Fair value measurements

9 Months Ended

Oct. 29, 2011

Fair value measurements [Abstract]

Fair Value Disclosures [Text Block]

4. Fair value measurements

To determine the fair value of our assets and liabilities, we utilize the established fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy).

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Derivative Financial Instruments

Currently, we use derivative financial arrangements to manage a variety of risk exposures, including interest rate risk associated with our Long-term debt and foreign currency risk relating to cross-currency intercompany lending and merchandise purchases. The valuation of these instruments is determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves, foreign exchange rates and implied volatilities.

We incorporate credit valuation adjustments to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of our derivative contracts for the effect of nonperformance risk, we have considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts and guarantees.

We evaluate the inputs used to value our derivatives at the end of each reporting period. Although certain inputs used to value our derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with our derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default. Based on this mixed input valuation we classify derivatives based on the lowest level in the fair value hierarchy that is significant to the fair value of the instrument. Any transfer into or out of a level of the fair value hierarchy is recognized based on the value of the instruments at the end of the reporting period. Changes in the fair value of our derivative financial instruments are recorded in Interest expense within the Condensed Consolidated Statements of Operations.

Cash Equivalents

Cash equivalents include highly liquid investments with an original maturity of three months or less at acquisition. We have determined that our cash equivalents in their entirety are classified as Level 1 within the fair value hierarchy.

The table below presents our assets and liabilities measured at fair value on a recurring basis as of October 29, 2011,  January 29, 2011 and October 30, 2010, aggregated by level in the fair value hierarchy within which those measurements fall.

(In millions)	Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance at October 29, 2011
Assets
Cash equivalents	$	40	$	—	$	—	$	40
Derivative financial instruments:
Interest rate contracts	—		1		12		13
Foreign exchange contracts	—		4		—		4
Total assets	$	40	$	5	$	12	$	57
Liabilities
Derivative financial instruments:
Interest rate contracts	$	—	$	2	$	9	$	11
Foreign exchange contracts	—		7		—		7
Total liabilities	$	—	$	9	$	9	$	18

(In millions)	Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance at January 29, 2011
Assets
Cash equivalents	$	312	$	—	$	—	$	312
Derivative financial instruments:
Interest rate contracts	—		6		—		6
Total assets	$	312	$	6	$	—	$	318
Liabilities
Derivative financial instruments:
Interest rate contracts	$	—	$	1	$	16	$	17
Foreign exchange contracts	—		2		—		2
Total liabilities	$	—	$	3	$	16	$	19

(In millions)	Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance at October 30, 2010
Assets
Cash equivalents	$	27	$	—	$	—	$	27
Derivative financial instruments:
Interest rate contracts	—		1		2		3
Foreign exchange contracts	—		1		—		1
Total assets	$	27	$	2	$	2	$	31
Liabilities
Derivative financial instruments:
Interest rate contracts	$	—	$	4	$	15	$	19
Foreign exchange contracts	—		5		—		5
Total liabilities	$	—	$	9	$	15	$	24

The table below presents the changes in the fair value of our derivative financial instruments within Level 3 of the fair value hierarchy for the thirteen and thirty-nine weeks ended October 29, 2011 and October 30, 2010.

(In millions)	Level 3
Balance, January 29, 2011	$	(16	)
Unrealized gain	3
Balance, April 30, 2011	(13		)
Unrealized gain	11
Balance, July 30, 2011	(2		)
Unrealized gain	5
Balance, October 29, 2011	$	3
(In millions)	Level 3
Balance, January 30, 2010	$	(2	)
Unrealized loss	(8		)
Balance, May 1, 2010	(10		)
Unrealized loss	(2		)
Balance, July 31, 2010	(12		)
Unrealized loss	(1		)
Balance, October 30, 2010	$	(13	)

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Certain of our assets and liabilities are measured at fair value on a nonrecurring basis, that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments only in certain circumstances (for example, whenever events or changes in circumstances indicate that a long-lived asset may be impaired). The fair value measurements related to long-lived assets held and used and held for sale in the following tables were determined using a valuation method such as discounted cash flow or a relative market-based approach based on offers. Based on the valuation method used, we classify these measurements as Level 3 and Level 2, respectively.

The following tables segregate all non-financial assets and liabilities measured at fair value on a nonrecurring basis in periods subsequent to initial recognition into the most appropriate level within the fair value hierarchy, based on the inputs used to determine fair value for the thirteen and thirty-nine weeks ended October 29, 2011 and October 30, 2010. As of October 29, 2011 and October 30, 2010, we did not have any long-lived assets classified as Level 1 within the fair value hierarchy.

(In millions)	Carrying Value		Significant Other Observable Inputs (Level 2)		Significant     Unobservable Inputs (Level 3)		Impairment Losses
Long-lived assets held and used	$	3	$	2	$	—	$	1
Balance, April 30, 2011	3		2		—		1
Long-lived assets held and used	2		—		1		1
Balance, July 30, 2011	5		2		1		2
Long-lived assets held and used	—		—		—		—
Balance, October 29, 2011	$	5	$	2	$	1	$	2

(In millions)	Carrying Value		Significant Other Observable Inputs (Level 2)		Significant     Unobservable Inputs (Level 3)		Impairment Losses
Long-lived assets held and used	$	4	$	3	$	—	$	1
Balance, May 1, 2010	4		3		—		1
Long-lived assets held and used	—		—		—		—
Balance, July 31, 2010	4		3		—		1
Long-lived assets held and used	7		4		—		3
Long-lived assets held for sale	5		4		—		1
Balance, October 30, 2010	$	16	$	11	$	—	$	5