Macy's 2014 Annual Report Download - page 31

26
The credit agreement requires the Company to maintain a specified interest coverage ratio for the latest four quarters
of no less than 3.25 and a specified leverage ratio as of and for the latest four quarters of no more than 3.75. The
Company's interest coverage ratio for 2014 was 9.68 and its leverage ratio at January 31, 2015 was 1.83, in each case as
calculated in accordance with the credit agreement. The interest coverage ratio is defined as EBITDA divided by net
interest expense and the leverage ratio is defined as debt divided by EBITDA. For purposes of these calculations EBITDA
is calculated as net income plus interest expense, taxes, depreciation, amortization, non-cash impairment of goodwill,
intangibles and real estate, non-recurring cash charges not to exceed in the aggregate $400 million and extraordinary losses
less interest income and non-recurring or extraordinary gains. Debt is adjusted to exclude the premium on acquired debt
and net interest is adjusted to exclude the amortization of premium on acquired debt and premium on early retirement of
debt.
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.
At January 31, 2015, no notes or debentures contain provisions requiring acceleration of payment upon a debt rating
downgrade. However, the terms of approximately $4,300 million in aggregate principal amount of the Company's senior
notes outstanding at that date require the Company to offer to purchase such notes at a price equal to 101% of their
principal amount plus accrued and unpaid interest in specified circumstances involving both a change of control (as defined
in the applicable indenture) of the Company and the rating of the notes by specified rating agencies at a level below
investment grade.
The Company's board of directors approved an additional authorization to purchase Common Stock of $1,500
million on May 14, 2014. During 2014, the Company repurchased approximately 31.9 million shares of its common stock
for a total of $1,900 million. As of January 31, 2015, the Company had $1,032 million of authorization remaining under its
share repurchase program. The Company may continue or, from time to time, suspend repurchases of shares under its share
repurchase program, depending on prevailing market conditions, alternate uses of capital and other factors.
On February 27, 2015, the Company's board of directors declared a quarterly dividend of 31.25 cents per share on its
common stock, payable April 1, 2015 to Macy's shareholders of record at the close of business on March 13, 2015.