Macy's 2015 Annual Report Download - page 32

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Liquidity and Capital Resources
The Company's principal sources of liquidity are cash from operations, cash on hand and the credit facility described
below.
Operating Activities
Net cash provided by operating activities was $1,984 million in 2015 compared to $2,709 million in 2014, reflecting
lower net income.
Investing Activities
Net cash used by investing activities for 2015 was $1,092 million, compared to net cash used by investing activities
of $970 million for 2014. Investing activities for 2015 includes the acquisition of Bluemercury, Inc., net of cash acquired,
for $212 million. Investing activities for 2015 also includes purchases of property and equipment totaling $777 million and
capitalized software of $336 million, compared to purchases of property and equipment totaling $770 million and
capitalized software of $298 million for 2014. Cash flows from investing activities included $204 million and $172 million
from the disposition of property and equipment for 2015 and 2014, respectively. At January 30, 2016, the Company had
approximately $57 million of cash in a qualified escrow account, included in prepaid expenses and other current assets, to
be utilized for potential tax deferred like-kind exchange transactions.
During 2015, the Company opened one new Macy's store, one new Bloomingdale's store, three new Bloomingdale's
Outlet stores and six new Macy's Backstage stores. Additionally, 15 new Bluemercury stores have opened since the
acquisition in March 2015. During 2014, the Company opened three new Macy's stores, one Bloomingdale's replacement
store, and one new Bloomingdale's furniture clearance store.
In 2015, the Company launched the marketing of potential partnership and joint venture transactions for certain of its
real estate. This includes the owned mall-based properties, as well as Macy's flagship real estate assets in Manhattan
(Herald Square), San Francisco (Union Square), Chicago (State Street) and Minneapolis (downtown Nicollet Mall). In
addition, the Company will also continue to pursue selected real estate dispositions and monetize assets in instances where
the business is simultaneously enhanced or where the value of real estate significantly outweighs the value of the retail
business.
Financing Activities
Net cash used by the Company for financing activities was $2,029 million for 2015, including the acquisition of the
Company's common stock under its share repurchase program at an approximate cost of $2,000 million, the repayment of
$152 million of debt and the payment of $456 million of cash dividends, partially offset by the issuance of $500 million of
debt, the issuance of $163 million of common stock, primarily related to the exercise of stock options, and a decrease in
outstanding checks of $83 million. $500 million aggregate principal amount of 3.450% senior unsecured notes due 2021
were issued in 2015.
On June 1, 2015, the Company repaid $69 million of 7.5% senior debentures at maturity. On August 17, 2015, the
Company redeemed at par the principal amount of $76 million of 8.125% senior debentures due 2035, pursuant to the
terms of the debentures. Interest expense in 2015 benefited from the recognition of unamortized debt premium associated
with the $76 million of 8.125% senior debentures.
Net cash used by the Company for financing activities was $1,766 million for 2014 and included the acquisition of
the Company's common stock under its share repurchase program at an approximate cost of $1,900 million, the repayment
of $870 million of debt and the payment of $421 million of cash dividends, partially offset by the issuance of $1,050
million of debt, the issuance of $258 million of common stock, primarily related to the exercise of stock options, and an
increase in outstanding checks of $133 million. $550 million aggregate principal amount of 4.5% senior notes due 2034
and $500 million aggregate principal amount of 3.625% senior unsecured notes due 2024 were issued in 2014.
On November 14, 2014, the Company provided a notice of redemption related to all of the $407 million of 7.875%
senior notes due 2015, as allowed under the terms of the indenture. The price for the redemption was calculated pursuant to
the indenture and resulted in the recognition of additional interest expense of $17 million during 2014. This additional
interest expense is presented as premium on early retirement of debt on the Consolidated Statements of Income. Debt
repaid during 2014 also included $453 million of 5.75% senior notes due July 15, 2014 paid at maturity.