Urban Outfitters 2012 Annual Report Download - page 59

Table of Contents
URBAN OUTFITTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(in thousands, except share and per share data)
securities, as well as the amortization of discounts and premiums, is included in interest income in the Consolidated Statements of Income. Unrealized gains
and losses on these securities are considered temporary and therefore are excluded from earnings and are reported in accumulated other comprehensive loss in
shareholders' equity until realized. Other than temporary impairment losses related to credit losses are considered to be realized losses. When available-for-
sale securities are sold, the cost of the securities is specifically identified and is used to determine the realized gain or loss. Securities classified as current have
maturity dates of less than one year from the balance sheet date. Securities classified as non-current have maturity dates greater than one year from the
balance sheet date. Available for sale securities, such as Auction Rate Securities ("ARS") that fail at auction and do not liquidate in the normal course, are
classified as non-current assets.
The Company's ARS represent interests in municipal and student loan related collateralized debt obligations, all of which are rated A" or better and are
guaranteed by either government agencies and/or insured by private insurance agencies up to 97% or greater of par value. The Company's ARS had a fair
value of $20.2 million as of January 31, 2012 and $29.5 million as of January 31, 2011. As of and subsequent to the end of the current fiscal year, all of the
ARS held by the Company failed to liquidate at auction due to a lack of market demand. Liquidity for these ARS was historically provided by an auction
process that resets the applicable interest rate at pre-determined intervals, usually 7, 28, 35 or 90 days. The principal associated with these failed auctions will
not be available until a successful auction occurs, the bond is called by the issuer, a buyer is found from outside the auction process, or the debt obligation
reaches its maturity. Based on review of credit quality, collateralization, final stated maturity, estimates of the probability of being called or becoming illiquid
prior to final maturity, redemptions of similar ARS, previous market activity for same investment security, impact due to extended periods of maximum
auction rates and valuation models, the Company has recorded $2.8 million and $3.8 million of temporary impairment on its ARS as of January 31, 2012 and
January 31, 2011, respectively. To date the Company has collected all interest receivable on outstanding ARS when due and has not been informed by the
issuers that accrued interest payments are currently at risk. The Company does not have the intent to sell the underlying securities prior to their recovery and
the Company believes it is not likely that it will be required to sell the underlying securities prior to their anticipated recovery of full amortized cost. As a
result of the current illiquidity, the Company has classified all ARS as non-current assets under marketable securities. The Company continues to monitor the
market for ARS and consider the impact, if any, on the fair value of its investments.
Accounts Receivable
Accounts receivable primarily consists of amounts due from our wholesale customers as well as credit card receivables outstanding with third-party
credit card vendors. The activity of the allowance for doubtful accounts for the years ended January 31, 2012, 2011 and 2010 was as follows:
Balance at
beginning of
year Additions Deductions
Balance at
end of
year
Year ended January 31, 2012 $ 1,015 3,920 (3,321) $ 1,614
Year ended January 31, 2011 $ 1,284 2,397 (2,666) $ 1,015
Year ended January 31, 2010 $ 1,229 1,791 (1,736) $ 1,284
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