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Financing | 12 Months Ended
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Jan. 29, 2022
Debt Disclosure [Abstract] |
Financing |
| 6. | Financing
The Company’s debt is as follows:
|  | January 29, |  |  | January 30, |
|  | 2022 |  |  | 2021 |
|  | (millions) |
Short-term debt: |  |  |  |  |  |  |  |
3.875% Senior notes due 2022 |  | $ | — |  |  | $ | 450 |
Current portion of other long-term obligations |  |  | — |  |  |  | 2 |
|  | $ | — |  |  | $ | 452 |
Long-term debt: |  |  |  |  |  |  |  |
8.375% Senior secured notes due 2025 |  | $ | — |  |  | $ | 1,300 |
2.875% Senior notes due 2023 |  |  | 504 |  |  |  | 640 |
5.875% Senior notes due 2029 |  |  | 500 |  |  |  | — |
4.5% Senior notes due 2034 |  |  | 367 |  |  |  | 367 |
3.625% Senior notes due 2024 |  |  | 350 |  |  |  | 500 |
5.125% Senior notes due 2042 |  |  | 250 |  |  |  | 250 |
4.3% Senior notes due 2043 |  |  | 250 |  |  |  | 250 |
6.375% Senior notes due 2037 |  |  | 192 |  |  |  | 192 |
6.7% Senior secured debentures due 2034 |  |  | 183 |  |  |  | 183 |
4.375% Senior notes due 2023 |  |  | 161 |  |  |  | 210 |
7.0% Senior debentures due 2028 |  |  | 105 |  |  |  | 105 |
6.65% Senior secured debentures due 2024 |  |  | 81 |  |  |  | 81 |
6.9% Senior debentures due 2029 |  |  | 79 |  |  |  | 79 |
6.7% Senior secured debentures due 2028 |  |  | 74 |  |  |  | 74 |
6.79% Senior debentures due 2027 |  |  | 71 |  |  |  | 71 |
6.65% Senior debentures due 2024 |  |  | 36 |  |  |  | 41 |
6.7% Senior debentures due 2028 |  |  | 29 |  |  |  | 29 |
8.75% Senior secured debentures due 2029 |  |  | 13 |  |  |  | 13 |
6.7% Senior debentures due 2034 |  |  | 18 |  |  |  | 18 |
6.9% Senior debentures due 2032 |  |  | 12 |  |  |  | 12 |
7.6% Senior debentures due 2025 |  |  | 6 |  |  |  | 24 |
7.875% Senior secured debentures due 2030 |  |  | 5 |  |  |  | 5 |
6.9% Senior secured debentures due 2032 |  |  | 5 |  |  |  | 5 |
7.875% Senior debentures due 2030 |  |  | 5 |  |  |  | 5 |
Unamortized debt issue costs and discount |  |  | (22 | ) |  |  | (77 | )
Premium on acquired debt, using an effective interest yield of 5.760% to 6.021% |  |  | 21 |  |  |  | 30 |
|  | $ | 3,295 |  |  | $ | 4,407 |
Interest expense and losses on early retirement of debt are as follows:
|  | 2021 |  |  | 2020 |  |  | 2019 |
|  |  |  |  |  | (millions) |  |  |  |  |
Interest on debt |  | $ | 246 |  |  | $ | 273 |  |  | $ | 211 |
Amortization of debt premium |  |  | (3 | ) |  |  | (4 | ) |  |  | (5 | )
Amortization of financing costs and debt discount |  |  | 26 |  |  |  | 23 |  |  |  | 6 |
Interest on finance leases |  |  | 1 |  |  |  | 1 |  |  |  | 2 |
|  |  | 270 |  |  |  | 293 |  |  |  | 214 |
Less interest capitalized on construction |  |  | 14 |  |  |  | 9 |  |  |  | 9 |
Interest expense |  | $ | 256 |  |  | $ | 284 |  |  | $ | 205 |
Losses on early retirement of debt |  | $ | 199 |  |  | $ | — |  |  | $ | 30 |
2021 Financing Activities On October 15, 2021, the Company redeemed the entire outstanding $294 million aggregate principal amount of its 3.875% senior notes due 2022 (the “2022 Notes”). The redemption price was equal to 100% of the outstanding principal amount of the 2022 Notes ($294 million), plus accrued and unpaid interest of $3 million. On August 17, 2021, the Company redeemed the entire outstanding $1.3 billion aggregate principal amount of its 8.375% senior secured notes due 2025 (the “2025 Notes”). The redemption price was equal to 100% of the outstanding principal amount of the 2025 Notes ($1.3 billion), plus accrued and unpaid interest of $19 million, plus the applicable premium due to holders of the 2025 Notes in connection with the early redemption of $138 million, plus unamortized deferred debt costs of $47 million. The Company recognized the redemption premium and unamortized deferred debt costs of $185 million as losses on early retirement of debt during the third quarter of 2021. On March 17, 2021, Macy’s Retail Holdings, LLC (“MRH”), a direct, wholly owned subsidiary of Macy’s, Inc., issued $500 million in aggregate principal amount of 5.875% senior notes due 2029 (the “2029 Notes”) in a private offering (the “Notes Offering”). The 2029 Notes