Abercrombie & Fitch 2008 Annual Report Download - page 73

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Table of Contents
ABERCROMBIE & FITCH CO.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(“EITF 97-14”), and recorded at fair value, with the exception of the trust-owned life insurance policies
which are recorded at cash surrender value, in other assets on the Consolidated Balance Sheets and are
restricted to their use as noted above. Net unrealized gains and losses related to the available-for-sale
securities held in the Rabbi Trust were not material for either of the fifty-two week periods ended
January 31, 2009 and February 2, 2008. The change in cash surrender value of the trust-owned life
insurance policies held in the Rabbi Trust resulted in a realized loss of $3.6 million and a realized gain of
$1.3 million for the fifty-two weeks ended January 31, 2009 and February 2, 2008, respectively recorded
in interest income, net on the Consolidated Statements of Net Income and Comprehensive Income.
6. FAIR VALUE
Effective February 3, 2008, the Company adopted SFAS No. 157 for financial assets and liabilities
and any other assets or liabilities measured at fair value on a recurring basis. SFAS No. 157 defines fair
value, establishes a framework for measuring fair value and expands disclosures about instruments
measured at fair value. SFAS No. 157 defines fair value as the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between market participants at the measurement
date. SFAS No. 157 also establishes a three-level hierarchy for fair value measurements, which prioritizes
valuation inputs as follows:
• Level 1 — inputs are unadjusted quoted prices for identical assets or liabilities that are available in
active markets.
• Level 2 — inputs are other than quoted market prices included within Level 1 that are observable
for assets or liabilities, directly or indirectly.
• Level 3 — inputs to the valuation methodology are unobservable.
The lowest level of significant input determines the placement of the entire fair value measurement in
the hierarchy. The three levels of the hierarchy and the distribution of the Company’s financial assets
within it are as follows:
Assets Measured at Fair Value
as of January 31, 2009
Level 1 Level 2 Level 3 Total
(In thousands)
Money market funds(1) $ 385,212 $ — $ — $ 385,212
Auction rate securities —
Available-for-Sale — — 166,533 166,533
Auction rate securities — Trading — — 62,548 62,548
Put Option — — 12,309 12,309
Municipal bonds held in the Rabbi Trust 18,804 — — 18,804
Derivative financial instruments — — — —
Total assets measured at fair value $ 404,016 $ — $ 241,390 $ 645,406
(1) Includes $384.7 million in money market funds included in cash and equivalents and $0.5 million of
money market funds held in the Rabbi Trust, which are included in Other Assets on the Consolidated
Balance Sheet.
69
Source: ABERCROMBIE & FITCH CO /DE/, 10-K, March 27, 2009 Powered by Morningstar® Document Research℠