This discussion and analysis should be read with, and is qualified in its
entirety by, the Consolidated Financial Statements and the notes thereto. It
also should be read in conjunction with the Cautionary Disclosure Regarding
Forward-Looking Statements and the Risk Factors disclosures set forth in the
Introduction and in Item 1A of this report, respectively.

Impact of COVID-19



The COVID-19 (coronavirus) pandemic continues to have a widespread impact on the
global economy as well as our business, customers, suppliers, and other business
partners. As an essential business in all locations where we operate, our stores
have generally remained open to serve our customers. In responding to the
pandemic and its effects, the health and safety of our employees and customers
remains a priority.

We expect to continue to be affected, although the extent and duration is
unknown, by the COVID-19 pandemic and its effects on the economy in a variety of
ways, including changes in consumer demand (whether higher or lower) in certain
product categories (or overall), supply chain interruptions or disruptions,
increased distribution and transportation costs, increased product costs and
increased payroll expenses. We also may experience adverse effects on our
business, results of operations and cash flows from a recessionary economic
environment that may occur after the COVID-19 pandemic and government response
thereto and their effects on the economy has moderated. As a result, the
quarterly cadence of our results of operations, which has varied from historical
patterns during the pandemic, may continue to do so in fiscal 2022.

Due to the significant uncertainty surrounding the COVID-19 pandemic and its
effects, there may be consequences that we do not anticipate at this time or
that develop in unexpected ways. We will continue to monitor the evolving
situation and take actions as necessary to serve our employees, customers,
communities and shareholders.

Executive Overview



We are the largest discount retailer in the United States by number of stores,
with 18,190 stores located in 47 states as of February 25, 2022, with the
greatest concentration of stores in the southern, southwestern, midwestern and
eastern United States. We offer a broad selection of merchandise, including
consumable products such as food, paper and cleaning products, health and beauty
products and pet supplies, and non-consumable products such as seasonal
merchandise, home decor and domestics, and basic apparel. Our merchandise
includes national brands from leading manufacturers, as well as our own private
brand selections with prices at substantial discounts to national brands. We
offer our customers these national brand and private brand products at everyday
low prices (typically $10 or less) in our convenient small-box locations.

We believe our convenient store formats, locations, and broad selection of
high-quality products at compelling values have driven our substantial growth
and financial success over the years and through a variety of economic cycles.
We are mindful that the majority of our customers are value-conscious, and many
have low and/or fixed incomes. As a result, we are intensely focused on helping
our customers make the most of their spending dollars. Our core customers are
often among the first to be affected by negative or uncertain economic
conditions and among the last to feel the effects of improving economic
conditions, particularly when trends are inconsistent and of an uncertain
duration. The primary macroeconomic factors that affect our core customers
include unemployment and underemployment rates, wage growth, changes in U.S. and
global trade policy, and changes to certain government assistance programs, such
as the Supplemental Nutrition Assistance Program ("SNAP"), unemployment
benefits, economic stimulus payments, and the child tax credit. In fiscal 2020
and 2021, our customers were affected both positively and negatively by many of
these factors in connection with the pandemic and its associated impacts. We
continue to monitor the potential impact of reductions in SNAP benefits and
unemployment benefit programs, as well as changes in the payments of the child
tax credit, although these programs did not result in a material impact on our
business or financial results in fiscal 2021. Additionally, our customers are
impacted by increases in those expenses that generally comprise a large portion
of their household budgets, such as

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rent, healthcare, and fuel prices; as well as cost inflation in frequently purchased household products, such as that which we experienced in 2021 and continue to experience as further discussed below. Finally, significant unseasonable or unusual weather patterns can impact customer shopping behaviors.



We remain committed to our long-term operating priorities as we consistently
strive to improve our performance while retaining our customer-centric focus.
These priorities include: 1) driving profitable sales growth, 2) capturing
growth opportunities, 3) enhancing our position as a low-cost operator, and 4)
investing in our diverse teams through development, empowerment and inclusion.

We seek to drive profitable sales growth through initiatives aimed at increasing
customer traffic and average transaction amount. As we work to provide everyday
low prices and meet our customers' affordability needs, we remain focused on
enhancing our margins through effective category management, inventory shrink
reduction initiatives, private brands penetration, distribution and
transportation efficiencies, global sourcing, and pricing and markdown
optimization. Several of our strategic and other sales-driving initiatives are
also designed to capture growth opportunities and are discussed in more detail
below.

Historically, our sales in our consumables category, which tend to have lower
gross margins, have been the key drivers of net sales and customer traffic,
while sales in our non-consumables categories, which tend to have higher gross
margins, have contributed to more profitable sales growth and an increase in
average transaction amount. Prior to 2020, our sales mix had continued to shift
toward consumables, and, within consumables, toward lower margin departments
such as perishables. This trend did not occur in fiscal 2020 or the first
quarter of fiscal 2021, as we saw a significant increase in demand in many
non-consumable products, including home, seasonal and apparel, resulting in an
overall significant mix shift into non-consumable categories during those
periods. Beginning in the second quarter of fiscal 2021 and continuing
thereafter, we began to see some reversion toward the prior mix trends. We
continue to expect some sales mix challenges to persist and that the mix trend
reversion toward consumables will continue. Several of our initiatives,
including certain of those discussed below, are intended to address these mix
challenges; however, there can be no assurances that these efforts will be
successful.

We have also experienced a shift in customer behavior toward trip consolidation,
as customers shopped our stores less frequently in fiscal 2020 and 2021 than in
fiscal 2019 but had a larger average transaction amount. We have seen a
continuation of these general trends toward trip consolidation and larger
transaction amount, and there can be no assurance that our sales growth
initiatives will be effective at reversing them. In addition, we believe our
sales have been negatively impacted as a result of supply chain disruptions,
primarily due to lower merchandise in-stock levels in our stores.

We continue to implement and invest in certain strategic initiatives that we
believe will help drive profitable sales growth, both with new and existing
customers, and capture long-term growth opportunities. Such opportunities
include providing our customers with additional shopping access points and even
greater convenience by leveraging and developing digital tools and technology,
such as our Dollar General app, which contains a variety of tools to enhance the
in-store shopping experience. Additionally, we launched a partnership with a
third party delivery service during 2021, which is now available in more than
10,700 stores, and we also continue to grow our DG Media Network, which is our
platform for connecting brand partners with our customers to drive even greater
value for each.

Further, our non-consumables initiative, which offers a new, differentiated and
limited assortment that will change throughout the year, continues to contribute
to improved overall sales and gross margin performance in stores where it has
been deployed. We significantly expanded the number of stores with either the
full or the "lite" version of our non-consumables initiative offering in 2021
and plan to complete the rollout in the vast majority of our Dollar General
stores by the end of fiscal 2022.

