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Fair Value Measurements (Tables)
 6 Months Ended
Apr. 13, 2014
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]  
Fair Value Measurements, Nonrecurring
Non-financial assets and liabilities — The Company’s non-financial instruments, which primarily consist of property and equipment, goodwill and intangible assets, are reported at carrying value and are not required to be measured at fair value on a recurring basis. However, on a periodic basis (at least annually for goodwill and intangible assets, and semi-annually for property and equipment) or whenever events or changes in circumstances indicate that their carrying value may not be recoverable, non-financial instruments are assessed for impairment. If applicable, the carrying values are written down to fair value.
The following table presents non-financial assets and liabilities measured at fair value on a nonrecurring basis during fiscal 2014 (in thousands):
 
Fair Value Measurement
 
Impairment Charges
Long-lived assets held and used
$
619

 
$
180

Long-lived assets held for sale
$
1,844

 
$
3,115

Long-lived asset abandoned
$
—

 
$
6,393

Long-lived assets held and used consist primarily of Jack in the Box restaurants determined to be underperforming or which we intend to close. To determine fair value, we use the income approach, which assumes that the future cash flows reflect current market expectations. The future cash flows are generally based on the assumption that the highest and best use of the asset is to sell the store to a franchisee (market participant). These fair value measurements require significant judgment using Level 3 inputs, such as discounted cash flows, which are not observable from the market, directly or indirectly. Refer to Note 7, Impairment, Disposition of Property and Equipment, Restaurant Closing Costs and Restructuring, for additional information regarding these impairment charges.
Long-lived assets held for sale were written down to fair value less costs to sell and relate to the anticipated sale of two Jack in the Box company-operated markets. We have signed letters of intent related to the sale of both markets and fair value was determined based on the terms contained therein. These impairment charges are included in gains (losses) on the sale of company-operated restaurants in the accompanying condensed consolidated statements of earnings.
The abandoned long-lived asset relates to the impairment of a restaurant software asset we no longer plan to place in service, and for which we have determined fair value to be zero. Refer to Note 7, Impairment, Disposition of Property and Equipment, Restaurant Closing Costs and Restructuring, for additional information regarding this impairment charge.
Financial Assets And Liabilities Measured At Fair Value On Recurring Basis
The following table presents the financial assets and liabilities measured at fair value on a recurring basis (in thousands):
 
Total      
 
Quoted Prices
in Active
Markets for
Identical
Assets (3)
(Level 1)
 
Significant
Other
Observable
Inputs (3)
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
Fair value measurements as of April 13, 2014:
 
 
 
 
 
 
 
Non-qualified deferred compensation plan (1)
$
(37,378
)
 
$
(37,378
)
 
$
—

 
$
—

Interest rate swaps (Note 6) (2) 
(527
)
 
—

 
(527
)
 
—

Total liabilities at fair value
$
(37,905
)
 
$
(37,378
)
 
$
(527
)
 
$
—

Fair value measurements as of September 29, 2013:
 
 
 
 
 
 
 
Non-qualified deferred compensation plan (1)
$
(39,135
)
 
$
(39,135
)
 
$
—

 
$
—

Interest rate swaps (Note 6) (2) 
(1,190
)
 
—

 
(1,190
)
 
—

Total liabilities at fair value
$
(40,325
)
 
$
(39,135
)
 
$
(1,190
)
 
$
—

 
____________________________
(1)
We maintain an unfunded defined contribution plan for key executives and other members of management excluded from participation in our qualified savings plan. The fair value of this obligation is based on the closing market prices of the participants’ elected investments.
(2)
We entered into interest rate swaps to reduce our exposure to rising interest rates on our variable debt. The fair values of our interest rate swaps are based upon Level 2 inputs which include valuation models as reported by our counterparties. The key inputs for the valuation models are quoted market prices, interest rates and forward yield curves.
(3)
We did not have any transfers in or out of Level 1 or Level 2.
The fair values of the Company’s debt instruments are based on the amount of future cash flows associated with each instrument discounted using the Company’s borrowing rate. At April 13, 2014, the carrying value of all financial instruments was not materially different from fair value, as the borrowings are prepayable without penalty. The estimated fair values of our capital lease obligations approximated their carrying values as of April 13, 2014