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Cash and Cash Equivalents, Short-term Investments and Long-term Investments
0203 - Disclosure - Cash and Cash Equivalents, Short-term Investments and Long-term Investments
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<!-- Begin Block Tagged Note 3 - aeo:CashAndCashEquivalentsShortTermInvestmentsAndLongTermInvestmentsTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>3. Cash and Cash Equivalents, Short-term Investments and Long-term Investments</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The following table summarizes the fair market values for the Company’s cash and marketable
securities, which are recorded as cash and cash equivalents, short-term investments and long-term
investments on the Consolidated Balance Sheets:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="64%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">July 31,</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">January 30,</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">August 1,</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="left" style="border-bottom: 0px solid #000000"><i>(In thousands)</i></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2010</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2010</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2009</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Cash and cash equivalents:
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Cash
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">186,888</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">144,391</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">72,708</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Commercial paper
</div></td>
<td> </td>
<td> </td>
<td align="right">31,499</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">25,420</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Treasury bills
</div></td>
<td> </td>
<td> </td>
<td align="right">118,725</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">119,988</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">100,000</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Money-market
</div></td>
<td> </td>
<td> </td>
<td align="right">88,411</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">404,161</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">327,555</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Total cash and cash equivalents
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">425,523</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">693,960</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">500,263</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Short-term investments:
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Student-loan backed ARS
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">400</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">5,700</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">State and local government ARS
</div></td>
<td> </td>
<td> </td>
<td align="right">5,800</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">4,275</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">23,825</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Total short-term investments
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">5,800</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">4,675</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">29,525</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Long-term investments:
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Student-loan backed ARS
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">131,163</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">149,031</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">146,184</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">State and local government ARS
</div></td>
<td> </td>
<td> </td>
<td align="right">22,200</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">35,969</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">39,717</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Auction rate preferred securities
</div></td>
<td> </td>
<td> </td>
<td align="right">13,354</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">12,773</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">12,658</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Total long-term investments
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">166,717</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">197,773</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">198,559</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Total
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">598,040</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">896,408</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">728,347</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Proceeds from the sale of available-for-sale securities were $27.9 million and
$49.9 million for the 26 weeks ended July 31, 2010 and August 1, 2009, respectively.
There were no purchases of available-for-sale securities during the 26 weeks ended July 31, 2010 or
August 1, 2009.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The following table presents the unrealized losses and fair value of available-for-sale securities
for which OTTI has not been recognized in earnings and the length of time that the securities were
in a continuous unrealized loss position.
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="52%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6">Greater Than or</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000">Less Than 12 Months</td>
<td style="border-bottom: 1px solid #000000"> </td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000">Equal to 12 Months</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Gross Unrealized</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Gross Unrealized</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td><i>(In thousands)</i></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Holding Losses</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Fair Value</td>
<td style="border-bottom: 0px solid #000000"> </td>
<td style="border-bottom: 0px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="2">Holding Losses</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Fair Value</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 1px solid #000000"> </td>
<td style="border-top: 1px solid #000000"> </td>
<td colspan="7" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>July 31, 2010</b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Student-loan backed ARS
</div></td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(805</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">$</td>
<td align="right">54,959</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(9,384</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">$</td>
<td align="right">47,453</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Auction rate preferred securities
</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(706</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">14,294</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Total (1)
</div></td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(805</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">$</td>
<td align="right">54,959</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(10,090</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">$</td>
<td align="right">61,747</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 3px double #000000"> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>August 1, 2009</b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Student-loan backed ARS
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(13,416</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">$</td>
