DSW 2009 Annual Report Download - page 61

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measurement based on assumptions of the market participants. As a basis for these assumptions, DSW classifies its
fair value measurements under the following fair value hierarchy:
•Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities that are
publicly accessible. Active markets have frequent transactions with enough volume to provide ongoing
pricing information.
•Level 2 inputs are other than level 1 inputs that are directly or indirectly observable. These can include
unadjusted quoted prices for similar assets or liabilities in active markets, unadjusted quoted prices for
identical assets or liabilities in inactive markets, or other observable inputs.
•Level 3 inputs are unobservable inputs.
The following table presents financial assets and liabilities measured at fair value on a recurring basis as of the
periods presented:
Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3
As of January 30, 2010 As of January 31, 2009
(In thousands)
Cash and equivalents ........... $125,020 $125,020 $ 54,782 $54,782
Short-term investments, net ...... 164,265 $164,265 101,404 $99,559 $1,845
Long-term investments, net ...... 1,151 $1,151 1,266 1,266
$290,436 $125,020 $164,265 $1,151 $157,452 $54,782 $99,559 $3,111
Cash and equivalents primarily represent cash deposits and investments in money market funds held with
financial institutions, as well as credit card receivables that generally settle within three days. The Company’s
investments in auction rate securities were recorded at fair value using an income approach valuation model that
uses level 3 inputs such as the financial condition of the issuers of the underlying securities, expectations regarding
the next successful auction, risks in the auction rate securities market and other various assumptions. Equity
investments are evaluated for other-than-temporary impairment using level 3 inputs such as the financial condition
and future prospects of the entity. The Company’s other types of investments are valued using a market-based
approach using level 2 inputs such as prices of similar assets in active markets.
F-17
DSW INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)