Macy's 2013 Annual Report Download - page 11

Table of Contents
The Company’s business could be affected by extreme weather conditions, regional or global health pandemics or natural disasters.
Extreme weather conditions in the areas in which the Company’s stores are located could negatively affect the Company’s business and results of
operations. For example, frequent or unusually heavy snowfall, ice storms, rainstorms or other extreme weather conditions over a prolonged period could make
it difficult for the Company’s customers to travel to its stores and thereby reduce the Company’s sales and profitability. The Company’s business is also
susceptible to unseasonable weather conditions. For example, extended periods of unseasonably warm temperatures during the winter season or cool weather
during the summer season could reduce demand for a portion of the Company’s inventory and thereby reduce the Company's sales and profitability. In
addition, extreme weather conditions could result in disruption or delay of production and delivery of materials and products in the Company's supply chain
and cause staffing shortages in the Company's stores.
The Company's business and results of operations could also be negatively affected if a regional or global health pandemic were to occur, depending
upon its location, duration and severity. To halt or delay the spread of disease, local, regional or national governments might limit or ban public gatherings or
customers might avoid public places, such as the Company's stores. A regional or global health pandemic might also result in disruption or delay of
production and delivery of materials and products in the Company's supply chain and cause staffing shortages in the Company's stores.
In addition, natural disasters such as hurricanes, tornadoes and earthquakes, or a combination of these or other factors, could damage or destroy the
Company’s facilities or make it difficult for customers to travel to its stores, thereby negatively affecting the Company’s business and results of operations.
The Company’s pension funding could increase at a higher than anticipated rate.
Significant changes in interest rates, decreases in the fair value of plan assets and investment losses on plan assets could affect the funded status of the
Company’s plans and could increase future funding requirements of the pension plans. A significant increase in future funding requirements could have a
negative impact on the Company’s cash flows, financial condition or results of operations.
Increases in the cost of employee benefits could impact the Company’s financial results and cash flow.
The Company’s expenses relating to employee health benefits are significant. Unfavorable changes in the cost of such benefits could negatively affect the
Company’s financial results and cash flow. Healthcare costs have risen significantly in recent years, and recent legislative and private sector initiatives
regarding healthcare reform could result in significant changes to the U.S. healthcare system. Due to the breadth and complexity of the healthcare reform
legislation, the lack of implementing regulations and interpretive guidance and the phased-in nature of the implementation of the legislation, the Company is
not able at this time to fully determine the impact that healthcare reform will have on the Company-sponsored medical plans.
Inability to access capital markets could adversely affect the Company’s business or financial condition.
Changes in the credit and capital markets, including market disruptions, limited liquidity and interest rate fluctuations, may increase the cost of
financing or restrict the Company’s access to this potential source of future liquidity. A decrease in the ratings that rating agencies assign to the Company’s
short and long-term debt may negatively impact the Company’s access to the debt capital markets and increase the Company’s cost of borrowing. In addition,
the Company’s bank credit agreements require the Company to maintain specified interest coverage and leverage ratios. The Company’s ability to comply with
the ratios may be affected by events beyond its control, including prevailing economic, financial and industry conditions. If the Company’s results of
operations or operating ratios deteriorate to a point where the Company is not in compliance with its debt covenants, and the Company is unable to obtain a
waiver, much of the Company’s debt would be in default and could become due and payable immediately. The Company’s assets may not be sufficient to
repay in full this indebtedness, resulting in a need for an alternate source of funding. The Company cannot make any assurances that it would be able to
obtain such an alternate source of funding on satisfactory terms, if at all, and its inability to do so could cause the holders of its securities to experience a
partial or total loss of their investments in the Company.
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