Fair Value Measurements

9 Months Ended

Sep. 23, 2012

Fair Value Disclosures [Abstract]

Fair Value Disclosures

FAIR VALUE MEASUREMENTS

Fair value is the price that would be received upon the sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date. The transaction would be in the principal or most advantageous market for the asset or liability, based on assumptions that a market participant would use in pricing the asset or liability.

The fair value hierarchy consists of three levels:

Level 1 – quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date;

Level 2 – inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and

Level 3 – unobservable inputs for the asset or liability.

Assets Measured and Recorded at Fair Value on a Recurring Basis

The following table summarizes our financial assets measured at fair value on a recurring basis as of September 23, 2012:

(In thousands)	September 23, 2012
	Total		Level 1		Level 2		Level 3
Available-for-sale security	$	7,674	$	7,674	$	—	$	—

Certain financial assets are valued using market prices on the active markets. Level 1 instrument valuations are obtained from real-time quotes for transactions in active exchange markets involving identical assets. In the first quarter of 2012, the common stock of Brightcove, Inc. (available-for-sale security) began to trade on an active market (see Note 5).

Assets Measured and Recorded at Fair Value on a Non-Recurring Basis

Certain non-financial assets, such as goodwill, other intangible assets, property, plant and equipment and certain investments, are only recorded at fair value if an impairment charge is recognized. The following table presents non-financial assets that were measured and recorded at fair value on a non-recurring basis and the impairment losses recorded during 2012 on those assets:

(In thousands)	Carrying Value		Fair Value Measured and Recorded Using						Impairment Losses
	as of September 23, 2012		Level 1		Level 2		Level 3		2012
Goodwill(1)	$	172,544	$	—	$	—	$	172,544	$	194,732	(2)
Cost method investments	$	—	$	—	$	—	$	—	$	5,500

(1) Goodwill relates to the About Group and is classified within “Assets held for sale” as of September 23, 2012. See Note 11 for additional information.

(2) Impairment losses relate to the About Group and are included within “Income/(loss) from discontinued operations, net of income taxes” for the nine months ended September 23, 2012. See Note 11 for additional information.

The impairment charge totaling $194.7 million in the table above was related to goodwill at the About Group in the second quarter of 2012 (see Note 11). The total fair value of the About Group was determined using a discounted cash flow model (present value of future cash flows). We estimated a 3.5% annual growth rate to arrive at a residual year representing the perpetual cash flows of the About Group. The residual year cash flow was capitalized to arrive at the terminal value of the About Group. Utilizing a discount rate of 15.0%, the present value of the cash flows during the projection period and terminal value were aggregated to estimate the fair value of the About Group. In our 2011 annual impairment test, we had assumed a 5.0% annual growth rate and a 13.8% discount rate. In determining the appropriate discount rate, we considered the weighted-average cost of capital for comparable companies.

The impairment charges totaling $5.5 million for the cost method investments in the first nine months of 2012, which were primarily related to our investment in Ongo Inc., were due to events surrounding ceasing the operations of our investments (see Note 5). We determined the fair value of these investments using the market and income approaches. The market approach includes the use of financial metrics and ratios of comparable companies. The income approach includes the use of a discounted cash flow model.

Financial Instruments Disclosed, But Not Recorded, at Fair Value

Our short-term investments, which include U.S. Treasury securities and commercial paper, are recorded at amortized cost (see Note 3). As of September 23, 2012 and December 25, 2011, the amortized cost approximated fair value because of the short-term maturity and highly liquid nature of these investments. We classified these investments as Level 2 since the fair value estimates are based on market observable inputs for investments with similar terms and maturities.

The carrying value of our long-term debt was approximately $695 million as of September 23, 2012 and $692 million as of December 25, 2011. The fair value of our long-term debt was approximately $850 million as of September 23, 2012 and $800 million as of December 25, 2011. We estimate the fair value of our debt utilizing market quotations for debt that have quoted prices in active markets. Since our debt does not trade on a daily basis in an active market, the fair value estimates are based on market observable inputs based on borrowing rates currently available for debt with similar terms and average maturities (Level 2).