Investments and Fair Value Measurements

12 Months Ended

Aug. 30, 2014

Fair Value Disclosures [Abstract]

Investments and Fair Value Measurements

Investments and 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 30, 2014 and August 31, 2013 according to the valuation techniques we used to determine their fair values:

	Fair Value at August 30, 2014		Fair Value Measurements Using Inputs Considered As
(In thousands)			Level 1		Level 2		Level 3
Assets that fund deferred compensation:
Domestic equity funds	$	5,465	$	5,465	—		—
International equity funds	716		716		—		—
Fixed income funds	242		242		—		—
Total assets at fair value	$	6,423	$	6,423	$	—	$	—

	Fair Value at August 31, 2013		Fair Value Measurements Using Inputs Considered As
(In thousands)			Level 1		Level 2		Level 3
Long-term investments:
Student loan ARS	$	2,108	$	—	$	—	$	2,108
Assets that fund deferred compensation:
Domestic equity funds	7,127		7,127		—		—
International equity funds	742		742		—		—
Fixed income funds	287		287		—		—
Total assets at fair value	$	10,264	$	8,156	$	—	$	2,108

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 30, 2014			August 31, 2013
Balance at beginning of year	$	2,108		$	9,074
Net realized loss included in non-operating income	—			(45		)
Net change included in other comprehensive income	242			379
Sales	(2,350		)	(7,300		)
Balance at the end of year	$	—		$	2,108

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

Long-term investments. At August 31, 2013, we held $2.4 million (par value) of tax-exempt ARS, which were variable-rate debt securities and had a long-term maturity. Our long-term ARS investments were classified as Level 3, as quoted prices were unavailable and there was insufficient observable ARS market information available to determine the fair value of these investments. During the first quarter of Fiscal 2014, our remaining ARS holding of $2.4 million was called at par for a full redemption.

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 9), a deferred compensation program. The Executive Plan assets related to those options that will expire within a year are included in prepaid expenses and other assets in the accompanying balance sheets. The remaining assets are included in other assets.

Assets and Liabilities that are measured at Fair Value on a Nonrecurring Basis. Our non-financial assets, which include goodwill 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.