Bed, Bath and Beyond 2010 Annual Report Download - page 25

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BED BATH & BEYOND 2010 ANNUAL REPORT
23
The following table presents the changes in the Company’s financial assets that are measured at fair value on a recurring
basis using significant unobservable inputs (Level 3):
Total Significant
Auction Rate Unobservable
(in millions) Securities Put Option Inputs (Level 3)
Balance on February 27, 2010, net of temporary valuation adjustment $ 176.3 $ 2.3 $ 178.6
Change in temporary valuation adjustment included in accumulated
other comprehensive income (1.1) — (1.1)
Unrealized gain included in earnings (1) 2.3 — 2.3
Change in valuation of Put Option — (2.3) (2.3)
Redemptions at par (67.8) — (67.8)
Balance on February 26, 2011, net of temporary valuation adjustment $ 109.7 — $ 109.7
(1) None of the gains for the period included in earnings relate to assets still held on February 26, 2011.
Subsequent to the end of fiscal 2010 through April 15, 2011, the Company additionally redeemed approximately $5.8 million of
short term available-for-sale securities at par.
5. INVESTMENT SECURITIES
The Company’s investment securities as of February 26, 2011 and February 27, 2010 are as follows:
February 26, February 27,
(in millions) 2011 2010
Available-for-sale securities:
Short term $ 5.8 $ 15.0
Long term 103.9 120.8
Trading securities:
Short term — 40.5
Long term 17.6 12.1
Held-to-maturity securities:
Short term 599.8 373.6
Put option:
Short term — 2.3
Total investment securities $ 727.1 $ 564.3
Auction Rate Securities
As of February 26, 2011 and February 27, 2010, the Company’s available-for-sale investment securities represented approximately
$112.9 million and approximately $137.9 million par value of auction rate securities, respectively, less temporary valuation
adjustments of approximately $3.2 million and $2.1 million, respectively. Since these valuation adjustments are deemed to be
temporary, they are recorded in accumulated other comprehensive income, net of a related tax benefit, and did not affect the
Company’s earnings. These securities at par are invested in preferred shares of closed end municipal bond funds, which are
required, pursuant to the Investment Company Act of 1940, to maintain minimum asset coverage ratios of 200%. All of these
available-for-sale investments carried triple-A credit ratings from one or more of the major credit rating agencies as of February
26, 2011 and February 27, 2010, and none of them are mortgage-backed debt obligations. As of February 26, 2011 and February
27, 2010, the Company’s available-for-sale investments have been in a continuous unrealized loss position for 12 months or more,
however, the Company believes that the unrealized losses are temporary and reflect the investments’ current lack of liquidity.
Due to their lack of liquidity, the Company classified approximately $103.9 million and $120.8 million of these investments as
long term investment securities at February 26, 2011 and February 27, 2010, respectively. During fiscal 2010, approximately $25.0
million of these securities were redeemed at par. Subsequent to the end of fiscal 2010 through April 15, 2011, the Company
additionally redeemed approximately $5.8 million of short term available-for-sale securities at par.