Fair Value Measurements

9 Months Ended

Sep. 29, 2013

The following table presents the Company’s hierarchy for assets and liabilities measured at fair value on a recurring basis as of September 29, 2013 and December 30, 2012 (in thousands):



	September 29, 2013								December 30, 2012
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets:
Money market funds (cash equivalents)	$	499,128	$	—	$	—	$	499,128	$	252,126	$	—	$	—	$	252,126
Debt securities in government-sponsored entities	—		71,343		—		71,343		—		314,873		—		314,873
Corporate debt securities	—		234,663		—		234,663		—		472,861		—		472,861
U.S. Treasury securities	30,149		—		—		30,149		128,489		—		—		128,489
Deferred compensation plan assets	—		17,057		—		17,057		—		13,626		—		13,626
Total assets measured at fair value	$	529,277	$	323,063	$	—	$	852,340	$	380,615	$	801,360	$	—	$	1,181,975
Liabilities:
Acquisition related contingent consideration liabilities	$	—	$	—	$	57,232	$	57,232	$	—	$	—	$	12,519	$	12,519
Deferred compensation liability	—		14,902		—		14,902		—		12,071		—		12,071
Total liabilities measured at fair value	$	—	$	14,902	$	57,232	$	72,134	$	—	$	12,071	$	12,519	$	24,590

The Company holds available-for-sale securities that consist of highly liquid, investment grade debt securities. The Company determines the fair value of its debt security holdings based on pricing from a service provider. The service provider values the securities based on “consensus pricing,” using market prices from a variety of industry-standard independent data providers. Such market prices may be quoted prices in active markets for identical assets or liabilities (Level 1 inputs) or pricing determined using inputs that are observable either directly or indirectly (Level 2 inputs), such as quoted prices for similar assets or liabilities, yield curve, volatility factors, credit spreads, default rates, loss severity, current market and contractual prices for the underlying instruments or debt, broker and dealer quotes, as well as other relevant economic measures. The Company’s deferred compensation plan assets consist primarily of mutual funds. The Company performs certain procedures to corroborate the fair value of its holdings, including comparing prices obtained from service providers to prices obtained from other reliable sources.

The Company reassesses the fair value of contingent consideration to be settled in cash related to acquisitions on a quarterly basis using the income approach. This is a Level 3 measurement. Significant assumptions used in the measurement include probabilities of achieving the remaining milestones and the discount rates, which depend on the milestone risk profiles. The changes in the fair value of the contingent considerations during the three and nine months ended September 29, 2013 were due to changes in the estimated payments and a shorter discounting period.

Changes in estimated fair value of contingent consideration liabilities during the nine months ended September 29, 2013 are as follows (in thousands):



	Contingent Consideration Liability (Level 3 Measurement)
Balance as of December 30, 2012	$	12,519
Additional liability recorded as a result of current period acquisitions	60,183
Change in estimated fair value, recorded in acquisition related (gain) expense, net	(11,031		)
Cash settlements	(4,439		)
Balance as of September 29, 2013	$	57,232

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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