Fair Value Measurements

9 Months Ended

Oct. 31, 2020

Fair Value Measurements [Abstract]

Fair Value Measurements

11. Fair Value Measurements

Our financial assets are recorded at fair value, using a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. The three levels of inputs used to measure fair value are categorized as follows:

Level 1 – Quoted prices for identical instruments in active markets.

Level 2 – Observable inputs other than quoted prices included within Level 1, including quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs or significant value-drivers are observable in active markets.

Level 3 – Model-derived valuations in which one or more significant inputs or significant value-drivers are unobservable.

The fair value of the auction rate security, classified as available-for-sale, is determined by using quoted prices for similar instruments in active markets and accordingly is classified as a Level 2 instrument.

Our derivative financial instruments are valued using market-based inputs to valuation models. These valuation models require a variety of inputs, including contractual terms, market prices, yield curves, and measures of volatility and, therefore, are classified as Level 2 instruments.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

	As of October 31, 2020						As of November 2, 2019						As of February 1, 2020
($ in millions)	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Assets
Available-for-sale security		—		7		—		—		6		—		—		7		—
Total Assets	$	—	$	7	$	—	$	—	$	6	$	—	$	—	$	7	$	—
Liabilities
Foreign exchange forward contracts		—		—		—		—		2		—		—		4		—
Total Liabilities	$	—	$	—	$	—	$	—	$	2	$	—	$	—	$	4	$	—

There were no transfers into or out of Level 1, Level 2, or Level 3 assets and liabilities for any of the periods presented.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Assets and liabilities recognized or disclosed at fair value on the consolidated financial statements on a nonrecurring basis include items such as property, plant and equipment, operating lease right-of-use assets, goodwill, other intangible assets, and minority investments that are not accounted for under the equity method of accounting. These assets are measured using Level 3 inputs, if determined to be impaired.

Minority interests measured using the fair value measurement alternative had a carrying value of $326 million, $133 million, and $134 million as of October 31, 2020, November 2, 2019, and February 1, 2020, respectively. One of these minority investments received additional funding in the third quarter of 2020, at a higher valuation than our initial investment. As a result, we recorded a $190 million non-cash gain reported in Other income. During the fourth quarter of 2019, we recorded a non-cash charge of $7 million related to the write-down of certain minority investments.

Long-Term Debt

The fair value of long-term debt is determined by using model-derived valuations in which all significant inputs or significant value drivers are observable in active markets and, therefore, are classified as Level 2. The carrying value and estimated fair value of long-term debt were as follows:

	October 31,		November 2,		February 1,
($ in millions)	2020		2019		2020
Carrying value	$	120	$	122	$	122
Fair value	$	129	$	135	$	135

The carrying values of cash and cash equivalents, and other current receivables and payables approximate their fair value.