Fair Value of Financial Instruments (Tables)

9 Months Ended

Oct. 01, 2016

Fair Value of Financial Instruments

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

	Fair Value Measurements at October 1, 2016 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	$	36,200	$	—	$	—	$	36,200
Certificates of deposit	—		2,956		—		2,956
Municipal bonds	—		301		—		301
Total cash equivalents	$	36,200	$	3,257	$	—	$	39,457
Short-term investments:
Municipal bonds	$	—	$	60,682	$	—	$	60,682
Corporate bonds	—		22,306		—		22,306
Variable-rate demand notes	—		15,324		—		15,324
U.S. government bonds	14,392		—		—		14,392
Asset-backed securities	—		10,961		—		10,961
Commercial paper	—		6,466		—		6,466
International government bonds	—		1,008		—		1,008
Total short-term investments	$	14,392	$	116,747	$	—	$	131,139
Long-term investments:
Auction rate securities	$	—	$	—	$	6,980	$	6,980
Total long-term investments	$	—	$	—	$	6,980	$	6,980
Other assets, net:
Derivative instruments	$	—	$	72	$	—	$	72
Total	$	—	$	72	$	—	$	72
Total	$	50,592	$	120,076	$	6,980	$	177,648

	Fair Value Measurements at January 2, 2016 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	$	37,721	$	—	$	—	$	37,721
Commercial paper	—		11,272		—		11,272
Certificates of deposit	—		2,845		—		2,845
U.S. government agency	—		1,599		—		1,599
Municipal bonds	—		1,577		—		1,577
Total cash equivalents	$	37,721	$	17,293	$	—	$	55,014
Short-term investments:
Municipal bonds	$	—	$	93,516	$	—	$	93,516
Commercial paper	—		11,176		—		11,176
Variable-rate demand notes	—		8,995		—		8,995
Certificates of deposit	—		8,000		—		8,000
U.S. government agency	—		3,998		—		3,998
International government bonds	—		2,220		—		2,220
Corporate bonds	—		996		—		996
Total short-term investments	$	—	$	128,901	$	—	$	128,901
Long-term investments:
Auction rate securities	$	—	$	—	$	7,126	$	7,126
Total long-term investments	$	—	$	—	$	7,126	$	7,126
Other assets, net:
Derivative instruments	$	—	$	92	$	—	$	92
Total	$	—	$	92	$	—	$	92
Total	$	37,721	$	146,286	$	7,126	$	191,133
Liabilities:
Accrued expenses:
Contingent consideration	$	—	$	—	$	4,749	$	4,749
Other non-current liabilities:
Contingent consideration	$	—	$	—	$	9,324	$	9,324
Total	$	—	$	—	$	14,073	$	14,073

Summarization of contractual underlying maturities of available-for-sale investments

The following summarizes the contractual underlying maturities of the Company’s available-for-sale investments at October 1, 2016 (in thousands):

	Cost		Fair Value
Due in one year or less	$	99,623	$	99,620
Due after one year through ten years	58,238		58,251
Due after ten years	20,725		19,705
	$	178,586	$	177,576

Schedule of available-for-sale investments in continuous unrealized loss position by length of time

The available-for-sale investments that were in a continuous unrealized loss position, aggregated by length of time that individual securities have been in a continuous loss position, were as follows (in thousands):

	Less Than 12 Months					12 Months or Greater					Total
As of October 1, 2016	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair  Value		Gross Unrealized Losses
Municipal bonds	$	42,653	$	(39	)	$	—	$	—		$	42,653	$	(39	)
Corporate bonds	9,368		(16		)	—		—			9,368		(16		)
Auction rate securities	—		—			6,980		(1,020		)	6,980		(1,020		)
U.S. government bonds	5,307		(2		)	—		—			5,307		(2		)
	$	57,328	$	(57	)	$	6,980	$	(1,020	)	$	64,308	$	(1,077	)

	Less Than 12 Months					12 Months or Greater					Total
As of January 2, 2016	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
Municipal bonds	$	29,271	$	(30	)	$	1,198	$	(2	)	$	30,469	$	(32	)
Auction rate securities	—		—			7,126		(874		)	7,126		(874		)
International government bonds	2,220		(7		)	—		—			2,220		(7		)
Corporate bonds	996		(3		)	—		—			996		(3		)
	$	32,487	$	(40	)	$	8,324	$	(876	)	$	40,811	$	(916	)

Summary of quantitative information about level 3 asset fair value measurements

Auction rate securities

Fair Value at October 1, 2016 (000s)		Valuation Technique	Unobservable Input	Weighted Average
$	6,980	Discounted cash flow	Estimated yield	1.12%
			Expected holding period	10 years
			Estimated discount rate	2.74%

Summary of activity in Level 3 financial instruments

The following summarizes the activity in Level 3 financial instruments for the three and nine months ended October 1, 2016 (in thousands):

Assets

Auction Rate Securities	Three Months Ended		Nine Months Ended
Beginning balance	$	6,921	$	7,126
Gain (loss) included in other comprehensive income (loss)	59		(146		)
Balance at October 1, 2016	$	6,980	$	6,980

Liabilities

Contingent Consideration (1)	Nine Months Ended
Beginning balance	$	14,073
Settlements (2)	(11,375		)
Gain recognized in earnings (3)	(2,698		)
Balance at October 1, 2016	$	—

(1) In connection with the acquisition of Energy Micro, 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 were recorded in selling, general and administrative expenses in the Consolidated Statement of Income.

(2) On March 11, 2016, the Company entered into an agreement which settled the total amount of contingent consideration related to the Energy Micro acquisition (including all amounts for fiscal 2015 through 2018). See Note 6, Acquisitions, for additional information.

(3) The gain recognized in earnings was due to the settlement of the Energy Micro contingent consideration. This gain was offset in part by a charge of approximately $2.7 million recorded in the nine months ended October 1, 2016 for a portion of the contingent consideration accounted for as post-combination compensation expense.