Target 2010 Annual Report Download - page 62

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The following table presents financial assets and liabilities measured at fair value on a recurring basis:
Fair Value at January 29, 2011 Fair Value at January 30, 2010
Fair Value Measurements – Recurring Basis
(millions) Level 1 Level 2 Level 3 Level 1 Level 2 Level 3
Assets
Cash and cash equivalents
Marketable securities $1,129 $ — $— $1,617 $ — $—
Other current assets
Prepaid forward contracts 63 — — 79——
Other noncurrent assets
Interest rate swaps (a) — 139 — — 131 —
Company-owned life insurance
investments (b) — 358 — — 319 —
Total $1,192 $497 $— $1,696 $450 $—
Liabilities
Other noncurrent liabilities
Interest rate swaps $ — $ 54 $— $ — $ 23 $—
Total $ — $ 54 $— $ — $ 23 $—
(a) There were no interest rate swaps designated as accounting hedges at January 29, 2011 or January 30, 2010.
(b) Company-owned life insurance investments consist of equity index funds and fixed income assets. Amounts are presented net of loans that
are secured by some of these policies of $645 million at January 29, 2011 and $620 million at January 30, 2010.
Position Valuation Technique
Marketable securities Initially valued at transaction price. Carrying value of cash equivalents (including money
market funds) approximates fair value because maturities are less than three months.
Prepaid forward Initially valued at transaction price. Subsequently valued by reference to the market price of
contracts Target common stock.
Interest rate swaps Valuation models are calibrated to initial trade price. Subsequent valuations are based on
observable inputs to the valuation model (e.g., interest rates and credit spreads). Model inputs
are changed only when corroborated by market data. A credit risk adjustment is made on
each swap using observable market credit spreads.
Company-owned life Includes investments in separate accounts that are valued based on market rates credited by
insurance the insurer.
investments
Certain assets are measured at fair value on a nonrecurring basis; that is, the assets are not measured at fair
value on an ongoing basis but are subject to fair value adjustments only in certain circumstances (for example,
when there is evidence of impairment). The fair value measurements related to long-lived assets held for sale and
held and used in the following table were determined using available market prices at the measurement date based
on recent investments or pending transactions of similar assets, third-party independent appraisals, valuation
multiples or public comparables, less cost to sell where appropriate. We classify these measurements as Level 2.
The fair value measurement of an intangible asset was determined using unobservable inputs that reflect our own
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