Derivative Financial Instrument

9 Months Ended

Oct. 25, 2015

Summary of Derivative Instruments [Abstract]

Derivative Instruments and Hedging Activities Disclosure [Text Block]

Derivative Financial Instrument

In August 2015, we entered into an interest rate swap for a portion of the operating lease financing arrangement for our new headquarters building, which entitles us to pay amounts based on a fixed interest rate in exchange for receipt of amounts based on variable interest rates. The objective of this interest rate swap is to mitigate variability in the benchmark interest rate on the first $200 million of existing operating lease financing payments.

This interest rate swap is designated as a cash flow hedge, will have settlements beginning in the second quarter of fiscal year 2019, and will terminate in the fourth quarter of fiscal year 2023. Gains or losses on this swap are recorded in accumulated other comprehensive income and will subsequently be recorded in earnings at the point when the related operating lease financing expense begins to affect earnings or if ineffectiveness of the swap should occur.

A summary of the notional amount and fair value of the interest rate swap recorded on the Condensed Consolidated Balance Sheets at October 25, 2015 and January 25, 2015 is as follows (in millions):

	Notional Amount				Fair Value Asset (Liability)
	October 25, 2015		January 25, 2015		October 25, 2015			January 25, 2015
Cash Flow Hedge
Interest rate swap	$	200	$	—	$	(3	)	$	—

We formally assess, both at inception and on an ongoing basis, whether the interest rate swap is highly effective. For the three and nine months ended October 25, 2015, the interest rate swap was determined to be highly effective and there were no gains or losses associated with ineffectiveness.

The effect of the interest rate swap on other comprehensive income is as follows (in millions):

	October 25, 2015			January 25, 2015
Cash Flow Hedge
Gain (loss) on interest rate swap	$	(3	)	$	—

Over the next twelve months, we do not expect to reclassify any amount from accumulated other comprehensive income or loss to income as the underlying operating lease financing payments for our new headquarters building will not start within the next twelve months.