Urban Outfitters 2010 Annual Report Download - page 67

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URBAN OUTFITTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Level 1 assets consist of financial instruments whose value has been based on quoted market
prices for identical financial instruments in an active market.
Level 2 assets consist of financial instruments whose value has been based on quoted prices for
similar assets and liabilities in active markets as well as quoted prices for identical or similar assets or
liabilities in markets that are not active.
Level 3 consists of financial instruments where there was no active market as of January 31, 2010
and 2009. As of January 31, 2010 and 2009 all of the Company’s level 3 financial instruments
consisted of failed ARS of which there was insufficient observable market information to determine
fair value. The Company estimated the fair values for these securities by incorporating assumptions
that market participants would use in their estimates of fair value. Some of these assumptions included
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. As a result of this review, the Company determined its ARS to have a temporary impairment
of $4,120 and $5,283 as of January 31, 2010 and January 31, 2009, respectively. The estimated fair
values could change significantly based on future market conditions. The Company will continue to
assess the fair value of its ARS for substantive changes in relevant market conditions, changes in its
financial condition or other changes that may alter its estimates described above. Failed ARS
represented approximately 4.5% and 7.4% of the Company’s total cash, cash equivalents and
marketable securities as of January 31, 2010 and January 31, 2009, respectively.
Below is a reconciliation of the beginning and ending ARS securities balances that the Company
valued using a Level 3 valuation for the fiscal years ended January 31, 2010 and 2009.
Fiscal Year Ended
January 31, 2010
Fiscal Year Ended
January 31, 2009
Balance at beginning of period .................. $38,742 $ 61,375
Total gains (losses) realized/unrealized:
Included in earnings ................... — (2,880)
Included in other comprehensive income . . 1,163 (5,283)
Purchases, issuances and settlements .......... (6,400) (17,350)
Transfers in and/or out of Level 3 ............ — 2,880
Balance at end of period ....................... $33,505 $ 38,742
Total losses for the period included in other
comprehensive income attributable to the change in
unrealized losses related to assets still held at
reporting date .............................. $(4,120) $ (5,283)
F-18