Sonic 2011 Annual Report Download - page 39

Notes to Consolidated Financial Statements
August 31, 2011, 2010 and 2009 (In thousands, except per share data)
The table below sets forth our fair value hierarchy for financial assets measured at fair value on a recurring basis as
of August 31, 2010 (in thousands):
Quoted Prices in Significant
Active Markets Other Significant
for Identical Observable Unobservable
Assets Inputs Inputs
(Level 1) (Level 2) (Level 3) Total
Assets:
Cash equivalents $ 74,132 $–$–$74,132
Restricted cash (current) 12,546 ––12,546
Restricted cash (noncurrent) 9,685 ––9,685
Total $ 96,363 $–$–$96,363
At August 31, 2010 the fair value of the company’s 2006 Fixed Rate Notes (as defined in note 10 – Debt below) was
estimated at $388.1 million versus a carrying value of $404.0 million (including accrued interest). The fair value of the
company’s 2006 Variable Funding Notes (as defined in note 10 – Debt below) at August 31, 2010 was estimated at $163.6
million versus a carrying value of $187.3 million (including accrued interest).
Certain nonfinancial assets and liabilities are measured at fair value on a nonrecurring basis, which means these
assets and liabilities are not measured at fair value on an ongoing basis but are subject to periodic impairment tests. For
the company, these items primarily include long-lived assets, goodwill and other intangible assets. Refer to sections
“Accounting for Long-Lived Assets” and “Goodwill and Other Intangible Assets,” discussed above, for inputs and valuation
techniques used to measure the fair value of these nonfinancial assets. The fair value was based upon management’s
assessment as well as appraisals or independent assessments which involved Level 3 inputs. There were impairment
charges related to long-lived assets of $0.8 million, $15.2 million and $11.2 million in fiscal years 2011, 2010 and 2009
respectively. See note 3 - Impairment of Long-Lived Assets for a description of the impairment.
Noncontrolling Interests
Effective September 1, 2009, the company implemented Accounting Standards Codification, (“ASC”) Topic 810,
“Consolidation,” which requires noncontrolling interests, previously called minority interests, to be presented as a separate
item in the equity section of the consolidated balance sheets. It also requires the amount of consolidated net income
related to noncontrolling interests to be clearly presented on the face of the consolidated statements of income.
Additionally, Topic 810 clarifies that changes in a parent’s ownership interest in a subsidiary that do not result in
deconsolidation are equity transactions, and that deconsolidation of a subsidiary requires gain or loss recognition in net
income based on the fair value on the deconsolidation date. Topic 810 was applied prospectively with the exception of
presentation and disclosure requirements, which were applied retrospectively for all periods presented, and did not
significantly change the presentation of our Consolidated Financial Statements.
New Accounting Pronouncements
In May 2011, FASB issued Accounting Standards Update (“ASU”) No. 2011-04, “Amendments to Achieve Common
Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS.” This pronouncement was issued to provide
a consistent definition of fair value and ensure that the fair value measurement and disclosure requirements are similar
between U.S. GAAP and International Financial Reporting Standards (“IFRS”). ASU 2011-04 changes certain fair value
measurement principles and enhances the disclosure requirements particularly for Level 3 fair value measurements. This
pronouncement is effective for interim and annual reporting periods beginning on or after December 15, 2011, with early
adoption prohibited. The new guidance will require prospective application. The adoption of this pronouncement is not
expected to have a material impact on the company’s consolidated financial statements.
In June 2011, the FASB issued ASU No. 2011-05, “Presentation of Comprehensive Income,” which was issued to
enhance comparability between entities that report under U.S. GAAP and IFRS, and to provide a more consistent method
of presenting non-owner transactions that affect an entity's equity. ASU 2011-05 eliminates the option to report other
comprehensive income and its components in the statement of changes in stockholders’ equity and requires an entity to
present the total of comprehensive income, the components of net income and the components of other comprehensive
income either in a single continuous statement or in two separate but consecutive statements. This pronouncement is
effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. Early adoption of
the new guidance is permitted, and full retrospective application is required. The adoption of this pronouncement is not
expected to have a material impact on the company’s consolidated financial statements.
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