DEBT OBLIGATIONS

4 Months Ended

May 25, 2024

DEBT OBLIGATIONS

DEBT OBLIGATIONS

2. DEBT OBLIGATIONS

Long-term debt consists of:

	May 25,		February 3,
	2024		2024
1.70% to 8.00% Senior Notes due through 2049	$	9,126	$	9,123
Other		1,060		1,064
Total debt, excluding obligations under finance leases		10,186		10,187
Less current portion		(22)		(25)
Total long-term debt, excluding obligations under finance leases	$	10,164	$	10,162

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 25, 2024 and February 3, 2024. At May 25, 2024, the fair value of total debt was $9,186 compared to a carrying value of $10,186. At February 3, 2024, the fair value of total debt was $9,401 compared to a carrying value of $10,187.

As of May 25, 2024 and February 3, 2024, the Company had five forward-starting interest rate swap agreements with a maturity date of August 1, 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 was designated as a cash-flow hedge as defined by GAAP. Accordingly, the changes in fair value of these forward-starting interest rate swaps are recorded to accumulated other comprehensive income and reclassified into net earnings when the hedged transaction affects net earnings. As of May 25, 2024, the fair value of the interest rate swaps designated as cash flow hedges was recorded in “Other assets” for $216 and accumulated other comprehensive income for $165, net of tax. As of February 3, 2024, the fair value of the interest rate swaps designated as cash flow hedges was recorded in “Other assets” for $125 and accumulated other comprehensive income for $95, net of tax.

The remainder of the notional amount of $3,000 of the forward-starting interest rate swaps was not designated as a cash-flow hedge. Accordingly, the changes in the fair value of these forward-starting interest rate swaps not designated as cash-flow hedges are recognized through net earnings. As of May 25, 2024, the fair value of these interest rate swaps was recorded in “Other Assets” for $111. During the first quarter of 2024, the Company recognized an unrealized gain of $79 related to these interest rate swaps that is included in “Gain (loss) on investments” in the Company’s Consolidated Statements of Operations. As of February 3, 2024, the fair value of these swaps was recorded in “Other Assets” for $35 and “Other long-term liabilities” for $3. During the first quarter of 2023, the Company recognized an unrealized gain of $87 related to these interest rate swaps that is included in “Gain (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.