Fair Value Measurements

9 Months Ended

Oct. 02, 2016

Fair Value Disclosures [Abstract]

Fair Value Measurements

Note 6 – Fair Value Measurements

J. Alexander’s Holdings, Inc. utilizes the following fair value hierarchy, which prioritizes the inputs into valuation techniques used to measure fair value. Accordingly, J. Alexander’s Holdings, Inc. uses valuation techniques which maximize the use of observable inputs and minimize the use of unobservable inputs when determining fair value. The three levels of the hierarchy are as follows:

Level 1 Defined as observable inputs such as quoted prices in active markets for identical assets or liabilities.

Level 2 Defined as observable inputs other than Level 1 prices. These include quoted prices for similar assets or liabilities in an active market, quoted prices for identical assets or liabilities in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 Defined as unobservable inputs for which little or no market data exists, therefore requiring an entity to develop its own assumptions about the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk.

The following tables present J. Alexander’s Holdings, Inc.’s financial assets and liabilities measured at fair value on a recurring basis as of October 2, 2016 and January 3, 2016:

	As of October 2, 2016
	Level 1		Level 2		Level 3
Cash and cash equivalents (as held in the Trust as defined below)	$	139	$	-	$	-
U.S. government obligations (as held in the Trust)		808		-		-
Corporate bonds (as held in the Trust)		1,490		-		-
Cash surrender value - life insurance (as held in the Trust)		-		1,966		-
Total	$	2,437	$	1,966	$	-
	As of January 3, 2016
	Level 1		Level 2		Level 3
Cash and cash equivalents (as held in the Trust)	$	1,205	$	-	$	-
U.S. government obligations (as held in the Trust)		700		-		-
Corporate bonds (as held in the Trust)		510		-		-
Cash surrender value - life insurance (as held in the Trust)		-		1,948		-
Total	$	2,415	$	1,948	$	-

Cash and cash equivalents are classified as Level 1 of the fair value hierarchy as they represent cash held in a rabbi trust established under a retirement benefit arrangement with certain of our current and former officers (the “Trust”) managed by the Pinnacle Bank trust department.  Cash held in the Trust is invested through an overnight repurchase agreement the investments of which may include U.S. Treasury securities, such as bonds or Treasury bills, and other agencies of the U.S. government.  Such investments are valued using quoted market prices in active markets.

U.S. government obligations held in the Trust include U.S. Treasury Bonds.  These bonds as well as the corporate bonds listed above are classified as Level 1 of the fair value hierarchy given their readily available quoted prices in active markets.

Cash surrender value - life insurance is classified as Level 2 in the fair value hierarchy.  The value of each policy was determined by MassMutual Financial Group, an A-rated insurance company, which provides the value of these policies to J. Alexander’s Holdings, Inc. on a regular basis by which J. Alexander’s Holdings, Inc. adjusts the recorded value accordingly.

There were no transfers between the levels listed above during either fiscal year 2015 or the nine-month period ended October 2, 2016.

The following table sets forth unrealized gains and losses on investments held in the Trust:

	For the Quarter Ended					For the Nine-Month Period Ended
	October 2, 2016			September 27, 2015		October 2, 2016		September 27, 2015
Unrealized gains (losses) on investments held in the Trust	$	(3	)	$	-	$	22	$	-

Unrealized gains or losses on investments held in the Trust are presented as a component of “Other, net” on the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

As of October 2, 2016 and January 3, 2016, the fair value of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and other current liabilities approximated their carrying value due to their short-term nature. The carrying amounts of the long-term debt approximate fair value as interest rates, and negotiated terms and conditions are consistent with current market rates, because of the close proximity of recent refinancing transactions to the dates of these Condensed Consolidated Financial Statements.

There were no assets and liabilities measured at fair value on a nonrecurring basis during the nine-month periods ended October 2, 2016 and September 27, 2015.