Quantitative and Qualitative Disclosures About Market Risk
−Removed: As of January 28, 2023, our exposure to market risk was primarily from interest rate changes on our debt obligations and short-term investments, some of which are at a London Interbank Offered Rate (LIBOR).
+Added: As of February 3, 2024, our exposure to market risk was primarily from interest rate changes on our debt obligations and short-term investments, some of which are at a Secured Overnight Financing Rate (SOFR).
Our interest rate exposure is primarily due to differences between our floating rate debt obligations compared to our floating rate short-term investments.
−Removed: As of January 28, 2023, our floating rate debt exceeded our floating rate short-term investments by approximately $1.2 billion.
−Removed: Based on our balance sheet position as of January 28, 2023, the annualized effect of a 0.1 percentage point increase in floating interest rates on our floating rate debt obligations, net of our floating rate short-term investments, would decrease our earnings before income taxes by $1 million.
+Added: As of February 3, 2024, our floating rate short-term investments exceeded our floating rate debt by approximately $450 million.
+Added: Based on our balance sheet position as of February 3, 2024, the annualized effect of a 1 percentage point increase in floating interest rates on our floating rate short-term investments, net of our floating rate debt obligations, would increase our earnings before income taxes by $5 million.
In general, we expect our floating rate debt to exceed our floating rate short-term investments over time, but that may vary in different interest rate and economic environments.
See further description of our debt and derivative instruments in Notes 16 and 17 to the Financial Statements.
−Removed: The United Kingdom's Financial Conduct Authority has announced the intent to phase out LIBOR by June 2023.
−Removed: We do not expect the phase out to materially impact our financial statements, liquidity, or access to capital markets.
We record our general liability and workers' compensation liabilities at net present value;
therefore, these liabilities fluctuate with changes in interest rates.
−Removed: Based on our balance sheet position as of January 28, 2023, the annualized effect of a 0.5 percentage point increase/(decrease) in interest rates would increase/(decrease) earnings before income taxes by $7 million.
+Added: Based on our balance sheet position as of February 3, 2024, the annualized effect of a 0.5 percentage point increase/(decrease) in interest rates would increase/(decrease) earnings before income taxes by $7 million.
In addition, we are exposed to market return fluctuations on our qualified defined benefit pension plan.
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To protect against declines in interest rates, we hold high-quality, long-duration bonds and derivative instruments in our pension plan trust.
−Removed: As of January 28, 2023, we had hedged 70 percent of the interest rate exposure of our plan liabilities.
+Added: As of February 3, 2024, we had hedged 70 percent of the interest rate exposure of our plan liabilities.
As more fully described in Note 23 to the Financial Statements, we are exposed to market returns on accumulated team member balances in our nonqualified, unfunded deferred compensation plans.
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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.