XML 27 R14.htm IDEA: XBRL DOCUMENT
v3.10.0.1

Derivative Instruments (Notes) | 6 Months Ended
--- | ---
Aug. 04, 2018
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 financial institutions with investment-grade credit ratings as our counterparties. We record all derivative instruments on our Condensed Consolidated Balance Sheets at fair value and evaluate hedge effectiveness prospectively or 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 of 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 gains and losses, if any, related to the amount excluded from the assessment of hedge effectiveness in net earnings. Interest Rate Swaps We have used "receive fixed-rate, pay variable-rate" interest rate swaps to mitigate the effect of interest rate fluctuations on our 2018 Notes, prior to their maturity, and our 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 for as fair value hedges 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. 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 tables present the gross fair values of our outstanding derivative instruments and the corresponding classification at August 4, 2018, February 3, 2018, and July 29, 2017 ($ in millions):
|  | Assets
Contract Type | Balance Sheet Location | August 4, 2018 |  | February 3, 2018 |  | July 29, 2017
Derivatives designated as net investment hedges | Other current assets | $ | 5 |  |  | $ | 2 |  |  | $ | — |
Derivatives designated as interest rate swaps | Other current assets and Other assets | — |  |  | — |  |  | 16 |
Total |  | $ | 5 |  |  | $ | 2 |  |  | $ | 16 |
|  | Liabilities
Contract Type | Balance Sheet Location | August 4, 2018 |  | February 3, 2018 |  | July 29, 2017
Derivatives designated as net investment hedges | Accrued liabilities | $ | — |  |  | $ | 7 |  |  | $ | 13 |
Derivatives designated as interest rate swaps | Accrued liabilities and Long-term liabilities | 7 |  |  | 5 |  |  | — |
No hedge designation (foreign exchange forward contracts) | Accrued liabilities | — |  |  | 1 |  |  | 2 |
Total |  | $ | 7 |  |  | $ | 13 |  |  | $ | 15 |
The following table presents the effects of derivative instruments on other comprehensive income ("OCI") for the three and six months ended August 4, 2018, and July 29, 2017 ($ in millions):
| Three Months Ended |  | Six Months Ended
Derivatives designated as net investment hedges | August 4, 2018 |  | July 29, 2017 |  | August 4, 2018 |  | July 29, 2017
Pre-tax gain(loss) recognized in OCI | $ | 3 |  |  | $ | (19 | ) |  | $ | 19 |  |  | $ | (11 | )
The following table presents the effects of derivatives not designated as hedging instruments on our Condensed Consolidated Statements of Earnings for the three and six months ended August 4, 2018, and July 29, 2017 ($ in millions):
|  | Gain (Loss) Recognized
|  | Three Months Ended |  | Six Months Ended
Contract Type | Location of Gain (Loss) Recognized | August 4, 2018 |  | July 29, 2017 |  | August 4, 2018 |  | July 29, 2017
No hedge designation (foreign exchange contracts) | SG&A | $ | 1 |  |  | $ | (4 | ) |  | $ | 1 |  |  | $ | (3 | )
The following table presents the effects of interest rate derivatives and adjustments to the carrying value of long-term debt on our Condensed Consolidated Statements of Earnings for the three and six months ended August 4, 2018, and July 29, 2017 ($ in millions):
|  | Gain (Loss) Recognized
|  | Three Months Ended |  | Six Months Ended
Contract Type | Location of Gain (Loss) Recognized | August 4, 2018 |  | July 29, 2017 |  | August 4, 2018 |  | July 29, 2017
Interest rate swap contracts | Interest expense | $ | 3 |  |  | $ | 14 |  |  | $ | (1 | ) |  | $ | 3 |
Adjustments to carrying value of long-term debt | Interest expense | (3 | ) |  | (14 | ) |  | 1 |  |  | (3 | )
Total |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
The following table presents the notional amounts of our derivative instruments at August 4, 2018, February 3, 2018, and July 29, 2017 ($ in millions):
| Notional Amount
Contract Type | August 4, 2018 |  | February 3, 2018 |  | July 29, 2017
Derivatives designated as net investment hedges | $ | 59 |  |  | $ | 462 |  |  | $ | 205 |
Derivatives designated as interest rate swap contracts | 650 |  |  | 1,150 |  |  | 1,000 |
No hedge designation (foreign exchange forward contracts) | 41 |  |  | 33 |  |  | 48 |
Total | $ | 750 |  |  | $ | 1,645 |  |  | $ | 1,253 |

X
- References No definition available. + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI http://asc.fasb.org/topic&trid=2229140 + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration