Fair Value of Financial Instruments (Tables)

12 Months Ended

Dec. 28, 2013

Fair Value of Financial Instruments

Financial assets and liabilities measured at fair value on a recurring basis

The following summarizes the valuation of the Company's financial instruments (in thousands).

	Fair Value Measurements at December 28, 2013 Using
Description	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Assets:
Cash Equivalents:
Money market funds	$	39,538	$	—	$	—	$	39,538
Certificates of deposit		—		7,768		—		7,768
Commercial paper		—		2,499		—		2,499
Municipal bonds		—		451		—		451
Total cash equivalents	$	39,538	$	10,718	$	—	$	50,256
Short-term Investments:
Municipal bonds	$	—	$	119,460	$	—	$	119,460
Variable-rate demand notes		—		38,025		—		38,025
Corporate bonds		—		17,844		—		17,844
Commercial paper		—		3,748		—		3,748
Asset-backed securities		—		516		—		516
Total short-term investments	$	—	$	179,593	$	—	$	179,593
Long-term Investments:
Auction rate securities	$	—	$	—	$	10,632	$	10,632
Total long-term investments	$	—	$	—	$	10,632	$	10,632
Other assets, net:
Derivative instruments	$	—	$	513	$	—	$	513
Total	$	—	$	513	$	—	$	513
Total	$	39,538	$	190,824	$	10,632	$	240,994
Other non-current liabilities:
Contingent consideration	$	—	$	—	$	12,919	$	12,919
Total	$	—	$	—	$	12,919	$	12,919

	Fair Value Measurements at December 29, 2012 Using
Description	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Assets:
Cash Equivalents:
U.S. Treasury bills	$	25,050	$	—	$	—	$	25,050
Money market funds		22,686		—		—		22,686
Municipal bonds		—		1,000		—		1,000
Total cash equivalents	$	47,736	$	1,000	$	—	$	48,736
Short-term Investments:
Corporate bonds	$	—	$	59,351	$	—	$	59,351
Municipal bonds		—		45,689		—		45,689
Variable-rate demand notes		—		41,785		—		41,785
Asset-backed securities		—		15,069		—		15,069
U.S. government bonds		12,663		—		—		12,663
International government bonds		—		2,008		—		2,008
Total short-term investments	$	12,663	$	163,902	$	—	$	176,565
Long-term Investments:
Auction rate securities	$	—	$	—	$	11,369	$	11,369
Total long-term investments	$	—	$	—	$	11,369	$	11,369
Total	$	60,399	$	164,902	$	11,369	$	236,670
Liabilities:
Derivative instruments	$	—	$	658	$	—	$	658
Contingent consideration		—		—		2,750		2,750
Total	$	—	$	658	$	2,750	$	3,408

Summary of quantitative information about level 3 asset fair value measurements

Fair Value at December 28, 2013 (000s)	Valuation Technique	Unobservable Input	Weighted Average
$10,632	Discounted cash flow	Estimated yield	1.11%
		Expected holding period	10 years
		Estimated discount rate	4.05%

Summary of quantitative information about level 3 liability fair value measurements

Fair Value at December 28, 2013 (000s)	Valuation Technique	Unobservable Input	Range
$12,919	Monte Carlo simulation	Expected revenue growth rate	26.2% - 51.9%
		Expected revenue volatility	20.0%
		Expected term	1.0 - 5.0 years
		Estimated discount rate	0.1% - 1.6%

Summary of activity in Level 3 financial instruments

The following summarizes the activity in Level 3 financial instruments for the years ended December 28, 2013 and December 29, 2012 (in thousands):

Assets

	Year Ended
Auction Rate Securities	December 28, 2013			December 29, 2012
Beginning balance	$	11,369		$	17,477
Settlements		(100	)		(6,700	)
Gain (loss) included in other comprehensive income		(637	)		592
Ending balance	$	10,632		$	11,369

Liabilities

	Year Ended
Contingent Consideration (1)	December 28, 2013			December 29, 2012
Beginning balance	$	2,750		$	876
Issues		13,964			4,004
Gain recognized in earnings (2)		(3,795	)		(2,130	)
Ending balance	$	12,919		$	2,750
Net gain for the period included in earnings attributable to contingent consideration held at the end of the period:	$	1,045		$	1,254

(1)

In connection with the acquisition of Energy Micro, Ember and ChipSensors, the Company recorded contingent consideration based upon the expected achievement of certain milestone goals. Changes to the fair value of contingent consideration due to changes in assumptions used in preparing the valuation model are recorded in selling, general and administrative expenses in the Consolidated Statements of Income.

(2)

The Company reduced the estimated fair value of contingent consideration because certain milestone goals were either not achieved or were expected to be achieved at a lower outcome.