AutoZone 2013 Annual Report Download - page 118

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56
The change in the fair value of the contingent consideration liability is summarized as follows:
(in thousands)
Fiscal Year
Ended
August 31, 2013
Fair value – beginning of period ............................................................................................. $ –
Fair value of contingent consideration issued during the period ............................................ (22,678)
Change in fair value................................................................................................................ 22,436
Fair value – end of period ....................................................................................................... $ (242)
Non-Financial Assets Measured at Fair Value on a Non-Recurring Basis
Non-financial assets are required to be measured at fair value on a non-recurring basis in certain circumstances,
including the event of impairment. The assets could include assets acquired in an acquisition as well as property,
plant and equipment that are determined to be impaired. During the fourth quarter of fiscal 2013, the Company
recorded a goodwill impairment charge of $18.3 million related to the acquisition of AutoAnything and an
impairment charge of $4.1 million of AutoAnything’s trade name in order to record these assets at fair value. The
fair value remeasurements are based on significant inputs not observable in the market and thus represent a Level
3 measurement as defined in the fair value hierarchy. See “Note N – Goodwill and Intangibles” for further
discussion. During fiscal 2013 and fiscal 2012, the Company did not have any other significant non-financial
assets measured at fair value on a non-recurring basis in periods subsequent to initial recognition.
Financial Instruments not Recognized at Fair Value
The Company has financial instruments, including cash and cash equivalents, accounts receivable, other current
assets and accounts payable. The carrying amounts of these financial instruments approximate fair value because
of their short maturities. The fair value of the Company’s debt is disclosed in “Note I – Financing.”
Note F – Marketable Securities
The Company’s basis for determining the cost of a security sold is the “Specific Identification Model”. Unrealized
gains (losses) on marketable securities are recorded in Accumulated other comprehensive loss. The Company’s
available-for-sale marketable securities consisted of the following:
August 31, 2013
(in thousands)
Amortized
Cost
Basis
Gross
Unrealized
Gains
Gross
Unrealized
Losses Fair Value
Corporate securities ........................................
.
$ 27,803 $ 148 $ (67) $ 27,884
Government bonds .........................................
.
21,372 18 (67) 21,323
Mortgage-backed securities ............................
.
7,198 24 (138) 7,084
Asset-backed securities and other ...................
.
25,825 50 (5) 25,870
$ 82,198 $ 240 $ (277) $ 82,161
August 25, 2012
(in thousands)
Amortized
Cost
Basis
Gross
Unrealized
Gains
Gross
Unrealized
Losses Fair Value
Corporate securities ........................................
.
$ 26,215 $ 307 $ – $ 26,522
Government bonds .........................................
.
20,790 117 (1) 20,906
Mortgage-backed securities ............................
.
4,369 17 (19) 4,367
Asset-backed securities and other ...................
.
24,299 120 – 24,419
$ 75,673 $ 561 $ (20) $ 76,214
The debt securities held at August 31, 2013, had effective maturities ranging from less than one year to
approximately 3 years. The Company did not realize any material gains or losses on its sale of marketable
securities during fiscal 2013, fiscal 2012, or fiscal 2011.
10-K