Henry Schein 2009 Annual Report Download - page 85

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HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(In thousands, except share and per share data)
73
Note 6 – Fair Value Measurements – (Continued)
As of December 26, 2009, we have classified our closed-end municipal bond funds, as well as our
student loan portfolios, as Level 3 within the fair value hierarchy due to the lack of observable inputs and
the absence of significant refinancing activity.
Based upon the information currently available and the use of a discounted cash flow model in
accordance with applicable authoritative guidance, our previously recorded cumulative temporary
impairment at December 27, 2008 of $2.0 million related to our closed-end municipal bond funds and our
student loan portfolios was increased to $2.2 million during the year ended December 26, 2009. The
temporary impairment has been recorded as part of Accumulated other comprehensive income within the
equity section of our consolidated balance sheet.
Money market fund
As of December 26, 2009, we had an investment of approximately $2.0 million ($1.7 million net of
reserves) invested in the Reserve Primary Fund. This money market fund included in its holdings
commercial paper of Lehman Brothers. As a result of the Chapter 11 bankruptcy of Lehman Brothers
Holdings, Inc., the net asset value of the fund decreased below $1.00. Currently, this fund is in the process
of being liquidated. During 2009, we have received approximately $3.3 million of distributions from the
Reserve Primary Fund. As of December 26, 2009, the value of our holdings in this fund are included
within Prepaid expenses and other in our consolidated balance sheets and as Level 3 within the fair value
hierarchy, due to the lack of observable inputs and the absence of trading activity.
Accounts payable and accrued expenses
Financial liabilities with carrying values approximating fair value include accounts payable and other
accrued liabilities. The carrying value of these financial instruments approximates fair value due to their
short maturities or variable interest rates that approximate current market rates.
Debt
The fair value of our debt is estimated based on quoted market prices for our traded debt and on
market prices of similar issues for our private debt. The fair value of our debt as of December 26, 2009
and December 27, 2008 was estimated at $307.5 million and $426.8 million.
Derivative contracts
Derivative contracts are valued using quoted market prices and significant other observable and
unobservable inputs. We use derivative instruments to minimize our exposure to fluctuations in interest
rates and foreign currency exchange rates. Our derivative instruments primarily include interest rate swap
agreements related to our long-term fixed rate debt and foreign currency forward and swap agreements
related to intercompany loans and certain forecasted inventory purchase commitments with suppliers.
The fair values for the majority of our foreign currency derivative contracts are obtained by comparing
our contract rate to a published forward price of the underlying currency, which is based on market rates
for comparable transactions and are classified within Level 2 of the fair value hierarchy.