DEBT OBLIGATIONS

9 Months Ended

Nov. 05, 2022

DEBT OBLIGATIONS

DEBT OBLIGATIONS

2. DEBT OBLIGATIONS

Long-term debt consists of:

	November 5,		January 29,
	2022		2022
1.70% to 8.00% Senior Notes due through 2049	$	10,213	$	10,607
Other		1,101		1,138
Total debt, excluding obligations under finance leases		11,314		11,745
Less current portion		(650)		(451)
Total long-term debt, excluding obligations under finance leases	$	10,664	$	11,294

The fair value of the Company’s long-term debt, including current maturities, was estimated based on the quoted market prices for the same or similar issues adjusted for illiquidity based on available market evidence. If quoted market prices were not available, the fair value was based upon the net present value of the future cash flow using the forward interest rate yield curve in effect at November 5, 2022 and January 29, 2022. At November 5, 2022, the fair value of total debt was $9,805 compared to a carrying value of $11,314. At January 29, 2022, the fair value of total debt was $13,189 compared to a carrying value of $11,745.

In the first three quarters of 2022, the Company repaid $400 of senior notes bearing an interest rate of 2.80% using cash on hand.

In the third quarter of 2021, the Company repaid $500 of senior notes bearing an interest rate of 2.95% using cash on hand. Additionally, in the first three quarters of 2021, the Company repaid $300 of senior notes bearing an interest rate of 2.60% using cash on hand.

In the third quarter of 2022, the Company entered into five forward-starting interest rate swap agreements with a maturity date of August 2027 with an aggregate notional amount totaling $5,350. A forward-starting interest rate swap is an agreement that effectively hedges the variability in future benchmark interest payments attributable to changes in interest rates on the forecasted issuance of fixed-rate debt. The Company entered into these forward-starting interest rate swaps in order to lock in fixed interest rates on its forecasted issuances of debt. A notional amount of $2,350 of these forward-starting interest rate swaps were designated as cash-flow hedges as defined by GAAP. Accordingly, the changes in fair value of these forward-starting interest rate swaps are recorded to other comprehensive income and reclassified into net earnings when the hedged transaction affects net earnings. As of November 5, 2022, the fair value of these interest rate swaps was recorded in other assets for $48 and accumulated other comprehensive income for $37 net of tax. The remainder of the notional amount of $3,000 of the forward-starting interest swaps were not designated as cash-flow hedges. Accordingly, the changes in the fair value of the forward-starting interest rate swaps not designated as cash-flow hedges are recognized through net earnings. As of November 5, 2022, the fair value of these swaps was recorded in other assets and other long-term liabilities for $19 and $1, respectively. During the third quarter and the first three quarters of 2022, the Company recognized an unrealized gain of $18 that is included in “Loss on investments” in the Company’s Consolidated Statements of Operations.

During the first quarter of 2021, the Company acquired 28, previously leased, properties for a purchase price of $455. Separately, the Company also entered into a transaction to sell those properties to a third party for total proceeds of $621. Total cash proceeds received as a result of the transactions was $166. The sale transaction did not qualify for sale-leaseback accounting treatment. As a result, the Company recorded property, plant and equipment for the $455 price paid and recorded a $621 financing obligation. The leases have a base term of 25 years and twelve option periods of five years each. The Company has the option to purchase the individual properties for fair market value at the end of the base term or at the end of any option period. The Company is obligated to repurchase the properties at the end of the base term for $300 if the lessor exercises its put option.

For additional information about the Company’s unsecured bridge loan facility and term loan credit agreement, see Note 10 to the Consolidated Financial Statements.