Long Term Debt

4 Months Ended

Jun. 16, 2012

Long-Term Debt [Abstract]

LONG-TERM DEBT

NOTE 5 — LONG-TERM DEBT

The Company’s long-term debt and capital lease obligations consisted of the following:

	June 16, 2012			February 25, 2012
2.74% to 4.75% Revolving Credit Facility and Variable Rate Notes due April 2015 – April 2018	$	1,315		$	1,074
8.00% Notes due May 2016		1,000			1,000
7.45% Debentures due August 2029		650			650
7.50% Notes due November 2014		490			490
6.34% to 7.15% Medium Term Notes due July 2012 – June 2028		440			440
8.00% Debentures due May 2031		400			400
7.50% Notes due May 2012		—			282
8.00% Debentures due June 2026		272			272
8.70% Debentures due May 2030		225			225
7.75% Debentures due June 2026		200			200
7.25% Notes due May 2013		140			140
Accounts Receivable Securitization Facility		130			55
7.90% Debentures due May 2017		96			96
Other		51			52
Net discount on debt, using an effective interest rate of 6.28% to 8.97%		(212	)		(216	)
Capital lease obligations		1,091			1,096
Total debt and capital lease obligations		6,288			6,256
Less current maturities of long-term debt and capital lease obligations		(258	)		(388	)
Long-term debt and capital lease obligations	$	6,030		$	5,868

Certain of the Company’s credit facilities and long-term debt agreements have restrictive covenants and cross-default provisions which generally provide, subject to the Company’s right to cure, for the acceleration of payments due in the event of a breach of a covenant or a default in the payment of a specified amount of indebtedness due under certain other debt agreements. The Company was in compliance with all such covenants and provisions for all periods presented.

In June 2006, the Company entered into senior secured credit facilities provided by a group of lenders consisting of a five-year revolving credit facility (the “Revolving Credit Facility”), a five-year term loan (“Term Loan A”) and a six-year term loan (“Term Loan B”). On April 5, 2010, the Company entered into an Amended and Restated Credit Agreement (the “Credit Agreement”), which provided for an extension of the maturity of portions of the senior secured credit facilities provided under the original credit agreement. Specifically, $1,500 of the Revolving Credit Facility was extended until April 5, 2015, $500 of Term Loan B (“Term Loan B-2”) was extended until October 5, 2015, leaving $502 of unextended Term Loan B (“Term Loan B-1”) scheduled to mature on June 2, 2012. On June 2, 2011, the $600 unextended Revolving Credit Facility expired and Term Loan A matured and was paid.

On April 29, 2011, the Company entered into the First Amendment to the Credit Agreement (the “Amended Credit Agreement”) which provided for Term Loan B-1 lenders to extend all or a portion of their advances into either Term Loan B-2 or a new seven-year term loan (“Term Loan B-3”) and also allowed new lenders to participate in Term Loan B-3, leaving $250 in Term Loan B-1 which matured June 2, 2012 and was paid. Through the amendment, $86 of Term Loan B-1 was extended into Term Loan B-2 and $161 of Term Loan B-1 was extended into Term Loan B-3. In addition, Term Loan B-3 received $291 of new advances which were used to reduce short-term borrowings and to retire Term Loan A at its maturity. Term Loan B-3 matures on April 29, 2018.

Refer to Note 11 – Subsequent Events for information relating to asset based lending and term loan facility underwritten commitments received from lending institutions on July 9, 2012.

The fees and rates in effect on outstanding borrowings under the senior secured credit facilities are based on the Company’s current credit ratings. As of June 16, 2012, there was $292 of outstanding borrowings under the Revolving Credit Facility at rates ranging from LIBOR plus 2.50 percent to Prime plus 1.50 percent. Term Loan B-2 had a remaining principal balance of $576 at LIBOR plus 3.25 percent, of which $6 was classified as current. Term Loan B-3 had a remaining principal balance of $447 at LIBOR plus 3.50 percent with a 1.00 percent LIBOR floor, of which $5 was classified as current. Letters of credit outstanding under the Revolving Credit Facility were $290 at fees up to 2.75 percent and the unused available credit under the Revolving Credit Facility was $917. The Company also had $1 of outstanding letters of credit issued under separate agreements with financial institutions. These letters of credit primarily support workers’ compensation, merchandise import programs and payment obligations. Facility fees under the Revolving Credit Facility are 0.625 percent. Borrowings under the term loans may be paid, in full or in part, at any time without penalty.

Under the Amended Credit Agreement, the Company must maintain a leverage ratio no greater than 4.0 to 1.0 from December 31, 2011 through December 30, 2012 and 3.75 to 1.0 thereafter. The Company’s leverage ratio was 3.64 to 1.0 at June 16, 2012. Additionally, the Company must maintain a fixed charge coverage ratio of not less than 2.25 to 1.0 from December 31, 2011 through December 30, 2012 and 2.3 to 1.0 thereafter. The Company’s fixed charge coverage ratio was 2.50 to 1.0 at June 16, 2012.

All obligations under the senior secured credit facilities are guaranteed by each material subsidiary of the Company. The obligations are also secured by a pledge of the equity interests in those same material subsidiaries, limited as required by the existing public indentures of the Company, such that the respective debt issued need not be equally and ratably secured.

In November 2011, the Company amended and extended its accounts receivable securitization program until November 2014. The Company can borrow up to $200 on a revolving basis, with borrowings secured by eligible accounts receivable, which remain under the Company’s control. As of June 16, 2012, there was $130 of outstanding borrowings under this facility at 1.38 percent. Facility fees on the unused portion are 0.50 percent. As of June 16, 2012, there was $294 of accounts receivable pledged as collateral, classified in Receivables in the Condensed Consolidated Balance Sheet.

As of June 16, 2012, the Company had $28 of debt with current maturities that are classified as long-term debt due to the Company’s intent to refinance such obligations with the Revolving Credit Facility or other long-term debt.