DEBT OBLIGATIONS

6 Months Ended

Aug. 17, 2024

DEBT OBLIGATIONS

DEBT OBLIGATIONS

2. DEBT OBLIGATIONS

Long-term debt consists of:

	August 17,		February 3,
	2024		2024
1.70% to 8.00% Senior Notes due through 2049	$	9,128	$	9,123
Other		1,046		1,064
Total debt, excluding obligations under finance leases		10,174		10,187
Less current portion		(23)		(25)
Total long-term debt, excluding obligations under finance leases	$	10,151	$	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 August 17, 2024 and February 3, 2024. At August 17, 2024, the fair value of total debt was $9,472 compared to a carrying value of $10,174. At February 3, 2024, the fair value of total debt was $9,401 compared to a carrying value of $10,187.

In the second quarter of 2024, the Company terminated five forward-starting interest rate swaps with a maturity date of August 1, 2027 and an aggregate notional amount totaling $5,350. These forward-starting interest rate swaps were hedging the variability in future benchmark interest payments attributable to changing interest rates on the forecasted issuance of fixed-rate debt that was issued in the third quarter of 2024.  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 unamortized gain of $48, $36 net of tax, has been deferred in accumulated other comprehensive income and will be amortized to earnings as the interest payments are made.  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 were recognized through net earnings.  In the second quarters of 2024 and 2023, the Company recognized a realized loss of $133 and an unrealized gain of $112, respectively, related to these forward-starting interest rate swaps that is included in “(Loss) gain on investments” in the Company’s Consolidated Statements of Operations.  During the first two quarters of 2024 and 2023, the Company recognized a realized loss of $55 and an unrealized gain of $199, respectively, related to these forward-starting interest rate swaps that is included in “(Loss) gain on investments” in the Company’s Consolidated Statements of Operations.

In the second quarter of 2024, the Company entered into two 10-year treasury lock agreements with an aggregate notional amount of $2,100 and a weighted-average interest rate of 3.91% and two 30-year treasury lock agreements with an aggregate notional amount of $3,250 and a weighted-average interest rate of 4.11%.  These treasury locks are an agreement used to hedge the U.S. Treasury benchmark interest rate associated with future interest payments on the forecasted issuance of fixed-rate debt that was issued in the third quarter of 2024.  These treasury locks were designated as cash-flow hedges as defined by GAAP. Accordingly, the changes in fair value of these treasury locks are recorded to accumulated other comprehensive income and reclassified into net earnings when the hedged transaction affects net earnings.  As of August 17, 2024, the fair value of these treasury locks was recorded in “Other assets” for $9 and accumulated other comprehensive income for $7, net of tax.

For additional information about the Company’s unsecured bridge loan facility and term loan credit agreement, see Note 10 to the Consolidated Financial Statements.  For additional information about the Company’s completed senior notes issuances in the amount of $10,500, amended and restated unsecured revolving credit facility and the termination of the treasury locks, in each case completed subsequent to the second quarter of 2024, see Note 11 to the Consolidated Financial Statements.