Banana Republic 2010 Annual Report Download - page 59

Download and view the complete annual report

Please find page 59 of the 2010 Banana Republic annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 88

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88

Note 5. Fair Value Measurements
Effective January 31, 2010, we adopted enhanced disclosure requirements for fair value measurements. There were
no transfers into or out of level 1 and level 2 for fiscal 2010.
Financial Assets and Liabilities
Financial assets and liabilities measured at fair value on a recurring basis and cash equivalents and short-term
investments held at amortized cost are as follows:
Fair Value Measurements at Reporting Date Using
($ in millions) January 29, 2011
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
Significant Other
Observable Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Assets:
Cashequivalents .......................... $604 $— $604 $—
Short-terminvestments .................... 100 — 100 —
Derivative financial instruments ............ 4— 4—
Deferred compensation plan assets ......... 27 27 — —
Total ..................................... $735 $ 27 $708 $—
Liabilities:
Derivative financial instruments ............ $ 37 $— $ 37 $—
Fair Value Measurements at Reporting Date Using
($ in millions) January 30, 2010
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
Significant Other
Observable Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Assets:
Cashequivalents .......................... $1,069 $— $1,069 $—
Short-terminvestments ................... 225 50 175 —
Derivative financial instruments ............ 9— 9—
Deferred compensation plan assets ......... 21 21 — —
Total ..................................... $1,324 $ 71 $1,253 $—
Liabilities:
Derivative financial instruments ............ $ 27 $— $ 27 $—
Derivative financial instruments primarily include foreign exchange forward contracts. The principal currencies
hedged against changes in the U.S. dollar are Euro, British pounds, Japanese yen, and Canadian dollars. The fair
value of the Company’s derivative financial instruments is determined using pricing models based on current
market rates. Derivative financial instruments in an asset position are recorded in other current assets or other
long-term assets in the Consolidated Balance Sheets. Derivative financial instruments in a liability position are
recorded in accrued expenses and other current liabilities or lease incentives and other long-term liabilities in the
Consolidated Balance Sheets.
We maintain a deferred compensation plan that allows eligible employees to defer compensation up to a
maximum amount. Plan investments are recorded at market value and are designated for the deferred
compensation plan. The fair value of the Company’s deferred compensation plan assets is determined based on
quoted market prices, and the assets are recorded in other long-term assets in the Consolidated Balance Sheets.
In addition, we have highly liquid investments classified as cash equivalents and short-term investments. These
investments are classified as held-to-maturity based on our positive intent and ability to hold the securities to maturity.
We value these investments at their original purchase prices plus interest that has accrued at the stated rate. The
January 30, 2010 fair value table has been updated to include cash equivalents and short term investments in level 2.
52 Gap Inc. Form 10-K