mature on April 1, 2029. The 2029 Notes are senior unsecured obligations of MRH and are unconditionally guaranteed on a senior unsecured basis by Macy’s, Inc. MRH used the net proceeds from the Notes Offering, together with cash on hand, to fund the tender offer discussed below. On March 17, 2021, the Company completed a tender offer in which $500 million of senior notes and debentures were tendered for early settlement and purchased by MRH. The total cash cost for the tender offer was $17 million with the remainder funded through the net proceeds from the Notes Offering discussed above. The Company recognized $11 million of losses on early retirement of debt during the first quarter of 2021. 2020 Financing Activities Secured Debt Issuance On June 8, 2020, the Company issued $1.3 billion aggregate principal amount of 8.375% senior secured notes due 2025. The 2025 Notes bore interest at a rate of 8.375% per annum, which accrued from June 8, 2020 and was payable in arrears on June 15 and December 15 of each year, commencing on December 15, 2020. The 2025 Notes mature on June 15, 2025, unless earlier redeemed or repurchased, and were subject to the terms and conditions set forth in the related indenture. The 2025 Notes were issued by Macy’s, Inc. and were secured on a first-priority basis by (i) a first mortgage/deed of trust in certain real property of subsidiaries of Macy’s, Inc. that was transferred to subsidiaries of PropCo, a newly created direct, wholly owned subsidiary of Macy’s, Inc., and (ii) a pledge by Propco of the equity interests in its subsidiaries that own such transferred real property. The 2025 Notes were, jointly and severally, unconditionally guaranteed on a secured basis by Propco and its subsidiaries and unconditionally guaranteed on an unsecured basis by MRH, a direct, wholly owned subsidiary of Macy’s, Inc. In fiscal 2021, the Company redeemed the entire outstanding $1.3 billion aggregate principal amount. Asset-Based Credit Facility On June 8, 2020, the ABL Borrower, an indirect wholly owned subsidiary of the Company, and its parent, the ABL Parent, entered into the ABL Credit Facility with Bank of America, N.A., as administrative agent and collateral agent, and the lenders party thereto. The ABL Credit Facility provides the ABL Borrower with a $2,941 million revolving credit facility (the “Revolving ABL Facility”), including a swingline sub-facility and a letter of credit sub-facility. The ABL Borrower may request increases in the size of the Revolving ABL Facility up to an additional aggregate principal amount of $750 million. As of January 29, 2022, the Company had $116 million of standby letters of credit outstanding under the ABL Credit Facility, which reduces the available borrowing capacity. There were $585 million of borrowings and repayments under the ABL Credit Facility in fiscal 2021 and therefore no borrowings outstanding as of January 29, 2022. There were no borrowings under the ABL Credit Facility in 2020. Additionally, on June 8, 2020 and concurrently with closing the ABL Credit Facility, the ABL Borrower purchased all presently existing inventory, and assumed the liabilities in respect of all presently existing and outstanding trade payables owed to vendors in respect of such inventory, from MRH and certain wholly owned subsidiaries of MRH. The ABL Credit Facility is secured on a first priority basis (subject to customary exceptions) by (i) all assets of the ABL Borrower including all such inventory and the proceeds thereof and (ii) the equity of the ABL Borrower. The ABL Parent guaranteed the ABL Borrower’s obligations under the ABL Credit Facility. The Revolving ABL Facility matures on May 9, 2024. The ABL Credit Facility contains customary borrowing conditions including a borrowing base equal to the sum of (a) 80% (which automatically increased to 90% during fiscal 2021 upon the satisfaction of certain conditions, including the delivery of an initial appraisal of the inventory) of the net orderly liquidation percentage of eligible inventory, minus (b) customary reserves. Amounts borrowed under the ABL Credit Facility are subject to interest at a rate per annum equal to (i) prior to the Step Down Date (as defined