NOTE 8: DEBT AND CREDIT FACILITIES

Debt

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


	January 28, 2012			January 29, 2011
Secured
Series 2007-2 Class A Notes, one-month LIBOR plus 0.06% per year, due April 2012		$454			$454
Series 2007-2 Class B Notes, one-month LIBOR plus 0.18% per year, due April 2012		46			46
Series 2011-1 Class A Notes, 2.28%, due October 2016		325			–
Mortgage payable, 7.68%, due April 2020		51			55
Other		12			14
		888			569
Unsecured
Senior notes, 6.75%, due June 2014, net of unamortized discount		399			399
Senior notes, 6.25%, due January 2018, net of unamortized discount		648			647
Senior notes, 4.75%, due May 2020, net of unamortized discount		498			498
Senior notes, 4.00%, due October 2021, net of unamortized discount		499			–
Senior debentures, 6.95%, due March 2028		300			300
Senior notes, 7.00%, due January 2038, net of unamortized discount		343			343
Other		72			25
		2,759			2,212

Total long-term debt		3,647			2,781
Less: current portion		(506	)		(6	)
Total due beyond one year		$3,141			$2,775

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 2007-2 Class A & B Notes, our Series 2011-1 Class A Notes and our Variable Funding Note facility ("2007-A VFN"). Our mortgage payable is secured by an office building which had a net book value of $73 at the end of 2011.

During 2011, we issued $500 of senior unsecured notes at 4.00%, due October 2021. After deducting the original issue discount of $1, net proceeds from the offering were $499. Additionally, we issued $325 of securitized Series 2011-1 Class A Notes at 2.28%, due October 2016.

In connection with the April 2012 maturity of our securitized Series 2007-2 Class A & B Notes totaling $500, we began making monthly cash deposits into a restricted account in December 2011. As of January 28, 2012, we had accumulated $200, which is included in our consolidated balance sheet in prepaid expense and other. In the first quarter of 2012, we expect to retire the Series 2007-2 Class A & B Notes with the accumulated restricted cash upon maturity.

During 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. Under the swap, we received a fixed rate of 6.25% and paid a variable rate based on one-month LIBOR plus a margin of 2.9%. As of the sale date of the swap, the accumulated adjustment to our long-term debt was $72, which will be amortized as a reduction of interest expense over the remaining life of the related debt. See Note 1: Nature of Operations and Summary of Significant Accounting Policies and Note 9: Fair Value Measurements for additional information related to our swap.

Other secured debt as of January 28, 2012 consisted primarily of capital lease obligations. Other unsecured debt consisted primarily of the adjustment to the long-term debt carrying value associated with our fair value hedge.

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


Fiscal year
2012	$	505
2013		5
2014		406
2015		6
2016		331
Thereafter		2,326

Interest Expense

The components of interest expense, net are as follows:

		00000000000			00000000000			00000000000
Fiscal year	2011			2010			2009
Interest on long-term debt and short-term borrowings		$139			$133			$148
Less:
Interest income		(2	)		(1	)		(3	)
Capitalized interest		(7	)		(5	)		(7	)
Interest expense, net		$130			$127			$138

Credit Facilities

As of January 28, 2012, we had total short-term borrowing capacity available for general corporate purposes of $800. Of the total capacity, we had $600 under our commercial paper program, which is backed by our unsecured revolving credit facility ("revolver") and $200 under our 2007-A Variable Funding Note ("2007-A VFN").

During 2011, we entered into a new revolver with a capacity of $600, which expires in June 2016. This revolver replaced our previous $650 unsecured line of credit which was scheduled to expire in August 2012. Under the terms of the revolver, we pay a variable rate of interest and a commitment fee based on our debt rating. The revolver is available for working capital, capital expenditures and general corporate purposes, including liquidity support for our commercial paper program. We have the option to increase the revolving commitment by up to $100, to a total of $700, provided that we obtain written consent from the new lenders.

The revolver requires that we maintain a leverage ratio, defined as Adjusted Debt to Earnings before Interest, Income Taxes, Depreciation, Amortization and Rent ("EBITDAR"), of less than four times.As of January 28, 2012, we were in compliance with this covenant.

Our $600 commercial paper program allows us to use the proceeds to fund share repurchases as well as 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 2011 and 2010, we had no borrowings under our revolver and no issuances under our commercial paper program.

During 2011, we amended the terms of our 2007-A VFN to reduce the borrowing capacity to $200, maturing in January 2013, from the previous $300 facility. The 2007-A VFN is backed by all of the Nordstrom private label card receivables and a 90% interest in the co-branded Nordstrom VISA credit card receivables. Borrowings under the 2007-A VFN incur interest based upon one-month LIBOR plus 35 basis points. We pay a commitment fee for the notes based on the size of the commitment. During 2011 and 2010, we had no borrowings against this facility.

Our wholly owned federal savings bank, Nordstrom fsb, also maintains a variable funding facility with a short-term credit capacity of $100. This facility is backed by the remaining 10% interest in the Nordstrom VISA credit card receivables and is available, if needed, to provide liquidity support to Nordstrom fsb. During 2011 and 2010, Nordstrom fsb had no outstanding borrowings under this facility. Borrowings under the facility incur interest based upon the cost of commercial paper issued by the third-party bank conduit plus specified fees.