Fair Value Measurement

12 Months Ended

Dec. 25, 2011

Fair Value, Assets and Liabilities Measured on Recurring Basis [Abstract]

Fair Value Measurement

FAIR VALUE MEASUREMENT

The asset (liability) amounts recorded in the Consolidated Balance Sheet (carrying amounts) and the estimated fair values of financial instruments consisted of the following:

	2011				2010				Note Reference
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
	(In thousands)
Short-term investments in available-     for-sale securities	157		157		1,554		1,554		7
Commodity derivative assets(a):									8
Futures	2,870		2,870		32,962		32,962
Options	—		—		399		399
Long-term investments in available-     for-sale securities	497		497		11,595		11,595		7
Commodity derivative liabilities(b):									8
Futures	(2,120	)	(2,120	)	(8,497	)	(8,497	)
Options	(603	)	(603	)	(7,890	)	(7,890	)
Long-term debt and other borrowing     arrangements(c)	(1,423,612	)	(1,421,517	)	(1,339,304	)	(1,355,135	)	12
Note payable to JBS USA Holdings	(50,000	)	(50,077	)	—		—		12, 16

(a) Commodity derivative assets are included in Prepaid expenses and other current assets on the Consolidated Balance Sheet.

(b) Commodity derivative liabilities are included in Accrued expenses on the Consolidated Balance Sheet.

(c) The fair values of the Company’s long-term debt and other borrowing arrangements were estimated by calculating the net present value of future payments for each debt obligation or borrowing by: (i) using a risk-free rate applicable for an instrument with a life similar to the remaining life of each debt obligation or borrowing plus the current estimated credit risk spread for the Company or (ii) using the quoted market price at December 25, 2011 or December 26, 2010.

The carrying amounts of our cash and cash equivalents, derivative trading accounts margin cash, restricted cash and cash equivalents, accounts receivable, accounts payable and certain other liabilities approximate their fair values due to their relatively short maturities. The Company adjusts its investments, commodity derivative assets and commodity derivative liabilities to fair value based on quoted market prices in active markets for identical instruments, quoted market prices in active markets for similar instruments or other inputs that are observable for the subject instrument or unobservable inputs such as discounted cash flow models or valuations.

ASC Topic 820, Fair Value Measurements and Disclosures, establishes a framework for measuring fair value and requires enhanced disclosures about fair value measurements. The subject guidance under ASC Topic 820 clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. The subject guidance under ASC Topic 820 also requires disclosure about how fair value was determined for assets and liabilities and established a hierarchy for which these assets and liabilities must be grouped, based on significant levels of inputs as follows:

Level 1	Unadjusted quoted prices in active markets for identical assets or liabilities;
Level 2	Quoted prices in active markets for similar assets and liabilities or other inputs that are observable for the asset or liability; or
Level 3	Unobservable inputs, such as discounted cash flow models or valuations.

The determination of where assets and liabilities fall within this hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

As of December 25, 2011, the Company held certain items that are required to be measured at fair value on a recurring basis. These included cash and cash equivalents, derivative assets and liabilities, short-term investments in available-for-sale securities and long-term investments in available-for-sale securities. Cash equivalents consist of short-term, highly liquid, income-producing investments such as money market funds and other funds that have maturities of 90 days or less. Derivative assets and liabilities consist of long and short positions on both exchange-traded commodity futures and commodity options as well as margin cash on account with the Company’s derivatives brokers. Short-term investments in available-for-sale securities consist of short-term, highly liquid, income-producing investments such as municipal debt securities that have maturities of greater than 90 days but less than one year. Long-term investments in available-for-sale securities consist of income-producing investments such as municipal debt securities, corporate debt securities and fund-of-funds units that have maturities of greater than one year.

The following items are measured at fair value on a recurring basis at December 25, 2011:

	Level 1			Level 2			Level 3		Total
	(In thousands)
Short-term investments in available-for-sale securities	$	—		$	157		$	—	$	157
Commodity derivative assets:
Futures	2,870			—			—		2,870
Long-term investments in available-for-sale securities	—			438			59		497
Commodity derivative liabilities:
Futures	(2,120		)	—			—		(2,120		)
Options	—			(603		)	—		(603		)

Financial assets and liabilities classified in Level 1 at December 25, 2011 include commodity futures derivative instruments traded in active markets. The valuation of these instruments is determined using a market approach, taking into account current interest rates, creditworthiness, and liquidity risks in relation to current market conditions, and is based upon unadjusted quoted prices for identical assets in active markets. The valuation of plan assets in Level 2 is determined using a market approach based upon quoted prices for similar assets and liabilities in active markets, or other inputs that are observable for substantially the full term of the financial instrument. Level 2 securities primarily include equity securities, fixed income securities and commodity option derivative instruments. The valuation of plan assets in Level 3 is determined using an income approach based on unobservable inputs such as discounted cash flow models or valuations. Level 3 securities consist of a fund of funds investment and auction rate securities.

The following table presents activity for each reporting period related to the Company’s investment in a fund of funds asset and auction rate securities that are measured at fair value on a recurring basis using Level 3 inputs:

	Fund of Funds			Auction Rate Securities			Total
	(In thousands)
Balance at September 27, 2008	$	1,197		$	3,850		$	5,047
Included in other comprehensive income	(129		)	—			(129		)
Sale of securities	—			(3,850		)	(3,850		)
Balance at September 26, 2009	1,068			—			1,068
Included in other comprehensive income	48			—			48
Balance at December 27, 2009	1,116			—			1,116
Included in other comprehensive income	74			—			74
Balance at December 26, 2010	1,190			—			1,190
Included in other comprehensive income	(19		)	—			(19		)
Sale of securities	(1,112		)	—			(1,112		)
Balance at December 25, 2011	$	59		$	—		$	59

In addition to assets and liabilities that are recorded at fair value on a recurring basis, the Company records certain assets and liabilities at fair value on a nonrecurring basis. Generally, assets are recorded at fair value on a nonrecurring basis as a result of impairment charges when required by U.S. GAAP. During 2011, certain long-lived assets with a carrying amount of $62.1 million were written down to their fair value of $39.2 million, resulting in a loss of $22.9 million recorded in earnings. These assets are classified as Level 2 assets because their fair value can be corroborated based on observable market data.