Debt and Derivative Instruments

12 Months Ended

Jan. 31, 2021

DEBT AND DERIVATIVE INSTRUMENTS

Short-Term Debt

In March 2020, we expanded our commercial paper programs from $3.0 billion to $6.0 billion to further enhance our liquidity position in response to the pandemic. All of our short-term borrowings in fiscal 2020 and fiscal 2019 were under these commercial paper programs. In connection with these programs, we had back-up credit facilities with a consortium of banks for borrowings up to $6.5 billion, which consisted of (1) a five-year $2.0 billion credit facility scheduled to expire in December 2023, (2) a 364-day $1.0 billion credit facility scheduled to expire in December 2021, and (3) a 364-day $3.5 billion credit facility that we entered into in March 2020 that was scheduled to expire in March 2021. In December 2020, we completed the renewal of our 364-day $1.0 billion credit facility and extended our five-year $2.0 billion credit facility, which extended the maturities from December 2020 to December 2021 and from December 2022 to December 2023, respectively. On January 29, 2021, we terminated the 364-day $3.5 billion credit facility and at the same time reduced our commercial paper programs back to a maximum of $3.0 billion. At

January 31, 2021, there were no outstanding borrowings under our commercial paper programs compared to $974 million outstanding at February 2, 2020.

Certain information on our commercial paper programs follow:


dollars in millions	January 31, 2021			February 2, 2020
Weighted average interest rate	—		%	1.56		%
Balance outstanding at fiscal year-end	$	—		$	974
Maximum amount outstanding at any month-end	$	11		$	2,097
Average daily short-term borrowings	$	11		$	624

Long-Term Debt

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


				Carrying Amount
in millions	Interest Payable	Principal Amount		January 31, 2021		February 2, 2020
Floating rate senior notes due June 2020	Quarterly	$	—	$	—	$	500
1.80% Senior notes due June 2020	Semi-annually	—		—		750
3.95% Senior notes due September 2020	Semi-annually	—		—		506
4.40% Senior notes due April 2021	Semi-annually	—		—		999
2.00% Senior notes due April 2021	Semi-annually	1,350		1,350		1,348
Floating rate senior notes due March 2022	Quarterly	300		300		299
3.25% Senior notes due March 2022	Semi-annually	700		699		698
2.625% Senior notes due June 2022	Semi-annually	1,250		1,248		1,246
2.70% Senior notes due April 2023	Semi-annually	1,000		998		998
3.75% Senior notes due February 2024	Semi-annually	1,100		1,096		1,095
3.35% Senior notes due September 2025	Semi-annually	1,000		997		996
3.00% Senior notes due April 2026	Semi-annually	1,300		1,291		1,290
2.125% Senior notes due September 2026	Semi-annually	1,000		990		989
2.50% Senior notes due April 2027	Semi-annually	750		743		—
2.80% Senior notes due September 2027	Semi-annually	1,000		1,017		1,007
0.90% Senior notes due March 2028	Semi-annually	500		494		—
3.90% Senior notes due December 2028	Semi-annually	1,000		1,075		1,059
2.95% Senior notes due June 2029	Semi-annually	1,750		1,828		1,797
2.70% Senior notes due April 2030	Semi-annually	1,500		1,464		—
1.375% Senior notes due March 2031	Semi-annually	1,250		1,229		—
5.875% Senior notes due December 2036	Semi-annually	3,000		2,935		2,953
3.30% Senior notes due April 2040	Semi-annually	1,250		1,207		—
5.40% Senior notes due September 2040	Semi-annually	500		496		495
5.95% Senior notes due April 2041	Semi-annually	1,000		990		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		980		979
4.40% Senior notes due March 2045	Semi-annually	1,000		979		978
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		1,144
4.50% Senior notes due December 2048	Semi-annually	1,500		1,463		1,462
3.125% Senior notes due December 2049	Semi-annually	1,250		1,222		1,221
3.35% Senior notes due April 2050	Semi-annually	1,500		1,470		—
2.375% Senior notes due March 2051	Semi-annually	1,250		1,220		—
3.50% Senior notes due September 2056	Semi-annually	1,000		973		972
Total senior notes		$	34,750	34,472		29,344
Finance lease obligations; payable in varying installments through January 31, 2055				2,766		1,165
Total long-term debt				37,238		30,509
Less current installments of long-term debt				1,416		1,839
Long-term debt, excluding current installments				$	35,822	$	28,670

January 2021 Issuance. In January 2021, we issued three tranches of senior notes.

•The first tranche consisted of $500 million of 0.90% senior notes due March 15, 2028 (the “2028 notes”) at a discount of $3 million. Interest on the 2028 notes is due semi-annually on March 15 and September 15 of each year, beginning September 15, 2021.

•The second tranche consisted of $1.25 billion of 1.375% senior notes due March 15, 2031 (the “2031 notes”) at a discount of $7 million. Interest on the 2031 notes is due semi-annually on March 15 and September 15 of each year, beginning September 15, 2021.

•The third tranche consisted of $1.25 billion of 2.375% senior notes due March 15, 2051 (the “2051 notes”) at a discount of $17 million (together with the 2028 notes and the 2031 notes, the “January 2021 issuance”). Interest on the 2051 notes is due semi-annually on March 15 and September 15 of each year, beginning September 15, 2021.

