Fair Value Measurements

3 Months Ended

Jun. 18, 2011

Fair Value Measurements

Fair Value Measurements

4.  Fair Value Measurements

The accounting guidance for fair value measurement defines and establishes a framework for measuring fair value.  Inputs used to measure fair value are classified based on the following three-tier fair value hierarchy:

Level 1 – Quoted prices in active markets for identical assets or liabilities.

Level 2 – Directly or indirectly observable inputs other than Level 1 quoted prices in active markets. Our Level 2 liabilities include warrants, which are valued using the Black-Scholes pricing model with inputs that are observable or can be derived from or corroborated by observable market data.  In addition, our investments in money market funds, which are considered cash equivalents, are classified as Level 2, as they are valued based on their reported Net Asset Value (NAV).

Level 3 – Unobservable inputs that are supported by little or no market activity whose value is determined using pricing models, discounted cash flows, or similar methodologies, as well as instruments for which the determination of fair value requires significant judgment or estimation.

A financial asset or liability's classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

The following table provides the assets and liabilities carried at fair value measured on a recurring basis as of June 18, 2011 and February 26, 2011 (in thousands):

			Fair Value Measurements at June 18, 2011 Using
			Quoted Prices		Significant Other		Significant
	Total Carrying		in Active		Observable		Unobservable
	Value at		Markets		Inputs		Inputs
	June 18, 2011		(Level 1)		(Level 2)		(Level 3)
Assets:
Cash equivalents	$	1,552	$	-	$	1,552	$	-
Liabilities:
Series B warrant	$	87	$	-	$	87	$	-

			Fair Value Measurements at Feb. 26, 2011 Using
			Quoted Prices		Significant Other		Significant
	Total Carrying		in Active		Observable		Unobservable
	Value at		Markets		Inputs		Inputs
	Feb. 26, 2011		(Level 1)		(Level 2)		(Level 3)
Assets:
Cash equivalents	$	1,553	$	-	$	1,553	$	-
Liabilities:
Series B warrant	$	170	$	-	$	170	$	-

There were no transfers in and out of Level 1 and Level 2 fair value measurements during the 16 weeks ended June 18, 2011.

Level 3 Valuations

We did not have any financial assets or liabilities classified as Level 3 within the fair value hierarchy as of June 18, 2011 and February 26, 2011.

Nonfinancial Assets and Liabilities Measured on a Nonrecurring Basis.  Fair value measurements of our nonfinancial assets and nonfinancial liabilities on a nonrecurring basis using Level 3 inputs are primarily used in the impairment analyses of our goodwill and other indefinite-lived intangible assets, our long-lived assets and closed locations occupancy costs.  Long-lived assets and closed locations occupancy costs were measured at fair value on a nonrecurring basis using Level 3 inputs, as unobservable inputs were used to measure their fair value.  Refer to Note 5 – Valuation of Long-Lived Assets, Note 16 – Discontinued Operations and Note 17 – Asset Disposition Initiatives for more information relating to the valuation of these assets and liabilities.

Long-Term Debt

The following table provides the carrying values recorded on our balance sheet and the estimated fair values of financial instruments as of June 18, 2011 and February 26, 2011 (in thousands):

	At June 18, 2011				At February 26, 2011
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
Current portion of long-term debt	$	350,000	$	350,000	$	159	$	159
Long-term debt-subject to compromise, net of related discount		905,278		470,674		1,255,225		765,577

Our long-term debt includes borrowings under our line of credit, credit agreement, related party promissory note and our debt securities.  The fair value of our debt securities are determined based on quoted market prices for such notes in non-active markets.