Fair Value Measurements

There were no purchases, sales, issuances, or settlements related to recurring level 3 measurements during fiscal 2016 or 2015. There were no transfers into or out of level 1 and level 2 during fiscal 2016 or 2015.

Financial Assets and Liabilities

Financial assets and liabilities measured at fair value on a recurring basis and cash equivalents held at amortized cost are as follows:



			Fair Value Measurements at Reporting Date Using
($ in millions)	January 28, 2017		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Cash equivalents	$	697	$	256	$	441	$	—
Derivative financial instruments	58		—		58		—
Deferred compensation plan assets	40		40		—		—
Total	$	795	$	296	$	499	$	—
Liabilities:
Derivative financial instruments	$	21	$	—	$	21	$	—



			Fair Value Measurements at Reporting Date Using
($ in millions)	January 30, 2016		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Cash equivalents	$	517	$	204	$	313	$	—
Derivative financial instruments	93		—		93		—
Deferred compensation plan assets	37		37		—		—
Total	$	647	$	241	$	406	$	—
Liabilities:
Derivative financial instruments	$	3	$	—	$	3	$	—

We have highly liquid investments classified as cash equivalents, which are placed primarily in time deposits, money market funds, and commercial paper. We value these investments at their original purchase prices plus interest that has accrued at the stated rate.

Derivative financial instruments primarily include foreign exchange forward contracts. The principal currencies hedged against changes in the U.S. dollar are Japanese yen, Canadian dollars, British pounds, Euro, Mexican pesos, Chinese yuan, and Taiwan dollars. The fair value of the Company’s derivative financial instruments is determined using pricing models based on current market rates. Derivative financial instruments in an asset position are recorded in other current assets or other long-term assets in the Consolidated Balance Sheets. Derivative financial instruments in a liability position are recorded in accrued expenses and other current liabilities or lease incentives and other long-term liabilities in the Consolidated Balance Sheets.

We maintain the Gap Inc. Deferred Compensation Plan (“DCP”), which allows eligible employees and non-employee directors to defer compensation up to a maximum amount. Plan investments are directed by participants and are recorded at market value and designated for the DCP. The fair value of the Company’s DCP assets is determined based on quoted market prices, and the assets are recorded in other long-term assets in the Consolidated Balance Sheets.

Nonfinancial Assets

In May 2016, the Company announced measures that resulted in the closure of its fleet of 53 Old Navy stores in Japan and select Banana Republic stores, primarily internationally. In fiscal 2016, we recorded a charge for the impairment of long-lived assets of $54 million related to the announced store closures, and an additional $53 million for long-lived assets that were unrelated to the announced measures.

In June 2015, the Company announced a series of strategic actions to position Gap brand for improved business performance in the future, including its plan to close about 175 Gap brand specialty stores in North America and a limited number of stores in Europe and Asia over the next few years. As a result of the strategic actions, in fiscal 2015, we recorded an impairment charge of $38 million related to long-lived assets. We also recorded an impairment charge of $16 million for long-lived assets that were unrelated to the Gap brand strategic actions.

As discussed above and in Note 2 of Notes to Consolidated Financial Statements, we recorded a total charge for the impairment of long-lived assets of $107 million, $54 million, and $10 million in fiscal 2016, 2015, and 2014, respectively. The impairment charge reduced the then carrying amount of the applicable long-lived assets of $125 million, $62 million, and $11 million to their fair value of $18 million, $8 million, and $1 million during fiscal 2016, 2015, and 2014, respectively. The fair value of the long-lived assets was determined using level 3 inputs and the valuation techniques discussed in Note 1 of Notes to Consolidated Financial Statements.

In fiscal 2015, we also recorded an impairment charge of $5 million related to an indefinite-lived intangible asset as a result of the strategic actions discussed above. The impairment charge was recorded in operating expenses in the Consolidated Statement of Income and reduced the then carrying amount of the applicable indefinite-lived intangible asset of $6 million to its fair value of $1 million during fiscal 2015. There were no impairment charges recorded for other indefinite-lived intangible assets for fiscal 2016 or 2014.

As discussed in Note 4 of Notes to Consolidated Financial Statements, we recorded an impairment charge of $71 million for Intermix goodwill in fiscal 2016. The fair value of the Intermix reporting unit was determined using level 3 inputs and valuation techniques discussed in Note 4 of Notes to Consolidated Financial Statements. There were no impairment charges recorded for goodwill for fiscal 2015 or 2014.