•Issuance costs for the January 2021 issuance totaled $21 million. The net proceeds of the January 2021 issuance were used to replace a portion of the cash on hand used to finance the acquisition of HD Supply. Remaining proceeds will be used for general corporate purposes.

March 2020 Issuance. In March 2020, we issued four tranches of senior notes.

•The first tranche consisted of $750 million of 2.50% senior notes due April 15, 2027 (the “2027 notes”) at a discount of $4 million. Interest on the 2027 notes is due semi-annually on April 15 and October 15 of each year, beginning October 15, 2020.

•The second tranche consisted of $1.5 billion of 2.70% senior notes due April 15, 2030 (the “2030 notes”) at a discount of $8 million. Interest on the 2030 notes is due semi-annually on April 15 and October 15 of each year, beginning October 15, 2020.

•The third tranche consisted of $1.25 billion of 3.30% senior notes due April 15, 2040 (the "2040 notes") at a discount of $11 million. Interest on the 2040 notes is due semi-annually on April 15 and October 15 of each year, beginning October 15, 2020.

•The fourth tranche consisted of $1.5 billion of 3.35% senior notes due April 15, 2050 (the "2050 notes") at a discount of $17 million (together with the 2027 notes, the 2030 notes and the 2040 notes, the "March 2020 issuance"). Interest on the 2050 notes is due semi-annually on April 15 and October 15 of each year, beginning October 15, 2020.

•Issuance costs for the March 2020 issuance totaled $36 million. The net proceeds of the March 2020 issuance were used for general corporate purposes, which included the repayment of outstanding senior notes that matured in June 2020 and the early repayment of outstanding senior notes that had a maturity date in September 2020.

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 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.

In addition to the repayments of the outstanding senior notes discussed above, in January 2021, we fully repaid our $1.0 billion 4.40% senior notes that had a maturity date of April 2021. In March 2021, we also fully repaid our $1.35 billion 2.00% senior notes that had a maturity date of April 2021. The early redemption of each of these notes occurred at or after their respective Par Call 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 2021	$	1,350
Fiscal 2022	2,250
Fiscal 2023	1,000
Fiscal 2024	1,100
Fiscal 2025	1,000
Thereafter	28,050
Total	$	34,750

Derivative Instruments and Hedging Activities

We use derivative and nonderivative instruments as part of our normal business operations in the management of our exposure to fluctuations in foreign currency exchange rates and interest rates on certain debt. Our objective in managing these exposures is to decrease the volatility of cash flows affected by changes in the underlying rates and minimize the risk of changes in the fair value of our senior notes.

We had outstanding interest rate swap agreements with combined notional amounts of $4.4 billion at January 31, 2021 and $2.1 billion at February 2, 2020. 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. At January 31, 2021, the fair values of these agreements totaled $101 million, with $172 million recognized in other assets and $71 million recognized in other long-term liabilities on the consolidated balance sheet. At February 2, 2020, the fair values of these agreements totaled $120 million, all of which was recognized within other assets on the consolidated balance sheet. The changes in the fair values of these agreements offset the changes in the fair value of the hedged long-term debt.

We also settled forward-starting interest rate swap agreements in prior years, which were used to hedge the variability in future interest payments attributable to changing interest rates on forecasted debt issuances. Unamortized losses on these forward-starting swaps, which were designated as cash flow hedges, are being amortized to interest expense over the life of the respective notes. Losses recognized on these swaps within interest expense were immaterial in fiscal 2020, fiscal 2019 and fiscal 2018.

During fiscal 2019, we also settled our outstanding cross currency swap agreements accounted for as cash flow hedges, which hedged foreign currency fluctuations on certain intercompany debt, resulting in a gain of $118 million.

At January 31, 2021 and February 2, 2020, we 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 January 31, 2021 and February 2, 2020, the notional amounts and the fair values of these contracts were not material.

We had outstanding foreign currency forward contracts accounted for as net investment hedges, with a combined notional amount of $141 million at January 31, 2021 and $1.2 billion at February 2, 2020. These agreements hedge against foreign currency exposure on our net investment in certain subsidiaries. At January 31, 2021 and February 2, 2020, the fair values of these contracts were not material.

In addition to our forward contracts, we also hedge a portion of our foreign currency risk by designating nonderivative foreign-currency-denominated intercompany debt as hedges of our net investment in certain of our foreign operations. As of January 31, 2021 and February 2, 2020, the notional value of our nonderivative hedges and related foreign currency translation adjustments recorded in accumulated other comprehensive income (loss) were immaterial.

We expect an immaterial amount recorded in accumulated other comprehensive income (loss) as of January 31, 2021 to be reclassified into earnings within the next 12 months.

We generally enter into master netting arrangements, which are designed to reduce credit risk by permitting net settlement of transactions with the same counterparty. To further limit our credit risk, we enter into collateral security arrangements that provide for collateral to be received or posted when the net fair value of certain derivative instruments exceeds or falls below contractually established thresholds. As of January 31, 2021, the cash collateral received by the Company related to derivative instruments under our collateral security arrangements was $103 million, which was recorded in other accrued expenses in the consolidated balance sheet. We did not receive any

cash collateral as of February 2, 2020 or have material cash collateral posted with counterparties as of January 31, 2021 or February 2, 2020.