Annual report pursuant to Section 13 and 15(d)

Fair Value Disclosures

v2.4.0.6
Fair Value Disclosures
12 Months Ended
Jan. 28, 2012
Fair Value Disclosures [Abstract]  
Fair Value Disclosures

9) Fair Value Disclosures

 

In determining fair value, the accounting standards establish a three-level hierarchy for inputs used in measuring fair value, as follows:

 

Level 1 — Quoted prices in active markets for identical assets or liabilities.

Level 2 — Significant observable inputs other than quoted prices in active markets for similar assets and liabilities, such as quoted prices for identical or similar assets or liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3 — Significant unobservable inputs reflecting our own assumptions, consistent with reasonably available assumptions made by other market participants.

 

REIT Assets Measured on a Recurring Basis

We determined the fair value of our investments in REITs using quoted market prices. As of January 28, 2012 and January 29, 2011, our REITs had a cost basis of $80 million. Our REIT assets measured at fair value on a recurring basis were as follows:

 

 

 

 

 

 

 

 

 

($ in millions)

Fair Value as of January 28, 2012

Fair Value as of January 29, 2011

 

 

Level 1

Level 2

Level 3

Level 1

Level 2

Level 3

 

 

 

 

 

 

 

 

 

REIT assets

$              336

$                -

$                -

$             254

$                -

$                -

 

 

 

 

Other Non-Financial Assets Measured on a Non-Recurring Basis

In 2011, eight underperforming department stores with a carrying value of $68 million were written down to their fair value of $10 million and resulted in an impairment charge of $58 million, which was included in real estate and other, net in the Consolidated Statement of Operations for the period (see Note 18). The inputs to determine fair values were primarily based on projected discounted cash flow as well as other market information obtained from brokers.

 

The following table presents fair values for those assets measured at fair value during 2011 on a non-recurring basis, and remaining on our Consolidated Balance Sheet:

 

 

Assets at Fair Value as of January 28, 2012

 

Level 1

 

Level 2

 

Level 3

 

Total

 

Stores

$                -

$                -

$                10

$                10

 

In 2010, primarily one underperforming department store with a carrying value of $3 million was impaired, which resulted in a $3 million charge to earnings and no remaining fair value.

 

Other Financial Instruments

Carrying values and fair values of financial instruments that are not carried at fair value in the Consolidated Balance Sheets are as follows:

 

 

 

 

 

 

 

2011

2010

($ in millions)

Carrying Amount

 

Fair

Value

 

Carrying Amount

 

Fair

Value

 

Long-term debt, including current maturities

$          3,102

$          3,046

$          3,099

$3,055

Cost investment (Note 6)

                 36

                    -

                     -

                -

 

The fair value of long-term debt is estimated by obtaining quotes from brokers or is based on current rates offered for similar debt. The cost investment is for equity securities that are not publicly traded and their fair values are not readily determinable; however, we believe the carrying value approximates or is less than the fair value.

 

As of January 28, 2012 and January 29, 2011, the fair values of cash and cash equivalents, accounts payables and current installments of long-term debt approximate carrying values due to the short-term nature of these instruments. These items have been excluded from the table above with the exception of the current installments of long-term debt.

 

Concentrations of Credit Risk

We have no significant concentrations of credit risk.