Additionally, in 2020, we introduced pOpshelf, a unique retail concept that
incorporates certain of the lessons learned from the non-consumables initiative
in a differentiated format that is focused on categories such as seasonal and
home décor, health and beauty, home cleaning supplies, and party and
entertainment goods. At the end of fiscal 2021, we operated 55 standalone
pOpshelf locations and 25 pOpshelf store-within-a-store concepts within existing
Dollar General Market stores. Our goal is to operate approximately 155 pOpshelf
locations, as well as

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approximately 50 pOpshelf store-within-a-store concepts, by the end of fiscal
2022. We believe this concept represents a significant growth opportunity, and
are targeting approximately 1,000 stores by the end of fiscal 2025.

In the second quarter of fiscal 2021, we completed our rollout of the "DG Fresh"
initiative, a self-distribution model for frozen and refrigerated products that
is designed to reduce product costs, enhance item assortment, improve our
in-stock position, and enhance sales. DG Fresh contributed to our strong sales
performance in 2021, driven by higher in-stock levels and the introduction of
new products in select stores. In addition, DG Fresh benefitted gross profit in
2021 through improved initial markups on inventory purchases, which were
partially offset by increased distribution and transportation costs. DG Fresh
now wholly or partially serves essentially all stores across the chain, and we
expect the overall net benefit to our financial results to continue throughout
2022. Moving forward, we plan to focus on additional optimization of the
distribution footprint and product assortment within DG Fresh to further drive
profitable sales growth.

To support our other operating priorities, we remain focused on capturing growth
opportunities. In 2021, we opened 1,050 new stores, remodeled 1,752 stores, and
relocated 100 stores. In 2022, we plan to open approximately 1,110 new stores
(including planned pOpshelf stores and up to ten stores in Mexico), remodel
approximately 1,750 stores, and relocate approximately 120 stores, for a total
of 2,980 real estate projects. We expect stores in Mexico, which will represent
our first store locations outside the United States, to open in the second half
of 2022.

We continue to innovate within our channel and are able to utilize the most
productive of our various Dollar General store formats based on the specific
market opportunity. We expect store format innovation to allow us to capture
additional growth opportunities within our existing markets. We recently
introduced two new larger format stores (approximately 8,500 square feet and
9,500 square feet, respectively), and expect the 8,500 square foot format, along
with our existing Dollar General Plus format of a similar size, to become our
base prototypes for the majority of new stores, replacing our traditional 7,300
square foot format and higher-cooler count Dollar General Traditional Plus
format. The larger formats allow for expanded high-capacity-cooler counts; an
extended queue line; and a broader product assortment, including the
non-consumable initiative, a larger health and beauty section, and produce in
select stores. We continue to incorporate lessons learned from our various store
formats and layouts into our existing store base. These lessons contribute to
innovation in developing new formats, with a goal of driving increased customer
traffic, average transaction amount, same-store sales and overall store
productivity.

We have established a position as a low-cost operator, always seeking ways to
reduce or control costs that do not affect our customers' shopping experiences.
We plan to continue enhancing this position over time while employing ongoing
cost discipline to reduce certain expenses as a percentage of sales.
Nonetheless, we seek to maintain flexibility to invest in the business as
necessary to enhance our long-term competitiveness and profitability.

We are also deploying "Fast Track", an initiative aimed at further enhancing our
convenience proposition and in-stock position as well as increasing labor
efficiencies within our stores. The completed first phase of Fast Track involved
sorting process optimization within our non-refrigerated distribution centers,
as well as increased shelf-ready packaging, to allow for greater store-level
stocking efficiencies, while the ongoing second phase involves adding a
self-checkout option, which we plan to have in up to 11,000 stores by the end of
fiscal 2022. These and the other strategic initiatives discussed above have
required and will require us to incur upfront expenses for which there may not
be an immediate return in terms of sales or enhanced profitability.

Certain of our operating expenses, such as wage rates and occupancy costs, have
continued to increase in recent years, due primarily to market forces, including
labor availability, increases in minimum wage rates and increases in property
rents. Further federal, state and/or local minimum wage increases could have a
material negative impact on our operating expenses, although the magnitude and
timing of such impact is uncertain. We have experienced incremental payroll,
distribution and transportation costs related to the COVID-19 pandemic and its
associated impacts. We continue to experience materially higher supply chain
costs and, in some instances, shipping delays, as a result of shipping capacity
shortages, port congestion and labor shortages. We expect continued inflationary
pressures due to higher input costs and higher fuel prices will continue to
affect us as well as our vendors and customers, including higher commodity,
transportation and other costs, all of which may result in continued pressure to
our operating results, and their duration is unknown. While we expect these

challenges to

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persist, certain of our initiatives and plans are intended to help offset these
challenges; however, they are somewhat dependent on the scale and timing of the
increased costs, among other factors. There can be no assurance that our
mitigation efforts will be successful.

Our diverse teams are a competitive advantage, and we proactively seek ways to
continue investing in their development. Our goal is to create an environment
that attracts, develops, and retains talented personnel, particularly at the
store manager level, because employees who are promoted from within our company
generally have longer tenures and are greater contributors to improvements in
our financial performance.

To further enhance shareholder returns, we repurchased shares of our common stock and paid quarterly cash dividends in 2021. We expect to continue our share repurchase activity and to pay quarterly cash dividends for the foreseeable future, subject to Board discretion and approval.



We utilize key performance indicators ("KPIs") in the management of our
business. Our KPIs include same-store sales, average sales per square foot, and
inventory turnover. Same-store sales are calculated based upon stores that were
open at least 13 full fiscal months and remain open at the end of the reporting
period. We include stores that have been remodeled, expanded or relocated in our
same-store sales calculation. Changes in same-store sales are calculated based
on the comparable 52 calendar weeks in the current and prior years. The method
of calculating same-store sales varies across the retail industry. As a result,
our calculation of same-store sales is not necessarily comparable to similarly
titled measures reported by other companies. Average sales per square foot is
calculated based on total sales for the preceding 12 months as of the ending
date of the reporting period divided by the average selling square footage
during the period, including the end of the fiscal year, the beginning of the
fiscal year, and the end of each of our three interim fiscal quarters. Inventory
turnover is calculated based on total cost of goods sold for the preceding four
quarters divided by the average inventory balance as of the ending date of the
reporting period, including the end of the fiscal year, the beginning of the
fiscal year, and the end of each of our three interim fiscal quarters. Each of
these measures is commonly used by investors in retail companies to measure the
health of the business. We use these measures to maximize profitability and for
decisions about the allocation of resources.

