Note 8 - Financial Instruments, Investments and Fair Value Measurements

12 Months Ended

Nov. 26, 2011

Fair Value Disclosures [Text Block]

8. Financial Instruments, Investments and Fair Value Measurements

Financial Instruments

Our financial instruments include cash and cash equivalents, accounts receivable, notes receivable, investment securities, cost and equity method investments, accounts payable and long-term debt. Because of their short maturity, the carrying amounts of cash and cash equivalents, accounts receivable, and accounts payable approximate fair value. Our cost and equity method investments generally involve entities for which it is not practical to determine fair values.

Investments

Our investments consist of our interest in Fortress (formerly a part of the Alternative Asset Fund, which was dissolved on December 31, 2010) and a portfolio of available-for-sale marketable securities as follows:

	November 26, 2011		November 27, 2010
Reported in current assets:
Available-for-sale marketable securities	$	2,939	$	-
Total current		2,939		-
Reported in non-current assets:
Money market shares	$	-	$	11,368
Available-for-sale marketable securities		-		2,911
Fortress		806		832
Total non-current		806		15,111
Total investments	$	3,745	$	15,111

Previously, our marketable securities, including money market shares, had been pledged as collateral under our former revolving credit facility (see Note 13). Although we had the ability to buy and sell the individual marketable securities, we were required to maintain a certain dollar amount in those brokerage accounts subject to the Securities Account Control Agreement as part of the revolving credit facility, and securities or proceeds from the sale thereof were not available for our general use.  Accordingly, they were classified as non-current assets in our balance sheet. As of July 5, 2011, these securities are no longer required to be pledged as security under our credit agreement. Due to the termination of the collateral pledge, we now include the balance of our investment in money market shares in cash and cash equivalents in the accompanying consolidated balance sheet as of November 26, 2011, with the remaining available-for-sale securities classified as marketable securities in current assets.

Fortress & Alternative Asset Fund

In 2008, we requested that our general partner begin to liquidate all of our investments in the Alternative Asset Fund.  During fiscal 2009, we received $19,258 for liquidations associated with various investments in the Fund.  At November 27, 2009, the Alternative Asset Fund held only a $749 investment in Fortress, along with some remaining cash that was distributed in early 2011.   Due to the level of the remaining assets in the Alternative Asset Fund, the Company and Private Advisors, L.L.C. (the general partner) dissolved the partnership effective December 31, 2009 and the Alternative Asset Fund’s remaining investment interest in Fortress was transferred to the Company.

Fortress is in the process of liquidating all of its underlying investments to wind down the fund.  Once fully liquidated, which is not expected in the near term, we will be paid our pro rata share of the proceeds.  We will continue to monitor the progress of the fund liquidation and adjust our valuation as necessary

Our investment in Fortress is valued at fair value primarily based on the net asset values which are determined by the fund manager. Consequently, the inputs are considered to be Level 3 as specified in the fair value hierarchy in ASC 820, Fair Value Measurements and Disclosures.

Available-for-Sale Securities

Historically, our marketable securities have been held by two different money managers and consisted of a combination of equity and fixed income securities, including money market funds.  During the second quarter of 2009, we liquidated our equity holdings with one of the managers and reinvested the proceeds in various money market funds, individual bonds and bond funds.  During the first quarter of 2010, we liquidated the equity holdings with the other manager and reinvested those funds in money market accounts.

We classify our marketable securities as available-for-sale, which are reported at fair value. Unrealized holding gains and losses, net of the related income tax effect, on available-for-sale securities are excluded from income and are reported as other comprehensive income in stockholders’ equity. Realized gains and losses from securities classified as available-for-sale are included in income.  We measure the fair value of our marketable securities in accordance withASC Topic 820, Fair Value Measurements and Disclosures.

As of November 26, 2011, available-for-sale securities consisted of the following:

	Cost		Gross Unrealized					Market
	Basis		Gains		Losses			Value
Bond mutual funds	$	1,175	$	149	$	(4	)	$	1,320
Government agency obligations		908		38		-			946
US Treasury Obligations		648		26		(1	)		673
	$	2,731	$	213	$	(5	)	$	2,939

As of November 27, 2010, available-for-sale securities consisted of the following:

	Cost		Gross Unrealized				Market
	Basis		Gains		Losses		Value
Money market shares	$	11,368	$	-	$	-	$	11,368
Bond mutual funds		990		224		-		1,214
Government agency obligations		761		45		-		806
US Treasury Obligations		876		15		-		891
	$	13,995	$	284	$	-	$	14,279

The realized earnings from our marketable securities portfolio include realized gains and losses, based upon specific identification, and dividend and interest income.  Realized earnings were $163, $2,272 and $764 for fiscal 2011, 2010, and 2009 respectively.  Realized earnings for the year ended November 26, 2011 include $28 of gains previously recorded in other comprehensive income. These amounts are recorded in income (loss) from investments in our consolidated statements of operations.  Of the $1,619 in fixed income securities, $432 matures in less than five years with the remainder being long-term and maturing in greater than 20 years.

In accordance with ASC Topic 320, Investments – Debt and Equity Securities, we review our marketable securities to determine whether a decline in fair value of a security below the cost basis is other than temporary.   Should the decline be considered other than temporary, we write down the cost basis of the security and include the loss in current earnings as opposed to an unrealized holding loss.  Consequently, in fiscal 2009 we recorded losses of $1,255 that were considered to be other than temporary. No losses for other than temporary impairments were recognized during fiscal 2011 or 2010.

Fair Value Measurement

The Company accounts for items measured at fair value in accordance with ASC Topic 820, Fair Value Measurements and Disclosures.  ASC 820’s valuation techniques are based on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect our market assumptions. ASC 820 classifies these inputs into the following hierarchy:

Level 1 Inputs– Quoted prices for identical instruments in active markets.

Level 2 Inputs– Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

Level 3 Inputs– Instruments with primarily unobservable value drivers.

The fair values of our marketable securities and our investment in Fortress based on the level of inputs are summarized below:

	Level 1		Level 2		Level 3		Fair Value
Assets
Marketable Securities	$	2,939	$	-	$	-	$	2,939
Investment in Fortress		-		-		806		806
Total Assets	$	2,939	$	-	$	806	$	3,745

The table below provides a reconciliation of all assets measured at fair value on a recurring basis which use level three or significant unobservable inputs for the period of November 27, 2010 to November 26, 2011.

	Fair Value Measurements Using
	Significant Unobservable Inputs
	(Level 3 Inputs)
Balance at November 27, 2010	$	832
		(26	)
Total gains (losses) included in earnings related to change in underlying net assets Transfers in and/or out of Level 3		-
Balance November 26, 2011	$	806

The carrying values and approximate fair values of financial instruments as of November 26, 2011 and November 27, 2010 were as follows:

	November 26, 2011				November 27, 2010
	Carrying		Fair		Carrying		Fair
	value		value		value		value
Assets:
Cash and cash equivalents	$	69,601	$	69,601	$	11,071	$	11,071
Accounts receivable, net		14,756		14,756		31,621		31,621
Notes receivable, net		1,877		1,877		8,166		8,212
Investments, including marketable securities		3,745		3,745		15,111		15,111
Liabilities:
Accounts payable	$	18,821	$	18,821	$	24,893	$	24,893
Real estate notes payable		3,864		3,804		13,816		13,556
Lease/loan guarantee reserves		508		508		2,304		2,304