Debt and Derivative Instruments

12 Months Ended

Feb. 02, 2020

DEBT AND DERIVATIVE INSTRUMENTS

Short-Term Debt

We have commercial paper programs with an aggregate borrowing capacity of $3.0 billion. All of our short-term borrowings in fiscal 2019 and fiscal 2018 were under these commercial paper programs. In connection with these programs, we have back-up credit facilities with a consortium of banks for borrowings up to $3.0 billion, which consist of a 364-day $1.0 billion credit facility and a five-year $2.0 billion credit facility, which expires in December 2022. In December 2019, we completed the renewal of our 364-day $1.0 billion credit facility, extending the maturity from December 2019 to December 2020.

Certain information on our commercial paper programs follows:



dollars in millions	February 2, 2020			February 3, 2019
Weighted average interest rate	1.56		%	2.41		%
Balance outstanding at fiscal year-end	$	974		$	1,339
Maximum amount outstanding at any month-end	$	2,097		$	2,264
Average daily short-term borrowings	$	624		$	621

Long-Term Debt

Details of the components of our long-term debt follow:



				Carrying Amount
in millions	Interest Payable	Principal Amount		February 2, 2020		February 3, 2019
2.00% Senior notes due June 2019	Semi-annually	$	—	$	—	$	999
Floating rate senior notes due June 2020	Quarterly	500		500		499
1.80% Senior notes due June 2020	Semi-annually	750		750		749
3.95% Senior notes due September 2020	Semi-annually	500		506		499
4.40% Senior notes due April 2021	Semi-annually	1,000		999		999
2.00% Senior notes due April 2021	Semi-annually	1,350		1,348		1,345
Floating rate senior notes due March 2022	Quarterly	300		299		299
3.25% Senior notes due March 2022	Semi-annually	700		698		696
2.625% Senior notes due June 2022	Semi-annually	1,250		1,246		1,245
2.70% Senior notes due April 2023	Semi-annually	1,000		998		997
3.75% Senior notes due February 2024	Semi-annually	1,100		1,095		1,094
3.35% Senior notes due September 2025	Semi-annually	1,000		996		995
3.00% Senior notes due April 2026	Semi-annually	1,300		1,290		1,288
2.125% Senior notes due September 2026	Semi-annually	1,000		989		987
2.80% Senior notes due September 2027	Semi-annually	1,000		1,007		981
3.90% Senior notes due December 2028	Semi-annually	1,000		1,059		1,005
2.95% Senior notes due June 2029	Semi-annually	1,750		1,797		—
5.875% Senior notes due December 2036	Semi-annually	3,000		2,953		2,951
5.40% Senior notes due September 2040	Semi-annually	500		495		495
5.95% Senior notes due April 2041	Semi-annually	1,000		989		989
4.20% Senior notes due April 2043	Semi-annually	1,000		989		989
4.875% Senior notes due February 2044	Semi-annually	1,000		979		979
4.40% Senior notes due March 2045	Semi-annually	1,000		978		977
4.25% Senior notes due April 2046	Semi-annually	1,600		1,585		1,585
3.90% Senior notes due June 2047	Semi-annually	1,150		1,144		738
4.50% Senior notes due December 2048	Semi-annually	1,500		1,462		1,462
3.125% Senior notes due December 2049	Semi-annually	1,250		1,221		—
3.50% Senior notes due September 2056	Semi-annually	1,000		972		972
Total senior notes		$	29,500	29,344		26,814
Finance lease obligations; payable in varying installments through January 31, 2055				1,165		1,049
Total long-term debt				30,509		27,863
Less current installments of long-term debt				1,839		1,056
Long-term debt, excluding current installments				$	28,670	$	26,807

January 2020 Issuance. In January, we issued two tranches of senior notes.

•

The first tranche consisted of $750 million of 2.95% senior notes due June 15, 2029 (the “2029 notes”) at a premium of $32 million. The 2029 notes form a single series with the Company’s $1.0 billion 2.95% senior notes due June 15, 2029 that were issued in June 2019 and have the same terms. The aggregate principal amount outstanding of the Company’s senior notes due June 15, 2029 is $1.8 billion. Interest on the 2029 notes is due semi-annually on June 15 and December 15 of each year, beginning June 15, 2020, with interest accruing from December 15, 2019.


•	The second tranche consisted of $1.3 billion of 3.125% senior notes due December 15, 2049 (the “2049 notes”) at a discount of $16 million (together with the 2029 notes, the “January 2020 issuance”). Interest on the 2049 notes is due semi-annually on June 15 and December 15 of each year, beginning June 15, 2020.


•	Issuance costs totaled $17 million. The net proceeds of the January 2020 issuance will be used for general corporate purposes, including repurchases of common stock.

June 2019 Issuance. In June 2019, we issued two tranches of senior notes.


•	The first tranche consisted of $1.0 billion of 2.95% senior notes due June 15, 2029 at a discount of $6 million. Interest on these notes is due semi-annually on June 15 and December 15 of each year, beginning December 15, 2019.

