JCP » Topics » 8) Fair Value of Financial Instruments

These excerpts taken from the JCP 10-K filed Mar 31, 2009.

7) Fair Value of Financial Instruments

We adopted SFAS 157 as of the beginning of 2008, as discussed in Note 1, for our investments in public real estate investment trusts (REITs), which are carried at fair value in our consolidated financial statements. SFAS 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability (i.e., the exit price) in an orderly transaction between market participants at the measurement date. SFAS 157 establishes a hierarchy for inputs used in measuring fair value, as follows:

Level 1 — Valuations are based on quoted market prices (unadjusted) in active markets for identical assets or liabilities that we have the ability to access. Since valuations are readily and regularly available, valuation of level 1 assets and liabilities does not require a significant degree of judgment.

Level 2 — Valuations are based on quoted prices for similar assets in active markets, or quoted prices in markets that are not active for which significant inputs are observable, either directly or indirectly.

Level 3 — Valuations are based on inputs that are unobservable and significant to the overall fair value measurement. Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.

We determined the fair value of our REITs using quoted market prices considered level 1 inputs. The fair value of these investments reflected in other assets in our Consolidated Balance Sheet as of January 31, 2009 is presented in the table below based on the hierarchy outlined in SFAS 157. See Note 12 for the accumulated net unrealized gain of $15 million in REITs in 2008 recorded in accumulated other comprehensive income, a component of net equity.

 

($ in millions)    Assets at Fair Value as of January 31, 2009
     Level 1    Level 2    Level 3    Total

Total REIT assets

   $   98    $   -    $   -    $   98
                           

7) Fair Value of Financial Instruments

STYLE="margin-top:12px;margin-bottom:0px">We adopted SFAS 157 as of the beginning of 2008, as discussed in Note 1, for our investments in public real estate investment trusts (REITs), which are carried at fair
value in our consolidated financial statements. SFAS 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability (i.e., the exit price) in an orderly transaction between market participants at the
measurement date. SFAS 157 establishes a hierarchy for inputs used in measuring fair value, as follows:

Level 1 — Valuations are based
on quoted market prices (unadjusted) in active markets for identical assets or liabilities that we have the ability to access. Since valuations are readily and regularly available, valuation of level 1 assets and liabilities does not require a
significant degree of judgment.

Level 2 — Valuations are based on quoted prices for similar assets in active markets, or quoted prices
in markets that are not active for which significant inputs are observable, either directly or indirectly.

Level 3 — Valuations are
based on inputs that are unobservable and significant to the overall fair value measurement. Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date.
Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.

We determined the fair value of
our REITs using quoted market prices considered level 1 inputs. The fair value of these investments reflected in other assets in our Consolidated Balance Sheet as of January 31, 2009 is presented in the table below based on the hierarchy
outlined in SFAS 157. See Note 12 for the accumulated net unrealized gain of $15 million in REITs in 2008 recorded in accumulated other comprehensive income, a component of net equity.

STYLE="font-size:12px;margin-top:0px;margin-bottom:0px"> 




























































($ in millions)  Assets at Fair Value as of January 31, 2009
   Level 1  Level 2  Level 3  Total

Total REIT assets

  $  98  $  -  $  -  $  98
                
These excerpts taken from the JCP 10-K filed Apr 1, 2008.

8) Fair Value of Financial Instruments

The following methods and assumptions were used in estimating the fair values of financial instruments:

8) Fair Value of Financial Instruments

SIZE="2">The following methods and assumptions were used in estimating the fair values of financial instruments:

This excerpt taken from the JCP 10-K filed Apr 4, 2007.
9) Fair Value of Financial Instruments
 
The following methods and assumptions were used in estimating the fair values of financial instruments:
 
Cash and Short-Term Investments
The carrying amount approximates fair value because of the short maturity of these instruments.
 
Long-Term Debt
The fair value of long-term debt, excluding equipment financing, capital leases and other is estimated by obtaining quotes from brokers or is based on current rates offered for similar debt. At February 3, 2007, long-term debt excluding equipment financing, capital leases and other, had a carrying value of $3.4 billion and a fair value of $3.6 billion. At January 28, 2006, long-term debt, excluding equipment financing, capital leases and other, had a carrying value of $3.4 billion and a fair value of $3.7 billion.
 
Concentrations of Credit Risk
The Company has no significant concentrations of credit risk.
 
This excerpt taken from the JCP 10-K filed Apr 6, 2006.

9)  Fair Value of Financial Instruments

The following methods and assumptions were used in estimating the fair values of financial instruments:

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