A continued focus on our four operating priorities as discussed above, coupled
with pandemic-related sales and other impacts (additional discussion below) and
strong cash flow management resulted in strong overall operating and financial
performance in 2021 as compared to 2020, as set forth below. Basis points, as
referred to below, are equal to 0.01% as a percentage of net sales.

Net sales in 2021 increased 1.4% over 2020. Sales in same-stores decreased

? 2.8%, primarily due to a decrease in customer traffic. Average sales per square

foot in 2021 were $262.

? Our gross profit rate decreased by 16 basis points due primarily to higher

transportation costs and a greater LIFO provision.

? SG&A as a percentage of sales increased by 96 basis points primarily due to

increases in retail labor and store occupancy costs.

? Operating profit decreased 9.4% to $3.22 billion in 2021 compared to $3.55

billion in 2020.

? Interest expense increased by $7.1 million in 2021 primarily due to higher

average outstanding debt balances.

The decrease in the effective income tax rate to 21.7% in 2021 from 22.0% in

? 2020 was due primarily to increased income tax benefits associated with federal

tax credits.

? We reported net income of $2.40 billion, or $10.17 per diluted share, for 2021

compared to net income of $2.66 billion, or $10.62 per diluted share, for 2020.




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? We generated approximately $2.87 billion of cash flows from operating

activities in 2021, a decrease of 26.1% compared to 2020.

? Inventory turnover was 4.4 times, and inventories increased 1.4% on a per store

basis compared to 2020.

? We repurchased approximately 12.1 million shares of our outstanding common

stock for $2.5 billion.




Readers should refer to the detailed discussion of our operating results below
for additional comments on financial performance in the current year as compared
with the prior years presented.

Results of Operations



Accounting Periods. The following text contains references to years 2021, 2020,
and 2019, which represent fiscal years ended January 28, 2022, January 29, 2021,
and January 31, 2020, respectively. Our fiscal year ends on the Friday closest
to January 31. Fiscal years 2021, 2020 and 2019 were each 52-week accounting
periods.

Seasonality. The nature of our business is somewhat seasonal. Primarily because
of sales of Christmas-related merchandise, operating profit in our fourth
quarter (November, December and January) has historically been higher than
operating profit achieved in each of the first three quarters of the fiscal
year. Expenses, and to a greater extent operating profit, vary by quarter.
Results of a period shorter than a full year may not be indicative of results
expected for the entire year. Furthermore, the seasonal nature of our business
may affect comparisons between periods. Consumer behavior driven by the COVID-19
pandemic has resulted in a departure from seasonal norms we have experienced in
recent years and may continue to disrupt the historical quarterly cadence of our
results of operations for an unknown period of time.

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The following table contains results of operations data for fiscal years 2021, 2020 and 2019, and the dollar and percentage variances among those years.



                                                                           2021 vs. 2020         2020 vs. 2019
(amounts
in millions, except                                                       Amount       %        Amount       %
per share amounts)                2021          2020          2019        Change     Change     Change     Change
Net sales by category:
Consumables                    $ 26,258.6    $ 25,906.7    $ 21,635.9    $   351.9      1.4 %  $ 4,270.8     19.7 %
% of net sales                      76.73 %       76.77 %       77.96 %
Seasonal                          4,182.2       4,083.7       3,258.9         98.5      2.4        824.8     25.3
% of net sales                      12.22 %       12.10 %       11.74 %
Home products                     2,322.4       2,210.0       1,611.9        112.4      5.1        598.1     37.1
% of net sales                       6.79 %        6.55 %        5.81 %
Apparel                           1,457.3       1,546.6       1,247.3       (89.2)    (5.8)        299.2     24.0
% of net sales                       4.26 %        4.58 %        4.49 %
Net sales                      $ 34,220.4    $ 33,746.8    $ 27,754.0    $   473.6      1.4 %  $ 5,992.9     21.6 %
Cost of goods sold               23,407.4      23,028.0      19,264.9        379.5      1.6      3,763.1     19.5
% of net sales                      68.40 %       68.24 %       69.41 %
Gross profit                     10,813.0      10,718.9       8,489.1         94.1      0.9      2,229.8     26.3
% of net sales                      31.60 %       31.76 %       30.59 %
Selling, general and
administrative expenses           7,592.3       7,164.1       6,186.8      

 428.2      6.0        977.3     15.8
% of net sales                      22.19 %       21.23 %       22.29 %
Operating profit                  3,220.7       3,554.8       2,302.3      (334.1)    (9.4)      1,252.5     54.4
% of net sales                       9.41 %       10.53 %        8.30 %
Interest expense                    157.5         150.4         100.6          7.1      4.7         49.8     49.5
% of net sales                       0.46 %        0.45 %        0.36 %
Income before income taxes        3,063.1       3,404.4       2,201.7      (341.2)   (10.0)      1,202.7     54.6
% of net sales                       8.95 %       10.09 %        7.93 %
Income tax expense                  663.9         749.3         489.2       (85.4)   (11.4)        260.2     53.2
% of net sales                       1.94 %        2.22 %        1.76 %
Net income                     $  2,399.2    $  2,655.1    $  1,712.6    $ (255.8)    (9.6) %  $   942.5     55.0 %
% of net sales                       7.01 %        7.87 %        6.17 %

Diluted earnings per share $ 10.17 $ 10.62 $ 6.64 $ (0.45) (4.2) % $ 3.98 59.9 %

Net Sales. The net sales increase in 2021 was primarily due to sales from new
stores, partially offset by a decrease in same-store sales of 2.8% compared to
2020 as well as the impact of store closures. In 2021, our 16,954 same-stores
accounted for sales of $32.4 billion. The decrease in same-store sales reflects
a decline in customer traffic partially offset by an increase in average
transaction amount which was driven by higher average item retail prices.
Same-store sales decreased in each of our product categories, with the largest
percentage decrease in the apparel category.

The net sales increase in 2020 reflects a same-store sales increase of 16.3%
compared to 2019. In 2020, our 16,050 same-stores accounted for sales of $31.9
billion. The increase in same-store sales reflects an increase in average
transaction amount driven by a significant increase in items per transaction
and, to a lesser degree, higher average item retail prices, which were offset in
part by a decline in customer traffic. Same-store sales increased in each of the
consumables, seasonal, home products and apparel categories, with the largest
percentage increase in the home products category. The 2020 net sales increase
was positively affected by new stores, modestly offset by sales from closed
stores.

