AMERICAN EAGLE OUTFITTERS INC
For the period ended Feb 1, 2025. Filed Mar 20, 2025.
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FY2025 · Filed Mar 20, 2025
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Fair Value Measurements
- Fair Value Measurements
ASC 820, Fair Value Measurement Disclosures (“ASC 820”), defines fair value, establishes a framework for measuring fair value in accordance with GAAP, and expands disclosures about fair value measurements. Fair value is defined under ASC 820 as the exit price associated with the sale of an asset or transfer of a liability in an orderly transaction between market participants at the measurement date.
Financial Instruments
Valuation techniques used to measure fair value under ASC 820 must maximize the use of observable inputs and minimize the use of unobservable inputs. In addition, ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include:
Level 1 — Quoted prices in active markets.
Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly.
Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
The Company’s cash equivalents and short-term investments are Level 1 financial assets and are measured at fair value on a recurring basis, for all periods presented. Refer to Note 3, Cash and Cash Equivalents and Short-term Investments, to the Consolidated Financial Statements for additional information regarding cash equivalents and short-term investments.
The Company hadno other financial instruments that required fair value measurement for any of the periods presented.
| (In thousands) | Carrying Amount | Quoted MarketPrices in ActiveMarkets forIdenticalAssets(Level 1) | Significant OtherObservable Inputs(Level 2) | SignificantUnobservableInputs(Level 3) |
|---|---|---|---|---|
| Cash and cash equivalents | ||||
| Cash | $150,053 | $150,053 | — | — |
| Interest-bearing deposits | 158,909 | 158,909 | — | — |
| Total cash and cash equivalents | $308,962 | $308,962 | — | — |
| Short-term investments: | ||||
| Certificates of deposits | $50,000 | $50,000 | — | — |
| Total short-term investments | $50,000 | $50,000 | — | — |
| Total cash and short-term investments | $358,962 | $358,962 | — | — |
Long-Term Debt
As of February 1, 2025, the Company had no outstanding borrowings under its Credit Facilities.
The Company's 2025 Notes were fully redeemed during Fiscal 2023. The fair value of the Company's 2025 Notes was not required to be measured at fair value on a recurring basis. Upon issuance, the fair value of the 2025 Notes was measured using two approaches that consider market-related conditions, including market benchmark rates and a secondary market quoted price, and is therefore within Level 2 of the fair value hierarchy.
Refer to Note 8, Long-Term Debt, Net, to the Consolidated Financial Statements for additional information regarding long-term debt and other credit arrangements.
Non-Financial Assets
The Company’s non-financial assets, which include intangible assets and property and equipment, are not required to be measured at fair value on a recurring basis. However, if certain triggering events occur and the Company is required to evaluate the non-financial asset for impairment, a resulting impairment would require that the non-financial asset be recorded at the estimated fair value. Certain long-lived assets were measured at fair value on a nonrecurring basis using Level 3 inputs as defined in ASC 820. During Fiscal 2024, the Company recorded asset impairment charges of $6.4 million related to the sale of its Hong Kong retail operations. During Fiscal 2023, the Company recorded asset impairment charges of $74.8 million primarily related to Quiet Platforms definite-lived intangible assets ($40.5 million), property and equipment and ROU assets ($24.7 million), Japan property and equipment and ROU assets ($8.3 million), and Hong Kong store property and equipment ($1.3 million). These assets were adjusted to their fair value and the loss on impairment was recorded within impairment, restructuring and other charges in the Consolidated Statements of Operations for Fiscal 2024 and Fiscal 2023, respectively. Refer to Note 15, Impairment, Restructuring and Other Charges, to the Consolidated Financial Statements for additional information regarding impairment, restructuring and other charges.
The fair value of the Company’s store assets in Fiscal 2024 and Fiscal 2023 was determined by estimating the amount and timing of net future cash flows and discounting them using a risk-adjusted rate of interest. The Company estimates future cash flows based on its experience and knowledge of the market in which the store is located.
The fair value of the Company's ROU assets was based upon market rent assumptions.
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