Annual report pursuant to Section 13 and 15(d)

Fair Value Measurements

v2.4.1.9
Fair Value Measurements
12 Months Ended
Jan. 31, 2015
Fair Value Measurements  
Fair Value Measurements

2. FAIR VALUE MEASUREMENTS

 

As defined in ASC 820, Fair Value Measurements (“ASC 820”), fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes a three-level valuation hierarchy for fair value measurements. These valuation techniques are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect less transparent active market data, as well as internal assumptions. These two types of inputs create the following fair value hierarchy:

 

·

Level 1—Quoted prices for identical instruments in active markets;

 

·

Level 2—Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose significant inputs are observable; and

 

·

Level 3—Instruments with significant unobservable inputs.

 

Impairment losses related to store-level property and equipment are calculated using significant unobservable inputs including the present value of future cash flows expected to be generated using a risk-adjusted weighted-average cost of capital and comparable store sales growth assumptions, and therefore are classified as a Level 3 measurement in the fair value hierarchy. As a result of our impairment review, we recorded a store level property and equipment impairment charge of less than $1 million and $2 million in fiscal 2014 and fiscal 2013, respectively.  We did not have an impairment charge in fiscal 2012.

 

In fiscal 2010, the Company acquired Scrap HD, an online scrapbooking business.  As a result of negative operating results, we estimated the fair value of ScrapHD to be zero as of February 2, 2013. We recorded an impairment charge in fiscal 2012 of $7 million for long-lived assets associated with our online scrapbooking business and a goodwill impairment charge of $1 million, which represents the total carrying amount of ScrapHD’s goodwill.

 

The table below provides the carrying and fair values of our Restated Term Loan Credit Facility, our 2020 Senior Subordinated Notes and our PIK Notes (all as defined in Note 5) as of January 31, 2015. The fair value of our Restated Term Loan Credit Facility, our 2020 Senior Subordinated Notes and our PIK Notes were determined based on quoted market prices which are considered Level 2 inputs within the fair value hierarchy.

 

 

 

 

 

 

 

 

 

 

    

Carrying

    

Fair

 

 

 

Value

 

Value

 

 

 

(In millions)

 

Restated term loan credit facility

 

$

2,453 

 

$

2,413 

 

Senior subordinated notes

 

 

515 

 

 

516 

 

PIK notes

 

 

181 

 

 

184