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Fair Value Measurement
 12 Months Ended
Dec. 27, 2011
Fair Value Measurement  
Fair Value Measurement

(13) Fair Value Measurement

        ASC 820, Fair Value Measurements and Disclosures ("ASC 820"), establishes a framework for measuring fair value and expands disclosures about fair value measurements. ASC 820 establishes a three-level hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs in measuring fair value. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability on the measurement date.

Level 1

   Inputs based on quoted prices in active markets for identical assets.

Level 2

   Inputs other than quoted prices included within Level 1 that are observable for the assets, either directly or indirectly.

Level 3

   Inputs that are unobservable for the asset.

        There were no transfers among levels within the fair value hierarchy during the year ended December 27, 2011.

        The following table presents the fair values for our financial assets and liabilities measured on a recurring basis:

 
   Fair Value Measurements  
 
   Level   December 27, 2011   December 28, 2010  

Interest rate swaps

     2   $ (4,247 ) $ (2,178 )

Deferred compensation plan—assets

     1     6,748     5,475  

Deferred compensation plan—liabilities

     1     (6,714 )   (5,469 )
                 

Total

         $ (4,213 ) $ (2,172 )
                 

        The fair value of our interest rate swaps were determined based on the present value of expected future cash flows considering the risks involved, including nonperformance risk, and using discount rates appropriate for the duration. See note 15 for discussion of our interest rate swaps.

        The Second Amended and Restated Deferred Compensation Plan of Texas Roadhouse Management Corp., as amended, (the "Deferred Compensation Plan") is a nonqualified deferred compensation plan which allows highly compensated employees to defer receipt of a portion of their compensation and contribute such amounts to one or more investment funds held in a rabbi trust. We report the accounts of the rabbi trust in our consolidated financial statements. These investments are considered trading securities and are reported at fair value based on third-party broker statements. The realized and unrealized holding gains and losses related to these investments, as well as the offsetting compensation expense, are recorded in general and administrative expense on the consolidated statements of income.

        The following table presents the fair values for our financial assets and liabilities measured on a nonrecurring basis:

 
   Fair Value Measurements    
  
 
   Level   December 27, 2011   December 28, 2010   Total losses  

Long-lived assets held for sale

     2   $ 1,398   $ 1,598   $ 200  

Long-lived assets held for use

     2     1,017     1,117     —  

Goodwill

     3     992     1,830     838  
                     

Total

         $ 3,407   $ 4,545   $ 1,038  
                     

        Long-lived assets held for sale include land and building and are valued using Level 2 inputs, primarily independent third party appraisal. These assets are included in Property and equipment in our consolidated balance sheets as we do not expect to sell these assets in the next 12 months. Cost to market and/or sell the assets are factored into the estimates of fair value. During the 52 weeks ended December 27, 2011, long-lived assets held for sale with a carrying amount of $1.6 million were written down to their fair value of $1.4 million, resulting in a loss of $0.2 million, which is included in Impairment and closures in our consolidated statements of income.

        Long-lived assets held for use include building, equipment and furniture and fixtures and are valued using Level 2 inputs, primarily an independent third party appraisal. These assets are included in Property and equipment in our consolidated balance sheets. During the 52 weeks ended December 29, 2009, long-lived assets held for use with a carrying amount of $2.5 million were written down to their fair value of $1.2 million, resulting in a loss of $1.3 million, which is included in Impairment and closures in our consolidated statements of income. Depreciation expense of $0.1 million was recorded on these assets during the 52 weeks ended December 27, 2011.

        As of December 27, 2011 and December 28, 2010, goodwill in the table above relates to two and three underperforming restaurants, respectively, in which the carrying value of the associated goodwill was reduced to fair value, based on their historical results and anticipated future trends of operations. These charges are included in Impairment and closures in our consolidated statements of income. For further discussion of impairment charges, see note 14.

        At December 27, 2011 and December 28, 2010, the fair value of cash and cash equivalents, accounts receivable and accounts payable approximated their carrying value based on the short-term nature of these instruments. The fair value of our long-term debt is estimated based on the current rates offered to us for instruments of similar terms and maturities. The carrying amounts and related estimated fair values for our debt is as follows:

 
   December 27, 2011   December 28, 2010  
 
   Carrying
Amount 		  Fair Value   Carrying
Amount 		  Fair Value  

Installment loans

   $ 1,679   $ 2,044   $ 1,865   $ 2,324  

Revolver

     60,000     60,000     50,000     50,000