| Fair Value Measurements | FAIR VALUE MEASUREMENTS The FASB has established a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. As of December 31, 2016 , the Company held financial instruments that are measured at fair value on a recurring basis. These included cash equivalents consisting of money market funds. The Company determined the estimated fair value of its investment in ARS by reviewing trading activity for similar securities in secondary markets as well as by using a discounted cash flow model. The assumptions used in preparing the discounted cash flow model include estimates for liquidity (average of LIBOR + 6.09% ), interest rates (weighted average of 0.2% ), timing (range from 9 – 13 years), credit ratings and amount of cash flows and expected holding periods of the ARS and recent trading activity in the secondary marketplace. The following items are measured at fair value on a recurring basis as of December 31, 2016 : Description December 31, Using Quoted Prices Significant Significant (Level 1) (Level 2) (Level 3) Fair value measurements at reporting date (In thousands) Cash equivalents $ 236 $ 236 $ — $ — Total $ 236 $ 236 $ — $ — The following items are measured at fair value on a recurring basis as of July 2, 2016 : Description July 2, 2016 Using Quoted Prices Significant Significant (Level 1) (Level 2) (Level 3) Fair value measurements at reporting date (In thousands) Cash equivalents $ 236 $ 236 $ — $ — Total $ 236 $ 236 $ — $ — The following items are measured at fair value on a recurring basis as of January 2, 2016 : Description January 2, 2016 Using Quoted Prices Significant Significant (Level 1) (Level 2) (Level 3) Fair value measurements at reporting date (In thousands) Cash equivalents $ 426 $ 426 $ — $ — Current available for sale securities 5,070 — 5,070 — Non-current available for sale securities 5,166 — — 5,166 Total $ 10,662 $ 426 $ 5,070 $ 5,166 During the quarter ended December 31, 2016 , there were no transfers of assets and liabilities between Level 1 (quoted prices in active markets for identical assets) and Level 2 (significant other observable inputs) of the fair value measurement hierarchy. An impairment charge was recorded in accumulated other comprehensive income that reduced the carrying amount of the applicable non-current assets of $9.0 million to their fair value of $5.2 million as of January 2, 2016 . Non-Financial Assets: The Company measures certain non-financial assets and liabilities, including long-lived assets, at fair value on a non-recurring basis. During the three months ended December 31, 2016 and January 2, 2016 , the Company recorded impairment charges of approximately $1.9 million and $2.0 million , respectively, related to under-performing stores. During the six months ended December 31, 2016 and January 2, 2016 , the Company recorded impairment charges of approximately $2.7 million and $3.5 million , respectively, related to under-performing stores. The following table presents the Company’s considerations of at-risk assets for the three month and six month periods ended December 31, 2016 and January 2, 2016 , respectively (amounts in millions, except for store count): Three Months Ended Six Months Ended December 31, 2016 January 2, 2016 December 31, 2016 January 2, 2016 Number of stores identified as at risk and evaluated for impairment 9 14 13 21 Number of stores identified as at risk, but not impaired (2 ) (3 ) (2 ) (4 ) Number of stores identified as at risk with impairment 7 11 11 17 Total carrying amount of stores identified as at risk prior to any impairment charges taken $ 2.4 $ 2.9 $ 3.2 $ 4.7 Total carrying amount of stores identified as at risk, but not impaired (0.3 ) (0.9 ) (0.3 ) (1.2 ) Total carrying amount of stores identified for impairment 2.1 2.0 2.9 3.5 Impairment charges recorded during the period (1.9 ) (2.0 ) (2.7 ) (3.5 ) Remaining carrying amount of stores identified for impairment after impairment charges taken $ 0.2 $ — $ 0.2 $ — The fair market value of these assets was determined using the income approach and level 3 inputs, which require management to make significant estimates about future operating plans and projected cash flows. Management estimates the amount and timing of future cash flows based on its experience and knowledge of the retail market in which each store operates. The assumptions used in preparing the discounted cash flow model and the related sensitivity analysis around the discounted cash flow model include estimates for weighted average cost of capital 11.0% and annual revenue growth rates (range from 0.0% – 5.0% ). The stores not impaired had undiscounted cash flows that exceeded their net carrying amount at a weighted average of 101% and 180% for the three and six month periods ended December 31, 2016 , respectively. For the three and six month periods ended January 2, 2016 , the stores not impaired had undiscounted cash flows that exceeded their net carrying amount at a weighted average of 453% and 340% , respectively. The impairment charge is included in selling, general and administrative expenses (“SG&A”) in the accompanying condensed consolidated statements of operations and comprehensive loss. The Company was not required to measure any other significant non-financial assets and liabilities at fair value. |