in the ABL Credit Facility), at the ABL Borrower’s option, either (a) adjusted LIBOR plus a margin of 2.75% to 3.00% or (b) a base rate plus a margin of 1.75% to 2.00%, in each case depending on revolving line utilization and (ii) after the Step Down Date, at the ABL Borrower’s option, either (a) adjusted LIBOR plus a margin of 2.25% to 2.50% or (b) a base rate plus a margin of 1.25% to 1.50%, in each case depending on revolving line utilization. The ABL Credit Facility also contains customary covenants that provide for, among other things, limitations on indebtedness, liens, fundamental changes, restricted payments, cash hoarding, and prepayment of certain indebtedness as well as customary representations and warranties and events of default typical for credit facilities of this type. The ABL Credit Facility also requires (1) the Company and its restricted subsidiaries to maintain a fixed charge coverage ratio of at least 1.00 to 1.00 as of the end of any fiscal quarter on or after April 30, 2021, if (a) certain events of default have occurred and are continuing or (b) Availability plus Suppressed Availability (each as defined in the ABL Credit Facility) is less than the greater of (x) 10% of the Loan Cap (as defined in the ABL Credit Facility) and (y) $250 million, in each case, as of the end of such fiscal quarter and (2) prior to April 30, 2021, that the ABL Borrower not permit Availability plus Suppressed Availability to be lower than the greater of (x) 10% of the Loan Cap and (y) $250 million. Amendment to Existing Credit Agreement On June 8, 2020, the Company substantially reduced the credit commitments of its existing $1,500 million unsecured credit agreement, which as of both January 29, 2022 and January 30, 2021 provided the Company with unsecured revolving credit of up to $1 million. Exchange Offers and Consent Solicitations for Certain Outstanding Debt Securities of MRH During the second quarter of 2020, MRH completed exchange offers (each, an “Exchange Offer” and, collectively, the “Exchange Offers”) with eligible holders and received related consents in consent solicitations for each series of notes as follows: (i) $81 million aggregate principal amount of 6.65% Senior Secured Debentures due 2024 (“New 2024 Notes”) issued by MRH for validly tendered (and not validly withdrawn) outstanding 6.65% Senior Debentures due 2024 issued by MRH (“Old 2024 Notes”); (ii) $74 million aggregate principal amount of 6.7% Senior Secured Debentures due 2028 (“New 2028 Notes”) issued by MRH for validly tendered (and not validly withdrawn) outstanding 6.7% Senior Debentures due 2028 issued by MRH (“Old 2028 Notes”); (iii) $13 million aggregate principal amount of 8.75% Senior Secured Debentures due 2029 (“New 2029 Notes”) issued by MRH for validly tendered (and not validly withdrawn) outstanding 8.75% Senior Debentures due 2029 issued by MRH (“Old 2029 Notes”); (iv) $5 million aggregate principal amount of 7.875% Senior Secured Debentures due 2030 (“New 2030 Notes”) issued by MRH for validly tendered (and not validly withdrawn) outstanding 7.875% Senior Debentures due 2030 issued by MRH (“Old 2030 Notes”); (v) $5 million aggregate principal amount of 6.9% Senior Secured Debentures due 2032 (“New 2032 Notes”) issued by MRH for validly tendered (and not validly withdrawn) outstanding 6.9% Senior Debentures due 2032 issued by MRH (“Old 2032 Notes”); and (vi) $183 million aggregate principal amount of 6.7% Senior Secured Debentures due 2034 (“New 2034 Notes” and, together with the New 2024 Notes, New 2028 Notes, New 2029 Notes, New 2030 Notes and New 2032 Notes, the “New Notes” and each series, a “series of New Notes”) issued by MRH for validly tendered (and not validly withdrawn) outstanding 6.7% Senior Debentures due 2034 issued by MRH (“Old 2034 Notes” and, together with the Old 2024 Notes, Old 2028 Notes, Old 2029 Notes, Old 2030 Notes and Old 2032 Notes, the “Old Notes” and each series, a “series of Old Notes”). Each New Note issued in the Exchange Offers for a validly tendered Old Note has an interest rate and maturity date that is identical to the interest rate and maturity date of the tendered Old Note, as well as identical interest payment dates and