Safeway 2013 Annual Report Download - page 68

Table of Contents
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
The following table presents assets and liabilities which are measured at fair value on a recurring basis at December 29, 2012 (in millions):
Fair Value Measurements
Assets: Total
Quoted prices in active
markets
for identical
assets
(Level 1)
Significant
observable
inputs
(Level 2)
Significant
unobservable
inputs
(Level 3)
Cash equivalents $96.5
$91.0
$5.5
$ —
Short-term investments (1) 44.2
14.5
29.7
—
Non-current investments (2) 33.9
—
33.9
—
Total $174.6
$105.5
$69.1
$ —
Liabilities:
Contingent consideration (3) $21.8
$ —
$ —
$21.8
Total $21.8
$ —
$ —
$21.8
(1) Included in Prepaid Expenses and Other Current Assets on the balance sheet.
(2) Included in Other Assets on the balance sheet.
(3) Included in Accrued Claims and Other Liabilities on the balance sheet.
A reconciliation of the beginning and ending balances for Level 3 liabilities for the year ended December 29, 2012 follows (in millions):
Contingent
consideration
Balance, beginning of year $26.3
Settlements (1.5)
Unrealized gains (3.0)
Balance, end of year $21.8
In determining the fair value of assets and liabilities, the Company maximizes the use of quoted market prices and minimizes the use of
unobservable inputs. The Level 1 fair values are based on quoted market values for identical assets. The fair values of Level 2 assets and
liabilities are determined using prices from pricing agencies and financial institutions that develop values based on observable inputs in
active markets. Level 3 fair values are determined from industry valuation models based on externally developed inputs.
In connection with the Company’s evaluation of long-lived assets for impairment, certain long-lived assets were measured at fair value on a
nonrecurring basis using Level 3 inputs as defined in the fair value hierarchy. Fair value of long-lived assets is determined by estimating the
amount and timing of net future cash flows (including rental expense for leased properties, sublease rental income, common area
maintenance costs and real estate taxes) and discounting them using a risk-adjusted rate of interest. Safeway estimates future cash flows
based on its experience and knowledge of the market in which the store is located and, when necessary, uses real estate brokers. During
fiscal 2013, long-lived assets with a carrying value of $63.5 million were written down to their estimated fair value of $27.9 million, resulting
in an impairment charge of $35.6 million. During fiscal 2012, long-lived assets with a carrying value of $51.8 million were written down to
their estimated fair value of $18.2 million, resulting in an impairment charge of $33.6 million.
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