American Eagle Outfitters 2009 Annual Report Download - page 56

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The following table presents a rollforward of the amount of net impairment loss recognized in earnings related
to credit losses:
For the Year Ended
January 30, 2010
(In thousands)
Beginning balance of credit losses previously recognized in earnings .......... $ —
Year-to-date OTTI credit losses recognized in earnings..................... 940
Ending balance of cumulative credit losses recognized in earnings ............ $940
The reconciliation of our assets measured at fair value on a recurring basis using unobservable inputs
(Level 3) is as follows:
Total
Auction-
Rate
Municipal
Securities
Student
Loan-
Backed
Auction-
Rate
Securities
Auction-Rate
Preferred
Securities
Level 3 (Unobservable Inputs)
Carrying value at February 2, 2008 ........... $ — $ — $ — $ —
Additions to Level 3 upon adoption of
ASC 820(1) .......................... 340,475 84,575 212,000 43,900
Settlements ............................. (29,875) (18,575) (11,300) —
Additions to Level 3(2) .................... 4,600 4,600 — —
Transfers out of Level 3(3) ................. (28,900) — — (28,900)
Losses:
Losses reported in OCI .................. (35,293) (630) (31,446) (3,217)
Balance at January 31, 2009 ................ $251,007 $ 69,970 $169,254 $ 11,783
Settlements ............................. (72,600) (29,900) (42,700) —
Gains and (losses):
Reported in earnings .................... (940) — — (940)
Reported in OCI ....................... 24,981 174 22,877 1,930
Balance at January 30, 2010 ................ $202,448 $ 40,244 $149,431 $ 12,773
(1) Represents amounts transferred upon the adoption of ASC 820 during the first quarter of Fiscal 2008.
(2) Additions to Level 3 include securities previously classified as Level 2, which were securities that had
experienced partial calls prior to the fourth quarter of 2008 and were previously valued at par.
(3) Transfers out of Level 3 include preferred securities (into Level 1) and ARPS (into Level 2). The transfers to
Level 1 occurred due to the Company acquiring exchange traded preferred shares as a result of the ARPS trusts
liquidating. The transfers to Level 2 occurred as a result of the Company determining that it was more appropriate
to value these investments using observable market prices of the underlying securities. The OTTI charge of
$22.9 million that was reported in earnings was taken on Level 1 and Level 2 securities transferred from Level 3.
Non-Financial Assets
The Company’s non-financial assets, which include goodwill and property and equipment, are not required to
be measured at fair value on a recurring basis. However, if certain triggering events occur, or if an annual
impairment test is required and the Company is required to evaluate the non-financial instrument for impairment, a
resulting asset impairment would require that the non-financial asset be recorded at the estimated fair value.
55
AMERICAN EAGLE OUTFITTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)