optional redemption prices. The New Notes are MRH’s and Macy’s general, senior obligations and are secured by a second-priority lien on the same collateral securing the Notes. Following the settlement, the aggregate principal amounts of each series of Old Notes outstanding are: (i) $41 million Old 2024 Notes, (ii) $29 million Old 2028 Notes, (iii) $5 million Old 2030 Notes, (iv) $12 million Old 2032 Notes and (v) $18 million Old 2034 Notes. In addition, MRH solicited and received consents from holders of each series of Old Notes (each, a “Consent Solicitation” and, collectively, the “Consent Solicitations”) pursuant to a separate Consent Solicitation Statement to adopt certain proposed amendments to the indenture governing the Old Notes (the “Existing Indenture”) to conform certain provisions in the negative pledge covenant in the Existing Indenture to the provisions of the negative pledge covenant in MRH’s most recent indenture (the “Proposed Amendments”). MRH received consents from holders of (i) $85 million aggregate principal amount of outstanding Old 2024 Notes, (ii) $77 million aggregate principal amount of outstanding Old 2028 Notes, (iii) $13 million aggregate principal amount of outstanding Old 2029 Notes, (iv) $5 million aggregate principal amount of outstanding Old 2030 Notes, (v) $6 million aggregate principal amount of outstanding Old 2032 Notes and (vi) $185 million aggregate principal amount of outstanding Old 2034 Notes. 2019 Financing Activities During December 2019, the Company completed a tender offer and purchased $525 million in aggregate principal amount of certain senior unsecured notes and debentures. The purchased senior unsecured notes and debentures included $190 million of 4.375% senior notes due 2023, $113 million of 6.9% senior debentures due 2029, $110 million of 2.875% senior notes due 2023, $100 million of 3.875% senior notes due 2022, and $12 million of 7.0% senior debentures due 2028. The total cash cost for the tender offer was $553 million. The Company recognized $30 million of expense related to the recognition of the tender premium and other costs including deferred debt discount amortization. This expense is presented as losses on early retirement of debt on the Consolidated Statements of Operations during 2019. Long-Term Debt Maturities Future maturities of long-term debt are shown below:
|  | (millions) |
Fiscal year |  |  |  |
2023 |  | $ | 665 |
2024 |  |  | 467 |
2025 |  |  | 6 |
2026 |  |  | — |
2027 |  |  | 71 |
After 2027 |  |  | 2,086 |
Debt Repayments The following table shows the detail of debt repayments:
|  | 2021 |  |  | 2020 |  |  | 2019 |
|  |  |  |  |  | (millions) |  |  |  |  |
8.375% Senior secured notes due 2025 |  | $ | 1,300 |  |  | $ | — |  |  | $ | — |
Revolving credit facility |  |  | 585 |  |  |  | 1,500 |  |  |  | — |
3.875% Senior notes due 2022 |  |  | 450 |  |  |  | — |  |  |  | 100 |
3.625% Senior notes due 2024 |  |  | 150 |  |  |  | — |  |  |  | — |
2.875% Senior notes due 2023 |  |  | 136 |  |  |  | — |  |  |  | 110 |
4.375% Senior notes due 2023 |  |  | 49 |  |  |  | — |  |  |  | 190 |
7.6% Senior debentures due 2025 |  |  | 18 |  |  |  | — |  |  |  | — |
6.65% Senior debentures due 2024 |  |  | 5 |  |  |  | — |  |  |  | — |
3.45% Senior notes due 2021 |  |  | — |  |  |  | 500 |  |  |  | — |
10.25% Senior debentures due 2021 |  |  | — |  |  |  | 33 |  |  |  | — |
6.9% Senior debentures due 2029 |  |  | — |  |  |  | — |  |  |  | 113 |
7.0% Senior debentures due 2028 |  |  | — |  |  |  | — |  |  |  | 12 |
8.5% Senior debentures due 2019 |  |  | — |  |  |  | — |  |  |  | 36 |
9.5% amortizing debentures due 2021 |  |  | 2 |  |  |  | 4 |  |  |  | 4 |
9.75% amortizing debentures due 2021 |  |  | 1 |  |  |  | 2 |  |  |  | 2 |
|  | $ | 2,696 |  |  | $ | 2,039 |  |  | $ | 567 |
