Fair Value Measurements

12 Months Ended

Feb. 03, 2018

Fair Value Measurements

The following table provides a summary of the principal value and estimated fair value of long-term debt, excluding Foreign Facility borrowings, as of February 3, 2018 and January 28, 2017:



	February 3, 2018		January 28, 2017
	(in millions)
Principal Value	$	5,750	$	5,750
Fair Value (a)	5,943		6,030

________________


(a)	The estimated fair value of the Company’s publicly traded debt is based on reported transaction prices which are considered Level 2 inputs in accordance with ASC Topic 820, Fair Value Measurement. The estimates presented are not necessarily indicative of the amounts that the Company could realize in a current market exchange.

The following table provides a summary of assets and liabilities measured in the consolidated financial statements at fair value on a recurring basis as of February 3, 2018 and January 28, 2017:



	Level 1		Level 2		Level 3		Total
	(in millions)
As of February 3, 2018
Assets:
Cash and Cash Equivalents	$	1,515	$	—	$	—	$	1,515
Marketable Securities	17		—		—		17
Liabilities:
Foreign Currency Cash Flow Hedges	—		9		—		9
As of January 28, 2017
Assets:
Cash and Cash Equivalents	$	1,934	$	—	$	—	$	1,934
Marketable Securities	5		—		—		5
Interest Rate Fair Value Hedges	—		2		—		2
Foreign Currency Cash Flow Hedges	—		18		—		18
Liabilities:
Foreign Currency Cash Flow Hedges	—		1		—		1

The Company's Level 1 fair value measurements use unadjusted quoted prices in active markets for identical assets. The Company's marketable securities are classified as Level 1 fair value measurements as they are traded with sufficient frequency and volume to enable the Company to obtain pricing information on an ongoing basis.

In the fourth quarter of 2017, the Company purchased $10 million of marketable equity securities which are classified as available-for-sale as of the end of 2017. The cash payment is included in Purchases of Marketable Securities in the Investing Activities section of the 2017 Consolidated Statement of Cash Flows.

In 2015, the Company purchased $10 million in marketable equity securities which are classified as available-for-sale. In the first quarter of 2016, the Company sold a portion of this investment for $10 million and recognized a pre-tax gain of $4 million (after-tax gain of $3 million). The gain is included in Other Income (Loss) in the 2016 Consolidated Statement of Income, and the cash proceeds are included in Proceeds from Sale of Marketable Securities in the Investing Activities section of the 2016 Consolidated Statement of Cash Flows.

The Company’s Level 2 fair value measurements use market approach valuation techniques. The primary inputs to these techniques include benchmark interest rates and foreign currency exchange rates, as applicable to the underlying instruments.

Management believes that the carrying values of accounts receivable, accounts payable, accrued expenses and current debt approximate fair value because of their short maturity.

- 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 + Details