Fair Value Measurements

FAIR VALUE MEASUREMENTS

Financial Assets and Liabilities- The following table presents financial assets and liabilities at fair value as of the dates presented:



	January 30, 2016								January 31, 2015
	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3

	(in thousands)
Financial Assets:
Cash and equivalents	$	32,495	$	32,495	—		—		$	59,171	$	59,171	—		—
Short-term investments^(a)	226,027		2,127		$	223,900	—		171,268		—		$	171,268	—
Long-term investments^(a)	71,953		181		71,772		—		216,810		—		216,810		—
Cost method investment^(b)	6,000		—		—		$	6,000	—		—		—		—
Note receivable from Town Shoes^(c)	33,311		—		33,311		—		43,304		—		43,304		—
Total Financial Assets	$	369,786	$	34,803	$	328,983	$	6,000	$	490,553	$	59,171	$	431,382	—

Financial Liabilities:
Stock appreciation rights^(d)	$	561	—		$	561	—		—		—		—		—
Total Financial Liabilities	$	561	—		$	561	—		—		—		—		—

(a) Short-term and long-term investments are valued using a market-based approach using level 2 inputs such as prices of similar assets in active markets.

(b) DSW Inc.'s cost method investment is valued using level 3 inputs. The fair value approximates the carrying value.

(c) The Company estimated the fair value of the note receivable based upon current interest rates offered on similar instruments. The reduction in fair value is based on the change in comparable rates on similar instruments. Based on the Company’s intention and ability to hold the note until maturity or the exercise of the put/call option (see Note 3), the carrying value is not other-than-temporarily impaired.

(d) Stock appreciation rights are valued using the Black-Scholes model.

The following table presents activity related to level 3 fair value measurement for DSW Inc.'s cost method investment for the period presented:



	Fiscal year ended
	January 30, 2016
	(in thousands)
Carrying value, beginning of period	$	—
Activity related to cost method investment	6,000
Carrying value, end of period	$	6,000

Non-Financial Assets- The Company periodically evaluates the carrying amount of its long-lived assets, primarily property and equipment, and finite lived intangible assets when events and circumstances warrant such a review to ascertain if any assets have been impaired.

In fiscal 2015 and 2014, the Company recognized impairment losses on leasehold improvements used in stores. The impairment losses were included in the DSW and ABG segments. The Company determined that the carrying value exceeded the expected future cash flows and recorded an impairment after determining fair value based on the discounted future cash flow analysis using a discount rate determined by management based on historical performance and expectations of future performance. The following table presents the activity related to the fair value of assets held and used that realized an impairment loss for the periods presented:



					Total Losses
	As of January 30, 2016				Fiscal
	Level 1	Level 2	Level 3	Fair Value as of the Impairment Date	2015		2014

	(in thousands)				(in thousands)
Assets held and used	—	—	—	—	$	962	$	5,095

After the impairment losses were recorded, the remaining fair value of assets was zero.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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