Pep Boys 2012 Annual Report Download - page 111

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THE PEP BOYS—MANNY, MOE & JACK AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Years ended February 2, 2013, January 28, 2012 and January 29, 2011
NOTE 16—FAIR VALUE MEASUREMENTS (Continued)
Assets and Liabilities that are Measured at Fair Value on a Recurring Basis:
The Company’s long-term investments, interest rate swap agreements and contingent consideration
are measured at fair value on a recurring basis. The information in the following paragraphs and tables
primarily addresses matters relative to these assets and liabilities.
Cash equivalents:
Cash equivalents, other than credit card receivables, include highly liquid investments with an
original maturity of three months or less at acquisition. The Company carries these investments at fair
value. As a result, the Company has determined that its cash equivalents in their entirety are classified
as a Level 1 measure within the fair value hierarchy.
Collateral investments:
Collateral investments include monies on deposit that are restricted. The Company carries these
investments at fair value. As a result, the Company has determined that its collateral investments are
classified as a Level 1 measure within the fair value hierarchy.
Deferred compensation assets:
Deferred compensation assets include variable life insurance policies held in a Rabbi Trust. The
Company values these policies using observable market data. The inputs used to value the variable life
insurance policy fall within Level 2 of the fair value hierarchy.
Derivative liability:
The Company has two interest rate swaps designated as cash flow hedges on $100.0 million of the
Company’s Senior Secured Term Loan facility that expires in October 2018. The Company values this
swap using observable market data to discount projected cash flows and for credit risk adjustments.
The inputs used to value derivatives fall within Level 2 of the fair value hierarchy.
The following table provides information by level for assets and liabilities that are measured at fair
value, on a recurring basis.
Fair Value Measurements
Fair Value at Using Inputs Considered as
(dollar amounts in thousands) February 2,
Description 2013 Level 1 Level 2 Level 3
Assets:
Cash and cash equivalents ............ $59,186 $59,186 $ — $—
Collateral investments(a) ............. 20,929 20,929 — —
Deferred compensation assets(a) ....... 3,834 — 3,834 —
Liabilities:
Other liabilities
Derivative liability(b) ................ 1,567 — 1,567 —
(a) included in other long-term assets
72