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Note 12. Financial Instruments and Fair Value Measurements
 3 Months Ended
Mar. 31, 2013
Fair Value Disclosures [Text Block]
12.  Financial Instruments and Fair Value Measurements

Overview

Estimates of fair value for financial assets and liabilities are based on the framework established in the accounting guidance for fair value measurements. The framework defines fair value, provides guidance for measuring fair value, and requires certain disclosures. The framework discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow) and the cost approach (cost to replace the service capacity of an asset or replacement cost). The framework utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:

 
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Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.

 
·
Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

 
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Level 3: Unobservable inputs that reflect the reporting entity’s own assumptions.

The Company’s financial instruments consist of cash and cash equivalents, notes and interest receivable and other long-term assets related to Indian casino projects, cost method investments, accounts payable and contract acquisition costs payable.

For the Company’s cash and cash equivalents, accounts payable and current portion of contract acquisition costs payable, the carrying amounts approximate fair value because of the short duration of these financial instruments.

The following table shows certain of the Company’s financial instruments disclosed at estimated fair value (in thousands):

   
March 31, 2013
 
 
 
 
Carrying Value, net of Current Portion
   
Estimated Fair Value
 
Fair Value Hierarchy
Assets
             
Shingle Springs notes and interest receivable
  $ 39,503     $ 53,245  
Level 3
Other assets related to Indian casino projects
    3,680       3,180   Level 3

   
December 30, 2012
 
 
 
 
Carrying Value, net of Current Portion
   
Estimated Fair Value
 
 
Fair Value Hierarchy
Assets
             
Shingle Springs notes and interest receivable
  $ 38,247     $ 49,920  
Level 3
Other assets related to Indian casino projects
    4,786       4,011  
Level 3

Shingle Springs notes and interest receivable - Management estimates the fair value of the notes and interest receivable from the Shingle Springs Tribe as of March 31, 2013 to be approximately $53.2 million using a discount rate of 11.8% and a remaining estimated term of 94 months. Management estimated the fair value of the notes and interest receivable from the Shingle Springs Tribe as of December 30, 2012, to be approximately $49.9 million using a discount rate of 12.8% and a remaining estimated term of 97 months.

Other assets related to Indian casino projects - These assets include financial instruments related to deferred management fees and interest due from the Shingle Springs Tribe and amounts due from Mr. Kevin M. Kean (see note 4, Intangible and Other Assets Related to Indian Casino Projects). The Company estimates the fair value of other assets related to the Shingle Springs Tribe and Mr. Kean to be $3.2 million as of March 31, 2013 using a discount rate of 19.5%.  Management estimated the fair value of these financial instruments related to the Shingle Springs Tribe and Mr. Kean to be $4.0 million as of December 30, 2012 using a discount rate of 19.5%.

Investment in unconsolidated investee - The fair value of the Company’s investment in unconsolidated investee was not estimated as of March 31, 2013 or December 30, 2012, as there were no events or changes in circumstances that may have a significant adverse effect on the fair value of the investment, and Lakes’ management determined that it was not practicable to estimate the fair value of the investment (see note 5, Investment in Unconsolidated Investee).

Contract acquisition costs payable - The carrying amount of the liability approximates its estimated fair value of $4.3 million and $4.6 million as of March 31, 2013 and December 30, 2012, respectively (see note 8, Contract Acquisition Costs Payable).