Advance Auto Parts 2013 Annual Report Download - page 76

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ADVANCE AUTO PARTS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 28, 2013, December 29, 2012 and December 31, 2011
(in thousands, except per share data)
F-24
The following table sets forth the Company’s financial liabilities that were measured at fair value on a recurring basis as of
December 28, 2013 and December 29, 2012:
Fair Value Measurements at Reporting Date Using
Level 1 Level 2 Level 3
Fair Value
Quoted Prices in
Active Markets for
Identical Assets
Significant Other
Observable Inputs
Significant
Unobservable
Inputs
As of December 28, 2013
Contingent consideration related to
business acquisitions $ 9,475 $ — $ — $ 9,475
As of December 29, 2012
Contingent consideration related to
business acquisitions $ 16,999 $ — $ — $ 16,999
In Fiscal 2011, the Company recorded contingent consideration related to its acquisition of two small technology
companies. The fair value of the contingent consideration, which is recorded in Accrued expenses and Other long-term
liabilities, is based on various estimates including the Company’s estimate of the probability of achieving the targets and the
time value of money. During Fiscal 2013, contingent consideration decreased due to the payment of $4,726 associated with the
achievement of a performance condition and a $3,529 net reduction in fair value of the remaining balance due to an increase in
likelihood of nonperformance in the future, partially offset by amortization of the net present value discount.
The carrying amount of the Company’s cash and cash equivalents, accounts receivable, bank overdrafts, accounts payable,
accrued expenses and current portion of long term debt approximate their fair values due to the relatively short term nature of
these instruments. The fair value of the Company’s senior unsecured notes was determined using Level 2 inputs based on
quoted market prices and the Company believes that the carrying value of its other long-term debt and certain long-term
liabilities approximate fair value.
The carrying value and fair value of the Company’s long-term debt as of December 28, 2013 and December 29, 2012,
respectively, are as follows:
December 28,
2013
December 29,
2012
Carrying Value $ 1,052,668 $ 604,461
Fair Value $ 1,086,000 $ 655,000
Non-Financial Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis
Certain assets and liabilities are measured at fair value on a nonrecurring basis; that is, the assets and liabilities are not
measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (e.g., when there is
evidence of impairment). At December 28, 2013, the Company had no significant non-financial assets or liabilities that had
been adjusted to fair value subsequent to initial recognition.