DEBT OBLIGATIONS

4 Months Ended

May 20, 2023

DEBT OBLIGATIONS

DEBT OBLIGATIONS

2. DEBT OBLIGATIONS

Long-term debt consists of:

	May 20,		January 28,
	2023		2023
1.70% to 8.00% Senior Notes due through 2049	$	10,218	$	10,215
Other		1,070		1,077
Total debt, excluding obligations under finance leases		11,288		11,292
Less current portion		(1,149)		(1,153)
Total long-term debt, excluding obligations under finance leases	$	10,139	$	10,139

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 May 20, 2023 and January 28, 2023. At May 20, 2023, the fair value of total debt was $10,300 compared to a carrying value of $11,288. At January 28, 2023, the fair value of total debt was $10,593 compared to a carrying value of $11,292.

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. The remainder of the notional amount of $3,000 of the forward-starting interest swaps were not designated as a cash-flow hedge. 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 May 20, 2023 and January 28, 2023, the fair value of the interest rate swaps designated as cash-flow hedges was $6 and $(116), respectively. As of May 20, 2023 and January 28, 2023, the amount included in “Accumulated other comprehensive income” is $4 and ($89), net of tax, respectively. As of May 20, 2023 and January 28, 2023, the fair value of forward-starting interest swaps not designated as cash-flow hedges were $(55) and $(142), respectively. During the first quarter of 2023, the Company recognized an unrealized gain of $87 related to these swaps that is included in “Loss on investments” in the Company’s Consolidated Statements of Operations.

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