Jack In The Box 2014 Annual Report Download - page 60
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Financial assets and liabilities — The following table presents the financial assets and liabilities measured at fair value on a recurring basis (in thousands):
Non-qualified deferred compensation plan (1)
$ (35,602)
$ (35,602)
$ —
$ —
Interest rate swaps (Note 6) (2)
(1,789)
—
(1,789)
—
Total liabilities at fair value
$ (37,391)
$ (35,602)
$ (1,789)
$ —
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. A t September 28, 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 September 28,
2014.
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 property and equipment long-lived assets measured at fair value on a non-recurring basis during fiscal year 2014 (in thousands):
Long-lived assets held for sale
$ 3,444
$ 3,517
Long-lived assets held and used
$ 619
$ 570
Long-lived asset abandoned
$ —
$ 6,486
Long-lived assets held for sale were written down to fair value less costs to sell and relate to the sale of two Jack in the Box company operated markets, and
the anticipated sale of one Jack in the Box company-operated market. We received a signed letter of intent related to the anticipated sale 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 consolidated statements of earnings.
Impairment of long-lived assets held and used primarily relates to locations we have closed or intend to close. Impairment recorded in connection with an
abandoned long-lived asset relates to a restaurant software asset we no longer plan to place in service, and for which we have determined the fair value to be
zero. Both types of impairment charges are included in impairment and other charges, net in the accompanying consolidated statements of earnings. Refer to
Note 9, Impairment, Disposition of Property and Equipment, Restaurant Closing Costs and Restructuring, for additional information regarding these
charges.
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