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Derivative Instruments (Notes) | 3 Months Ended
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Apr. 30, 2016
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Instruments | Derivative Instruments We manage our economic and transaction exposure to certain risks through the use of foreign currency derivative instruments and interest rate swaps. Our objective in holding derivatives is to reduce the volatility of net earnings, cash flows and net asset value associated with changes in foreign currency exchange rates and interest rates. We do not hold derivative instruments for trading or speculative purposes. We have no derivatives that have credit risk-related contingent features, and we mitigate our credit risk by engaging with major financial institutions as our counterparties. We record all derivative instruments on our Condensed Consolidated Balance Sheets at fair value and evaluate hedge effectiveness prospectively and retrospectively when electing to apply hedge accounting. We formally document all hedging relations at inception for derivative hedges and the underlying hedged items, as well as the risk management objectives and strategies for undertaking the hedge transaction. In addition, we have derivatives which are not designated as hedging instruments. Net Investment Hedges We use foreign exchange forward contracts to hedge against the effect of Canadian dollar exchange rate fluctuations on a portion of our net investment in our Canadian operations. The contracts have terms up to 12 months. For a net investment hedge, we recognize changes in the fair value of the derivative as a component of foreign currency translation within other comprehensive income to offset a portion of the change in translated value of the net investment being hedged, until the investment is sold or liquidated. We limit recognition in net earnings of amounts previously recorded in other comprehensive income to circumstances such as complete or substantially complete liquidation of the net investment in the hedged foreign operation. We report the ineffective portion of the gain or loss, if any, in net earnings. Interest Rate Swaps We use "receive fixed-rate, pay variable-rate" interest rate swaps to mitigate the effect of interest rate fluctuations on our 2018 Notes and 2021 Notes. Our interest rate swap contracts are considered perfect hedges because the critical terms and notional amounts match those of our fixed-rate debt being hedged and are therefore accounted as a fair value hedge using the shortcut method. Under the shortcut method, we recognize the change in the fair value of the derivatives with an offsetting change to the carrying value of the debt. Accordingly, there is no impact on our Condensed Consolidated Statements of Earnings from the fair value of the derivatives. Derivatives Not Designated as Hedging Instruments We use foreign currency forward contracts to manage the impact of fluctuations in foreign currency exchange rates relative to recognized receivable and payable balances denominated in non-functional currencies and on certain forecast inventory purchases denominated in non-functional currencies. The contracts generally have terms of up to 12 months. These derivative instruments are not designated in hedging relationships, and, therefore, we record gains and losses on these contracts directly to net earnings. Summary of Derivative Balances The following table presents the gross fair values for outstanding derivative instruments and the corresponding classification at April 30, 2016, January 30, 2016, and May 2, 2015 ($ in millions):
| April 30, 2016 |  | January 30, 2016 |  | May 2, 2015
Contract Type | Assets |  | Liabilities |  | Assets |  | Liabilities |  | Assets |  | Liabilities
Derivatives designated as net investment hedges(1) | $ | — |  |  | $ | 11 |  |  | $ | 15 |  |  | $ | 1 |  |  | $ | 8 |  |  | $ | 2 |
Derivatives designated as interest rate swaps(2) | 15 |  |  | — |  |  | 25 |  |  | — |  |  | 7 |  |  | 2 |
No hedge designation (foreign exchange forward contracts)(1) | — |  |  | 2 |  |  | 3 |  |  | — |  |  | 5 |  |  | 3 |
Total | $ | 15 |  |  | $ | 13 |  |  | $ | 43 |  |  | $ | 1 |  |  | $ | 20 |  |  | $ | 7 |
(1) | The fair value is recorded in other current assets or accrued liabilities.
(2) | The fair value is recorded in other assets or long-term liabilities.
The following table presents the effects of derivative instruments on Other Comprehensive Income ("OCI") and on our Condensed Consolidated Statements of Earnings for the three months ended April 30, 2016, and May 2, 2015 ($ in millions):
| Three Months Ended
| April 30, 2016 |  | May 2, 2015
Contract Type | Pre-tax Gain(Loss) Recognized in OCI |  | Gain(Loss) Reclassified from Accumulated OCI to Earnings (Effective Portion) |  | Pre-tax Gain(Loss) Recognized in OCI |  | Gain(Loss) Reclassified from Accumulated OCI to Earnings (Effective Portion)
Derivatives designated as net investment hedges | $ | (22 | ) |  | $ | — |  |  | $ | (9 | ) |  | $ | — |
The following tables present the effects of derivative instruments on our Condensed Consolidated Statements of Earnings for the three months ended April 30, 2016, and May 2, 2015 ($ in millions):
| Gain (Loss) Recognized within SG&A
| Three Months Ended
Contract Type | April 30, 2016 |  | May 2, 2015
No hedge designation (foreign exchange forward contracts) | $ | (5 | ) |  | $ | (5 | )
| Gain (Loss) Recognized within Interest Expense
| Three Months Ended
Contract Type | April 30, 2016 |  | May 2, 2015
Interest rate swap gain (loss) | $ | (10 | ) |  | $ | 4 |
Adjustments to carrying value of long-term debt | 10 |  |  | (4 | )
Net impact on Condensed Consolidated Statements of Earnings | $ | — |  |  | $ | — |
The following table presents the notional amounts of our derivative instruments at April 30, 2016, January 30, 2016, and May 2, 2015 ($ in millions):
| Notional Amount
Contract Type | April 30, 2016 |  | January 30, 2016 |  | May 2, 2015
Derivatives designated as net investment hedges | $ | 204 |  |  | $ | 208 |  |  | $ | 222 |
Derivatives designated as interest rate swaps | 750 |  |  | 750 |  |  | 750 |
No hedge designation (foreign exchange forward contracts) | 95 |  |  | 94 |  |  | 199 |
Total | $ | 1,049 |  |  | $ | 1,052 |  |  | $ | 1,171 |

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