Fair Value Measurements

9 Months Ended

Oct. 27, 2012

Fair Value Measurements [Abstract]

Fair Value Measurements

Fair Value Measurements

The following table provides a summary of the carrying value and fair value of long-term debt as of October 27, 2012, January 28, 2012 and October 29, 2011:

	October 27, 2012		January 28, 2012		October 29, 2011
	(in millions)
Carrying Value	$	4,535	$	3,538	$	3,536
Fair Value (a)	5,073		3,849		3,762

(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 Measurements and Disclosure. The estimates presented are not necessarily indicative of the amounts that the Company could realize in a current market exchange.

The authoritative guidance included in ASC Topic 820, establishes a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:

• Level 1 – Quoted market prices in active markets for identical assets or liabilities.

• Level 2 – Observable inputs other than quoted market prices included in Level 1, such as quoted prices of similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

• Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

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 October 27, 2012, January 28, 2012 and October 29, 2011:

	Level 1		Level 2		Level 3		Total
	(in millions)
As of October 27, 2012
Assets:
Cash and Cash Equivalents	$	547	$	—	$	—	$	547
Liabilities:
Cross-currency Cash Flow Hedges	—		59		—		59
Lease Guarantees	—		—		3		3
As of January 28, 2012
Assets:
Cash and Cash Equivalents	$	935	$	—	$	—	$	935
Interest Rate Designated Fair Value Hedges	—		14		—		14
Liabilities:
Cross-currency Cash Flow Hedges	—		60		—		60
Lease Guarantees	—		—		4		4
As of October 29, 2011
Assets:
Cash and Cash Equivalents	$	498	$	—	$	—	$	498
Interest Rate Designated Fair Value Hedges	—		10		—		10
Liabilities:
Cross-currency Cash Flow Hedges	—		66		—		66
Lease Guarantees	—		—		5		5

The Company’s Level 2 fair value measurements are measured using 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.

The Company’s Level 3 fair value measurements are measured using income approach valuation techniques. The primary inputs to these techniques include the guaranteed lease payments, discount rates, as well as the Company’s assessment of the risk of default on guaranteed leases.

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

The following table provides a reconciliation of the Company’s lease guarantees measured at fair value on a recurring basis using unobservable inputs (Level 3) for the third quarter and year-to-date 2012 and 2011:

	Third Quarter				Year-to-Date
	2012		2011		2012			2011
	(in millions)
Beginning Balance	$	3	$	5	$	4		$	6
Change in Estimated Fair Value Reported in Earnings	—		—		(1		)	(1		)
Ending Balance	$	3	$	5	$	3		$	5

The Company’s lease guarantees include minimum rent and additional payments covering taxes, common area costs and certain other expenses and relate to leases that commenced prior to the disposition of certain businesses. The fair value of these lease guarantees is impacted by economic conditions, probability of rent obligation payments, period of obligation as well as the discount rate utilized. For additional information, see Note 14, “Commitments and Contingencies.”