Note 10 - Fair Value Measurements

9 Months Ended

Nov. 02, 2024

Notes to Financial Statements

Fair Value Disclosures [Text Block]

10. Fair Value Measurements

Our financial assets and liabilities are recorded at fair value, using a three-level fair value hierarchy that prioritizes the inputs used to measure fair value.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

($ in millions)	As of November 2, 2024						As of October 28, 2023
	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Assets
Available-for-sale security	$	—	$	7	$	—	$	—	$	6	$	—
Foreign exchange forward contracts		—		4		—		—		1		—
Cross-currency swap contract		—		14		—		—		6		—
Total assets	$	—	$	25	$	—	$	—	$	13	$	—
Liabilities
Contingent consideration	$	—	$	—	$	—	$	—	$	—	$	4
Foreign exchange forward contracts		—		1		—		—		1		—
Total liabilities	$	—	$	1	$	—	$	—	$	1	$	4

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

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Certain assets and liabilities are measured at fair value on a nonrecurring basis. Assets and liabilities recognized or disclosed at fair value on the consolidated financial statements on a nonrecurring basis include items such as property, plant and equipment, operating lease right-of-use assets, goodwill, other intangible assets, and minority investments that are not accounted for under the equity method of accounting. These assets are measured using Level 3 inputs, if determined to be impaired.

During the third quarter of 2024, we recorded $25 million of impairment on the atmos tradename following a strategic review of the atmos business. We calculated the fair value using a discounted cash flow method, based on the relief from royalty method, which uses estimates of future growth and trends, royalty rates in the category of intellectual property, discount rates, and other variables.

We have a minority investment that is accounted for using the fair value measurement alternative. During the third quarter of 2024, we recognized a $35 million non-cash impairment charge related to our investment, thereby reducing the carrying value to $98 million due to an evaluation of events that indicated that the carrying value of the investment was impaired. We estimated the fair value using a discounted cash flow approach, which considered forecasted cash flows provided by the investee's management, as well as assumptions over discount rates, and terminal values.

As of November 2, 2024, cumulative impairments on our portfolio of minority investments were $566 million.

Long-Term Debt

The fair value of long-term debt is determined by using model-derived valuations in which all significant inputs or significant value drivers are observable in active markets and, therefore, are classified as Level 2. The carrying value and estimated fair value of long-term debt were as follows:

	November 2,		October 28,
($ in millions)	2024		2023
Carrying value (1)	$	396	$	395
Fair value	$	343	$	294

⁽¹⁾ The carrying value of debt as of November 2, 2024 and October 28, 2023, included $4 and $5 million, respectively, of issuer’s discount and costs.

The carrying values of cash and cash equivalents, and other current receivables and payables approximate their fair value.