American Eagle Outfitters 2008 Annual Report Download - page 57

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As a result of the fair value analysis for Fiscal 2008, the Company recorded a net temporary impairment of
$35.3 million ($21.8 million, net of tax). This amount was recorded in other comprehensive income (“OCI”). The
Company also recorded OTTI of $22.9 million during Fiscal 2008. The reconciliation of our assets measured at fair
value on a recurring basis using unobservable inputs (Level 3) is as follows:
Total
Auction-
Rate
Municipal
Securities
Student
Loan-
Backed
Auction-
Rate
Securities
Auction-Rate
Preferred
Securities
Level 3 (Unobservable Inputs)
(In thousands)
Carrying Value at February 2, 2008 ........... $ — $ — $ — $ —
Additions to Level 3 upon adoption of
SFAS No. 157(1) ...................... 340,475 84,575 212,000 43,900
Settlements ............................. (29,875) (18,575) (11,300) —
Additions to Level 3(2) .................... 4,600 4,600 — —
Transfer out of Level 3(3) .................. (28,900) — — (28,900)
Gains and losses:
Reported in earnings .................... — — — —
Reported in OCI ....................... (35,293) (630) (31,446) (3,217)
Balance at January 31, 2009 ................ $251,007 $ 69,970 $169,254 $ 11,783
(1) Represents amounts transferred upon the adoption of SFAS No. 157 during the first quarter of Fiscal 2008.
(2) Additions to Level 3 include securities previously classified as Level 2, which were securities that had
experienced partial calls prior to the fourth quarter of 2008 and were previously valued at par.
(3) Transfers out of Level 3 include preferred securities (into Level 1) and ARPS (into Level 2). The transfers to
Level 1 occurred due to the Company acquiring exchange traded preferred shares as a result of the ARPS trusts
liquidating. The transfers to Level 2 occurred as a result of the company determining that it was more
appropriate to value these investments using observable market prices of the underlying securities. Refer to
Note 3 to the Consolidated Financial Statements. The OTTI charge of $22.9 million that was reported in
earnings was taken on Level 1 and Level 2 securities transferred from Level 3.
5. Accounts and Note Receivable
Accounts and note receivable are comprised of the following:
January 31,
2009
February 2,
2008
(In thousands)
Construction allowances ...................................... $11,139 $12,284
Merchandise sell-offs ........................................ 17,057 11,101
Interest income ............................................. 1,355 4,803
Marketing cost reimbursements . . . .............................. 2,363 917
Credit card receivable ........................................ 5,175 —
Merchandise vendor receivables . . .............................. 2,899 626
Other .................................................... 1,483 2,189
Total .................................................... $41,471 $31,920
55
AMERICAN EAGLE OUTFITTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)