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A-51
NO T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S , CO N T I N U E D
Fair Value Interest Rate Swaps
The table below summarizes the outstanding interest rate swaps designated as fair value hedges as of
February 2, 2013, and January 28, 2012.
2012 2011
Pay
Floating
Pay
Fixed
Pay
Floating
Pay
Fixed
Notional amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 475 $— $1,625 $—
Number of contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 — 18 —
Duration in years. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.41 — 0.74 —
Average variable rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.29 % — 3.84% —
Average fixed rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.38 % — 5.87% —
Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Between
April 2013 and
December 2018
Between
April 2012 and
April 2013
During 2012, fourteen of the Company’s fair value swaps, with a notional amount of $1,250, matured.
In 2012, the Company entered into two fair value swaps with a total notional amount of $100.
The gain or loss on these derivative instruments as well as the offsetting gain or loss on the hedged items
attributable to the hedged risk are recognized in current income as “Interest expense.” These gains and losses
for 2012 and 2011 were as follows:
Year-To-Date
February 2, 2013 January 28, 2012
Income Statement Classification
Gain/(Loss) on
Swaps
Gain/(Loss) on
Borrowings
Gain/(Loss) on
Swaps
Gain/(Loss) on
Borrowings
Interest Expense . . . . . . . . . . . . . . . . . . . $(24) $16 $(20) $22
The following table summarizes the location and fair value of derivative instruments designated as fair
value hedges on the Company’s Consolidated Balance Sheets:
Asset Derivatives
Fair Value
Derivatives Designated as Fair Value Hedging Instruments
February 2,
2013
January 28,
2012
Balance Sheet
Location
Interest Rate Hedges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1 $25 Other Assets
Cash Flow Forward-Starting Interest Rate Swaps
As of February 2, 2013, the Company had 17 forward-starting interest rate swap agreements with
maturity dates between April 2013 and January 2014 with an aggregate notional amount totaling $850. In
2012, the Company entered into seven of these forward-starting interest rate swap agreements with an
aggregate notional amount totaling $350. A forward-starting interest rate swap is an agreement that effectively
hedges the variability in future benchmark interest payments attributable to changes in interest rates on the
forecasted issuance of fixed-rate debt. The Company entered into the forward-starting interest rate swaps
in order to lock in fixed interest rates on its forecasted issuances of debt in fiscal year 2013. Accordingly,
the forward-starting interest rate swaps were designated as cash-flow hedges as defined by GAAP. As of
February 2, 2013, the fair value of the interest rates swaps was recorded in other investments for $5 and
accumulated other comprehensive income for $3 net of tax.