Fair Value of Financial Assets and Liabilities

9 Months Ended

Jul. 06, 2011

Fair Value Disclosures [Abstract]

Fair Value of Financial Assets and Liabilities

19. Fair Value of Financial Assets and Liabilities

The fair value framework as established in ASC paragraph 820-10-50-2 requires the categorization of assets and liabilities into three levels based upon the assumptions (inputs) used to price the assets or liabilities. Level 1 provides the most reliable measure of fair values, whereas Level 3 generally requires significant management judgment. The three levels are defined as follows:

• Level 1: Unadjusted quoted prices in active markets for identical assets and liabilities.

• Level 2: Observable inputs other than those included in Level 1. For example, quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets.

• Level 3: Unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset or liability.

The following methods and assumptions were used to determine the fair value of each class of the following assets and liabilities recorded at fair value in the condensed consolidated Balance Sheet.

Cash equivalents: Cash equivalents primarily consist of money market funds. Money market funds that are carried at fair value, based on quoted market prices, are classified within Level 1 of the fair value hierarchy. All other cash equivalents carried at fair value based on observable inputs for which a quoted market price is not available are classified within Level 2 of the fair value hierarchy. Cash equivalents reflected below includes $0 and $6,845 of cash equivalents held by the consolidated affiliated partnerships at July 6, 2011 and September 29, 2010, respectively.

Equity securities: Except as follows, the Company’s investments in equity securities are carried at fair value, based on quoted market prices, and are classified within Level 1 of the fair value hierarchy. Approximately $814 of the investments held by consolidated affiliated partnerships at September 29, 2010 have been classified within Level 2 of the fair value hierarchy and have been valued, in the absence of observable market prices, by management, using valuation methodologies after giving consideration to a range of observable factors.

Non-qualified deferred compensation plan investments: The assets of the Non-Qualified Deferred Compensation plan are set up in a rabbi trust. They represent mutual funds that are carried at fair value, based on quoted market prices, and are classified within Level 1 of the fair value hierarchy.

Investment held by consolidated affiliated partnership: Investments of $189 and $323 as of July 6, 2011 and September 29, 2010, respectively, have been classified within Level 3 of the fair value hierarchy and represents a private security.

Securities sold, not yet purchased: The liability for securities sold, not yet purchased (short sales) is marked to market each reporting period with fair value based on quoted market prices for the underlying securities. At July 6, 2011, the amount includes $6,407 held by the Company and $3,661 held by consolidated affiliated partnerships.

Investment derivatives and interest rate swaps: Investment derivatives and interest rate swaps are marked to market each reporting period with fair value based on readily available market quotes, and are classified within Level 2 of the fair value hierarchy. Interest rate swaps at July 6, 2011 represent the mark to market adjustment for Steak n Shake’s interest rate swap.

As of July 6, 2011, the fair values of financial assets and liabilities were as follows:

	July 6, 2011								September 29, 2010
	Level 1		Level 2		Level 3		Total		Level 1			Level 2		Level 3		Total
Assets
Cash equivalents	$	-	$	9,432	$	-	$	9,432	$	6,845		$	38,134	$	-	$	44,979
Equity securities:
Restaurant/Retail		99,914		-		-		99,914		26,789			-		-		26,789
Other		16,829		-		-		16,829		5,734			-		-		5,734
Equity securities held by consolidated affiliated partnerships:
Restaurant/Retail		9,932		-		-		9,932		5,559			-		-		5,559
Other		9,362		-		-		9,362		8,931			814		-		9,745
Non-qualified deferred compensation plan investments		576		-		-		576		476			-		-		476
Investment held by consolidated affiliated partnership	-		-		189		189		-			-		323		323
Total assets at fair value	$136,613		$    9,432		$      189		$146,234		$ 54,334			$ 38,948		$      323		$93,605
Liabilities
Securities sold, not yet purchased	$   10,068		$          -		$          -		$10,068		$           -			$            -		$            -		$          -
Investment derivatives	-		-		-		-		-		--	97		-		97
Interest rate swaps	-		309		-		309		-			-		-		-
Total liabilities at fair value	$    10,068		$      309		$          -		$10,377		$           -			$         97		$            -		$        97

There were no changes in our valuation techniques used to measure fair values on a recurring basis.

A reconciliation of the beginning and ending balances of assets measured at fair value on a recurring basis using Level 3 inputs is as follows:

	July 6,
	2011
Beginning of period balance	$                 323
Sale of assets	(124	)
Loss included in earnings	(10	)
End of period balance	$                 189

During fiscal 2011, the Company had no significant fair value adjustments applicable to items that are subject to non-recurring fair value measurement after the initial measurement date.