Macy’s, Inc. Acts to Amend Bank Credit Facility

CINCINNATI--(BUSINESS WIRE)--Macy’s, Inc. (NYSE:M) today announced that it has entered into an agreement to amend its existing bank credit agreement, led by Bank of America and J.P. Morgan. The size of the company’s credit facility ($2 billion) and its maturity date (Aug. 31, 2012) remain unchanged, providing substantial liquidity for the company to weather the current economic downturn.

“We have a long and productive relationship with the financial community, and we are pleased that with the ongoing support of our bank group we are able to provide protection for all of our stakeholders”

“Macy’s is managing its capital structure and credit facilities in a prudent and conservative manner,” said Terry J. Lundgren, Macy’s, Inc. chairman, president and chief executive officer. “While we have remained well within the requirements of the existing bank credit agreement and expect to remain so, we believe it was appropriate to proactively pursue amendments that would permit continued financial flexibility in the current uncertain economic environment. Especially given our strong cash flow and healthy balance sheet, this action should remove any question about the financial strength of Macy’s, Inc., including our ability to retire $950 million in debt that is maturing in 2009.

The amendment updates both financial covenants of the bank credit agreement. First, a leverage covenant moves from debt-to-capitalization to debt-to-EBITDA (earnings before interest, taxes, depreciation and amortization), a more market-based approach that eliminates from the calculation any potential future non-cash goodwill or asset impairment charges. In addition, the interest coverage ratio was reduced to 3.0 times (versus the current 3.25 times) through Oct. 30, 2010, when it then reverts to 3.25. In return for these covenant changes, fees and pricing were increased, as was credit protection. Subject to the satisfaction or waiver of specified conditions, all of which are in the company’s control, the agreement will become effective on Jan. 5, 2009

“We have a long and productive relationship with the financial community, and we are pleased that with the ongoing support of our bank group we are able to provide protection for all of our stakeholders,” Lundgren added.

The company noted that it has no current borrowings against this credit agreement, and the 2008 fall season peak borrowing needs (now fully repaid) were $163 million, compared to approximately $1 billion last year.

Macy's, Inc., with corporate offices in Cincinnati and New York, is one of the nation's premier retailers, with fiscal 2007 sales of $26.3 billion. The company operates more than 850 department stores in 45 states, the District of Columbia, Guam and Puerto Rico under the names of Macy's and Bloomingdale's. The company also operates macys.com, bloomingdales.com and Bloomingdale's By Mail. Prior to June 1, 2007, Macy's, Inc. was known as Federated Department Stores, Inc.

All statements in this press release that are not statements of historical fact are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are based upon the current beliefs and expectations of Macy’s management and are subject to significant risks and uncertainties. Actual results could differ materially from those expressed in or implied by the forward-looking statements contained in this release because of a variety of factors, including conditions to, or changes in the timing of, proposed transactions, prevailing interest rates, competitive pressures from specialty stores, general merchandise stores, manufacturers' outlets, off-price and discount stores, new and established forms of home shopping (including the Internet, mail-order catalogs and television) and general consumer spending levels, including the impact of the availability and level of consumer debt, the effect of weather and other factors identified in documents filed by the company with the Securities and Exchange Commission.

(NOTE: Additional information on Macy’s, Inc., including past news releases, is available at www.macysinc.com/pressroom)