DEBT AND CREDIT FACILITIES

Debt

A summary of our long-term debt is as follows:



	February 1, 2014			February 2, 2013
Secured
Series 2011-1 Class A Notes, 2.28%, due October 2016		$325		325
Mortgage payable, 7.68%, due April 2020	42			47
Other	9			10
Total secured debt	376			382
Unsecured
Net of unamortized discount:
Senior notes, 6.75%, due June 2014	—			400
Senior notes, 6.25%, due January 2018	648			648
Senior notes, 4.75%, due May 2020	499			498
Senior notes, 4.00%, due October 2021	499			499
Senior debentures, 6.95%, due March 2028	300			300
Senior notes, 7.00%, due January 2038	146			344
Senior notes, 5.00%, due January 2044	595			—
Unamortized fair value hedge and other	50			60
Total unsecured debt	2,737			2,749

Total long-term debt	3,113			3,131
Less: current portion	(7		)	(7		)
Total due beyond one year		$3,106			$3,124

All of our Nordstrom private label card receivables and a 90% interest in our Nordstrom VISA credit card receivables serve as collateral for various borrowings and credit facilities, including our Series 2011-1 Class A Notes.

In the fourth quarter of 2013, we issued $665 of 5.00% senior unsecured notes due January 2044 (“2044 Notes”). We used $400 of the proceeds to retire all senior unsecured notes due June 2014. We exchanged $201 of the 7.00% senior unsecured notes due January 2038 (“2038 Notes”) for $265 of the 2044 Notes. The $64 in excess of the outstanding principal of 2038 Notes relates to the lower interest rate and longer maturity of the new 2044 Notes, and we recorded it as part of the discount to be amortized over the term of the 2044 Notes. As of February 1, 2014, we had $595 of outstanding 2044 Notes, net of a $70 discount. The 2044 Notes exchanged for the 2038 Notes and the related discounts represented a non-cash activity of $201 that had no impact to our 2013 Consolidated Statements of Cash Flows for the year ended February 1, 2014.

Our mortgage payable is secured by an office building that had a net book value of $67 at the end of 2013. Other secured debt as of February 1, 2014 consisted primarily of capital lease obligations.

In 2011, we received proceeds of $72 from the sale of our interest rate swap agreements (collectively, the “swap”) with a $650 notional amount maturing in 2018. We recorded the $72 on the sale date as an accumulated adjustment to our long-term debt, which will be amortized as a reduction of interest expense over the remaining life of the debt. As of February 1, 2014, the accumulated adjustment to our long-term debt was $48 and is included as part of unsecured debt in the table above. See Note 1: Nature of Operations and Summary of Significant Accounting Policies for additional information related to our swap.

Required principal payments on long-term debt, excluding capital lease obligations, are as follows:



Fiscal year
2014		$6
2015	6
2016	332
2017	657
2018	9
Thereafter	2,124

Interest Expense

The components of interest expense, net are as follows:



Fiscal year	2013			2012			2011
Interest on long-term debt and short-term borrowings		$176			$167			$139
Less:
Interest income	(1		)	(2		)	(2		)
Capitalized interest	(14		)	(5		)	(7		)
Interest expense, net		$161			$160			$130

Credit Facilities

As of February 1, 2014, we had total short-term borrowing capacity available for general corporate purposes of $800.

In March 2013, we terminated both our $600 unsecured revolving credit facility that was scheduled to expire in June 2016, and our $200 2007-A Variable Funding Note that was scheduled to expire in January 2014. We replaced these with a new five-year $800 senior unsecured revolving credit facility (“revolver”) that expires in March 2018. Also in March 2013, our wholly owned subsidiary Nordstrom fsb terminated its $100 variable funding facility.

Under the terms of our new revolver, we pay a variable rate of interest and a commitment fee based on our debt rating. The new revolver is available for working capital, capital expenditures and general corporate purposes and backs our commercial paper program. We have the option to increase the revolving commitment by up to $200, to a total of $1,000, provided that we obtain written consent from the lenders.

The new revolver requires that we maintain an adjusted debt to earnings before interest, income taxes, depreciation, amortization and rent (“EBITDAR”) leverage ratio of less than four times. As of February 1, 2014 and February 2, 2013, we were in compliance with this covenant.

Our $800 commercial paper program allows us to use the proceeds to fund operating cash requirements. Under the terms of the commercial paper agreement, we pay a rate of interest based on, among other factors, the maturity of the issuance and market conditions. The issuance of commercial paper has the effect, while it is outstanding, of reducing borrowing capacity under our revolver by an amount equal to the principal amount of commercial paper.

During 2013, we had no issuances under our commercial paper program and no borrowings under our new revolver, the terminated $600 credit facility, or the terminated Nordstrom fsb credit facility. During 2012, we had no issuances under our commercial paper program and no borrowings under our $600 credit facility, the $200 Variable Funding Note, or the $100 Nordstrom fsb credit facility.

In November 2013, our wholly owned subsidiary in Puerto Rico entered into a $52 unsecured borrowing facility to support our expansion into that market. The facility expires in November 2018 and borrowings on this facility incur interest based upon the one-month LIBOR plus 1.275% per annum. During 2013, $2 was borrowed and is outstanding on this facility.