Target 2015 Annual Report Download - page 50

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10. Fair Value Measurements
Fair value measurements are reported in one of three levels based on the lowest level of significant input used: Level€1
(unadjusted quoted prices in active markets); Level€2 (observable market inputs, other than quoted prices included in
Level€1); and Level€3 (unobservable inputs that cannot be corroborated by observable market data).
Fair€Value€Measurements€-€Recurring€Basis
Fair€Value€at
(millions)
Pricing
Category
January 30,
2016
January 31,
2015
Assets
Cash and cash equivalents
Short-term investments Level 1 $3,008 $1,520
Other current assets
Interest rate swaps(a) Level 2 12 —
Prepaid forward contracts Level 1 32 38
Beneficial interest asset Level 3 19 43
Other noncurrent assets
Interest rate swaps(a) Level 2 27 65
Beneficial interest asset Level 3 12 31
Liabilities
Other current liabilities
Interest rate swaps(a) Level 2 8 —
Other noncurrent liabilities
Interest rate swaps(a) Level 2 — 24
(a) See Note€21 for additional information on interest rate swaps.
Valuation Technique
Short-term investments - Carrying value approximates fair value because maturities are less than three months.
Prepaid forward contracts - Initially valued at transaction price. Subsequently valued by reference to the market price
of 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).
Significant Financial Instruments not Measured at Fair Value (a)
(millions)
2015 2014
Carrying
Amount
Fair
Value
Carrying
Amount
Fair
Value
Debt (b) $11,859 $13,385 $11,875 $14,089
(a) The carrying amounts of certain other current assets, accounts payable, and certain accrued and other current liabilities approximate fair
value due to their short-term nature.
(b) The fair value of debt is generally measured using a discounted cash flow analysis based on current market interest rates for the same
or similar types of financial instruments and would be classified as Level 2. These amounts exclude unamortized swap valuation
adjustments and capital lease obligations.
Refer to Note 7 for information about fair value measurements related to our discontinued Canadian operations.
45