Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

In addition to the risks inherent in our operations, we are exposed to certain market risks.

Interest Rate Risk

We are exposed to changes in short-term market interest rates and these changes in rates will impact our net interest expense. Our cash and short-term investments generate interest income that will vary based on changes in short-term interest rates. In addition, we have swapped all of our fixed-rate debt to floating-rate such that the interest expense on this debt will vary with short-term interest rates. Refer to Note 5, Debt, and Note 6, Derivative Instruments, of the Notes to Consolidated Financial Statements, included in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K for further information regarding our interest rate swaps.

As of February 3, 2018, we had $3.1 billion of cash and short-term investments and $1.2 billion of debt that has been swapped to floating rate. Therefore, we had net cash and short-term investments of $2.0 billion generating income that is exposed to interest rate changes. As of February 3, 2018, a 50 basis point increase in short-term interest rates would have led to an estimated $10 million reduction in net interest expense, and conversely a 50 basis point decrease in short-term interest rates would have led to an estimated $10 million increase in net interest expense.

Foreign Currency Exchange Rate Risk

We have market risk arising from changes in foreign currency exchange rates related to our International segment operations. On a limited basis, we utilize foreign exchange forward contracts to manage foreign currency exposure to certain forecasted inventory purchases, recognized receivable and payable balances and our investment in our Canadian operations. Our primary objective in holding derivatives is to reduce the volatility of net earnings and cash flows, as well as net asset value associated with changes in foreign currency exchange rates. Our foreign currency risk management strategy includes both hedging instruments and derivatives that are not designated as hedging instruments, which generally have terms of up to 12 months. Refer to Note 6, Derivative Instruments, of the Notes to Consolidated Financial Statements, included in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K for further information regarding these instruments.

The weakening of the U.S. dollar compared to the Canadian dollar compared to the prior-year period had a positive overall impact on our revenue as these currencies translated into more U.S. dollars. Exchange rate fluctuations in the U.S. dollar compared to the Mexican peso compared to the prior-year period had an immaterial impact in the current year. We estimate that foreign currency exchange rate fluctuations had a net favorable impact on our revenue in fiscal 2018 of approximately $85 million and a net favorable impact on earnings of $4 million. In fiscal 2017, the impact of foreign currency exchange rate fluctuations had a net unfavorable impact on our revenue of approximately $76 million and a net favorable impact on earnings of $4 million.