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Investments

3 Months Ended

Apr. 30, 2011

6. INVESTMENTS

Investments consisted of (in thousands):

	April 30, 2011		January 29, 2011
Marketable securities - Non-Current:

Available-for-sale securities:
Auction rate securities - student loan backed	$	86,758	$	85,732
Auction rate securities - municipal authority bonds		14,792		14,802
Total available-for-sale securities		101,550		100,534

Rabbi Trust assets: (1)
Money market funds		490		343
Municipal notes and bonds		11,782		11,870
Trust-owned life insurance policies (at cash surrender value)		71,008		70,288
Total Rabbi Trust assets		83,280		82,501
Total Investments	$	184,830	$	183,035

(1) Rabbi Trust assets are included in Other Assets on the Consolidated Balance Sheets and are restricted as to their use.

At April 30, 2011, the Company's investment grade auction rate securities (“ARS”) consisted of insured student loan backed securities and municipal authority bonds, with maturities ranging from 17 to 32 years. Each investment in student loans is insured by (1) the U.S. government under the Federal Family Education Loan Program, (2) a private insurer or (3) a combination of both. The percentage of insurance coverage of the outstanding principal and interest of the ARS varies by security.

The par and carrying values, and related cumulative temporary impairment charges for the Company's available-for-sale marketable securities as of April 30, 2011 were as follows:


					Temporary			Carrying
(in thousands)			Par Value		Impairment			Value

Available-for-sale securities:
	Auction rate securities - student loan backed		$	95,500	$	(8,742)	$	86,758
	Auction rate securities - municipal authority bonds			19,975		(5,183)		14,792
		Total available-for-sale securities	$	115,475	$	(13,925)	$	101,550

See Note 7, “Fair Value,” for further discussion on the valuation of the ARS.

An impairment is considered to be other-than-temporary if an entity (i) intends to sell the security, (ii) more likely than not will be required to sell the security before recovering its amortized cost basis, or (iii) does not expect to recover the security's entire amortized cost basis, even if there is no intent to sell the security. The Company has not incurred any credit-related losses on available-for-sale ARS and furthermore, the issuers continued to perform under the obligations, including making scheduled interest payments, and the Company expects that this will continue going forward.

On November 13, 2008, the Company executed an agreement (the "UBS Agreement") with UBS AG ("UBS"), a Swiss corporation, relating to ARS with a par value of $76.5 million (“UBS ARS”). By entering into the UBS Agreement, UBS received the right to purchase these UBS ARS at par, commencing on November 13, 2008. The Company received a right (“Put Option”) to sell the UBS ARS back to UBS at par, commencing on June 30, 2010. Upon acceptance of the UBS Agreement, the Company no longer had the intention to hold the UBS ARS until maturity. Therefore, the impairment could no longer be considered temporary. The impact of this was immaterial for the first quarter of Fiscal 2010, and since the Company exercised the put option in Fiscal 2010 and the ARS were acquired by UBS, there was no impact in the first quarter of Fiscal 2011.

The irrevocable rabbi trust (the “Rabbi Trust”) is intended to be used as a source of funds to match respective funding obligations to participants in the Abercrombie & Fitch Co. Nonqualified Savings and Supplemental Retirement Plan I, the Abercrombie & Fitch Co. Nonqualified Savings and Supplemental Retirement Plan II and the Chief Executive Officer Supplemental Executive Retirement Plan. The Rabbi Trust assets are consolidated and recorded at fair value, with the exception of the trust-owned life insurance policies which are recorded at cash surrender value. The Rabbi Trust assets are included in Other Assets on the Consolidated Balance Sheets and are restricted as to their use as noted above. Net unrealized gains and losses related to the municipal notes and bonds held in the Rabbi Trust were not material for the thirteen week periods ended April 30, 2011 and May 1, 2010. The change in cash surrender value of the trust-owned life insurance policies held in the Rabbi Trust resulted in realized gains of $0.7 million and $0.5 million for the thirteen weeks ended April 30, 2011 and May 1, 2010, respectively, recorded as Interest Expense, Net on the Consolidated Statements of Operations and Comprehensive Income (Loss).

- Definition

This item represents the entire disclosure related to Investments in Certain Debt and Equity Securities (and certain other trading assets) which include all debt and equity securities (other than those equity securities accounted for under the equity or cost methods of accounting) with readily determinable fair values. Other trading assets include assets that are carried on the balance sheet at fair value and held for trading purposes. A debt security represents a creditor relationship with an enterprise that is in the form of a security. Debt securities include, among other items, US Treasury securities, US government securities, municipal securities, corporate bonds, convertible debt, commercial paper, and all securitized debt instruments. An equity security represents an ownership interest in an enterprise or the right to acquire or dispose of an ownership interest in an enterprise at fixed or determinable prices. Equity securities include, among other things, common stock, certain preferred stock, warrant rights, call options, and put options, but do not include convertible debt. An entity may opt to provide the reader with additional narrative text to better understand the nature of investments in debt and equity securities (and other trading assets).

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