Gross Profit. In 2021, gross profit increased by 0.9%, and as a percentage of
net sales decreased by 16 basis points to 31.6% compared to 2020. Increased
transportation costs, a greater LIFO provision which was driven by higher
product costs, increased inventory damages and higher distribution costs each
contributed to the decrease in the gross profit rate. These factors were
partially offset by higher inventory markups, a reduction in markdowns as a
percentage of net sales, and a lower inventory shrink rate. In 2021, consumables
and non-consumables sales increased at approximately the same rate when compared
to 2020.

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In 2020, gross profit increased by 26.3%, and as a percentage of net sales
increased by 117 basis points to 31.8%, compared to 2019. A reduction in
markdowns as a percentage of net sales and higher initial markups on inventory
purchases each contributed to the increase in the gross profit rate. In
addition, non-consumables sales increased at a higher rate than consumables
sales in 2020, which contributed to the increase in the gross profit rate. We
also experienced a lower rate of inventory shrink in 2020 compared to 2019.
These factors were partially offset by increased distribution and transportation
costs which were impacted by increased volume, some of which was attributable to
the COVID-19 pandemic, and discretionary employee bonus expense. We believe the
effect of the COVID-19 pandemic on consumer behavior had a significant positive
effect on net sales, and also had a positive effect on our gross profit in 2020.

SG&A. SG&A as a percentage of net sales was 22.2% in 2021 compared to 21.2% in
2020, an increase of 96 basis points. The primary expenses that were higher as a
percentage of net sales in 2021 were retail labor, store occupancy costs,
depreciation and amortization, employee benefits, utilities, and workers'
compensation and general liability expenses, partially offset by reductions in
discretionary employee bonus and other miscellaneous COVID-related expenses and
incentive compensation expenses.

SG&A as a percentage of net sales was 21.2% in 2020 compared to 22.3% in 2019, a
decrease of 106 basis points. Although we incurred certain incremental costs
associated with the COVID-19 pandemic, including discretionary employee bonus
expense, they were more than offset by the significant increase in net sales
during the period as discussed above. Among the expenses that were a lower
percentage of net sales in 2020 were retail labor, store occupancy costs,
utilities, and depreciation and amortization. In addition, we recorded expenses
of $31.0 million in 2019 reflecting our estimate for the settlement of
significant legal matters. These items were partially offset by 2020 increases
in incentive compensation and hurricane-related expenses.

Interest Expense. Interest expense increased $7.1 million to $157.5 million in
2021 compared to 2020, and increased $49.8 million to $150.4 million in 2020
compared to 2019 primarily due to higher average outstanding debt balances in
connection with the issuance of debt in the first quarter of 2020. The majority
of our debt is fixed rate debt. See the detailed discussion under "Liquidity and
Capital Resources" regarding the financing of various long-term obligations.

Income Taxes. The effective income tax rate for 2021 was 21.7% compared to a
rate of 22.0% for 2020 which represents a net decrease of 0.3 percentage points.
The effective income tax rate was lower in 2021 primarily due to increased
income tax benefits associated with federal tax credits partially offset by a
higher state effective tax rate compared to 2020.

The effective income tax rate for 2020 was 22.0% compared to a rate of 22.2% for
2019 which represents a net decrease of 0.2 percentage points. The effective
income tax rate was lower in 2020 primarily due to increased tax benefits
associated with share-based compensation and a larger income tax rate benefit
from state taxes offset by a lower income tax rate benefit from federal income
tax credits due primarily to higher pre-tax earnings in 2020 compared to 2019.

Effects of Inflation



In 2021, 2020 and 2019, we experienced increases in product costs due in part to
the COVID-19 pandemic and its effect on the global economy, particularly to the
global supply chain, and tariffs on certain items imported from China.

Liquidity and Capital Resources

Current Financial Condition and Recent Developments



During the past three years, we have generated an aggregate of approximately
$9.0 billion in cash flows from operating activities and incurred approximately
$2.9 billion in capital expenditures. During that period, we expanded the number
of stores we operate by 2,760, representing growth of approximately 18%, and we
remodeled

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or relocated 4,756 stores, or approximately 31% of the stores we operated as of the beginning of the three-year period. In 2022, we intend to continue our current strategy of pursuing store growth, remodels and relocations.



At January 28, 2022, we had a $2.0 billion unsecured revolving credit agreement
(the "Revolving Facility"), $4.0 billion aggregate principal amount of senior
notes, and a commercial paper program that may provide borrowing availability of
up to $2.0 billion. At January 28, 2022, we had total consolidated outstanding
debt (including the current portion of long-term obligations) of $4.2 billion,
most of which was in the form of senior notes. All of our material borrowing
arrangements are described in greater detail below. Our borrowing availability
under the Revolving Facility may be effectively limited by our commercial paper
notes ("CP Notes") as further described below. The information contained in Note
5 to the consolidated financial statements contained in Part II, Item 8 of this
report is incorporated herein by reference.

We believe our cash flow from operations, and our existing cash balances,
combined with availability under the Revolving Facility, CP Notes and access to
the debt markets, will provide sufficient liquidity to fund our current
obligations, projected working capital requirements, capital spending and
anticipated dividend payments for a period that includes the next twelve months
as well as the next several years. However, our ability to maintain sufficient
liquidity may be affected by numerous factors, many of which are outside of our
control. Depending on our liquidity levels, conditions in the capital markets
and other factors, we may from time to time consider the issuance of debt,
equity or other securities, the proceeds of which could provide additional
liquidity for our operations.

For fiscal 2022, we anticipate potential combined borrowings under the Revolving
Facility and CP Notes to be a maximum of approximately $1.5 billion outstanding
at any one time, including any anticipated borrowings to fund repurchases of
common stock.

Revolving Credit Facility


Effective December 2, 2021, we amended and extended our Revolving Facility,
which consists of a $2.0 billion senior unsecured revolving credit facility of
which up to $100.0 million is available for the issuance of letters of credit
and which is scheduled to mature on December 2, 2026.

Borrowings under the Revolving Facility bear interest at a rate equal to an
applicable interest rate margin plus, at our option, either (a) LIBOR or (b) a
base rate (which is usually equal to the prime rate). The Revolving Facility
includes customary LIBOR replacement provisions. The applicable interest rate
margin for borrowings as of January 28, 2022 was 1.015% for LIBOR borrowings and
0.015% for base-rate borrowings. We must also pay a facility fee, payable on any
used and unused commitment amounts of the Revolving Facility, and customary fees
on letters of credit issued under the Revolving Facility. As of January 28,
2022, the facility fee rate was 0.11%. The applicable interest rate margins for
borrowings, the facility fees and the letter of credit fees under the Revolving
Facility are subject to adjustment from time to time based on our long-term
senior unsecured debt ratings.

