Fair Value Measurements

6 Months Ended

Feb. 01, 2015

Financial assets and liabilities are categorized based on the following fair value hierarchy:


•	Level 1: Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.


•	Level 2: Inputs other than quoted prices included in Level 1 that are observable for the asset or liability through corroboration with observable market data.


•	Level 3: Unobservable inputs, which are based on our estimates of assumptions that market participants would use in pricing the asset or liability.

Fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. When available, we use unadjusted quoted market prices to measure the fair value and classify such items as Level 1. If quoted market prices are not available, we base fair value upon internally developed models that use current market-based or independently sourced market parameters such as interest rates and currency rates. Included in the fair value of derivative instruments is an adjustment for credit and nonperformance risk.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table presents our financial assets and liabilities that are measured at fair value on a recurring basis as of February 1, 2015, and August 3, 2014, consistent with the fair value hierarchy:



	Fair Value as of February 1, 2015		Fair Value Measurements at February 1, 2015 Using Fair Value Hierarchy						Fair Value as of August 3, 2014		Fair Value Measurements at August 3, 2014 Using Fair Value Hierarchy
	Fair Value as of February 1, 2015		Level 1		Level 2		Level 3		Fair Value as of August 3, 2014		Level 1		Level 2		Level 3
Assets
Forward starting interest rate swaps⁽¹⁾	$	—	$	—	$	—	$	—	$	11	$	—	$	11	$	—
Foreign exchange forward contracts⁽²⁾	13		—		13		—		2		—		2		—
Commodity derivative contracts⁽³⁾	—		—		—		—		2		1		1		—
Cross-currency swap contracts⁽⁴⁾	40		—		40		—		—		—		—		—
Deferred compensation derivative contracts⁽⁵⁾	1		—		1		—		—		—		—		—
Total assets at fair value	$	54	$	—	$	54	$	—	$	15	$	1	$	14	$	—



	Fair Value as of February 1, 2015		Fair Value Measurements at February 1, 2015 Using Fair Value Hierarchy						Fair Value as of August 3, 2014		Fair Value Measurements at August 3, 2014 Using Fair Value Hierarchy
	Fair Value as of February 1, 2015		Level 1		Level 2		Level 3		Fair Value as of August 3, 2014		Level 1		Level 2		Level 3
Liabilities
Forward starting interest rate swaps⁽¹⁾	$	38	$	—	$	38	$	—	$	—	$	—	$	—	$	—
Foreign exchange forward contracts⁽²⁾	2		—		2		—		3		—		3		—
Commodity derivative contracts⁽³⁾	20		20		—		—		11		11		—		—
Cross-currency swap contracts⁽⁴⁾	—		—		—		—		6		—		6		—
Deferred compensation derivative contracts⁽⁵⁾	1		—		1		—		3		—		3		—
Deferred compensation obligation⁽⁶⁾	131		131		—		—		123		123		—		—
Total liabilities at fair value	$	192	$	151	$	41	$	—	$	146	$	134	$	12	$	—

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⁽¹⁾	Based on LIBOR swap rates.


⁽²⁾	Based on observable market transactions of spot currency rates and forward rates.


⁽³⁾	Based on quoted futures exchanges and on observable prices of futures and options transactions in the marketplace.


⁽⁴⁾	Based on observable local benchmarks for currency and interest rates.


⁽⁵⁾	Based on LIBOR and equity index swap rates.


⁽⁶⁾	Based on the fair value of the participants’ investments.

Fair Value of Financial Instruments

The carrying values of cash and cash equivalents, accounts receivable, accounts payable and short-term borrowings, excluding the current portion of long-term debt, approximate fair value.

Cash equivalents of $42 at February 1, 2015 and $46 at August 3, 2014 represent fair value as these highly liquid investments have an original maturity of three months or less. Fair value of cash equivalents is based on Level 2 inputs.

The fair value of long-term debt, including the current portion of long-term debt in Short-term borrowings, was $2,397 at February 1, 2015 and $2,647 at August 3, 2014. The carrying value was $2,263 at February 1, 2015 and $2,544 at August 3, 2014. The fair value of long-term debt is principally estimated using Level 2 inputs based on quoted market prices or pricing models using current market rates.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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