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78
Net Investment Hedges
We use foreign exchange forward contracts to hedge against the effect of Canadian dollar exchange rate fluctuations on a
portion of our net investment in our Canadian operations. The contracts have terms up to 12 months. For a net investment
hedge, we recognize changes in the fair value of the derivative as a component of foreign currency translation within other
comprehensive income to offset a portion of the change in translated value of the net investment being hedged, until the
investment is sold or liquidated. We limit recognition in net earnings of amounts previously recorded in other comprehensive
income to circumstances such as complete or substantially complete liquidation of the net investment in the hedged foreign
operation. We report the ineffective portion of the gain or loss, if any, in net earnings.
Interest Rate Swaps
We use "receive fixed-rate, pay variable-rate" interest rate swaps to mitigate the effect of interest rate fluctuations on a portion
of our 2018 Notes and 2021 Notes. Our interest rate swap contracts are considered perfect hedges because the critical terms and
notional amounts match those of our fixed-rate debt being hedged and are therefore accounted as a fair value hedge using the
shortcut method. Under the shortcut method, we recognize the change in the fair value of the derivatives with an offsetting
change to the carrying value of the debt. Accordingly, there is no impact on our Consolidated Statements of Earnings from the
fair value of the derivatives.
Derivatives Not Designated as Hedging Instruments
We use foreign currency forward contracts to manage the impact of fluctuations in foreign currency exchange rates relative to
recognized receivable and payable balances denominated in non-functional currencies. The contracts generally have terms of
up to 12 months. These derivative instruments are not designated in hedging relationships and, therefore, we record gains and
losses on these contracts directly to net earnings.
Summary of Derivative Balances
The following table presents the gross fair values for outstanding derivative instruments and the corresponding classification at
January 30, 2016 and January 31, 2015:
January 30, 2016 January 31, 2015
Contract Type Assets Liabilities Assets Liabilities
Derivatives designated as net investment hedges(1) $15$ 1$19$—
Derivatives designated as interest rate swaps(2) 25 — 1 —
No hedge designation (foreign exchange forward contracts)(1) 3 — 11 —
Total $ 43 $ 1 $ 31 $ —
(1) The fair value is recorded in other current assets or accrued liabilities.
(2) The fair value is recorded in other assets or long-term liabilities.
The following table presents the effects of derivative instruments on Other Comprehensive Income ("OCI") and on our
Consolidated Statements of Earnings for fiscal 2016 and 2015:
2016 2015
Contract Type
Pre-tax Gain
(Loss)
Recognized in
OCI
Gain(Loss)
Reclassified from
Accumulated OCI
to Earnings
(Effective Portion)
Pre-tax Gain
(Loss)
Recognized in
OCI
Gain(Loss)
Reclassified from
Accumulated OCI
to Earnings
(Effective Portion)
Derivatives designated as net investment hedges $ 21 $ — $ 22 $ —