The Revolving Facility contains a number of customary affirmative and negative
covenants that, among other things, restrict, subject to certain exceptions, our
(including our subsidiaries') ability to: incur additional liens; sell all or
substantially all of our assets; consummate certain fundamental changes or
change in our lines of business; and incur additional subsidiary indebtedness.
The Revolving Facility also contains financial covenants that require the
maintenance of a minimum fixed charge coverage ratio and a maximum leverage
ratio. As of January 28, 2022, we were in compliance with all such covenants.
The Revolving Facility also contains customary events of default.

As of January 28, 2022, under the Revolving Facility, we had no outstanding
borrowings, outstanding letters of credit of $1.9 million, and borrowing
availability of $2.0 billion that, due to our intention to maintain borrowing
availability related to the commercial paper program described below, could
contribute incremental liquidity of $1.76 billion at January 28, 2022. In
addition, as of January 28, 2022 we had outstanding letters of credit of $48.6
million which were issued pursuant to separate agreements.

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Commercial Paper

We may issue the CP Notes from time to time in an aggregate amount not to exceed
$2.0 billion outstanding at any time. The CP Notes may have maturities of up to
364 days from the date of issue and rank equal in right of payment with all of
our other unsecured and unsubordinated indebtedness. We intend to maintain
available commitments under the Revolving Facility in an amount at least equal
to the amount of CP Notes outstanding at any time. As of January 28, 2022, our
consolidated balance sheet reflected outstanding unsecured CP Notes of $54.3
million. CP Notes totaling $181.0 million were held by a wholly-owned subsidiary
and therefore are not reflected in the consolidated balance sheets.

Senior Notes


In April 2013 we issued $900.0 million aggregate principal amount of 3.25%
senior notes due 2023 (the "2023 Senior Notes") at a discount of $2.4 million,
which are scheduled to mature on April 15, 2023. In October 2015 we issued
$500.0 million aggregate principal amount of 4.150% senior notes due 2025 (the
"2025 Senior Notes") at a discount of $0.8 million, which are scheduled to
mature on November 1, 2025. In April 2017 we issued $600.0 million aggregate
principal amount of 3.875% senior notes due 2027 (the "2027 Senior Notes") at a
discount of $0.4 million, which are scheduled to mature on April 15, 2027. In
April 2018 we issued $500.0 million aggregate principal amount of 4.125% senior
notes due 2028 (the "2028 Senior Notes") at a discount of $0.5 million, which
are scheduled to mature on May 1, 2028. In April 2020 we issued $1.0 billion
aggregate principal amount of 3.5% senior notes due 2030 (the "2030 Senior
Notes") at a discount of $0.7 million, which are scheduled to mature on April 3,
2030, and $500.0 million aggregate principal amount of 4.125% senior notes due
2050 (the "2050 Senior Notes") at a discount of $5.0 million, which are
scheduled to mature on April 3, 2050. Collectively, the 2023 Senior Notes, 2025
Senior Notes, 2027 Senior Notes, 2028 Senior Notes, 2030 Senior Notes and 2050
Senior Notes comprise the "Senior Notes", each of which were issued pursuant to
an indenture as supplemented and amended by supplemental indentures relating to
each series of Senior Notes (as so supplemented and amended, the "Senior
Indenture"). Interest on the 2023 Senior Notes and the 2027 Senior Notes is
payable in cash on April 15 and October 15 of each year. Interest on the 2025
and 2028 Senior Notes is payable in cash on May 1 and November 1 of each year.
Interest on the 2030 and 2050 Senior Notes is payable in cash on April 3 and
October 3 of each year.

We may redeem some or all of the Senior Notes at any time at redemption prices
set forth in the Senior Indenture. Upon the occurrence of a change of control
triggering event, which is defined in the Senior Indenture, each holder of our
Senior Notes has the right to require us to repurchase some or all of such
holder's Senior Notes at a purchase price in cash equal to 101% of the principal
amount thereof, plus accrued and unpaid interest, if any, to, but excluding, the
repurchase date.

The Senior Indenture contains covenants limiting, among other things, our
ability (subject to certain exceptions) to consolidate, merge, or sell or
otherwise dispose of all or substantially all of our assets; and our ability and
the ability of our subsidiaries to incur or guarantee indebtedness secured by
liens on any shares of voting stock of significant subsidiaries.

The Senior Indenture also provides for events of default which, if any of them
occurs, would permit or require the principal of and accrued interest on our
Senior Notes to become or to be declared due and payable, as applicable.

Rating Agencies


Our senior unsecured debt is rated "Baa2," by Moody's with a stable outlook and
"BBB" by Standard & Poor's with a stable outlook, and our commercial paper
program is rated "P-2" by Moody's and "A-2" by Standard and Poor's. Our current
credit ratings, as well as future rating agency actions, could (i) impact our
ability to finance our operations on satisfactory terms; (ii) affect our
financing costs; and (iii) affect our insurance premiums and collateral
requirements necessary for our self-insured programs. There can be no assurance
that we will maintain or improve our current credit ratings.

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Future Cash Requirements

The following table summarizes significant estimated future cash requirements
under our various contractual obligations and other commitments at January 28,
2022, in total and disaggregated into current (<1 year) and long-term (1 or more
years) obligations (in thousands):

                                                            Payments Due by

Period


Contractual obligations              Total         < 1 year      1 - 3 years     3 - 5 years      5+ years
Long-term debt obligations        $  4,213,826    $    61,774    $    913,278    $    512,700    $ 2,726,074
Interest(a)                          1,241,977        149,460         245,855         213,147        633,515
Self-insurance liabilities(b)          257,411        127,719          91,420          30,890          7,382
Operating lease obligations         11,941,185      1,529,978       2,885,518       2,462,492      5,063,197
Subtotal                          $ 17,654,399    $ 1,868,931    $  4,136,071    $  3,219,229    $ 8,430,168


                                                      Commitments Expiring by Period
Commercial commitments(c)          Total         < 1 year      1 - 3 years     3 - 5 years      5+ years
Letters of credit               $     15,476    $    15,476    $          -    $          -    $         -
Purchase obligations(d)            2,124,249      2,120,271           3,978               -              -
Subtotal                        $  2,139,725    $ 2,135,747    $      3,978    $          -    $         -
Total contractual
obligations and commercial
commitments                     $ 19,794,124    $ 4,004,678    $  4,140,049

$ 3,219,229 $ 8,430,168

Represents obligations for interest payments on long-term debt and includes

projected interest on variable rate long-term debt using 2021 year end rates

and balances. Variable rate long-term debt includes the Revolving Facility (a) (although such facility had a balance of zero as of January 28, 2022), the CP

Notes (which had a balance of $54.3 million as of January 28, 2022, and which

amount is net of $181 million held by a wholly-owned subsidiary), interest


    rate swaps being accounted for as fair value hedges, and the balance of an
    outstanding tax increment financing of $1.9 million.