Other Debt Obligations The following summarizes certain components of the Company’s other debt obligations: Bank Credit Agreement On May 9, 2019, the Company entered into a new credit agreement with certain financial institutions that replaced the previous credit agreement which was set to expire on May 6, 2021. Similar to the previous agreement, the new credit agreement provided for revolving credit borrowings and letters of credit in an aggregate amount not to exceed $1,500 million (which could increase to $1,750 million at the option of the Company, subject to the willingness of existing or new lenders to provide commitments for such additional financing). The new credit agreement is scheduled to expire on May 9, 2024, subject to up to two one-year extensions that could be requested by the Company and agreed to by the lenders. The unsecured revolving credit facility contains covenants that provide for, among other things, limitations on fundamental changes, use of proceeds, and maintenance of property, as well as customary representations and warranties and events of default. As of January 29, 2022 and January 30, 2021, there were no revolving credit loans outstanding under the credit agreement. Senior Notes and Debentures The senior notes and the senior debentures are unsecured obligations of a 100%-owned subsidiary of Macy’s, Inc. and Parent has fully and unconditionally guaranteed these obligations. Other Financing Arrangements There were $116 million and $142 million, respectively, of other standby letters of credit outstanding at January 29, 2022 and January 30, 2021. Subsequent Event 2022 Financing Activities On March 3, 2022, the ABL Borrower entered into a third amendment to the ABL Credit Facility which provides for a new revolving credit facility of $3.0 billion, including a swingline sub-facility and a letter of credit sub-facility (the “New ABL Credit Facility). The New ABL Credit Facility replaces the ABL Credit Facility, with consistent collateral support, but reduced interest and unused facility fees. Amounts borrowed under the New ABL Credit Facility are subject to interest at a rate per annum equal to, at the ABL Borrower’s option, either (i) adjusted SOFR (calculated to include a 0.10% credit adjustment spread) plus a margin of 1.25% to 1.50% or (ii) a base rate plus a margin of 0.25% to 0.50%, in each case depending on revolving line utilization. The New ABL Credit Facility matures in March 2027. On March 8, 2022, MRH completed a tender offer in which $8 million of senior secured notes (“Second Lien Notes”) were tendered for early settlement and purchased by MRH in an amount equal to 100% of the aggregate principal amount. Pursuant to the indenture governing the Second Lien Notes, the collateral that secured the remaining $352 million of Second Lien Notes was automatically released on March 8, 2022. On March 10, 2022, MRH issued $850 million in aggregate principal amount of senior notes in two separate tranches, one representing $425 million in aggregate principal amount of 5.875% senior notes due 2030 (the “2030 Notes”) and the other representing $425 million in aggregate principal amount of 6.125% senior notes due 2032 (the “2032 Notes”), in a private offering. The 2030 Notes mature on March 15, 2030 and the 2032 Notes mature on March 15, 2032. Each of the 2030 Notes and 2032 Notes are senior unsecured obligations of MRH and are unconditionally guaranteed on an unsecured basis by Macy’s, Inc. Proceeds from the issuance, together with cash on hand, were used to redeem certain of its outstanding senior notes and pay fees and expenses in connection with the offering.

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1B -Subparagraph (h) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1C -Subparagraph (c) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1I -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1I -Subparagraph (d) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(c)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1B -Subparagraph (g) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1C -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1C -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1E -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495348-112611 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1B -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1I -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -SubTopic 20 -Section 50 -Paragraph 1B -Subparagraph (i) -URI http://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611 + Details
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