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NOTE 16—FAIR VALUE MEASUREMENTS
Fair value refers to the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the market in which the entity transacts. The inputs used to develop these fair value measurements are established in a hierarchy, which ranks the quality and reliability of the information used to determine the fair values. The fair value classification is based on levels of inputs. Assets and liabilities that are carried at fair value are classified and disclosed in one of the following categories:
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Level 1: Quoted market prices in active markets for identical assets or liabilities.
Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data.
Level 3: Unobservable inputs that are not corroborated by market data.
Recurring Fair Value Measurements. The following table summarizes the fair value hierarchy of the Company's financial assets carried at fair value on a recurring basis as of March 29, 2012:
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Fair Value Measurements at March 29, 2012 Using |
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(In thousands) |
|
Total Carrying
Value at
March 29, 2012 |
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Quoted prices in
active market
(Level 1) |
|
Significant other
observable inputs
(Level 2) |
|
Significant
unobservable inputs
(Level 3) |
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Other long-term assets: |
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Money Market Mutual Funds |
|
$ |
72 |
|
$ |
72 |
|
$ |
— |
|
$ |
— |
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Equity securities, available-for-sale: |
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RealD Inc. Common Stock |
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15,945 |
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|
15,945 |
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|
— |
|
|
— |
|
|
Mutual Fund Large U.S. Equity |
|
|
2,186 |
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|
2,186 |
|
|
— |
|
|
— |
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|
Mutual Fund Small/Mid U.S. Equity |
|
|
332 |
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|
332 |
|
|
— |
|
|
— |
|
|
Mutual Fund International |
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|
146 |
|
|
146 |
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|
— |
|
|
— |
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|
Mutual Fund Broad U.S. Equity |
|
|
34 |
|
|
34 |
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|
— |
|
|
— |
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Mutual Fund Balance |
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|
79 |
|
|
79 |
|
|
— |
|
|
— |
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Mutual Fund Fixed Income |
|
|
267 |
|
|
267 |
|
|
— |
|
|
— |
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| |
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|
|
|
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Total assets at fair value |
|
$ |
19,061 |
|
$ |
19,061 |
|
$ |
— |
|
$ |
— |
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| |
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Valuation Techniques. The Company's money market mutual funds are invested in funds that seek to preserve principal, are highly liquid, and therefore are recorded on the balance sheet at the principal amounts deposited, which equals fair value. The equity securities, available-for-sale, primarily consist of common stock and mutual funds invested in equity, fixed income, and international funds and are measured at fair value using quoted market prices. The unrealized gain on the equity securities recorded in accumulated other comprehensive loss as of March 29, 2012 was approximately $6,642,000. See Note 7—Investments, for further information regarding RealD Inc. common stock and the related other-than-temporary impairment.
The following table summarizes the fair value hierarchy of the Company's financial assets carried at fair value on a recurring basis as of March 31, 2011:
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Fair Value Measurements at March 31, 2011 Using |
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|
(In thousands) |
|
Total Carrying
Value at
March 31, 2011 |
|
Quoted prices in
active market
(Level 1) |
|
Significant other
observable inputs
(Level 2) |
|
Significant
unobservable inputs
(Level 3) |
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Cash and Equivalents: |
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Money Market Mutual Funds |
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$ |
77 |
|
$ |
77 |
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$ |
— |
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$ |
— |
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Restricted short-term investments |
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2,284 |
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|
2,284 |
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— |
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— |
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Other long-term assets: |
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Equity securities, available-for-sale: |
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RealD Inc. Common Stock |
|
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33,455 |
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|
33,455 |
|
|
— |
|
|
— |
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Mutual Fund Large U.S. Equity |
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|
2,532 |
|
|
2,532 |
|
|
— |
|
|
— |
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Mutual Fund Small/Mid U.S. Equity |
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|
291 |
|
|
291 |
|
|
— |
|
|
— |
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Mutual Fund International |
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121 |
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|
121 |
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— |
|
|
— |
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Mutual Fund Broad U.S. Equity |
|
|
26 |
|
|
26 |
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|
— |
|
|
— |
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Mutual Fund Balance |
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56 |
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|
56 |
|
|
— |
|
|
— |
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Mutual Fund Fixed Income |
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|
262 |
|
|
262 |
|
|
— |
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|
— |
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| |
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Total assets at fair value |
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$ |
39,104 |
|
$ |
39,104 |
|
$ |
— |
|
$ |
— |
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| |
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|
|
|
|
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Valuation Techniques. The Company's money market mutual funds are invested in funds that seek to preserve principal, are highly liquid, and therefore are recorded on the balance sheet at the principal amounts deposited, which equals fair value. The restricted short-term investments are liquid, overnight deposits which are held as collateral for the Company's letters of credits, and are measured at fair value using principal amounts deposited plus any interest paid. The equity securities, available-for-sale, primarily consist of common stock and mutual funds invested in equity, fixed income, and international funds and are measured at fair value using quoted market prices and are classified.
