Fair Value Measurements

9 Months Ended

Oct. 27, 2012

Fair Value Measurements

6. Fair Value Measurements

The Company’s financial assets recorded at fair value are categorized as follows:

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

Level 2 – 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 following tables provide a summary of the Company’s recognized assets and liabilities that are measured at fair value on a recurring basis:

	At October 27, 2012						At October 29, 2011						At January 28, 2012
(in millions)	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Assets
Short-term investments	$	—	$	49	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Auction rate security		—		6		—		—		4		—		—		5		—
Forward foreign exchange contracts		—		1		—		—		—		—		—		—		—
Total Assets	$	—	$	56	$	—	$	—	$	4	$	—	$	—	$	5	$	—
Liabilities
Forward foreign exchange contracts		—		1		—		—		—		—		—		2		—
Total Liabilities	$	—	$	1	$	—	$	—	$	—	$	—	$	—	$	2	$	—

Available-for-sale securities are recorded at fair value with unrealized gains and losses reported, net of tax, in other comprehensive income, unless unrealized losses are determined to be other than temporary. As of October 27, 2012, the Company held $55 million of available-for-sale securities, which was comprised of $49 million in short-term investments and a $6 million auction rate security.

Short-term investments represent corporate bonds with maturity dates within one year from the purchase date. These securities are valued using quoted prices for similar instruments in active markets and therefore are classified as Level 2 instruments. Level 2 instrument valuations are obtained from readily available pricing sources for comparable instruments.

The fair value of the auction rate security is determined by review of the underlying security at each reporting period.

The Company’s 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.

Interest income related to the short-term investments included within interest expense was not significant for both the thirteen and thirty-nine weeks ended October 27, 2012.

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