American Eagle Outfitters 2009 Annual Report Download - page 54

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Have Significantly Decreased and Identifying Transactions That Are Not Orderly as of May 3, 2009 for its financial
instruments measured at fair value. The impact of adopting these was not significant on the Company’s accompanying
financial statements.
Financial Instruments
Valuation techniques used to measure fair value under ASC 820 must maximize the use of observable inputs
and minimize the use of unobservable inputs. In addition, ASC 820 establishes this three-tier fair value hierarchy,
which prioritizes the inputs used in measuring fair value. These tiers include:
•Level 1 — Quoted prices in active markets for identical assets or liabilities.
•Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for
similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or
can be corroborated by observable market data for substantially the full term of the assets or liabilities.
•Level 3 — Unobservable inputs (i.e. projections, estimates, interpretations, etc.) that are supported by little
or no market activity and that are significant to the fair value of the assets or liabilities.
As of January 30, 2010 and January 31, 2009, the Company held certain assets that are required to be measured
at fair value on a recurring basis. These include cash equivalents and short and long-term investments, including
ARS and ARPS.
In accordance with ASC 820, the following tables represent the fair value hierarchy for the Company’s
financial assets (cash equivalents and investments) measured at fair value on a recurring basis as of January 30, 2010
and January 31, 2009:
Carrying
Amount as
of January 30,
2010
Quoted Market
Prices in Active
Markets for
Identical Assets
(Level 1)
Significant Other
Observable Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Fair Value Measurements at January 30, 2010
(In thousands)
Cash and Cash Equivalents
Cash ........................ $144,391 $144,391 $ — $ —
Commercial paper .............. 25,420 25,420 — —
Treasury bills ................. 119,988 119,988 — —
Money-market ................ 404,161 404,161 — —
Total cash and cash equivalents ...... $693,960 $693,960 $ — $ —
Short-term Investments
Student-loan backed ARS ........ $ 400 $ — $— $ 400
State and local government ARS . . . 4,275 — — 4,275
Total Short-term Investments........ $ 4,675 $ — $ — $ 4,675
Long-term Investments
Student-loan backed ARS ........ $149,031 $ — $ — $149,031
State and local government ARS . . . 35,969 — — 35,969
Auction rate preferred securities . . . 12,773 — — 12,773
Total Long-term Investments ........ $197,773 $ — $ — $197,773
Total ......................... $896,408 $693,960 $ — $202,448
Percent to total .................. 100.0% 77.4% 0.0% 22.6%
53
AMERICAN EAGLE OUTFITTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)