We retain a significant portion of the risk for our workers' compensation,

employee health, general liability, property loss, automobile, and certain (b) third-party landlord claims exposures. As these obligations do not have

scheduled maturities, these amounts represent undiscounted estimates based


    upon actuarial assumptions. Substantially all amounts are reflected on an
    undiscounted basis in our consolidated balance sheets.

Commercial commitments include information technology license and support (c) agreements, supplies, fixtures, letters of credit for import merchandise, and

other inventory purchase obligations.

Purchase obligations include legally binding agreements for software licenses (d) and support, supplies, fixtures, and merchandise purchases (excluding such

purchases subject to letters of credit).

Share Repurchase Program


Our common stock repurchase program had a total remaining authorization of
approximately $2.13 billion at January 28, 2022. The authorization allows
repurchases from time to time in open market transactions, including pursuant to
trading plans adopted in accordance with Rule 10b5-1 of the Securities Exchange
Act of 1934, as amended, or in privately negotiated transactions. The timing,
manner and number of shares repurchased will depend on a variety of factors,
including price, market conditions, compliance with the covenants and
restrictions under our debt agreements and other factors. The repurchase program
has no expiration date and may be modified or terminated from time to time at
the discretion of our Board of Directors. For more detail about our share
repurchase program, see Part II, Item 5 of this report and Note 11 to the
consolidated financial statements contained in Part II, Item 8 of this report.

Other Considerations



On March 16, 2022, the Board of Directors declared a quarterly cash dividend of
$0.55 per share which is payable on or before April 19, 2022 to shareholders of
record of our common stock on April 5, 2022. We paid

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quarterly cash dividends of $0.42 per share in 2021. Although the Board
currently expects to continue regular quarterly cash dividends, the declaration
and amount of future cash dividends are subject to the Board's sole discretion
and will depend upon, among other factors, our results of operations, cash
requirements, financial condition, contractual restrictions and other factors
that our Board may deem relevant in its sole discretion.

Our inventory balance represented approximately 52% of our total assets
exclusive of goodwill, operating lease assets, and other intangible assets as of
January 28, 2022. Our ability to effectively manage our inventory balances can
have a significant impact on our cash flows from operations during a given
fiscal year. Inventory purchases are often somewhat seasonal in nature, such as
the purchase of warm-weather or Christmas-related merchandise. Efficient
management of our inventory has been and continues to be an area of focus for
us.

We utilize supply chain finance programs whereby qualifying suppliers may elect
at their sole discretion to sell our payment obligations to designated third
party financial institutions. While the terms of these agreements are between
the supplier and the financial institution, the supply chain finance financial
institutions allow the participating suppliers to utilize our creditworthiness
in establishing credit spreads and associated costs. As of January 28, 2022, the
amount due to suppliers participating in these supply chain finance programs was
$328.2 million.

As described in Note 7 to the consolidated financial statements, we are involved
in a number of legal actions and claims, some of which could potentially result
in material cash payments. Adverse developments in those actions could
materially and adversely affect our liquidity.

Cash Flows


Cash flows from operating activities. Cash flows from operating activities were
$2.87 billion in 2021, which represents a $1.01 billion decrease compared to
2020. As noted above, the COVID-19 pandemic resulted in significantly increased
sales, gross profit, and operating income in 2020, and our net income decreased
$255.8 million in 2021 compared to 2020. Changes in accounts payable resulted in
a $98.7 million increase in our working capital in 2021 compared to a $745.6
million increase in 2020, due primarily to the timing of receipts and payments.
Changes in accrued expenses resulted in a $37.3 million decrease in our working
capital in 2021 compared to a $388.6 million increase in 2020, due primarily to
the timing of accruals and payments for payroll taxes and incentive
compensation. Changes in merchandise inventories resulted in a $550.1 million
decrease in our working capital in 2021 which was similar to the decrease of
$575.8 million in 2020 as described in greater detail below. Changes in income
taxes in 2021 compared to 2020 are primarily due to the timing of payments for
income taxes.

Cash flows from operating activities were $3.88 billion in 2020, which
represents a $1.64 billion increase compared to 2019. The increased sales, gross
profit, and operating income driven by the COVID-19 pandemic contributed to the
increase in net income of $942.5 million in 2020 over 2019. Changes in accounts
payable resulted in a $745.6 million increase in our working capital in 2020
compared to a $428.6 million increase in 2019, due primarily to the timing of
receipts and payments. Changes in accrued expenses resulted in a $388.6 million
increase in our working capital in 2020 compared to a $100.3 million increase in
2019, due primarily to increased accruals for incentive compensation and
non-income taxes. Changes in merchandise inventories resulted in a $575.8
million decrease in our working capital in 2020 which was similar to the
decrease of $578.8 million in 2019 as described in greater detail below. Changes
in income taxes including an increase in cash paid for income taxes in 2020
compared to 2019 are primarily due to the increase in pre-tax earnings in 2020.

On an ongoing basis, we closely monitor and manage our inventory balances, and
they may fluctuate from period to period based on new store openings, the timing
of purchases, and other factors. Merchandise inventories increased by 7% in
2021, by 12% in 2020 and by 14% in 2019. Inventory levels in the consumables
category decreased by $1.8 million, or 0%, in 2021, increased by $455.6 million,
or 15%, in 2020, and increased by $371.9 million, or 14% in 2019. The seasonal
category increased by $177.8 million, or 20%, in 2021, by $35.7 million, or 4%,
in 2020, and by $127.3 million, or 17%, in 2019. The home products category
increased by $230.0 million, or 45%, in 2021, by $66.3 million, or 15%, in 2020,
and by $82.8 million, or 23%, in 2019. The apparel category decreased by $39.2
million, or 10%, in 2021, increased by $12.9 million, or 3%, in 2020, and
decreased by $2.1 million, or 1%, in 2019.

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Cash flows from investing activities. Significant components of property and
equipment purchases in 2021 included the following approximate amounts: $510
million for improvements, upgrades, remodels and relocations of existing stores;
$268 million for distribution and transportation-related capital expenditures;
$244 million related to store facilities, primarily for leasehold improvements,
fixtures and equipment in new stores; and $44 million for information systems
upgrades and technology-related projects. The timing of new, remodeled and
relocated store openings along with other factors may affect the relationship
between such openings and the related property and equipment purchases in any
given period. During 2021, we opened 1,050 new stores and remodeled or relocated
1,852 stores.

