FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair value refers to the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the market in which the entity transacts. The inputs used to develop these fair value measurements are established in a hierarchy, which ranks the quality and reliability of the information used to determine fair value. The fair value classification is based on levels of inputs. Assets and liabilities that are carried at fair value are classified and disclosed in one of the following categories described in ASC Topic 820, Fair Value Measurements and Disclosures:

Level 1 Inputs: Quoted market prices in active markets for identical assets or liabilities.

Level 2 Inputs: Observable market based inputs or unobservable inputs that are corroborated by market data.

Level 3 Inputs: Unobservable inputs that are not corroborated by market data.

The following tables summarize the fair value hierarchy of the Company's financial assets and liabilities carried at fair value on a recurring basis as of December 31, 2015 and January 1, 2015:



		Total Carrying Value at December 31, 2015		Fair Value Measurements at December 31, 2015
	Balance Sheet Location	Total Carrying Value at December 31, 2015		Quoted prices in active market (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
				(in millions)
Assets:
Equity securities, available for sale(1)	Other Non-Current Assets	$	3.4	$	3.4	$	—	$	—
Total assets at fair value		$	3.4	$	3.4	$	—	$	—
Liabilities:
Interest rate swap designated as cash flow hedge (2)	Accrued Expenses	$	3.1	$	—	$	3.1	$	—
Interest rate swap designated as cash flow hedge (2)	Other Non-Current Liabilities	$	1.9	$	—	$	1.9	$	—
Total liabilities at fair value		$	5.0	$	—	$	5.0	$	—



		Total Carrying Value at January 1, 2015		Fair Value Measurements at January 1, 2015
	Balance Sheet Location	Total Carrying Value at January 1, 2015		Quoted prices in active market (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
				(in millions)
Assets:
Equity securities, available for sale(1)	Other Non-Current Assets	$	3.8	$	3.8	$	—	$	—
Total assets at fair value		$	3.8	$	3.8	$	—	$	—
Liabilities:
Interest rate swap designated as cash flow hedge (2)	Accrued Expenses	$	4.6	$	—	$	4.6	$	—
Interest rate swap designated as cash flow hedge (2)	Other Non-Current Liabilities	$	0.1	$	—	$	0.1	$	—
Total liabilities at fair value		$	4.7	$	—	$	4.7	$	—

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(1)

The Company maintains an investment in RealD, Inc., further described in Note 4—"Investments." The fair value of the RealD, Inc. shares is determined using RealD, Inc.'s publicly traded common stock price, which falls under Level 1 of the valuation hierarchy. The held shares of RealD, Inc. stock are accounted for as available for sale equity securities and recurring fair value adjustments to these shares are recorded to "Other Non-Current Assets" with a corresponding entry to "Accumulated other comprehensive income (loss)" on a quarterly basis. The fair value of the 322,780 RealD, Inc. common shares held as of December 31, 2015 and January 1, 2015 was based on the publicly traded common stock price of RealD, Inc. of $10.55 per share and $11.80 per share, respectively.

(2)

The fair value of the Company’s interest rate swaps described in Note 13—"Derivative Instruments" is based on Level 2 inputs, which include observable inputs such as dealer quoted prices for similar assets or liabilities, and represents the estimated amount Regal Cinemas would receive or pay to terminate the agreements taking into consideration various factors, including current interest rates, credit risk and counterparty credit risk. The counterparties to the Company’s interest rate swaps are major financial institutions. The Company evaluates the bond ratings of the financial institutions and believes that credit risk is at an acceptably low level.

There were no changes in valuation techniques during the period. There were no transfers in or out of Level 3 during the years ended December 31, 2015, January 1, 2015 and December 26, 2013.

In addition, the Company is required to disclose the fair value of financial instruments that are not recognized in the statement of financial position for which it is practicable to estimate that value. The methods and assumptions used to estimate the fair value of each class of financial instrument are as follows:

Cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities:

The carrying amounts approximate fair value because of the short maturity of these instruments.

Long-Lived Assets, Intangible Assets and Other Investments

As further described in Note 2—"Summary of Significant Accounting Policies," the Company regularly reviews long-lived assets (primarily property and equipment), intangible assets and investments in non-consolidated entities, for impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be fully recoverable. When the estimated fair value is determined to be lower than the carrying value of the asset, an impairment charge is recorded to write the asset down to its estimated fair value.

The Company’s analysis relative to long-lived assets resulted in the recording of impairment charges of $15.6 million, $5.6 million and $9.5 million for the years ended December 31, 2015, January 1, 2015 and December 26, 2013, respectively. The long-lived asset impairment charges recorded were specific to theatres that were directly and individually impacted by increased competition, adverse changes in market demographics or adverse changes in the development or the conditions of the areas surrounding the theatres we deemed other than temporary.

In addition, during the year ended December 26, 2013, the Company recorded an impairment charge of approximately $1.5 million pertaining to certain favorable leases associated with the acquisition of Consolidated Theatres. The Company did not record an impairment of any intangible assets during the years ended December 31, 2015 and January 1, 2015.

Finally, the Company did not record an impairment of any investments in non-consolidated subsidiaries accounted for under the equity method during the years ended December 31, 2015, January 1, 2015 or December 26, 2013.

Long term obligations, excluding capital lease obligations, lease financing arrangements and other:

The fair value of the Amended Senior Credit Facility described in Note 5—"Debt Obligations," which consists of the New Term Facility and the New Revolving Facility, is estimated based on quoted prices (Level 2 inputs as described in ASC Topic 820) as of December 31, 2015 and January 1, 2015. The associated interest rates are based on floating rates identified by reference to market rates and are assumed to approximate fair value. The fair values of the 5³/₄% Senior Notes Due 2022, the 5³/₄% Senior Notes Due 2025, and the 5³/₄% Senior Notes Due 2023 were estimated based on quoted prices (Level 1 inputs as described in ASC Topic 820) for these issuances as of as of December 31, 2015 and January 1, 2015.

The aggregate carrying values and fair values of long-term debt at December 31, 2015 and January 1, 2015 consist of the following:



	December 31, 2015		January 1, 2015
	(in millions)
Carrying value	$	2,233.8	$	2,240.8
Fair value	$	2,226.6	$	2,147.6