Henry Schein 2012 Annual Report Download - page 90
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Please find page 90 of the 2012 Henry Schein annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(in thousands, except per share data)
80
Note 8 – Fair Value Measurements – (Continued)
As of December 29, 2012, we have estimated the value of our closed-end municipal bond fund ARS portfolio
and our student loan backed ARS portfolio based upon a discounted cash flow model, including assumptions for
estimated interest rates, timing and amount of cash flows and expected holding period for the ARS portfolio, in
accordance with applicable authoritative guidance. The balance of our recorded cumulative temporary impairment
related to our ARS as of December 29, 2012 and December 31, 2011 was $0.5 million and $1.2 million,
respectively. The temporary impairment has been recorded as part of Accumulated other comprehensive income
within the equity section of our consolidated balance sheet.
Debt
The fair value of our debt, which approximates the carrying value of our debt, as of December 29, 2012 and
December 31, 2011 was estimated at $533.3 million and $441.4 million, respectively. Factors that we considered
when estimating the fair value of our debt include market conditions, prepayment and make-whole provisions,
liquidity levels in the private placement market, variability in pricing from multiple lenders and term of debt.
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 foreign currency exchange rates.
Our derivative instruments primarily include foreign currency forward 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 market rates, which is based on market rates for
comparable transactions and are classified within Level 2 of the fair value hierarchy.
Redeemable noncontrolling interests
Some minority shareholders in certain of our subsidiaries have the right, at certain times, to require us to
acquire their ownership interest in those entities at fair value based on third-party valuations. The future value of
redeemable noncontrolling interests is subject to expected earnings and, if such earnings are not achieved, the value
of the redeemable noncontrolling interests might be impacted. The noncontrolling interests subject to put options
are adjusted to their estimated redemption amounts each reporting period with a corresponding adjustment to
Additional paid-in capital. Future reductions in the carrying amounts are subject to a “floor” amount that is equal
to the fair value of the redeemable noncontrolling interests at the time they were originally recorded. The recorded
value of the redeemable noncontrolling interests cannot go below the floor level. These adjustments do not impact
the calculation of earnings per share. The values for Redeemable noncontrolling interests are classified within
Level 3 of the fair value hierarchy. The details of the changes in Redeemable noncontrolling interests are presented
in Note 6.