<td align="right">54,584</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">State and local government ARS
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(29</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">4,571</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(279</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">16,371</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Auction rate preferred securities
</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(2,117</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">12,658</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Total (1)
</div></td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(29</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">$</td>
<td align="right">4,571</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(15,812</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">$</td>
<td align="right">83,613</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 3px double #000000"> </td>
<td> </td>
<td colspan="7" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left">
<div style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000"> 
</div>
</div>
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left">
<tr>
<td width="3%"></td>
<td width="1%"></td>
<td width="96"></td>
</tr>
<tr valign="top">
<td nowrap="nowrap" align="left">(1)</td>
<td> </td>
<td>Fair value excludes $58.0 million as of July 31, 2010 and $139.9 million as of August 1,
2009 of securities whose fair value approximates par. Additionally, as of July 31, 2010 and August
1, 2009, the fair value shown above excludes ($2.2) million and ($0.2) million, respectively, of OTTI
that has been previously recognized in earnings.</td>
</tr>
</table>
<div align="left" style="font-size: 10pt; margin-top: 6pt">As of July 31, 2010, the Company had a total of $598.0 million in cash and cash equivalents,
short-term and long-term investments, which included $172.5 million of investments in ARS and
auction rate preferred securities (“ARPS”), net of $10.9 million ($6.8 million, net of tax) of
impairment included in OCI and $2.2 million of impairment previously recognized in earnings. Our
investment portfolio consisted of the following:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="40%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">No. of</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Cumulative Unrealized</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Cumulative Losses</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Carrying Value as of</td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="left"><i>(In thousands, except no. of issues amount)</i></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">issues</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Par Value</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Losses Recognized in OCI</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Recognized in Earnings</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">July 31, 2010</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="19" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Auction rate securities (“ARS”):
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Closed-end municipal fund ARS
</div></td>
<td> </td>
<td> </td>
<td align="right">5</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">15,250</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">15,250</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Municipal Bond ARS
</div></td>
<td> </td>
<td> </td>
<td align="right">3</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">12,750</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">12,750</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Auction rate preferred securities
</div></td>
<td> </td>
<td> </td>
<td align="right">2</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">15,000</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(706</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(940</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">13,354</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Federally-insured student loan ARS
</div></td>
<td> </td>
<td> </td>
<td align="right">15</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">132,600</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(7,907</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(1,248</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">123,445</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Private-insured student loan ARS
</div></td>
<td> </td>
<td> </td>
<td align="right">1</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">10,000</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(2,282</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">7,718</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td> </td>
<td> </td>
<td colspan="19" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Total Auction rate securities
</div></td>
<td> </td>
<td> </td>
<td align="right">26</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">185,600</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(10,895</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(2,188</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">$</td>
<td align="right">172,517</td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">For its available-for-sale securities, the Company does not have the intention to sell and
does not believe that it is more likely than not that it will be required to liquidate these
investments prior to successful auctions or redemptions at par plus accrued interest. The Company
generally believes that the current illiquidity and impairment of these investments is temporary
and related to factors other than credit losses. However, OTTI of $0.9 million and $1.2 million
has been recognized in earnings during Fiscal 2009 and the 13 weeks ended July 31, 2010,
respectively, related to credit losses on auction rate preferred securities. In addition, the
Company believes that the current lack of liquidity relating to ARS and ARPS investments will have
no impact on its ability to fund its ongoing operations and growth initiatives.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The Company continues to monitor the market for ARS and ARPS and consider the impact, if any, on
the fair value of its investments. If current market conditions deteriorate further, or the
anticipated recovery in market values does not occur, the Company may be required to record
additional impairment.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Lehman Brothers Holding, Inc. (“Lehman”) acted as the broker and auction agent for all of the
Company’s ARPS. Lehman filed for Chapter 11 bankruptcy protection during September 2008, resulting
in the dissolution of the investment trusts for most of the Company’s ARPS. As a result, the
Company received 760,000 preferred shares in Fiscal 2008 and an additional
576,000 preferred shares during the 13 weeks ended May 2, 2009. During the 13 weeks ended May 2,
2009, the Company liquidated all 1.3 million shares for $7.8 million and recorded an incremental
loss of $2.7 million in other income (expense), net. The total realized loss on the sale of these
securities was $25.6 million, of which $22.9 million was recorded as OTTI in Fiscal 2008.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Refer to Note 4 to the Consolidated Financial Statements for additional information regarding the
fair value measurement of our investment securities.
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
</div>
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Cash and Cash Equivalents, Short-term Investments and Long-term Investments.
No authoritative reference available.
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