Fair Value of Financial Instruments

12 Months Ended

Dec. 25, 2013

Fair Value of Assets and Liabilities Measured on a Recurring and Nonrecurring Basis

Financial assets and liabilities measured at fair value on a recurring basis are summarized below:



	Total		Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Valuation Technique
	(In thousands)
Fair value measurements as of December 25, 2013:
Deferred compensation plan investments (1)	$	8,168	$	8,168	$	—	$	—	market approach
Interest rate swaps (2)	$	3,032	—		3,032		—		income approach
Interest rate caps (2)	$	11	$	—	$	11	$	—	income approach
Total	$	11,211	$	8,168	$	3,043	$	—

Fair value measurements as of December 26, 2012:
Deferred compensation plan investments (1)	$	6,371	$	6,371	$	—	$	—	market approach
Interest rate caps (2)	$	8	$	—	$	8	$	—	income approach
Total	$	6,379	$	6,371	$	8	$	—


(1)	The fair values of our deferred compensation plan investments are based on the closing market prices of the participants’ elected investments.


(2)	The fair values of our interest rate swaps and interest rate caps are based upon Level 2 inputs which include valuation models as reported by our counterparties. The key inputs for the valuation models are quoted market prices, interest rates and forward yield curves. See Note 10 for details on the interest rate swaps and interest rate caps.

See Note 11 for the disclosures related to the fair value of our pension plan assets.

Those assets and liabilities measured at fair value on a nonrecurring basis are summarized below:



	Total		Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Valuation Technique
	(In thousands)
Fair value measurements as of December 25, 2013:
Assets held and used (1)	$	1,198	$	—	$	—	$	1,198	income approach
Total	$	1,198	$	—	$	—	$	1,198

Fair value measurements as of December 26, 2012:
Assets held and used (1)	$	228	$	—	$	—	$	228	income approach
Total	$	228	$	—	$	—	$	228

(1)

As of December 25, 2013 and December 26, 2012, impaired assets related to underperforming restaurants were written down to their fair value. Impairment charges of $4.8 million and $0.7 million were recognized as a component of operating (gains), losses and other charges, net in our Consolidated Statements of Income for the years ended December 25, 2013 and December 26, 2012, respectively. To determine fair value, we used the income approach, which assumes that the future cash flows reflect current market expectations. These fair value measurements require significant judgment using Level 3 inputs, such as discounted cash flows from operations, which are not observable from the market, directly or indirectly.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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