Nonrecurring Fair Value Measurements. The following table summarizes the fair value hierarchy of the Company's assets that were measured at fair value on a nonrecurring basis:
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Fair Value Measurements During Fiscal 2012 Using |
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|
|
(In thousands) |
|
Total Carrying
Value |
|
Quoted prices in
active market
(Level 1) |
|
Significant
other
observable
inputs (Level 2) |
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Significant
unobservable
inputs
(Level 3) |
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Total Losses |
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Property, net: |
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Property owned, net |
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$ |
99 |
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— |
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|
— |
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$ |
99 |
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$ |
285 |
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Other long-term assets: |
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Investment in a joint venture |
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2,761 |
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— |
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— |
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2,761 |
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2,742 |
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Fair Value Measurements at March 31, 2011 Using |
|
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|
|
(In thousands) |
|
Total Carrying
Value at
March 31, 2011 |
|
Quoted prices in
active market
(Level 1) |
|
Significant
other
observable
inputs (Level 2) |
|
Significant
unobservable
inputs
(Level 3) |
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Total Losses |
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Property, net: |
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Property owned, net |
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$ |
10,351 |
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|
— |
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|
— |
|
$ |
10,351 |
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$ |
11,445 |
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Intangible assets, net: |
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Favorable lease, net |
|
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— |
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— |
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— |
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— |
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1,334 |
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Other long-term assets: |
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Investment in a joint venture |
|
|
236 |
|
|
— |
|
|
— |
|
|
236 |
|
|
8,825 |
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In accordance with the provisions of the impairment of long-lived assets subsections of ASC 360-10, long-lived assets held and used that were considered impaired were written down to their fair value at December 29, 2011, March 29, 2012 and March 31, 2011 of $2,761,000, $99,000 and $10,587,000, respectively. For the fifty-two weeks ending March 29, 2012, $285,000 was recorded as an impairment of long-lived assets and $2,742,000 was recorded as a charge to equity in earnings of non-consolidated entities. For the fifty-two weeks ending March 31, 2011, $12,779,000 was recorded as an impairment of long-lived assets and $8,825,000 was recorded as a charge to equity in earnings of non-consolidated entities.
Other Fair Value Measurement Disclosures. The Company is required to disclose the fair value of financial instruments that are not recognized in the statement of financial position, for which it is practicable to estimate that value. At March 29, 2012, the carrying amount of the Company's liabilities for corporate borrowings was $2,146,534,000 and the fair value was approximately $2,146,136,000. At March 31, 2011, the carrying amount of the Company's liabilities for corporate borrowings was $2,102,540,000 and the fair value was approximately $2,212,100,000. Quoted market prices were used to value publicly held corporate borrowings. The carrying value of cash and equivalents approximates fair value because of the short duration of those instruments. |