NOTE 13

Fair value measurement

The company measures and records in the accompanying consolidated financial statements certain assets and liabilities at fair value. ASC Topic 820, “Fair Value Measurements and Disclosures,” establishes a fair value hierarchy for those instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and the company’s own assumptions (unobservable inputs). The hierarchy consists of three levels:

Level 1—Quoted market prices in active markets for identical assets or liabilities;

Level 2—Inputs other than Level 1 inputs that are either directly or indirectly observable; and

Level 3—Unobservable inputs developed using estimates and assumptions developed by the company, which reflect those that a market participant would use.

The financial instruments measured at fair value in the accompanying consolidated balance sheets consist of the following:

Company Owned Assets

In thousands of dollars

Fair value measurement as of Dec. 25, 2011

		September 30,		September 30,		September 30,		September 30,
	Level 1		Level 2		Level 3		Total
Assets:
Employee compensation related investments	$	17,224	$	—	$	—	$	17,224
Sundry investments		26,162		—		—		26,162

Total Assets	$	43,386	$	—	$	—	$	43,386

Liabilities:
Contingent consideration payable	$	—	$	—	$	15,808	$	15,808

Total Liabilities	$	—	$	—	$	15,808	$	15,808

Under certain acquisition agreements entered into during 2011, the company has agreed to pay the sellers earn-outs based on the financial performance of the businesses acquired. Contingent consideration payable in the table above represents the estimated fair value of future earn-outs payable under such agreements. The fair value of the contingent payments was measured based on the present value of the consideration expected to be transferred, using a discount rate commensurate with the risks associated with the cash flows. The company recognized a credit to expense of $3.8 million in its results for the year-ended December 25, 2011 related to the updating of the fair value measurement of its contingent considerations.

In thousands of dollars

Fair value measurement as of Dec. 26, 2010

		September 30,		September 30,		September 30,		September 30,
	Level 1		Level 2		Level 3		Total
Assets:
Employee compensation related investments	$	15,976	$	—	$	—	$	15,976
Sundry investments		26,902		—		—		26,902

Total Assets	$	42,878	$	—	$	—	$	42,878

During the second quarter of 2010, the company sold auction rate securities held by CareerBuilder, receiving proceeds of $28.4 million and recording a gain of $2.1 million.

The following tables set forth by level within the fair value hierarchy the fair values of the company’s pension plan assets:

Pension Plan Assets/Liabilities

In thousands of dollars

Fair value measurement as of Dec. 25, 2011^(a)

		September 30,			September 30,			September 30,			September 30,
	Level 1			Level 2			Level 3			Total
Assets:
Fixed Income
U.S. government-related securities	$	—		$	50,582		$	—		$	50,582
Mortgage backed securities		—			165,651			1,271			166,922
Other government bonds		—			38,246			1,441			39,687
Corporate bonds		—			135,635			2,070			137,705
Corporate stock		613,976			999			—			614,975
Real estate		—			—			93,620			93,620
Interest in common/collective trusts
Equities		—			434,693			—			434,693
Fixed income		24,632			348,736			—			373,368
Interest in reg. invest. companies		92,840			19,927			—			112,767
Interest in 103-12 investments		—			79,432			—			79,432
Partnership/joint venture interests		—			—			128,121			128,121
Hedge funds		—			76,801			156,016			232,817
Derivative contracts		—			53,591			235			53,826

Total	$	731,448		$	1,404,293		$	382,774		$	2,518,515


	Level 1			Level 2			Level 3			Total
Liabilities:
Derivative liabilities	$	(15	)	$	(54,139	)	$	(2,517	)	$	(56,671	)
Liability to purchase
U.S. government and other securities	$	—		$	(71,876	)	$	—		$	(71,876	)

Total	$	(15	)	$	(126,015	)	$	(2,517	)	$	(128,547	)

Cash and other		18,135			665			—		$	18,800

Total net fair value of plan assets	$	749,568		$	1,278,943		$	380,257		$	2,408,768

(a)

The company uses a Dec. 31 measurement date for its retirement plans.