Significant components of property and equipment purchases in 2020 included the
following approximate amounts: $447 million for improvements, upgrades, remodels
and relocations of existing stores; $271 million for distribution and
transportation-related capital expenditures; $250 million related to store
facilities, primarily for leasehold improvements, fixtures and equipment in new
stores; and $50 million for information systems upgrades and technology-related
projects. During 2020, we opened 1,000 new stores and remodeled or relocated
1,780 stores.

Significant components of property and equipment purchases in 2019 included the
following approximate amounts: $338 million for improvements, upgrades, remodels
and relocations of existing stores; $217 million for distribution and
transportation-related projects; $149 million for new leased stores, primarily
for leasehold improvements, fixtures and equipment; and $59 million for
information systems upgrades and technology-related projects. During 2019, we
opened 975 new stores and remodeled or relocated 1,124 stores.

Capital expenditures during 2022 are projected to be in the range of $1.4
billion to $1.5 billion. We anticipate funding 2022 capital requirements with a
combination of some or all of the following: existing cash balances, cash flows
from operations, availability under our Revolving Facility and/or the issuance
of additional senior notes and CP Notes. We plan to continue to invest in store
growth and development of approximately 1,110 new stores and approximately 1,870
stores to be remodeled or relocated. Capital expenditures in 2022 are
anticipated to support our store growth as well as our remodel and relocation
initiatives, including capital outlays for leasehold improvements, fixtures and
equipment; the construction of new stores; costs to support and enhance our
supply chain initiatives including new and existing distribution center
facilities and our private fleet; technology initiatives; as well as routine and
ongoing capital requirements.

Cash flows from financing activities. In 2021, net commercial paper borrowings
increased by $54.3 million. and we had no borrowings or repayments under the
Revolving Facility. We repurchased 12.1 million shares of our common stock at a
total cost of $2.5 billion and paid cash dividends of $392.2 million.

In 2020, net proceeds from the issuance of the 2030 Senior Notes and 2050 Senior
Notes totaled $1.5 billion, net commercial paper borrowings decreased by $425.2
million, and borrowings and repayments under the Revolving Facility were $300.0
million each. We repurchased 12.3 million shares of our common stock at a total
cost of $2.5 billion and paid cash dividends of $355.9 million.

In 2019, we had a net increase in consolidated commercial paper borrowings of
$58.3 million and had no borrowings or repayments under the Revolving Facility.
We repurchased 8.3 million outstanding shares of our common stock in 2019 at a
total cost of $1.2 billion and paid cash dividends of $327.6 million.

Critical Accounting Policies and Estimates



The preparation of financial statements in accordance with generally accepted
accounting principles in the United States ("U.S. GAAP") requires management to
make estimates and assumptions that affect reported amounts and related
disclosures. In addition to the estimates presented below, there are other items
within our financial statements that require estimation, but are not deemed
critical as defined below. We believe these estimates are reasonable and
appropriate. However, if actual experience differs from the assumptions and
other considerations used, the resulting changes could have a material effect on
the financial statements taken as a whole.

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Management believes the following policies and estimates are critical because
they involve significant judgments, assumptions, and estimates. Management has
discussed the development and selection of the critical accounting estimates
with the Audit Committee of our Board of Directors, and the Audit Committee has
reviewed the disclosures presented below relating to those policies and
estimates. See Note 1 to the consolidated financial statements for a detailed
discussion of our principal accounting policies.

Merchandise Inventories. Merchandise inventories are stated at the lower of cost
or market ("LCM") with cost determined using the retail last in, first out
("LIFO") method. We use the retail inventory method ("RIM") to calculate gross
profit and the resulting valuation of inventories at cost, which are computed
utilizing a calculated cost-to-retail inventory ratio to the retail value of
sales at an inventory department level. We apply the RIM to these departments,
which are groups of products that are fairly uniform in terms of cost, selling
price relationship and turnover. The RIM will result in valuing inventories at
LCM if permanent markdowns are currently taken as a reduction of the retail
value of inventories. Inherent in the RIM calculation are certain management
judgments and estimates that may impact the ending inventory valuation at cost,
as well as the gross profit recognized. These judgments include ensuring
departments consist of similar products, recording estimated shrinkage between
physical inventories, and timely recording of markdowns needed to sell
inventory.

We perform an annual LIFO analysis whereby all merchandise units are considered
for inclusion in the index formulation. An actual valuation of inventory under
the LIFO method is made at the end of each year based on the inventory levels
and costs at that time. In contrast, interim LIFO calculations are based on
management's annual estimates of sales, the rate of inflation or deflation, and
year-end inventory levels. We also perform analyses for determining obsolete
inventory, adjusting inventory on a quarterly basis to an LCM value based on
various management assumptions including estimated below cost markdowns not yet
recorded, but required to liquidate such inventory in future periods.

Factors considered in the determination of markdowns include current and
anticipated demand based on changes in competitors' practices, consumer
preferences, consumer spending, significant weather events and unseasonable
weather patterns. Certain of these factors are outside of our control and may
result in greater than estimated markdowns to entice consumer purchases of
excess inventory. The amount and timing of markdowns may vary significantly from
year to year.

We perform physical inventories in virtually all of our stores on an annual
basis. We calculate our shrink provision based on actual physical inventory
results during the fiscal period and an accrual for estimated shrink occurring
subsequent to a physical inventory through the end of the fiscal reporting
period. This accrual is calculated as a percentage of sales at each retail
store, at a department level, based on the store's most recent historical shrink
rate. To the extent that subsequent physical inventories yield different results
than the estimated accrual, our effective shrink rate for a given reporting
period will include the impact of adjusting to the actual results.

We believe our estimates and assumptions related to the application of the RIM
results in a merchandise inventory valuation that reasonably approximates cost
on a consistent basis.

Impairment of Long-lived Assets. Impairment of long-lived assets results when
the carrying value of the assets exceeds the estimated undiscounted future cash
flows generated by the assets. Our estimate of undiscounted future store cash
flows is based upon historical operations of the stores and estimates of future
profitability which encompasses many factors that are subject to variability and
are difficult to predict. If our estimates of future cash flows are not
materially accurate, our impairment analysis could be impacted accordingly. If a
long-lived asset is found to be impaired, the amount recognized for impairment
is equal to the difference between the carrying value and the asset's estimated
fair value. The fair value is estimated based primarily upon projected future
cash flows (discounted at our credit adjusted risk-free rate) or other
reasonable estimates of fair market value. Although not currently anticipated,
changes in these estimates, assumptions or projections could materially affect
the determination of fair value or impairment.

