit outstanding at February 2, 2013 and January 28, 2012.
7. Accounts Payable and Accrued Liabilities
February 2,
2013 January 28, 2012
(millions)
Accounts payable............................................................................................................. $ 625 $ 669
Gift cards and customer award certificates ..................................................................... 801 725
Accrued wages and vacation ........................................................................................... 226 317
Taxes other than income taxes......................................................................................... 195 190
Lease related liabilities.................................................................................................... 145 164
Current portion of workers’ compensation and general liability reserves....................... 138 136
Current portion of post employment and postretirement benefits................................... 100 94
Allowance for future sales returns................................................................................... 81 76
Accrued interest............................................................................................................... 78 86
Dividends payable ........................................................................................................... — 83
Severance and relocation................................................................................................. 3 4
Other................................................................................................................................ 218 244
$ 2,610 $ 2,788
Adjustments to the allowance for future sales returns, which amounted to charges of $5 million, $9 million and $2 million
for 2012, 2011 and 2010, respectively, are reflected in cost of sales.