In thousands of dollars

Fair value measurement as of Dec. 26, 2010^(a)

		September 30,		September 30,		September 30,		September 30,
	Level 1		Level 2		Level 3		Total
Assets:
Fixed Income
U.S. government-related securities	$	—	$	99,454	$	—	$	99,454
Mortgage backed securities		—		83,070		—		83,070
Other government bonds		—		30,841		1,526		32,367
Corporate bonds		—		169,410		5,896		175,306
Corporate stock		676,777		1,338		—		678,115
Real estate		—		—		90,344		90,344
Interest in common/collective trusts
Equities		461		342,707		—		343,168
Fixed income		59,544		318,473		—		378,017
Interest in reg. invest. companies		208,023		5,398		—		213,421
Interest in 103-12 investments		—		106,947		—		106,947
Partnership/joint venture interests		—		—		117,698		117,698
Hedge funds		—		77,851		163,349		241,200
Derivative contracts		500		84,641		104		85,245

Total	$	945,305	$	1,320,130	$	378,917	$	2,644,352

		September 30,			September 30,			September 30,			September 30,
	Level 1			Level 2			Level 3			Total
Liabilities:
Derivative liabilities	$	(2,521	)	$	(87,260	)	$	(453	)	$	(90,234	)

Total	$	(2,521	)	$	(87,260	)	$	(453	)	$	(90,234	)

Cash and other		12,885			21,725			—		$	34,610

Total net fair value of plan assets	$	955,669		$	1,254,595		$	378,464		$	2,588,728

(a)

The company uses a Dec. 31 measurement date for its retirement plans.

Items included in “Cash and other” in the table above primarily consist of amounts categorized as cash and cash equivalents and pending purchases and sales of securities.

Valuation methodologies used for assets and liabilities measured at fair value are as follows:

U.S. government-related securities are treasury bonds, bills and notes that are primarily obligations to the U.S. Treasury. Values are obtained from industry vendors who use various pricing models or quotes for identical or similar securities. Mortgage-backed securities are typically not actively quoted. Values are obtained from industry vendors who use various pricing models or use quotes for identical or similar securities. Investments categorized in Level 3 are thinly traded with values derived using unobservable inputs.

Other government and corporate bonds are mainly valued based on institutional bid evaluations using proprietary models, using discounted cash flow models or models that derive prices based on similar securities. Corporate bonds categorized in Level 3 are primarily from distressed issuers for whom the values represent an estimate of recovery in a potential or actual bankruptcy situation.

Corporate stock is valued primarily at the closing price reported on the active market on which the individual securities are traded.

Investments in direct real estate have been valued by an independent qualified valuer in the U.K. using a valuation approach that capitalizes any current or future income streams at an appropriate multiplier. Investments in real estate funds are mainly valued utilizing the net asset valuations provided by the underlying private investment companies.

Interest in common/collective trusts and interest in 103-12 investments are valued using the net asset value as provided monthly by the fund family or fund company. Shares in the common/collective trusts are generally redeemable upon request. The investments classified in Level 1 are money market funds with a constant net asset value.

Two of these investments are fixed income funds which use individual subfunds to efficiently add a representative sample of securities in individual market sectors to the portfolio. These funds are generally redeemable with a short-term written or verbal notice. Also included is a fund that invests in a select portfolio of large cap domestic stocks perceived to have superior growth characteristics. Shares in this fund are generally redeemable on any business day, upon two-day notice. There are no unfunded commitments related to these types of funds.

Interest in registered investment companies is valued using the published net asset values as quoted through publicly available pricing sources. The investments in Level 2 are proprietary funds of the individual fund managers and are not publicly quoted.

Investments in partnerships and joint venture interests are valued based on an assessment of each underlying investment, considering items such as expected cash flows, changes in market outlook and subsequent rounds of financing. These investments are included in Level 3 of the fair value hierarchy because exit prices tend to be unobservable and reliance is placed on the above methods. Certain of the partnerships are general leveraged buyout funds and others are venture capital funds. Also included within the partnership portfolio is a fund formed to invest in the leveraged loan market. Interest in partnership investments cannot be redeemed. Instead, distributions are received as the underlying assets of the funds are liquidated. It is estimated that the underlying assets of the funds will be liquidated over approximately 5 to 15 years. There are future funding commitments of $33 million as of Dec. 25, 2011 and $54 million as of Dec. 26, 2010.

Investments in hedge funds are valued at the net asset value as reported by the fund managers. Within this category is a fund of hedge funds whose strategy is to produce a return that is uncorrelated with market movements. Certain of the other funds categorized as hedge funds were formed to invest in mortgage and credit trading opportunities while others were formed to invest in the leveraged loan market. Shares in the hedge funds are generally redeemable twice a year or on the last business day of each quarter with at least 60 days written notice subject to potential 5% holdback. There are no unfunded commitments related to the hedge funds.