Insurance Liabilities. We retain a significant portion of the risk for our
workers' compensation, employee health, general liability, property loss,
automobile and certain third-party landlord claim exposures. These represent
significant costs primarily due to our large employee base and number of stores.
Provisions are made for these

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liabilities on an undiscounted basis. Certain of these liabilities are based on
actual claim data and estimates of incurred but not reported claims developed
using actuarial methodologies based on historical claim trends, which have been
and are anticipated to continue to be materially accurate. If future claim
trends deviate from recent historical patterns, or other unanticipated events
affect the number and significance of future claims, we may be required to
record additional expenses or expense reductions, which could be material to our
future financial results.

Contingent Liabilities - Income Taxes. Income tax reserves are determined using
the methodology established by accounting standards relating to uncertainty in
income taxes. These standards require companies to assess each income tax
position taken using a two-step process. A determination is first made as to
whether it is more likely than not that the position will be sustained, based
upon the technical merits, upon examination by the taxing authorities. If the
tax position is expected to meet the more likely than not criteria, the benefit
recorded for the tax position equals the largest amount that is greater than 50%
likely to be realized upon ultimate settlement of the respective tax position.
Uncertain tax positions require determinations and liabilities to be estimated
based on provisions of the tax law which may be subject to change or varying
interpretation. If our determinations and estimates prove to be inaccurate, the
resulting adjustments could be material to our future financial results.

Lease Accounting. Lease liabilities are recorded at a discount based upon our
estimated collateralized incremental borrowing rate which involves significant
judgments and estimates. Factors incorporated into the calculation of lease
discount rates include the valuations and yields of our senior notes, their
credit spread over comparable U.S. Treasury rates, and an index of the credit
spreads for all North American investment grade companies by rating. To
determine an indicative secured rate, we use the estimated credit spread
improvement that would result from an upgrade of one ratings classification by
tenor. Many of our stores are subject to build-to-suit arrangements with
landlords, which typically carry a primary lease term of up to 15 years with
multiple renewal options. We also have stores subject to shorter-term leases and
many of these leases have renewal options. We record single lease expense on a
straight-line basis over the lease term including any option periods that are
reasonably certain to be renewed, commencing on the date that we take physical
possession of the property from the landlord. Tenant allowances, to the extent
received, are recorded as a reduction of the right of use asset. Improvements of
leased properties are amortized over the shorter of the life of the applicable
lease term or the estimated useful life of the asset.

Share-Based Payments. Our stock option awards are valued on an individual grant
basis using the Black-Scholes-Merton closed form option pricing model. We
believe that this model fairly estimates the value of our stock option awards.
The application of this valuation model involves assumptions that are judgmental
in the valuation of stock options, which affects compensation expense related to
these options. These assumptions include the term that the options are expected
to be outstanding, the historical volatility of our stock price, applicable
interest rates and the dividend yield of our stock. Other factors involving
judgments that affect the expensing of share-based payments include estimated
forfeiture rates of share-based awards. Historically, these estimates have been
materially accurate; however, if our estimates differ materially from actual
experience, we may be required to record additional expense or reductions of
expense, which could be material to our future financial results.

Fair Value Measurements. Accounting standards for the measurement of fair value
of assets and liabilities establish a fair value hierarchy that distinguishes
between market participant assumptions based on market data obtained from
sources independent of the reporting entity (observable inputs that are
classified within Levels 1 and 2 of the hierarchy) and the reporting entity's
own assumptions about market participant assumptions (unobservable inputs
classified within Level 3 of the hierarchy). Therefore, Level 3 inputs are
typically based on an entity's own assumptions, as there is little, if any,
related market activity, and thus require the use of significant judgment and
estimates. Currently, we have no assets or liabilities that are valued based
solely on Level 3 inputs. Our fair value measurements are primarily associated
with our outstanding debt instruments. We use various valuation models in
determining the values of these liabilities. We believe that in recent years
these methodologies have produced materially accurate valuations.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Financial Risk Management



We are exposed to market risk primarily from adverse changes in interest rates,
and to a lesser degree commodity prices. To minimize this risk, we may
periodically use financial instruments, including derivatives. All derivative
financial instrument transactions must be authorized and executed pursuant to
approval by the Board of Directors. As a matter of policy, we do not buy or sell
financial instruments for speculative or trading purposes, and any such
derivative financial instruments are intended to be used to reduce risk by
hedging an underlying economic exposure. Our objective is to correlate
derivative financial instruments and the underlying exposure being hedged, so
that fluctuations in the value of the financial instruments are generally offset
by reciprocal changes in the value of the underlying economic exposure.

Interest Rate Risk



We are exposed to changes in interest rates as a result of our short-term
borrowings and long-term debt. We manage our interest rate risk through the
strategic use of fixed and variable interest rate debt and, from time to time,
derivative financial instruments. Currently, we are counterparty to certain
interest rate swaps with a total notional amount of $350.0 million entered into
in May 2021. These swaps are scheduled to mature in April 2030. Under the terms
of these agreements, we swapped fixed interest rates on a portion of our 2030
Senior Notes for three-month LIBOR rates. In recent years, our principal
interest rate exposure has been from outstanding borrowings under our Revolving
Facility as well as our commercial paper program. As of January 28, 2022, we had
$54.3 million of consolidated commercial paper borrowings and no borrowings
outstanding under our Revolving Facility. For a detailed discussion of our
Revolving Facility and our commercial paper program, see Note 5 to the
consolidated financial statements.

A change in interest rates on variable rate debt impacts our pre-tax earnings
and cash flows; whereas a change in interest rates on fixed rate debt impacts
the economic fair value of debt but not our pre-tax earnings and cash flows. At
January 28, 2022, our primary interest rate exposure was from changes in
interest rates which affect our variable rate debt. Based on our outstanding
variable rate debt as of January 28, 2022, after giving consideration to our
interest rate swap agreements, the annualized effect of a one percentage point
increase in variable interest rates would have resulted in a pretax reduction of
our earnings and cash flows of approximately $4.1 million in 2021.

At January 29, 2021, our primary interest rate exposure was from changes in
interest rates on our variable rate investment holdings, which were classified
as cash and cash equivalents in our consolidated financial statements. The
increase in cash and cash equivalents was driven primarily by our issuance of
$1.5 billion of senior unsecured notes during the first quarter of 2020 as we
sought to strengthen liquidity as a result of the uncertainty caused by the
COVID-19 pandemic. Based on our variable rate cash investment balance of $1.1
billion at January 29, 2021, the annualized effect of a 0.1 percentage point
decrease in interest rates would have resulted in a pre-tax reduction of our
earnings and cash flows of approximately $1.1 million in 2020.

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