•

The second tranche consisted of $400 million of 3.90% senior notes due June 15, 2047 (the “2047 notes”) at a premium of $10 million (together with the $1.0 billion of 2.95% senior notes due June 15, 2029, the “June 2019 issuance”). The 2047 notes form a single series with the Company’s $750 million 3.90% senior notes due June 15, 2047 that were issued in June 2017, and have the same terms. The aggregate principal amount outstanding of the Company’s senior notes due June 15, 2047 is $1.2 billion. Interest on the 2047 notes is due semi-annually on June 15 and December 15 of each year, beginning December 15, 2019, with interest accruing from June 15, 2019.


•	Issuance costs totaled $10 million. The net proceeds of the June 2019 issuance were used to repay the Company’s 2.00% senior notes that matured on June 15, 2019 and for general corporate purposes, including repurchases of common stock.

December 2018 Issuance. In December 2018, we issued four tranches of senior notes.

•

The first tranche consisted of $300 million of floating rate senior notes due March 1, 2022 (the “2022 floating rate notes”). The 2022 floating rate notes bear interest at a variable rate determined quarterly equal to the three-month LIBOR plus 31 basis points. Interest on the 2022 floating rate notes is due quarterly on March 1, June 1, September 1, and December 1 of each year, beginning March 1, 2019.


•	The second tranche consisted of $700 million of 3.25% senior notes due March 1, 2022 (the “2022 notes”) at a discount of $2 million. Interest on the 2022 notes is due semi-annually on March 1 and September 1 of each year, beginning March 1, 2019.


•	The third tranche consisted of $1.0 billion of 3.90% senior notes due December 6, 2028 (the “2028 notes”) at a discount of $7 million. Interest on the 2028 notes is due semi-annually on June 6 and December 6 of each year, beginning June 6, 2019.


•	The fourth tranche consisted of $1.5 billion of 4.50% senior notes due December 6, 2048 (the “2048 notes”) at a discount of $25 million (together with the 2022 floating rate notes, the 2022 notes and the 2028 notes, the “December 2018 issuance”). Interest on the 2048 notes is due semi-annually on June 6 and December 6 of each year, beginning June 6, 2019.


•	Issuance costs totaled $22 million. The net proceeds of the December 2018 issuance were used for general corporate purposes, including repurchases of common stock.

Redemption. All of our senior notes, other than our outstanding floating rate notes, may be redeemed by us at any time, in whole or in part, at the redemption price plus accrued interest up to the redemption date. With respect to the 1.80% 2020 notes, the 3.25% 2022 notes, and the 5.875% 2036 notes, the redemption price is equal to the greater of (1) 100% of the principal amount of the notes to be redeemed, or (2) the sum of the present values of the remaining scheduled payments of principal and interest on the notes to be redeemed that would be due after the related redemption date. With respect to all other notes, the redemption price is equal to the greater of (1) 100% of the principal amount of the notes to be redeemed, or (2) the sum of the present values of the remaining scheduled payments of principal and interest to the Par Call Date, as defined in the respective notes. Additionally, if a Change in Control Triggering Event occurs, as defined in the notes, holders of all notes have the right to require us to redeem those notes at 101% of the aggregate principal amount of the notes plus accrued interest up to the redemption date.

We are generally not limited under the indentures governing the notes in our ability to incur additional indebtedness or required to maintain financial ratios or specified levels of net worth or liquidity. The indentures governing the notes contain various customary covenants; however, none are expected to impact our liquidity or capital resources.

Maturities of Long-Term Debt. Our long-term debt maturities, excluding finance leases, follow:



in millions	Principal
Fiscal 2020	$	1,750
Fiscal 2021	2,350
Fiscal 2022	2,250
Fiscal 2023	1,000
Fiscal 2024	1,100
Thereafter	21,050
Total	$	29,500

Derivative Instruments

We use derivative financial instruments from time to time in the management of our interest rate exposure on long-term debt and our exposure on foreign currency fluctuations.

We had outstanding interest rate swap agreements with combined notional amounts of $2.1 billion at February 2, 2020 and $1.3 billion at February 3, 2019. These agreements were accounted for as fair value hedges that swap fixed for variable rate interest to hedge changes in the fair values of certain senior notes. The fair values of these agreements were $120 million at February 2, 2020 and not material at February 3, 2019.

We had outstanding cross currency swap agreements with a combined notional amount of $326 million at February 3, 2019, accounted for as cash flow hedges, to hedge foreign currency fluctuations on certain intercompany debt. The approximate fair values of these agreements were assets of $121 million at February 3, 2019, which were the estimated amounts we would have received to settle the agreements and were included in other assets. These cross currency swap agreements settled during fiscal 2019, resulting in a gain of $118 million.

We also had outstanding foreign currency forward contracts, accounted for as cash flow hedges, which hedge the variability of forecasted cash flows associated with certain payments made in our foreign operations. At February 2, 2020 and February 3, 2019, the notional amounts and the fair values of these agreements were not material.

At February 2, 2020, we had outstanding foreign currency forward contracts, accounted for as net investment hedges, with a combined notional amount of $1.2 billion. These agreements hedge against foreign currency exposure on our net investment in certain subsidiaries. At February 2, 2020, the fair values of these agreements were not material.