Urban Outfitters 2012 Annual Report Download - page 40

Table of Contents
Our exposure to market risk for changes in interest rates relates to our cash, cash equivalents and marketable securities. As of January 31, 2012 and
2011, our cash, cash equivalents and marketable securities consisted primarily of funds invested in money market accounts, corporate bonds rated "A" or
better, municipal and pre-refunded municipal bonds rated "A" or better, auction rate securities ("ARS") rated "A" or better, which bear interest at variable
rates, treasury bills, certificates of deposit, federal government agencies, and commercial paper. Due to the short average maturity and conservative nature of
our investment portfolio, we believe a 100 basis point change in interest rates would not have a material effect on the Condensed Consolidated Financial
Statements. As the interest rates on a material portion of our cash, cash equivalents and marketable securities are variable, a change in interest rates earned on
the cash, cash equivalents and marketable securities would impact interest income along with cash flows, but would not impact the fair market value of the
related underlying instruments.
Our ARS are invested in "A" or better rated issuances that represent interests in municipal and student loan related collateralized debt obligations, all of
which are guaranteed by either government agencies and/or insured by private insurance agencies up to 97% or greater of par value. Our ARS had a par value
and fair value of $23.0 million and $20.2 million as of January 31, 2012 and $33.3 million and $29.5 million as of January 31, 2011. As of January 31, 2012,
all of the ARS we held failed to liquidate at auction due to lack of market demand. Based on review of credit quality, collateralization, final stated maturity,
estimates of the probability of being called or becoming liquid prior to final maturity, redemptions of similar ARS, previous market activity for the same
investment security, impact due to extended periods of maximum auction rates and valuation models, we have recorded $2.8 million of temporary impairment
on our ARS as of January 31, 2012 and $3.8 million as of January 31, 2011. To date, we have collected all interest payable on outstanding ARS when due and
expect to continue to do so in the future. We do not have the intent to sell the underlying securities prior to their recovery and we believe that it is not likely
that we will be required to sell the underlying securities prior to their anticipated recovery of full amortized cost. As a result of the current illiquidity, we have
classified all ARS as non-current assets under marketable securities. We continue to monitor the market for ARS and consider the impact, if any, on the fair
value of our investments.
Item 8. Financial Statements and Supplementary Data
The information required by this Item is incorporated by reference from Item 7: Management's Discussion and Analysis of Financial Condition and
Results of Operations—Seasonality and Quarterly Results of Operations and from pages F-1 through F-33.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures
as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended. Based on this review, the Chief Executive Officer and Chief
Financial Officer concluded that the Company's disclosure controls and procedures were effective as of January 31, 2012.
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