Macy's 2014 Annual Report Download - page 61

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
F-14
2. Impairments, Store Closing and Other Costs
Impairments, store closing and other costs consist of the following:
2014 2013 2012
(millions)
Impairments of properties held and used ................................................. $ 33 $ 39 $ 4
Severance ................................................................................................. 46 43 3
Other......................................................................................................... 8 6 (2)
$ 87 $ 88 $ 5
During January 2015, the Company announced a series of initiatives to evolve its business model and invest in
continued growth opportunities, including a restructuring of merchandising and marketing functions at Macy's and
Bloomingdale's consistent with the Company's omnichannel approach to retailing, as well as a series of adjustments to its
field and store operations to increase productivity and efficiency.
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 2015, the Company announced the closure of fourteen Macy's stores; during January 2014, the
Company announced the closure of five Macy's stores; and during January 2013, the Company announced the closure of
six 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 2014 accrued severance costs, which are included in accounts payable and
accrued liabilities on the Consolidated Balance Sheets, prior to May 2, 2015. The 2013 and 2012 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.
3. Receivables
Receivables were $424 million at January 31, 2015, compared to $438 million at February 1, 2014.
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 with an initial term of 10 years which was to expire on July 17, 2016. During 2014, the
Company entered into an amended and restated Credit Card Program Agreement (the “Program Agreement”) with
substantially similar financial terms as the prior credit card program agreement. The Program Agreement is now set to
expire March 31, 2025, subject to 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.