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FAIR VALUE MEASUREMENTS | 12 Months Ended
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Feb. 03, 2024
FAIR VALUE MEASUREMENTS |
FAIR VALUE MEASUREMENTS |
7. | FAIR VALUE MEASUREMENTS
​ GAAP establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The three levels of the fair value hierarchy defined in the standards are as follows: ​ Level 1 - Quoted prices are available in active markets for identical assets or liabilities; ​ Level 2 - Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable; ​ Level 3 - Unobservable pricing inputs in which little or no market activity exists, therefore requiring an entity to develop its own assumptions about the assumptions that market participants would use in pricing an asset or liability. ​ For items carried at (or adjusted to) fair value in the consolidated financial statements, the following tables summarize the fair value of these instruments at February 3, 2024 and January 28, 2023: ​ February 3, 2024 Fair Value Measurements Using ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | Quoted Prices in |  | ​ | ​ |  | ​ | ​ |
​ | ​ | Active Markets | ​ | ​ | ​ | ​ | ​ | ​ |
​ | ​ | for Identical | ​ | Significant Other | ​ | ​ | ​ |
​ | ​ | Assets | ​ | Observable Inputs | ​ | ​ | ​ |
​ | ​ | (Level 1) | ​ | (Level 2) | ​ | Total |
Marketable Securities | ​ | $ | 646 | ​ | $ | — | ​ | $ | 646 | ​
Forward-Starting Interest Rate Swaps and Commodity Contracts | ​ |  | — | ​ |  | 155 | ​ |  | 155 | ​
Total | ​ | $ | 646 | ​ | $ | 155 | ​ | $ | 801 | ​
​ January 28, 2023 Fair Value Measurements Using ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | Quoted Prices in |  | ​ | ​ |  | ​ | ​ |
​ | ​ | Active Markets | ​ | ​ | ​ | ​ | ​ | ​ |
​ | ​ | for Identical | ​ | Significant Other | ​ | ​ | ​ |
​ | ​ | Assets | ​ | Observable Inputs | ​ | ​ | ​ |
​ | ​ | (Level 1) | ​ | (Level 2) | ​ | Total |
Marketable Securities | ​ | $ | 463 | ​ | $ | — | ​ | $ | 463 | ​
Forward-Starting Interest Rate Swaps | ​ | ​ | — | ​ |  | (258) | ​ |  | (258) | ​
Total | ​ | $ | 463 | ​ | $ | (258) | ​ | $ | 205 | ​
​ The Company values interest rate hedges using observable forward yield curves. These forward yield curves are classified as Level 2 inputs. ​ Fair value measurements of non-financial assets and non-financial liabilities are primarily used in the impairment analysis of goodwill, other intangible assets, long-lived assets and in the valuation of store lease exit costs. The Company reviews goodwill and indefinite-lived intangible assets for impairment annually, during the fourth quarter of each fiscal year, and as circumstances indicate the possibility of impairment. See Note 2 for further discussion related to the Company’s carrying value of goodwill. Long-lived assets and store lease exit costs were measured at fair value on a nonrecurring basis using Level 3 inputs as defined in the fair value hierarchy. See Note 1 for further discussion of the Company’s policies for impairments of long-lived assets and valuation of store lease exit costs. In 2023, long-lived assets with a carrying amount of $72 were written down to their fair value of $3, resulting in an impairment charge of $69. In 2022, long-lived assets with a carrying amount of $69 were written down to their fair value of $1, resulting in an impairment charge of $68. ​ Fair Value of Other Financial Instruments ​ Current and Long-term Debt ​ The fair value of the Company’s long-term debt, including current maturities, was estimated based on the quoted market prices for the same or similar issues adjusted for illiquidity based on available market evidence. If quoted market prices were not available, the fair value was based upon the net present value of the future cash flow using the forward interest rate yield curve in effect at respective year-ends. At February 3, 2024, the fair value of total debt excluding obligations under finance leases was $9,401 compared to a carrying value of $10,187. At January 28, 2023, the fair value of total debt excluding obligations under finance leases was $10,593 compared to a carrying value of $11,292. ​ Contingent Consideration ​ As a result of the Home Chef merger in 2018, the Company recognized a contingent liability of $91 on the acquisition date. The contingent consideration was measured using unobservable (Level 3) inputs and was included in “Other long-term liabilities” within the Consolidated Balance Sheet. The Company estimated the fair value of the earnout liability by applying a Monte-Carlo simulation method using the Company’s projection of future operating results for both the online and offline businesses related to the Home Chef merger and the estimated probability of achievement of the earnout target metrics. The Monte-Carlo simulation is a generally accepted statistical technique used to generate a defined number of valuation paths in order to develop a reasonable estimate of the fair value of the earnout liability. The liability is remeasured to fair value using the Monte-Carlo simulation method at each reporting period, and the change in fair value, including accretion for the passage of time, is recognized in net earnings until the contingency is resolved. In 2020, the Company amended the contingent consideration agreement including the performance milestones to align with the Company’s current business strategies. In 2022, the Company recorded adjustments to increase the contingent consideration liability for $20 in OG&A. During 2023, the Company made the final contingent consideration payment of $83 which was based on the fair value of the outstanding year-end 2022 liability. ​ Cash and Temporary Cash Investments, Store Deposits In-Transit, Receivables, Prepaid and Other Current Assets, Accounts Payable, Accrued Salaries and Wages and Other Current Liabilities ​ The carrying amounts of these items approximated fair value due to their short-term nature. ​ Other Assets ​ The fair value of certain financial instruments, measured using Level 1 inputs, was $578 and $401 as of February 3, 2024 and January 28, 2023, respectively, and is included in “Other assets” in the Company’s Consolidated Balance Sheets. The unrealized loss for these Level 1 investments was approximately $66 and $586 for 2023 and 2022, respectively, and is included in “Gain (loss) on investments” in the Company’s Consolidated Statements of Operations. ​ The Company held other equity investments without a readily determinable fair value. These investments are measured initially at cost and remeasured for observable price changes to fair value through net earnings. The value of these investments was $92 and $320 as of February 3, 2024 and January 28, 2023, respectively, and is included in “Other assets” in the Company’s Consolidated Balance Sheets. The decrease in the value of these other equity investments without a readily determinable fair value was the result of one of the Company’s investments now being measured using Level 1 inputs. There were no other observable price changes or impairments for these investments without a readily determinable fair value during 2023 or 2022, and as such, they are excluded from the fair value measurements table above for February 3, 2024 and January 28, 2023. ​ The following table presents the Company’s remaining other assets as of February 3, 2024 and January 28, 2023: ​
​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | February 3, 2024 |  | January 28, 2023
Other Assets | ​ | ​ | ​ | ​ | ​ | ​
Equity method and other long-term investments | ​ | $ | 290 | ​ | $ | 274
Notes receivable | ​ |  | 78 | ​ |  | 169
Prepaid deposits under certain contractual arrangements | ​ |  | 193 | ​ |  | 199
Implementation costs related to cloud computing arrangements | ​ | ​ | 257 | ​ | ​ | 193
Forward-starting interest rate swaps | ​ | ​ | 160 | ​ | ​ | —
Funded asset status of pension plans | ​ | ​ | 44 | ​ | ​ | 69
Other | ​ | ​ | 128 | ​ | ​ | 125
Total | ​ | $ | 1,150 | ​ | $ | 1,029
​

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482106/820-10-50-2 + Details
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