Ross 2008 Annual Report Download - page 43

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41
Note B: Investments
The amortized cost and fair value of the Company’s available-for-sale securities as of January 31, 2009 were:
Amortized Unrealized Unrealized
($000) cost gains losses Fair value Short-term Long-term
Auction-rate securities $ 1,100 $ — $ — $ 1,100 $ — $ 1,100
Asset-backed securities 984 5 200 789 389 400
Corporate securities 13,773 152 685 13,240 — 13,240
U.S. Government and agency
securities 15,940 446 — 16,386 — 16,386
Mortgage-backed securities 8,189 119 1,011 7,297 409 6,888
Total $ 39,986 $ 722 $ 1,896 $ 38,812 $ 798 $ 38,014
The amortized cost and fair value of the Company’s available-for-sale securities as of February 2, 2008 were:
Amortized Unrealized Unrealized
($000) cost gains losses Fair value Short-term Long-term
Auction-rate securities $ 5,900 $ — $ — $ 5,900 $ 4,000 $ 1,900
Asset-backed securities 1,446 17 35 1,428 862 566
Corporate securities 13,644 227 184 13,687 428 13,259
U.S. Government and agency
securities 16,482 1,133 — 17,615 350 17,265
Mortgage-backed securities 8,052 217 35 8,234 458 7,776
Total $ 45,524 $ 1,594 $ 254 $ 46,864 $ 6,098 $ 40,766
At January 31, 2009, the Company had investments of approximately $40.0 million of which $4.0 million had gross unrealized
losses of $1.0 million which had been in a continuous unrealized loss position for more than twelve months. Of the remaining
$36.0 million, $6.9 million of investments had gross unrealized losses of $0.9 million which had been in a continuous unrealized
loss position for less than twelve months. These unrealized losses on investments were caused primarily by the downturn in the
market values of mortgaged backed securities and in the financial sector during 2008. The Company does not consider these
investments to be other than temporarily impaired at January 31, 2009.
In applying the valuation principles in SFAS No. 157 to financial assets and liabilities, a three-tier fair value hierarchy was used to
prioritize the inputs used in the valuation methodologies as follows:
Level 1 — Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2 — Include other inputs that are directly or indirectly observable in the marketplace.
Level 3 — Unobservable inputs which are supported by little or no market activity.
This fair value hierarchy also requires the Company to maximize the use of observable inputs and minimize the use of
unobservable inputs when measuring fair value. Asset-backed, corporate, U.S. Government and agency, and mortgage-
backed securities are classified within Level 1 or Level 2 because these securities are valued using quoted market prices or
alternative pricing sources and models utilizing market observable inputs. The Company’s investment in auction rate securities is
classified within Level 3 because these are valued using valuation techniques for which some of the inputs to these models are
unobservable in the market.