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Fair Value Measurement

12 Months Ended

Aug. 26, 2020

GAAP establishes a framework for using fair value to measure assets and liabilities, and expands disclosure about fair value measurements. Fair value measurements guidance applies whenever other statements require or permit assets or liabilities to be measured at fair value.

GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used to measure fair value. These include:

•Level 1: Defined as observable inputs such as quoted prices in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

•Level 2: Defined as pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors, and current market and contractual prices for the underlying instruments, as well as other relevant economic measures.

•Level 3: Defined as pricing inputs that are unobservable from objective sources. These inputs may be used with internally developed methodologies that result in management's best estimate of fair value.

There were no recurring fair value measurements related to assets at August 26, 2020 or August 28, 2019. We terminated the interest rate swap in the first quarter of fiscal 2019 and received proceeds of approximately $0.3 million.

There were no recurring fair value measurements related to liabilities at August 26, 2020 or August 28, 2019.

Non-recurring fair value measurements related to impaired property and equipment consist of the following:


			Fair Value Measurement Using
	Fiscal Year Ended August 26, 2020		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Impairments (5)
Nonrecurring Fair Value Measurements	(In thousands)
Continuing Operations:
Property and equipment related to Company-owned restaurants(1)	$	481	$	—	$	—	$	481	$	(4,831)
Goodwill(2)	—		—		—		—		(320)
Property held for sale(3)	3,362		—		—		3,362		(14)
Operating lease right-of-use assets(4)	272		—		—		272		(5,380)
Total Nonrecurring Fair Value Measurements	$	4,115	$	—	$	—	$	4,115	$	(10,545)

(1) In accordance with Subtopic 360-10, long-lived assets held and used with a carrying amount of $5.3 million were written down to their fair value of $0.5 million, resulting in an impairment charge of $4.8 million.

(2) In accordance with Subtopic 350-20, goodwill with a carrying amount of $0.3 million was written down to its implied fair value of zero resulting in an impairment charge of $0.3 million.

(3) In accordance with Subtopic 360-10, long-lived assets held for sale with carrying values of $3.4 million were written down to their fair value, less cost to sell, of $3.4 million, resulting in an impairment charge of $14 thousand.

(4) In accordance with Subtopic 360-10, operating lease right-of-use assets with a carrying value of $5.7 million were written down to their fair value of $0.3 million, resulting in an impairment charge of $5.4 million.

(5) Total impairments are included in provision for asset impairments and restaurant closings in the our consolidated statement of operations.


			Fair Value Measurement Using
	Fiscal Year Ended August 28, 2019		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Impairments(4)
Nonrecurring Fair Value Measurements			(In thousands)
Continuing Operations:
Property and equipment related to Company-owned restaurants(1)	$	1,220	$	—	$	—	$	1,220	$	(5,627)
Goodwill(2)	514		—		—		514		(41)
Property held for sale(3)	8,030		—		—		8,030		(124)
Total Nonrecurring Fair Value Measurements	$	9,764	$	—	$	—	$	9,764	$	(5,792)

(1) In accordance with Subtopic 360-10, long-lived assets held and used with a carrying amount of $7.2 million were written down to their fair value of $1.2 million, resulting in an impairment charge of $5.6 million.

(2) In accordance with Subtopic 350-20, goodwill with a carrying amount of $0.6 million was written down to its implied fair value of $0.5 million, resulting in an impairment charge of $41 thousand.

(3) In accordance with Subtopic 360-10, long-lived assets held for sale with carrying values of $8.2 million were written down to their fair value, less costs to sell, of $8.0 million resulting in an impairment charge of approximately $0.1 million.

(4) Total impairments are included in Provision for asset impairments and restaurant closings in our consolidated statement of operations.

- 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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