Restoration Hardware 2015 Annual Report Download - page 89

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86
The Company’s financial assets and liabilities measured and reported at fair value are classified and disclosed in one of the
following categories:
• Level 1—Quoted prices are available in active markets for identical investments as of the reporting date.
• Level 2—Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable
as of the reporting date, and fair value is determined through the use of models or other valuation methodologies.
• Level 3—Pricing inputs are unobservable for the investment and include situations where there is little, if any, market
activity for the investment. The inputs used in the determination of fair value require significant management judgment or
estimation.
A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant
to the fair value measurement.
Fair Value Measurements
All of the Company’s investments are classified as available-for-sale and are carried at fair value. Assets measured at fair value
were as follows (in thousands):
January 30, January 31,
2016 2015
Level 1 Level 2 Total Level 1 Level 2 Total
Cash equivalents
Money market funds ............................................... $ 70 $ — $ 70 $ 44 $ — $ 44
Commercial paper................................................... — 46,726 46,726 — 18,248 18,248
Government agency obligations ............................. — — — — 1,001 1,001
Total cash equivalents ....................................... 70 46,726 46,796 44 19,249 19,293
Short-term investments
Commercial paper................................................... — 15,488 15,488 — 13,996 13,996
Government agency obligations ............................. 22,011 93,302 115,313 — 48,172 48,172
Total short-term investments ............................. 22,011 108,790 130,801 — 62,168 62,168
Long-term investments
Government agency obligations ............................. 7,829 14,225 22,054 — 18,338 18,338
Total long-term investments .............................. 7,829 14,225 22,054 — 18,338 18,338
Total .................................................................. $ 29,910 $ 169,741 $ 199,651 $ 44 $ 99,755 $ 99,799
The following table summarizes the amortized cost and estimated fair value of the available-for-sale securities within the
Company’s investment portfolio based on stated maturities, which are recorded within cash and cash equivalents, short-term
investments and long-term investments on the consolidated balance sheets (in thousands):
January 30, January 31,
2016 2015
Cost Fair Value Cost Fair Value
Range of maturity
Due within 1 year .............................................................. $ 177,564 $ 177,527 $ 81,413 $81,419
Due in 1 to 2 years ............................................................ $ 22,033 $ 22,054 $ 18,324 $18,338
The Company invests excess cash primarily in investment-grade interest-bearing securities such as money market funds,
certificates of deposit, commercial paper, government agency obligations and guaranteed obligations of the U.S. government, all of
which are subject to minimal credit and market risks. The Company estimates the fair value of its commercial paper and U.S.
government agency bonds by taking into consideration valuations obtained from third party pricing services. The pricing services
utilize industry standard valuation models, including both income and market based approaches, for which all significant inputs are
observable, either directly or indirectly, to estimate fair value. These inputs include reported trade dates of and broker/dealer quotes on
the same or similar securities; issuer credit spreads; benchmark securities, prepayment/default projections based on historical data; and
other observable inputs.
There were no purchases, sales, issuances, or settlements related to recurring level 3 measurements during fiscal 2015 or fiscal
2014. There were no transfers into or out of level 1 and level 2 during fiscal 2015 or fiscal 2014.