Derivative Instruments and Hedging Activities (Notes)

3 Months Ended

Apr. 29, 2017

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities Disclosure [Text Block]

Derivative Instruments and Hedging Activities

From time to time, Staples uses derivative instruments to hedge certain financial exposures. The Company does not use derivatives for speculative purposes. The derivatives qualify for hedge accounting treatment if they are highly effective in offsetting the underlying exposures. All derivatives are recorded at fair value and the changes in fair value are immediately included in earnings if the derivatives do not qualify as effective hedges, or if a derivative has not been designated as a hedge for accounting purposes. The Company formally documents all hedging relationships for all derivatives, non-derivative hedges and the underlying hedged items, as well as its risk management objectives and strategies for undertaking the hedge transactions. There are no amounts excluded from the assessment of hedge effectiveness.

In the first quarter of 2017, the Company entered into foreign currency forwards with aggregate notional amounts of 170 million Canadian dollars that were designated as foreign currency hedges on Staples’ net investment in Canadian dollar denominated subsidiaries. In the first quarter of 2017 the Company recognized a net unrealized gain of $3 million related to these forward agreements. The gain was recorded as a foreign currency translation gain within other comprehensive income. No amounts were included in the consolidated statements of income related to ineffectiveness associated with these net investment hedges. These forward agreements are expected to be fully settled by September 2017.

In the first quarter of 2017, the Company entered into foreign currency forwards with aggregate notional amounts of 70 million Australian dollars that were not designated as hedges for accounting purposes. In the first quarter of 2017 the Company recognized a net unrealized gain of $1 million related to these forward agreements. The gain is included in Pretax loss of discontinued operations in the consolidated statements of income. These forward agreements were settled in early May 2017.