Pep Boys 2011 Annual Report Download - page 118

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THE PEP BOYS—MANNY, MOE & JACK AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Years ended January 29, 2011, January 30, 2010 and January 31, 2009
NOTE 16—FAIR VALUE MEASUREMENTS (Continued)
Fair Value Measurements
Fair Value at Using Inputs Considered as
(dollar amounts in thousands) January 29,
Description 2011 Level 1 Level 2 Level 3
Assets:
Cash and cash equivalents ........... $90,240 $90,240 $ — $ —
Collateral investments(a) ............ 9,638 9,638 — —
Deferred compensation assets(a) ....... 3,037 — 3,037 —
Liabilities:
Current liabilities
Contingent consideration(b) . . . . . . . . . . 288 — — 288
Other liabilities
Derivative liability(c) ............... 16,424 — 16,424
Contingent consideration(c) .......... 1,224 — — 1,224
(a) included in other long-term assets
(b) included in accrued liabilities
(c) included in other long-term liabilities
The following represents the impact of fair value accounting for the Company’s derivative liability
on its consolidated financial statements:
Amount of Gain/
(Loss) in
Other Comprehensive Amount of Loss
Income Earnings Statement Recognized in Earnings
(Effective Portion) Classification (Effective Portion)
(dollar amounts in thousands)
Fiscal 2011 .......... $2,428 Interest expense $6,970
Fiscal 2010 . . . . . . . . . . $ (14) Interest expense $6,905
Non-financial assets measured at fair value on a non-recurring basis:
Certain assets are measured at fair value on a non-recurring basis, that is, the assets are subject to
fair value adjustments in certain circumstances such as when there is evidence of impairment. In
response to a continuing weak real estate market, the Company reduced its prices for certain properties
held for disposal and recorded impairment charges of $0.2 million and $3.1 million in fiscal 2010 and
2009, respectively. The fair values were based on selling prices of comparable properties, net of
expected disposal costs. These measures of fair value, and related inputs, are considered level 2
measures under the fair value hierarchy. Measurements of assets held and used are discussed in
Note 11, ‘‘Store Closures and Asset Impairments.’’
NOTE 17—LEGAL MATTERS
The Company is party to various actions and claims arising in the normal course of business. The
Company believes that amounts accrued for awards or assessments in connection with all such matters
are adequate and that the ultimate resolution of these matters will not have a material adverse effect
74