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Derivative Instruments | 6 Months Ended
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Jul. 29, 2017
Summary of Derivative Instruments [Abstract] |
Derivative Instruments | Derivative Financial Instruments Foreign Exchange Derivative Instruments The earnings of the Company's wholly owned foreign businesses are subject to exchange rate risk as substantially all of their merchandise is sourced through U.S. dollar transactions. The Company uses foreign currency forward contracts designated as cash flow hedges to mitigate this foreign currency exposure for its Canadian and U.K. businesses. These forward contracts currently have a maximum term of 18 months. Amounts are reclassified from accumulated other comprehensive income (loss) upon sale of the hedged merchandise to the customer. These gains and losses are recognized in Cost of Goods Sold, Buying and Occupancy on the Consolidated Statements of Income. The Company has a cross-currency swap related to an intercompany loan of approximately CAD$170 million maturing in January 2018 which is designated as a cash flow hedge of foreign currency exchange risk. This cross-currency swap mitigates the exposure to fluctuations in the U.S. dollar-Canadian dollar exchange rate related to the Company's Canadian operations. The cross-currency swap requires the periodic exchange of fixed-rate Canadian dollar interest payments for fixed-rate U.S. dollar interest payments as well as exchange of Canadian dollar and U.S. dollar principal payments upon maturity. Changes in the U.S. dollar-Canadian dollar exchange rate and the related swap settlements result in reclassification of amounts from accumulated other comprehensive income (loss) to earnings to completely offset foreign currency transaction gains and losses recognized on the intercompany loan. The Company uses foreign currency forward contracts to mitigate the impact of fluctuations in foreign currency exchange rates relative to recognized payable balances denominated in non-functional currencies. The fair value of these non-designated foreign currency forward contracts is not significant as of July 29, 2017. The following table provides the U.S. dollar notional amount of outstanding foreign currency derivative financial instruments as of July 29, 2017, January 28, 2017 and July 30, 2016:
| July 29, 2017 |  | January 28, 2017 |  | July 30, 2016
| (in millions)
Notional Amount | $ | 376 |  |  | $ | 360 |  |  | $ | 152 |
The following table provides a summary of the fair value and balance sheet classification of outstanding derivative financial instruments designated as foreign currency cash flow hedges as of July 29, 2017, January 28, 2017 and July 30, 2016:
| July 29, 2017 |  | January 28, 2017 |  | July 30, 2016
| (in millions)
Other Current Assets | $ | 8 |  |  | $ | 18 |  |  | $ | — |
Accrued Expenses and Other | 8 |  |  | 1 |  |  | — |
Other Long-term Assets | — |  |  | — |  |  | 16 |
Other Long-term Liabilities | 3 |  |  | — |  |  | — |
The following table provides a summary of the pre-tax financial statement effect of the gains and losses on derivative financial instruments designated as foreign currency cash flow hedges for the second quarter and year-to-date 2017 and 2016:
| Second Quarter |  | Year-to-Date
| 2017 |  | 2016 |  | 2017 |  | 2016
| (in millions)
Gain (Loss) Recognized in Accumulated Other Comprehensive Income (Loss) | $ | (28 | ) |  | $ | 5 |  |  | $ | (18 | ) |  | $ | (11 | )
(Gain) Loss Reclassified from Accumulated Other Comprehensive Income into Cost of Goods Sold, Buying and Occupancy Expense (a) | (1 | ) |  | — |  |  | (3 | ) |  | — |
(Gain) Loss Reclassified from Accumulated Other Comprehensive Income into Other Income (b) | 13 |  |  | (5 | ) |  | 8 |  |  | 9 |
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(a) | Represents reclassification of amounts from accumulated other comprehensive income (loss) to earnings when the hedged merchandise is sold to the customer. No ineffectiveness was associated with these foreign currency cash flow hedges.
(b) | Represents reclassification of amounts from accumulated other comprehensive income (loss) to earnings to completely offset foreign currency transaction gains and losses recognized on the intercompany loan. No ineffectiveness was associated with this foreign currency cash flow hedge.
The Company estimates that $6 million of losses included in accumulated other comprehensive income (loss) as of July 29, 2017 related to foreign currency forward contracts designated as cash flow hedges will be reclassified into earnings within the following 12 months. Actual amounts ultimately reclassified depend on the exchange rates in effect when derivative contracts that are currently outstanding mature. Interest Rate Derivative Instruments The Company has interest rate swap arrangements related to $300 million of the outstanding 2019 Notes that are designated as interest rate fair value hedges. The interest rate swap arrangements effectively convert the fixed interest rate on the related debt to a variable interest rate based on LIBOR plus a fixed percentage. The changes in the fair value of the interest rate swaps have an equal and offsetting impact to the carrying value of the debt on the balance sheet. The differential to be paid or received on the interest rate swap arrangements is accrued and recognized as an adjustment to interest expense. The following table provides a summary of the fair value and balance sheet classification of the derivative financial instruments designated as interest rate fair value hedges as of July 29, 2017, January 28, 2017 and July 30, 2016:
| July 29, 2017 |  | January 28, 2017 |  | July 30, 2016
| (in millions)
Other Long-term Assets | $ | 2 |  |  | $ | 2 |  |  | $ | 8 |

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- 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://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI http://asc.fasb.org/topic&trid=2229140 + Details
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- References No definition available. + Details
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