Urban Outfitters 2009 Annual Report Download - page 62

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URBAN OUTFITTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Foreign Currency Translation
The financial statements of the Company’s foreign operations are translated into U.S. dollars.
Assets and liabilities are translated at current exchange rates while income and expense accounts are
translated at the average rates in effect during the year. Translation adjustments are not included in
determining net income, but are included in accumulated other comprehensive income within
shareholders’ equity. As of January 31, 2009, 2008 and 2007, foreign currency translation adjustments
resulted in a loss of $14,496, and gains of $5,370 and $4,667, respectively.
Fair Value of Financial Instruments
Effective February 1, 2008, the Company adopted the provisions of SFAS No. 157, “Fair Value
Measurements” (“SFAS No. 157”) that relate to its financial assets and financial liabilities as discussed
in Note 4. SFAS No. 157 establishes a hierarchy that prioritizes fair value measurements based on the
types of inputs used for the various valuation techniques (market approach, income approach and cost
approach).
Management’s assessment of the significance of a particular input to the fair value measurement
requires judgment and may affect the valuation of financial assets and liabilities and their placement
within the fair value hierarchy.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist
principally of cash, cash equivalents, marketable securities and accounts receivable. The Company
manages the credit risk associated with cash, cash equivalents and marketable securities by investing
high-quality securities held with reputable trustees and, by policy, limiting the amount of credit
exposure to any one issue. The Company’s investment policy requires that the majority of its cash,
cash equivalents and marketable securities are invested in federally insured or guaranteed investment
vehicles such as; money market accounts up to applicable TARP limits, FDIC insured corporate bonds,
federal government agencies and irrevocable pre-refunded municipal bonds. Receivables from third-
party credit cards are processed by financial institutions, which are monitored for financial stability.
The Company periodically evaluates the financial condition of its wholesale segment customers. The
Company’s allowance for doubtful accounts reflects current market conditions and management’s
assessment regarding the likelihood of collecting its accounts receivable. The Company maintains cash
accounts that, at times, may exceed federally insured limits. The Company has not experienced any
losses from maintaining cash accounts in excess of such limits. Management believes that it is not
exposed to any significant risks related to its cash accounts.
F-14