Fair Value Measurements

12 Months Ended

Aug. 25, 2012

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value hierarchy contains three levels as follows:

Level 1 - Unadjusted quoted prices that are available in active markets for the identical assets or liabilities at the measurement date.

Level 2 - Other observable inputs available at the measurement date, other than quoted prices included in Level 1, either directly or indirectly, including:

• Quoted prices for similar assets or liabilities in active markets;

• Quoted prices for identical or similar assets in nonactive markets;

• Inputs other than quoted prices that are observable for the asset or liability; and

• Inputs that are derived principally from or corroborated by other observable market data.

Level 3 - Unobservable inputs that cannot be corroborated by observable market data and reflect the use of significant management judgment. These values are generally determined using pricing models for which the assumptions utilize management’s estimates of market participant assumptions.

Assets and Liabilities that are Measured at Fair Value on a Recurring Basis. We account for fair value measurements in accordance with ASC 820, Fair Value Measurements and Disclosures, which defines fair value, establishes a framework for measurement and expands disclosure about fair value measurement. The fair value hierarchy requires the use of observable market data when available. In instances in which the inputs used to measure fair value fall into different levels of the fair value hierarchy, the fair value measurement has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. Our assessment of the significance of a particular item to the fair value measurement in its entirety requires judgment, including the consideration of inputs specific to the asset or liability.

The following tables set forth by level within the fair value hierarchy our financial assets that were accounted for at fair value on a recurring basis at August 25, 2012 and August 27, 2011 according to the valuation techniques we used to determine their fair values:

	Fair Value at August 25, 2012		Fair Value Measurements Using Inputs Considered As
(In thousands)			Level 1		Level 2		Level 3
Long-term investments:
Student loan ARS	$	9,074	$	—	$	—	$	9,074
Assets that fund deferred compensation:
Domestic equity funds	7,924		7,924		—		—
International equity funds	957		957		—		—
Fixed income funds	487		487		—		—
Total assets at fair value	$	18,442	$	9,368	$	—	$	9,074

	Fair Value at August 27, 2011		Fair Value Measurements Using Inputs Considered As
(In thousands)			Level 1		Level 2		Level 3
Long-term investments:
Student loan ARS	$	10,627	$	—	$	—	$	10,627
Assets that fund deferred compensation:
Domestic equity funds	9,362		9,362		—		—
International equity funds	1,441		1,441		—		—
Fixed income funds	649		649		—		—
Total assets at fair value	$	22,079	$	11,452	$	—	$	10,627

The following table provides a reconciliation between the beginning and ending balances of items measured at fair value on a recurring basis in the table above that used significant unobservable inputs (Level 3):

(In thousands)	August 25, 2012			August 27, 2011
Balance at beginning of year	$	10,627		$	17,785
Net change included in other comprehensive income	(503		)	(8		)
Sales	(1,050		)	(7,150		)
Balance at the end of year	$	9,074		$	10,627

The following table presents quantitative information regarding unobservable inputs that were significant to the valuation of assets measured at fair value on a recurring basis at August 25, 2012 using Level 3 inputs:

					Range
(In thousands)	Fair Value		Valuation Technique	Unobservable Input	Low	High
Student loan ARS	$	9,074	Discounted Cash Flow	Projected ARS Yield	2.02%	2.16%
				Discount for lack of marketability	2.95%	3.45%

The following methods and assumptions were used to estimate the fair value of each class of financial instrument:

Long-term investments. Our long-term investments are comprised of our ARS as described in Note 4. Our ARS investments are classified as Level 3, as quoted prices were unavailable due to events described in Note 4. Due to limited market information, we utilized a DCF model to derive an estimate of fair value for the ARS at August 25, 2012. The assumptions used in preparing the DCF model included estimates with respect to the amount and timing of future interest and principal payments, forward projections of the interest rate benchmarks, the probability of full repayment of the principal considering the credit quality and guarantees in place and the rate of return required by investors to own such securities given the current liquidity risk associated with ARS.

Assets that fund deferred compensation. Our assets that fund deferred compensation are marketable equity securities measured at fair value using quoted market prices and primarily consist of equity-based mutual funds. They are classified as Level 1 as they are traded in an active market for which closing stock prices are readily available. These securities fund the Executive Share Option Plan (see Note 10), a deferred compensation program, and are presented as other assets in the accompanying balance sheets.

Assets and Liabilities that are measured at Fair Value on a Nonrecurring Basis. Our non-financial assets, which include goodwill, intangible assets and property and equipment, are not required to be measured at fair value on a recurring basis. However, if certain triggering events occur, or if an annual impairment test is required, we must evaluate the non-financial asset for impairment. If an impairment did occur, the asset is required to be recorded at the estimated fair value. Using Level 2 inputs, we recorded an impairment of $50,000 for our idled fiberglass facility in Hampton, Iowa during the fiscal year ended August 25, 2012 , as compared to a $605,000 impairment of this facility recorded in Fiscal 2011 (see Note 6).