Restoration Hardware 2014 Annual Report Download - page 101
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Fair Value Measurements
All of the Company’s investments are classified as available-for-sale and are carried at fair value. Assets
measured at fair value were as follows (in thousands):
January 31,
2015
February 1,
2014
Level 1 Level 2 Total Level 1 Level 2 Total
Cash equivalents
Money market funds $ 44 $ — $ 44 $— $— $—
Commercial paper — 18,248 18,248 — — —
Government agency obligations — 1,001 1,001 — — —
Total cash equivalents 44 19,249 19,293 — — —
Short-term investments
Commercial paper — 13,996 13,996 — — —
Government agency obligations — 48,172 48,172 — — —
Total short-term investments — 62,168 62,168 — — —
Long-term investments
Government agency obligations — 18,338 18,338 — — —
Total long-term investments — 18,338 18,338
Total $ 44 $99,755 $99,799 $— $— $—
The Company invests excess cash primarily in investment-grade interest-bearing securities such as money
market funds, certificates of deposit, commercial paper, municipal and government agency obligations and
guaranteed obligations of the U.S. government, all of which are subject to minimal credit and market risks. The
Company estimates the fair value of its commercial paper and U.S. government agency bonds by taking into
consideration valuations obtained from third party pricing services. The pricing services utilize industry standard
valuation models, including both income and market based approaches, for which all significant inputs are
observable, either directly or indirectly, to estimate fair value. These inputs include reported trade dates of and
broker/dealer quotes on the same or similar securities; issuer credit spreads; benchmark securities, prepayment/
default projections based on historical data; and other observable inputs.
There were no purchases, sales, issuances, or settlements related to recurring level 3 measurements during
fiscal 2014 or fiscal 2013. There were no transfers into or out of level 1 and level 2 during fiscal 2014.
Fair Value of Financial Instruments
Amounts reported as cash and equivalents, receivables, and accounts payable and accrued expenses
approximate fair value. The estimated fair value and carrying value of the Notes (carrying value excludes the
equity component of the Notes classified in stockholders’ equity) were as follows (in thousands):
January 31,
2015
February 1,
2014
Fair
Value
Carrying
Value
Fair
Value
Carrying
Value
Convertible senior notes $260,444 $287,487 $— $—
The fair value of the Notes were determined based on inputs that are observable in the market or that could
be derived from, or corroborated with, observable market data, including the trading price of the Company’s
convertible notes, when available, the Company’s stock price and interest rates based on similar debt issued by
parties with credit ratings similar to the Company (Level 2).
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