Macy's 2013 Annual Report Download - page 60

Table of Contents

 
Impairments, store closing and other costs and gain on sale of leases consist of the following:




Impairments of properties held and used $ 39
$4
$ 22
Severance 43
3
4
Gain on sale of leases —
—
(54)
Other 6
(2)
3
$ 88
$ 5
$ (25)
During January 2014, the Company announced a series of cost-reduction initiatives, including organization changes that combine certain region and
district organizations of the My Macy’s store management structure and the realignment and elimination of certain store, central office and administrative
functions.
During January 2014, the Company announced the closure of five Macy's stores; during January 2013, the Company announced the closure of six
Macy's and Bloomingdale's stores; and during January 2012, the Company announced the closure of ten Macy’s and Bloomingdale's stores.
In connection with these announcements and the plans to dispose of these locations, the Company incurred severance and other human resource-related
costs and other costs related to lease obligations and other store liabilities.
As a result of the Company’s projected undiscounted future cash flows related to certain store locations and other assets being less than their carrying
value, the Company recorded impairment charges, including properties that were the subject of announced store closings. The fair values of these assets were
calculated based on the projected cash flows and an estimated risk-adjusted rate of return that would be used by market participants in valuing these assets or
based on prices of similar assets.
The Company expects to pay out the 2013 accrued severance costs, which are included in accounts payable and accrued liabilities on the Consolidated
Balance Sheets, prior to May 3, 2014. The 2012 and 2011 accrued severance costs, which were included in accounts payable and accrued liabilities on the
Consolidated Balance Sheets, were paid out in the fiscal year subsequent to incurring such severance costs.
During 2011, the Company recognized a gain on the sale of store leases related to the 2006 divestiture of Lord & Taylor, partially offset by impairment
charges and other costs and expenses related to store closings.
 
Receivables were $438 million at February 1, 2014, compared to $371 million at February 2, 2013.
In connection with the sale of most of the Company's credit card accounts and related receivable balances to Citibank, the Company and Citibank
entered into a long-term marketing and servicing alliance pursuant to the terms of a Credit Card Program Agreement (the “Program Agreement”) with an initial
term of 10 years expiring on July 17, 2016 and, unless terminated by either party as of the expiration of the initial term, an additional renewal term of three
years. The Program Agreement provides for, among other things, (i) the ownership by Citibank of the accounts purchased by Citibank, (ii) the ownership by
Citibank of new accounts opened by the Company’s customers, (iii) the provision of credit by Citibank to the holders of the credit cards associated with the
foregoing accounts, (iv) the servicing of the foregoing accounts, and (v) the allocation between Citibank and the Company of the economic benefits and
burdens associated with the foregoing and other aspects of the alliance.
Pursuant to the Program Agreement, the Company continues to provide certain servicing functions related to the accounts and related receivables owned
by Citibank and receives compensation from Citibank for these services. The amounts earned under the Program Agreement related to the servicing functions
are deemed adequate compensation and, accordingly, no servicing asset or liability has been recorded on the Consolidated Balance Sheets.
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