Fair Value Measurements (Tables)

3 Months Ended

Mar. 29, 2020

Fair Value Disclosures [Abstract]

Fair value, financial instruments measured on nonrecurring basis, valuation techniques

Fair value is categorized into one of the following three levels based on the lowest level of significant input:

Level 1	Unadjusted quoted market prices in active markets for identical assets or liabilities
Level 2	Observable inputs available at measurement date other than quoted prices included in Level 1
Level 3	Unobservable inputs that cannot be corroborated by observable market data

Schedule of assets and liabilities measured at fair value on a recurring basis

The following table summarizes the Company’s financial assets and liabilities measured at fair value by hierarchy level on a recurring basis as of the periods indicated:

	MARCH 29, 2020						DECEMBER 29, 2019
(dollars in thousands)	TOTAL		LEVEL 1		LEVEL 2		TOTAL		LEVEL 1		LEVEL 2
Assets:
Cash equivalents:
Fixed income funds	$	2,324	$	2,324	$	—	$	1,037	$	1,037	$	—
Money market funds	7,046		7,046		—		12,752		12,752		—
Total asset recurring fair value measurements	$	9,370	$	9,370	$	—	$	13,789	$	13,789	$	—
Liabilities:
Accrued and other current liabilities:
Derivative instruments - interest rate swaps	$	13,335	$	—	$	13,335	$	7,174	$	—	$	7,174
Other long-term liabilities:
Derivative instruments - interest rate swaps	26,758		—		26,758		16,835		—		16,835
Total liability recurring fair value measurements	$	40,093	$	—	$	40,093	$	24,009	$	—	$	24,009

Fair value, assets measured on recurring basis, methods and assumptions

Fair value of each class of financial instrument is determined based on the following:

FINANCIAL INSTRUMENT	METHODS AND ASSUMPTIONS
Fixed income funds and Money market funds	Carrying value approximates fair value because maturities are less than three months.
Derivative instruments	The Company’s derivative instruments include interest rate swaps. Fair value measurements are based on the contractual terms of the derivatives and use observable market-based inputs. The interest rate swaps are valued using a discounted cash flow analysis on the expected cash flows of each derivative using observable inputs including interest rate curves and credit spreads. The Company also considers its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. As of March 29, 2020 and December 29, 2019, the Company has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives.

Fair value, assets and liabilities measured on a nonrecurring basis

The following table summarizes the Company’s assets measured at fair value by hierarchy level on a nonrecurring basis, for the periods indicated:

	THIRTEEN WEEKS ENDED
	MARCH 29, 2020				MARCH 31, 2019
(dollars in thousands)	CARRYING VALUE		TOTAL IMPAIRMENT		CARRYING VALUE		TOTAL IMPAIRMENT
Assets held for sale (1)	$	1,182	$	75	$	2,149	$	215
Operating lease right-of-use assets (2)	55,644		19,563		2,242		596
Property, fixtures and equipment (3)	21,693		18,398		490		2,671
Goodwill and other assets (4)	1,044		2,388		—		—
	$	79,563	$	40,424	$	4,881	$	3,482

____________________

(1) Assets generally measured using third-party market appraisals or executed sales contracts (Level 2).

(2) Carrying values measured using Level 3 inputs to estimate fair value totaled $55.6 million and $2.0 million during the thirteen weeks ended March 29, 2020 and March 31, 2019, respectively. All other assets were valued using Level 2 inputs. Third-party market appraisals (Level 2) and discounted cash flow models (Level 3) were used to estimate fair value.

(3) Carrying values measured using Level 3 inputs to estimate fair value totaled $19.2 million and $0.5 million during the thirteen weeks ended March 29, 2020 and March 31, 2019, respectively. All other assets were valued using Level 2 inputs. Third-party market appraisals (Level 2) and discounted cash flow models (Level 3) were used to estimate fair value.

(4)

All assets measured using the quoted market value of comparable assets (Level 2).

Fair value, assets and liabilities measured on nonrecurring basis, valuation techniques

The following table presents quantitative information related to certain unobservable inputs used in the Company’s Level 3 fair value measurements of Operating lease right-of-use assets and Property, fixtures and equipment for the impairment losses incurred during the period indicated:

	THIRTEEN WEEKS ENDED
UNOBSERVABLE INPUTS	MARCH 29, 2020
Weighted-average cost of capital	10.4%
Long-term growth rate	1.5%	to	2.0%

Schedule of carrying value and fair value of senior secured credit facilities and other unsecured debt

The following table includes the carrying value and fair value of the Company’s debt by hierarchy level as of the periods indicated:

	MARCH 29, 2020				DECEMBER 29, 2019
	CARRYING VALUE		FAIR VALUE LEVEL 2		CARRYING VALUE		FAIR VALUE LEVEL 2
(dollars in thousands)
Senior Secured Credit Facility:
Term loan A	$	443,750	$	397,156	$	450,000	$	450,563
Revolving credit facility	$	975,000	$	832,777	$	599,000	$	599,000