Fair Value Measurements

9 Months Ended

Sep. 28, 2021

Fair Value Measurements

Fair Value Measurements

(9) Fair Value Measurements

Accounting Standards Codification ("ASC") 820, Fair Value Measurements and Disclosures ("ASC 820"), establishes a framework for measuring fair value and expands disclosures about fair value measurements. ASC 820 establishes a three-level hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs in measuring fair value. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability on the measurement date.

Level 1 Inputs based on quoted prices in active markets for identical assets.

Level 2 Inputs other than quoted prices included within Level 1 that are observable for the assets, either directly or indirectly.

Level 3 Inputs that are unobservable for the asset.

There were no transfers among levels within the fair value hierarchy during the 13 and 39 weeks ended September 28, 2021.

The following table presents the fair values for our financial assets and liabilities measured on a recurring basis:

	Fair Value Measurements
	Level	September 28, 2021		December 29, 2020
Deferred compensation plan—assets	1	$	65,482	$	55,633
Deferred compensation plan—liabilities	1	$	(65,337)	$	(55,614)

The Second Amended and Restated Deferred Compensation Plan of Texas Roadhouse Management Corp. (as amended, the "Deferred Compensation Plan") is a nonqualified deferred compensation plan which allows highly compensated employees to defer receipt of a portion of their compensation and contribute such amounts to one or more investment funds held in a rabbi trust. We report the amounts of the rabbi trust in other assets and the corresponding liability in other liabilities in our unaudited condensed consolidated financial statements. These investments are considered trading securities and are reported at fair value based on quoted market prices. The realized and unrealized holding gains and losses related to these investments, as well as the offsetting compensation expense, are recorded in general and administrative expense in the unaudited condensed consolidated statements of income and comprehensive income.

The following table presents the fair value of our assets measured on a nonrecurring basis:

	Fair Value Measurements					Total loss
						13 Weeks Ended				39 Weeks Ended
		September 28,		December 29,		September 28,		September 29,		September 28,		September 29,
	Level	2021		2020		2021		2020		2021		2020
Long-lived assets held for sale	3	$	—	$	1,645	$	—	$	(432)	$	(470)	$	(432)
Goodwill	3	$	—	$	2,625	$	—	$	—	$	—	$	—
Investments in unconsolidated affiliates	3	$	—	$	1,531	$	—	$	—	$	(531)	$	(528)

Long-lived assets held for sale include land and building at a site that was relocated and had a carrying amount of $1.2 million as of September 28, 2021. These assets are included in prepaid expenses and other current assets in our unaudited condensed consolidated balance sheets. These assets are valued using a Level 3 input. This resulted in a loss of $0.5 million which is included in impairment and closure, net in our unaudited condensed consolidated statement of income and comprehensive income for the 39 weeks ended September 28, 2021.

 Goodwill includes two restaurants whose carrying amounts were determined to be in excess of their fair values as part of our most recent annual goodwill impairment assessment in 2020 and had a carrying amount of $2.6 million as of September 28, 2021. In determining the fair value, multiple valuation approaches were utilized which considered the historical results and anticipated future trends of operations for these restaurants. We consider this a Level 3 input.

Investments in unconsolidated affiliates include a 40% equity interest in a joint venture in China that had a carrying amount of $1.0 million as of September 28, 2021. This asset is valued using a Level 3 input, or the amount we expect to receive upon the sale of this investment. This resulted in a loss of $0.5 million which is included in equity income from investments in unconsolidated affiliates in our unaudited condensed consolidated statement of income and comprehensive income for the 39 weeks ended September 28, 2021.

At September 28, 2021 and December 29, 2020, the fair values of cash and cash equivalents, accounts receivable and accounts payable approximated their carrying values based on the short-term nature of these instruments. At September 28, 2021 and December 29, 2020, the fair value of our revolving credit facility approximated its carrying value since it is a variable rate credit facility (Level 2).