Derivatives primarily consist of forward and swap contracts. Forward contracts are valued at the spot rate, plus or minus forward points between the valuation date and maturity date. Swaps are valued at the mid-evaluation price using discounted cash flow models. Items in Level 3 are valued based on the market values of other securities for which they represent a synthetic combination.

Liability to purchase U.S. government and other securities relates to buying and selling contracts in federal agency securities that have not yet been opened up for public trading. In these instances the investment manager has sold the securities prior to owning them, resulting in a negative asset position. These securities are valued in the same manner as those noted above in U.S. government-related securities.

The tables below set forth a summary of changes in the fair value of the company’s pension plan assets and liabilities, categorized as Level 3, for the fiscal year ended Dec. 25, 2011 and Dec. 26, 2010:

Pension Plan Assets/Liabilities

In thousands of dollars

For the year-ended Dec. 25, 2011

		September 30,			September 30,			September 30,			September 30,			September 30,			September 30,
				Actual Return on Plan Assets
	Balance at			Relating to			Relating to			Purchases,			Transfers in
	beginning			assets still held			assets sold during			sales, and			and/or out			Balance at
	of year			at report date			the period			settlements			of Level 3⁽¹⁾			end of year
Assets:
Fixed Income
Mortgage-backed securities	$	—		$	(11	)	$	—		$	1,282		$	—		$	1,271
Other government bonds		1,526			65			—			(150	)		—			1,441
Corporate bonds		5,896			(133	)		7			205			(3,905	)		2,070
Real estate		90,344			(503	)		—			3,779			—			93,620
Partnership/joint venture interests		117,698			20,706			—			(10,283	)		—			128,121
Hedge funds		163,349			(1,632	)		(150	)		(7,151	)		1,600			156,016
Derivative contracts		104			(265	)		(76	)		(28	)		500			235

*Total*	$	378,917		$	18,227		$	(219	)	$	(12,346	)	$	(1,805	)	$	382,774

Liabilities:
Derivative liabilities	$	(453	)	$	(8	)	$	(733	)	$	1,183		$	(2,506	)	$	(2,517	)

(1)	The company’s policy is to recognize transfers in and transfers out as of the beginning of the reporting period.

Pension Plan Assets/Liabilities (continued)

In thousands of dollars

For the year-ended Dec. 26, 2010

		September 30,			September 30,			September 30,			September 30,			September 30,			September 30,
				Actual Return on Plan Assets
	Balance at			Relating to			Relating to			Purchases,			Transfers in
	beginning			assets still held			assets sold during			sales, and			and/or out			Balance at
	of year			at report date			the period			settlements			of Level 3⁽¹⁾			end of year
Assets:
Fixed Income
Mortgage-backed securities	$	3,437		$	—		$	(17	)	$	(3,420	)	$	—		$	—
Other government bonds		—			9			—			1,517			—			1,526
Corporate bonds		15,191			466			7			(7,816	)		(1,952	)		5,896
Real estate		91,765			670			—			(2,091	)		—			90,344
Partnership/joint venture interests		95,965			22,273			—			(5,767	)		5,227			117,698
Hedge funds		173,559			17,032			—			(27,242	)		—			163,349
Derivative contracts		1,865			(228	)		(89	)		(1,444	)		—			104

*Total*	$	381,782		$	40,222		$	(99	)	$	(46,263	)	$	3,275		$	378,917

Liabilities:
Derivative liabilities	$	(3	)	$	(453	)	$	11		$	(8	)	$	—		$	(453	)

(1)	The company’s policy is to recognize transfers in and transfers out as of the beginning of the reporting period.

The fair value of the company’s total long-term debt, determined based on the bid and ask quotes for the related debt, totaled $1.9 billion and $2.5 billion at Dec. 25, 2011 and Dec. 26, 2010, respectively. As described in Note 7, the company recognized the debt resulting from the May 2009 private exchange offer at fair value in accordance with the modifications and extinguishments requirements of ASC Topic 470, “Debt.”

Certain assets are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments only in certain circumstances (for example, when there is evidence of impairment).

The following table summarizes the nonfinancial assets measured at fair value on a nonrecurring basis in the accompanying consolidated balance sheet as of Dec. 26, 2010 (none for Dec. 25, 2011):

Non-Financial Assets

In thousands of dollars

Fair value measurement as of Dec. 26, 2010

		September 30,		September 30,		September 30,		September 30,
	Level 1		Level 2		Level 3		Total:
Other intangible assets –
Quarter 4	$	—	$	—	$	9,266	$	9,266