DSW 2010 Annual Report Download - page 62

measurement based on assumptions of the market participants. As a basis for these assumptions, DSW classifies its
fair value measurements under the following fair value hierarchy:
• Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities that are
publicly accessible. Active markets have frequent transactions with enough volume to provide ongoing
pricing information.
• Level 2 inputs are other than level 1 inputs that are directly or indirectly observable. These can include
unadjusted quoted prices for similar assets or liabilities in active markets, unadjusted quoted prices for
identical assets or liabilities in inactive markets, or other observable inputs.
• Level 3 inputs are unobservable inputs.
The following table presents financial assets and liabilities measured at fair value on a recurring basis as of the
periods presented:
Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3
As of January 29, 2011 As of January 30, 2010
(In thousands)
Cash and equivalents .......... $ 93,617 $93,617 $125,020 $125,020
Short-term investments ......... 241,557 $241,557 164,265 $164,265
Long-term investments ......... 49,867 48,915 $952 1,151 $1,151
$385,041 $93,617 $290,472 $952 $290,436 $125,020 $164,265 $1,151
Cash and equivalents primarily represent cash deposits and investments in money market funds held with
financial institutions, as well as credit card receivables that generally settle within three days. Available-for-sale and
held-to maturity investments are valued using a market-based approach using level 2 inputs such as prices of similar
assets in active markets. Equity investments are evaluated for other-than-temporary impairment using level 3 inputs
such as the financial condition and future prospects of the entity.
The following table presents the activity related to level 3 fair value measurements for the periods presented:
Short-Term
Investments
Long-Term
Investments
Short-Term
Investments
Long-Term
Investments
January 29, 2011 January 30, 2010
Fiscal Years Ended
(In thousands)
Carrying value at the beginning of the period ................ $0 $1,151 $ 1,845 $ 1,266
Purchase of equity investment ........................... 1,151
Return of capital from equity investment . . ................. (199)
Transfer out of level 3 ................................. (1,266)
Transfers between short-term and long-term investments........ (1,845) 1,845
Reclassification of unrealized losses on available-for-sale
securities to an other-than-temporary impairment ........... 655
Other-than-temporary impairment included in earnings ......... (2,500)
Carrying value at the end of the period . . . ................. $0 $ 952 $ 0 $1,151
Long-lived assets held and used with a carrying amount of $1.9 million were written down to their fair value of
$1.0 million, resulting in an impairment charge of $0.9 million, which was included in earnings for fiscal 2009.
There were no impairment charges in fiscal 2010.
The Company periodically evaluates the carrying amount of its long-lived assets, primarily property and
equipment, and finite life intangible assets when events and circumstances warrant such a review to ascertain if any
F-16
DSW INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)