Walmart 2013 Annual Report Download - page 47

Walmart 2013 Annual Report || 45
7 Fair Value Measurements
The Company records and discloses certain  nancial and non- nancial assets and liabilities at their fair value. The fair value of an asset is the price
at which the asset could be sold in an ordinary transaction between unrelated, knowledgeable and willing parties able to engage in the transaction.
A liability’s fair value is de ned as the amount that would be paid to transfer the liability to a new obligor in a transaction between such parties,
not the amount that would be paid to settle the liability with the creditor. Assets and liabilities recorded at fair value are measured using the fair value
hierarchy, which prioritizes the inputs used in measuring fair value. The levels of the fair value hierarchy are:
• Level 1: observable inputs such as quoted prices in active markets;
• Level 2: inputs other than quoted prices in active markets that are either directly or indirectly observable; and
• Level 3: unobservable inputs for which little or no market data exists, therefore requiring the Company to develop its own assumptions.
Recurring Fair Value Measurements
The Company holds derivative instruments that are required to be measured at fair value on a recurring basis. The fair values are the estimated
amounts the Company would receive or pay upon termination of the related derivative agreements as of the reporting dates. The fair values have
been measured using the income approach and Level 2 inputs, which include the relevant interest rate and foreign currency forward curves.
As of January 31, 2013 and 2012, the notional amounts and fair values of these derivatives are as follows:
January 31, 2013 January 31, 2012
(Amounts in millions) Notional Amount Fair Value Notional Amount Fair Value
Receive  xed-rate, pay variable-rate interest rate swaps designated
as fair value hedges $ 3,445 $ 60 $3,945 $183
Receive  xed-rate, pay  xed-rate cross-currency interest rate swaps
designated as net investment hedges 1,250 223 1,250 316
Receive  xed-rate, pay  xed-rate cross-currency interest rate swaps
designated as cash  ow hedges 2,944 230 2,884 (3)
Receive variable-rate, pay  xed-rate interest rate swaps designated
as cash  ow hedges 1,056 (8) 1,270 (16)
Receive variable-rate, pay  xed-rate forward starting interest rate swaps
designated as cash  ow hedges 5,000 10 — —
Total $13,695 $515 $9,349 $480
Nonrecurring Fair Value Measurements
In addition to assets and liabilities that are recorded at fair value on a recurring basis, the Company’s assets and liabilities are also subject to
nonrecurring fair value measurements. Generally, assets are recorded at fair value on a nonrecurring basis as a result of impairment charges.
The Company did not record any signi cant impairment charges to assets measured at fair value on a nonrecurring basis during the  scal years
ended January 31, 2013 or 2012.
Other Fair Value Disclosures
The Company records cash and cash equivalents and short-term borrowings at cost. The carrying values of these instruments approximate their
fair value due to their short-term maturities.
The Company’s long-term debt is also recorded at cost. The fair value is estimated using Level 2 inputs based on the Company’s current incremental
borrowing rate for similar types of borrowing arrangements. The carrying value and fair value of the Company’s long-term debt as of January 31, 2013
and January 31, 2012, are as follows:
January 31, 2013 January 31, 2012
(Amounts in millions) Carrying Value Fair Value Carrying Value Fair Value
Long-term debt, including amounts due within one year $43,981 $50,664 $46,045 $53,043
Notes to Consolidated Financial Statements