Home Depot 2012 Annual Report Download - page 55

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49
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The assets and liabilities of the Company that are measured at fair value on a recurring basis as of February 3, 2013 and
January 29, 2012 were as follows (amounts in millions):
Fair Value at February 3, 2013 Using Fair Value at January 29, 2012 Using
Level 1 Level 2 Level 3 Level 1 Level 2 Level 3
Derivative agreements - assets $ — $ 64 $ — $ — $ 91 $ —
Derivative agreements - liabilities — (15) — — (27) —
Total $ — $ 49 $ — $ — $ 64 $ —
The Company uses derivative financial instruments from time to time in the management of its interest rate exposure on
long-term debt and its exposure on foreign currency fluctuations. The fair value of the Company’s derivative financial
instruments was measured using level 2 inputs. The Company’s derivative agreements are discussed further in Note 5.
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
The assets and liabilities of the Company that were measured at fair value on a nonrecurring basis during fiscal 2012, 2011
and 2010 were as follows (amounts in millions):
Fair Value Measured
During Fiscal 2012
Level 3 Gains (Losses)
Lease obligation costs, net $(137) $ (16)
Total for fiscal 2012 $(16)
Fair Value Measured
During Fiscal 2011
Level 3 Gains (Losses)
Lease obligation costs, net $(144) $ (15)
Total for fiscal 2011 $(15)
Fair Value Measured
During Fiscal 2010
Level 3 Gains (Losses)
Lease obligation costs, net $(158) $ (9)
Guarantee of HD Supply loan $(67)(51)
Total for fiscal 2010 $(60)
Lease obligation costs were related to certain store closings and the exit of certain businesses in fiscal 2009 and 2008. These
charges were measured on a nonrecurring basis using fair value measurements with unobservable inputs (level 3). The
guarantee of the HD Supply loan was measured on a nonrecurring basis using fair value measurements with unobservable
inputs (level 3), as further discussed in Note 3.
Upon announcement in fiscal 2012 of its intention to close seven stores in China, the Company completed an assessment on
the recoverability of Goodwill for its China reporting unit. The fair value of the China reporting unit was estimated using the
present value of expected future discounted cash flows through unobservable inputs. As a result of this analysis, the Company
recorded a $97 million impairment charge to Goodwill in fiscal 2012. See Note 2 for further discussion of the China store
closings.
Long-lived assets, the remaining goodwill and other intangible assets were also analyzed for impairment on a nonrecurring
basis using fair value measurements with unobservable inputs (level 3). Impairment charges related to long-lived assets, the
remaining goodwill and other intangible assets in fiscal 2012 and 2011 were not material, as further discussed in Note 1
under the captions "Impairment of Long-Lived Assets" and "Goodwill and Other Intangible Assets," respectively.
The aggregate fair value of the Company’s Senior Notes, based on quoted market prices, was $12.2 billion and $12.1 billion
at February 3, 2013 and January 29, 2012, respectively, compared to a carrying value of $10.3 billion and $10.3 billion at
February 3, 2013 and January 29, 2012, respectively.