Target 2011 Annual Report Download - page 62

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measurement date, other than quoted prices included in Level 1); and Level 3 (unobservable inputs that cannot be
corroborated by observable market data).
Fair Value at January 28, 2012 Fair Value at January 29, 2011
Fair Value Measurements – Recurring Basis
(millions) Level 1 Level 2 Level 3 Level 1 Level 2 Level 3
Assets
Cash and cash equivalents
Short-term investments $ 194 $ — $— $1,129 $ — $—
Other current assets
Interest rate swaps (a) —20 — ———
Prepaid forward contracts 69 — — 63 — —
Other noncurrent assets
Interest rate swaps (a) — 114 — — 139 —
Company-owned life insurance
investments (b) — 371 — — 358 —
Total $ 263 $505 $— $1,192 $497 $—
Liabilities
Other current liabilities
Interest rate swaps (a) $— $7 $— $— $— $—
Other noncurrent liabilities
Interest rate swaps (a) —69 — —54—
Total $— $76 $— $— $54 $—
(a) There was one interest rate swap designated as an accounting hedge at January 28, 2012, and none at January 29, 2011. See Note 20 for
additional information on interest rate swaps.
(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 $669 million at January 28, 2012, and $645 million at January 29, 2011.
Position Valuation Technique
Short-term Cash equivalents approximate fair value because maturities are less than three months.
investments
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 in the following
table were determined using available market prices at the measurement date based on recent investments or
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